Education and Innovation: Twin Paths to Canada's Future

MR. DERRY:

Distinguished Past Presidents, members, and guests: With the business side of our meeting completed, we can proceed to the part that I know you have been looking forward to. It is always a pleasure to welcome back to this podium a Past President of our club. We normally have this opportunity throughout the season when our Past Presidents and Directors are good enough to express appreciation to the speaker of the day, and Mr. Macdonald was kind enough to do so when Robert Waterman addressed us last January. It is less frequent that we welcome a Past President as the main draw - and far less frequent that we do so for the fourth time. Indeed, only two of the club's Past Presidents have addressed our members more frequently - the Honourable George Drew and the Honourable Howard Ferguson - both former premiers of the province. It made me wonder, Ian, with your experience as a civil servant, combined with your political expertise in a university, whether this might be an indicator of something! But back to the subject at hand.

As your many friends who are present today know, your career to date has been varied and most distinguished. After graduating from the University of Toronto with the Governor General's medal for top marks in the Faculty of Arts and the Cody trophy for contributing most to athletic life at University College in 1952, you were off to Oxford as a Rhodes scholar to obtain a masters degree in Economics and a Bachelor of Philosophy. Then followed ten years of academic life at the University of Toronto, first as a lecturer, then as an assistant professor of Economics and also as Dean of Men, University College.

Next, there were nine years with the Government of Ontario, in which Ian started as Chief Economist and quickly rose to, at the time of changing direction again in 1974, Deputy Treasurer, and Deputy Minister of Economics and Intergovernmental Affairs. In recognition of his many valued contributions, Ian's Toronto Alma Mater honoured him with an honorary doctorate that same year.

Also in 1974, Mr Macdonald resumed the life of an educator, with his appointment as President of York University, a post which he still fills most ably. With this varied background and breadth of interest, it is not surprising that Mr. Macdonald has for many years been a director of a large number of companies, associations, and charities. In recognition of these many contributions, Mr. Macdonald was in 1977 made an officer of the Order of Canada, in 1978 a Knight of Grace of the Order of St. Lazarus, and in 1980 he received the Citation of Merit, the Court of Canadian Citizenship.

I mentioned his many other activities. One of these responsibilities - and the context in which Mr. Macdonald joins us today - is as Chairman of Ontario's recently established Crown Corporation, IDEA Corporation - Innovation Development and Employment Advancement. IDEA Corporation was established to encourage and finance the commercial development of technological innovation. You will note a complementary objective to that of the Science Council of Canada, and theme to that of Dr. Stuart Smith, who addressed us late last month.

Somewhat similar to the Science Council, IDEA Corporation is expected to participate in public policy development and education as it relates to technological innovation. However, it is also expected to be a venture capital investor in private sector technological innovation and development, and a broker of technology, arranging licences for new developments so companies can put new technology to use. To accomplish this, IDEA Corporation has received total funding of $107 million over five years from the Board of Industrial Leadership and Development of the Ontario government.

In deciding on a topic today, Ian selected "Education and Innovation: Twin Paths to Canada's Future." I know that you will agree with me that his distinguished career as an educator, economist, government policymaker, and now Chairman of IDEA Corporation make him well qualified to address us on this topic. Please join me in welcoming Mr. Ian Macdonald.

MR. MACDONALD:

Mr. Chairman, ladies and gentlemen: As a Past President of The Empire Club of Canada, I am highly conscious of the honour that accompanies an invitation to this platform at any time. To have been asked to address the club for the fourth time surpasses any reasonable entitlement on my part. However, I am delighted to speak to you again, particularly at an annual meeting.

I discover that there is a common thread running through each of my addresses, although I doubt that you remember them all as well as I do! In 1961,1 embarked upon a verbal tour through the young and evolving European Common Market. In February 1974, I reflected on the role of universities and provided my response to the question, "Who Needs Them?" And then in April 1975, 1 analyzed Canada's economy with that question of Bertolt Brecht, "Can We Advance Back to Reason?" However, that common thread now threatens to spin itself not into a seamless web, but into a shroud that could mark the end of the great prospects for this nation over the next two decades and into the next century if we do nothing to save them. "The Twentieth Century will belong to Canada." So said Wilfrid Laurier - but what, we must now ask, of the twentyfirst?

And so today, I want to tackle the rather ambitious task of offering some views on the future of Canada based on my own experiences of the past twenty-nine years. As you have indicated, Mr. Chairman, that period of service includes university teaching, a decade in the public service of Ontario, and university administration. I recall the parody that the late Sidney Smith, when President of the University of Toronto, offered on that aphorism of George Bernard Shaw, "Those who can, do; and those who can't, teach." Dr. Smith went on to suggest that, "Those who can't teach, administer - and those who can't administer, work for the government!" Thus, when I conclude my presi dency on the first of September, I will continue my climb back to redemption, through re-entry into the lecture halls of York University.

However, when anticipating that moment in time, my thoughts turned to other opportunities that might await me. As a child, the first subject I can recall contemplating was what lay beyond the beyond, and hence I have had a lifelong dream of travelling in space and exploring the universe. And so, as I was preparing for the end of my ten-year term as President of York University, the Canadian astronaut competition was announced; naturally, I applied. I was both surprised and disappointed not to survive the final round.

My wife suggested that my high hopes were surely unfounded. "After all," she said, "you began flying back in the period when one pulled down the aircraft window, wet one's finger, and stuck it out to see which way the wind was blowing!" However, I pointed out that any technical shortcomings on my part were more than compensated for by unquestioned personal integrity, impeccable judgement, and a great range of experience. Besides, I suggested, there must be any number of faculty members who would gladly provide me with an instant launching pad, and, after ten years as a university president, who could be more "spaced out" than I am? What I have learned is that the sky is the limit - rather there are no limits - for this country if we agree to follow the twin paths of education and innovation. Nothing can dampen our prospects if we believe in ourselves and if we believe in our capacity to exploit our opportunities. This means that we must recognize that the history of the world is the history of ideas, and that the winners in the twenty-first century will be those who use to full advantage their human resources to harness their innovative ideas. And these are the subjects I wish to discuss with you today.

We are at a point where a number of fundamental questions are being asked about education and about universities in particular. Let us remember that the past 200 years, on a global scale, and the last 120 years, in Canada, have been the years of the industrial revolution. Canadians were involved to the full in that process through the exploitation of our natural resources, along with a participation in the international economy to the extent of some 30 per cent of our gross national production.

However, we are now entering a new revolution, the information revolution, in which the key ingredient will be the skills of individuals and the innovation born of research and development. Whereas we enjoyed a comparative advantage in natural resources, we enjoy no such advantage where people are concerned. We have no monopoly on knowledge and every nation of the world is possessed of a like. share of bright and increasingly educated people. For Canada to compete, we must not only invest in our people, but we must turn their attention toward the development of new ideas and the application of those ideas to our economic process.

The most inspiring period of time for me during my university years has been convocation week, when I have had the opportunity of looking out at the faces of people who have worked hard and struggled greatly in order to ensure that their children had the opportunity of going to university. The great glory of Canada and the expectation of those who came here to make their lives and to build their homes and families was that there would be such opportunities for those who had the ability to undertake them. That is the reason why I believe that accessibility to university must be a cardinal value in Canadian society, quite apart from economic considerations.

And I wish all of you could have shared my experiences over the past ten years in seeing the enormous strength and potential in our young people, people who, incidentally, are achieving new standards of attainment in their personal lives. You might be interested to know, for example, that some 85 per cent of the students in York University come from homes where neither one of the parents went to university.

But what of the economic considerations? The principles of economics teach us that we maximize our production when we use our resources to their fullest potential. Today, that means, as I suggest, essentially our human resources. Therefore, we cannot afford not to develop our individual capacities to their fullest potential unless we are prepared to lag behind our competitors in the world. And that is a matter which can be documented not only in comparison with other OECD countries, but also with other emerging productive nations.

I believe that, unless we put our heads in the sand, the most important task confronting universities is to avoid pessimism and to challenge the conventional wisdom that universities face a downward slide in the 1980s and 1990s. In order to do so, we must demystify some of the popular thinking about enrolment prospects, and make our case on the grounds that adequate funding is not only in our interests but is, moreover, a prerequisite to economic and social progress on a world scale. "The relationship between the worlds of work and of education is becoming closer, as economic activity becomes increasingly based on knowledge rather than on human or mechanical muscle." So said the British industrialist, Sir Adrian Cadbury, at the Commonwealth Universities Congress in Birmingham last August while warning governments against their traditional response to the financial pressures arising from slow growth - cutting their investment in higher education. With the state of the world economy as it now stands, the financial outlook for our universities is at first glance bleak, to say the least, particularly since we are so dependent upon government grants for the major portion of our funding. However, the reversal in our economic fortunes must begin with renewed faith in investment in people, their education, and universities in particular. University education is more important now than ever before for two reasons: first to provide the knowledge that will enable us to improve our economic performance in the face of diminishing resources; second, to provide us with the capacity to live a very different style of life. Our real task is to start preparing society and individuals for that day twenty-five or even ten years hence when the world will look so different.

While I am on the topic of changes over a ten-year period, I am reminded of the story of a graduate who returned to his Alma Mater to pay a visit to his favourite economics professor. While they were talking, he noticed that the final exam was on the professor's desk and he leaned over to have a look at it. "Why, this is exactly the same exam you set for my class ten years ago!" he said. "Yes," replied the professor, "the questions are always the same." "But don't your students get wise?" "No - there is no danger in that," said the professor, "because, while the questions remain the same, in economics we keep changing the answers!"

In matters of our economic and social future, both the questions and the answers are changing radically. It is vitally important that the universities retain the capacity to play their part in the asking of the questions and in the providing of the answers. For example, while we were once able in Canada to depend on "imported" technological skills from Europe and the United States, that is no longer possible; therefore, we must now develop our own technological skills on a massive scale.

We must allow people to get the best out of their working lives by matching their skills to new opportunities. This will require the provision of degree and non-degree programs to meet the changes in society's demands for: a broader education for those who received a narrow technical training and wish to expand their educational base and change their roles;

upgrading in competence and perspective for people faced with early obsolescence of their knowledge or skills; regular updating for professionals (teachers, planners, environmentalists, lawyers, managers, etc.); and, introduction to new technological developments in certain fields that I shall be referring to later.

For years past, I have argued that economic policy and educational policy are two sides of the same coin. There is no future in maintaining obsolete or non-competitive industrial structures or blocking technological progress. We must produce managers and entrepreneurs able and willing to breathe new life into existing industry through the infusion of new technology. On the other hand, we cannot persuade business and labour of the folly of opposing industrial and technological change or hanging on to a job at all costs, if our people have no sense of security and no confidence that they can and will be retrained for new jobs. We must be prepared to substitute investment in people for the present inclination to shore up and maintain declining and non-competitive business.

Continuing education will be increasingly important, as more people who were denied an opportunity at one time in their lives have a second or third chance, and as retraining becomes the norm. And much of this will be conducted on a part-time basis. As part-time study becomes more and more prominent, the university, in turn, must then adapt its procedures radically to cope with changing styles and expectations. We must be prepared to take the university to students as well as taking students to the university. Education at the workplace, on weekends, and by the electronic media will be commonplace in the future. The fact is that Canadians have some of the best brains and the best ideas in the world. Certainly, in my experience as Chairman of IDEA Corporation, I have been impressed with the great potential that we have for innovation. IDEA Corporation, a provincial crown corporation, provides venture capital and pre-venture capital for technological innovation, in attempting to advance the commercialization of new ideas, and thereby in the long term, to raise the thresholds of our technological industries and, of course, increase employment. At the same time, we have the responsibility of bridging the well-known gaps between government, business, and education. Let me now turn from the importance of our universities to the path of innovation, as it leads, beside its educational twin, to Canada's future.

Our problem in Canada is not in producing ideas, but in our general tendency to resist the diffusion of technology, and in some particular impediments to advancing and developing innovation. Long-standing circumstances are partly to blame. We have a comparatively small, resource-based, and largely foreign-controlled economy, which is technologically underdeveloped. For every one hundred dollars of high-technology products crossing our borders either way, we incur a deficit of about thirty-three dollars. Our spending on research and development, proportionate to national income, continues to lag seriously behind that of our major trading partners and countries of comparable size and industrial structure. The business sector in Canada conducts considerably less of our national R and D than business sectors in other OECD countries. And, perhaps of greatest concern, the Economic Council of Canada has demonstrated recently that Canadian industry is generally slow in adopting and adapting new products and processes even when the benefits of doing so are evident.

A long-standing issue in Canada has been the lack of risk capital for technological innovation. Our universities provide one of our principal sources of innovation, but risk capital has not been available to them. Instead, research in our universities is sponsored primarily by the federal government's granting councils, which normally finance research and development with no view to commercial application. Typically, however, two to four years of further development remain before that research can reach the marketplace. Unfortunately, for the venture capitalist outside the university such long lead times create unacceptable risk and high cost.

Not so very long ago, researchers in an Ontario university produced an insecticide highly effective in the control of black flies and mosquitoes, yet one that disintegrated rapidly so that it was free of damaging environmental consequences. In Canada, it was looked upon as a product that might have some application in Muskoka, but not much interest was shown in it. An Israeli firm, however, saw its great potential for thirdworld countries in the control of disease, and so that invention was financed, produced, and marketed in Israel - with the result that we are buying back our own invention at a high price. I could produce many such illustrations from the Canadian experience.

Until recently, the federal government and universities conducted more than half of Canadian R and D, the highest proportion by far of public-sector funding among major OECD countries. Canadian universities perform about 20 per cent and finance about 10 per cent of national R and D, only a small part of which is under contract to industry. The quality of this research is generally high. Too often, we fail to recognize its merit. Indeed, when I visited several Japanese universities two years ago, I concluded that our universities were more dedicated to research and graduate programs than theirs were. The problem is that far too little of this research is intended to be commercial. In practice, most of it is years away from commercial application and many projects are dropped before they get to the stage where private investors can take them on and develop them further.

Universities, therefore, can play a key role and have a major influence in raising national levels of technology. Clearly, the needs of industry must combine with the capabilities of the university. An interrelationship between industries and universities can be built on three fronts: 1) sponsored research; 2) cross-pollination among the laboratory, the office, the drawing board, and the classroom; and 3) the training of more entrepreneurs and the promotion of the entrepreneurial spirit.

In the competitive realities of 1984, when technology increasingly influences national output and employment, there can be no question that partnerships between the universities and industry shall serve, effectively, the needs of both. For instance, when undertaking to provide a loan to an innovative company, IDEA Corporation became aware that a certain British Columbia firm had been attracted to Ontario to expand its operation, because of our university resources. In other words, the capacity of our universities became a key factor in the research and development plan of that firm. However, this has not been our tradition. Too often, university researchers have perceived linkages with industry as a threat to the purity of their mission. Yet, I have noted that American university laboratories with strong, industrially oriented research continue to win their share of Nobel prizes.

In my view, the objective of university-industry partnership is critical enough to demand detailed assessments of how to structure and reorganize incentives to link the university to business. In the United Kingdom, for instance, policymakers are now considering a bonus provision within the university granting system, whereby twenty-five cents is provided by the government for every dollar obtained in industrial contracts. We are presently looking at such possibilities in IDEA Corporation, and I hope that Ontario's Bovey Commission will examine such an approach in its deliberations over the future role of higher education in our economy.

New technology and education must follow identical paths to progress, but their precise direction and bearings are exceedingly difficult to plan and realize, because their success is influenced, to a formidable degree, by that which has not yet happened! We must never forget that many of the technological innovations that have had the most pervasive effects upon our lives could never have been predicted. On the philosophical side, of course, the surprises of human ingenuity are among our most valued characteristics. Therefore, while I do not believe that predicting the future will ever become a reliable or even a desirable science, I do believe that we can, and must, learn to be better prepared for, and adaptable to, change.

To do so is not as straightforward as it once was. In the past, during periods of relatively slow technological change and more rapid economic growth, it was easy to let the labour market send signals to high school students on their way to university. The colleges and universities let the market determine what disciplines should be emphasized, and thus education was "market driven."

But in the late 1970s, that system became increasingly less effective. Remember when the demand seemed high for computer programmers? The universities and colleges responded, but within four years, there was a glut of computer programmers on the market, and, to make matters worse, programming had become centralized by new "user-friendly" machines with built-in programming capabilities. Thus, the market prediction was not only untrustworthy, it was invalidated by unforeseen innovation.

To prepare ourselves for the jobs of the future, we can no longer rely on the vagaries of the market. Instead, we must understand how the world is changing and what will be different. We are coming to realize that certain core technologies will develop over the next ten years. Great strides are being made today in such fields as biological and medical science, microelectronics, composite materials, and automation. In educational planning, we must be mindful of the importance of these core technologies - without overemphasizing them in a single-minded way, as in the cautionary example of computer programming.

However, science and technology must be balanced by renewed efforts in the humanities and the social sciences. As science steps into the unknown, for instance, scholars in the humanities have a new responsibility on a host of ethical problems, not to mention interpreting and recording the meaning of human endeavour, at a time when we most need to get our bearings.

Let me mention a rather touching testimonial to the essential need for broadening scholarship in the realm of humanitarian concern to balance the more exciting and charismatic advances we are making in science and technology. Recently, I was asked to speak at a dinner in honour of six university students from across Canada who had won a competition for their predictions of the future in a number of technological areas. Their essays were full of wondrous ideas, particularly in computer technology. But the really admirable strain that ran through all their predictions was their stated need for conscience and for ethical guidance in limiting and shaping the inventions of science. Paramount was the worry that artificial intelligence might somehow rise up against us.

However, one student was confident in his humanitarian vision: he suggested that perhaps the intelligent machines we create would not, ultimately, "outdo us - rather, they would inspire us with a new reverence for life." "No machine," he affirmed, "could ever really play or dance or experience real joy." If we can keep that humanitarian vision in mind - of human wonderment and adaptability, and the triumph of joie de vivre - we can see our way steadily through even the most awe-inspiring and turbulent of technological advances.

I began by talking about the space program and my own wonder at the idea of infinitude. To me, The Empire Club has always stood for the Empire of Ideas, an empire - or indeed a universe - the frontiers of which extend, like space itself, in infinite directions. We must, in the words of Tenny'son:

Follow knowledge like a sinking star

To the utmost bounds of human thought.

Yet, in following knowledge, let us place no bounds on the opportunities for young people in this country. Canada can provide boundless opportunities and our young people deserve them. We should be prepared to offer them no less. And so, the strategy I propose for the future is one that combines the magnificent strength of our educational system in Canada with a new curiosity and attitude that will seek out invention and innovation wherever they exist and ensure that they are diffused throughout our economy while insisting, as a matter of public policy, that we continue to retrain people for the opportunities that will evolve and that they so richly deserve.

Recently, I asked a young friend of one of my children how he was doing in school, and he replied "I'm doin' good. I'm doin' good in reading and in arithmetic and I'm doin' real good in grammar." In turn, I said, "Charlie, do you mean you are doing really well in grammar?" "Oh no," he said sadly, "I'm not doin' that good." We can do well, and we can do good in this country if we are only prepared to follow those twin paths that I have sketched out today.

The appreciation of the audience was expressed by Dr. Harold Cranfield, a Past President of The Empire Club of Canada.