Private sector president favoured as NRC formulates new commercialization role

Support is growing for the next president of the National Research Council (NRC) to be chosen from among the ranks of the private sector. Such an appointment would be a dramatic departure from historical tradition but could be a master policy stroke as the organization seeks to transform itself into the Canada’s premier agent of commercialization. Dr Michael Raymont — currently the NRC’s interim president — is a logical candidate for the job top. Sources tell RE$EARCH MONEY that the selection process for a replacement for Dr Arthur Carty has been put on a slow track to give Raymont time to garner on-the-job experience.

The push for a president with strong private sector credentials comes at a time of considerable confusion at Canada’s largest R&D organization, dedicated to bridging the divide between university laboratories and industry. In addition to a vacancy in the president’s office, the NRC is seeking a replacement for Margo Montgomery, the recently departed DG of the Industrial Research Assistance Program (IRAP).

There are also concerns raised in the most recent report from the auditor general (AG). The AG report criticizes the role of the NRC’s governing council for not providing clear direction and the federal government for essentially starving the NRC of A-base funding (R$, April 6/04). It makes several recommendations, including the call for a review of the governing council and senior management structure and the establishment of a corporate business plan.

“The NRC’s review of the Governing Council’s structure and governance mechanisms would also provide a timely opportunity to review its senior management structure,” states the AG report. “Crown corporations with the complexity, staff and budget comparable to those of the NRC normally have vice-presidents of finance and human resources management headed by directors general reporting to the president.”

The NRC has already responded and said it is taking steps to add those positions to its senior executive committee and will be conducting further reviews once a new president is installed. The AG’s observations have served to embolden backers of the push for a president with business credentials.

“If the NRC is expected to run more like a business, we should have someone at the top who knows how to run a business,” says one NRC official who asked not to be named. “The NRC needs to priorize projects and use Canadian needs to set those priorities. Canada needs the part of the original NRC mandate that was lost when the act was broadened.”

One of the main drivers for change at the NRC comes from the federal government itself, in particular prime minister Paul Martin. He has made repeated references to the NRC and the need to provide smaller companies with commercialization assistance along the lines of contract research organizations such as Battelle Corp in the US and the Fraunhofer Institutes in Germany. The latter is developing some traction as the more realistic model as it obtains funding from government grants, government contracts and private sector contracts in roughly equal measure.

With approximately 50 branches across Germany, the Fraunhofer Institutes are seen as an effective interface with industry, conducting a mixture of targetted basic and applied research.

The Battelle Corp, on the other hand, is a classic contract research operation, primarily working with the US departments of defence and energy. More than 80% of its revenues are derived from those two sources alone and the US has a much larger and more diverse industrial R&D base than Canada.

RE$EARCH MONEY has obtained data that compare the history of NRC presidents with those of Battelle and Fraunhofer. They show that the latter two have drawn primarily from the private sector for their leadership. In contrast, the NRC has had only one president from the private sector for a one-year term in 1921-2.

Dr John ApSimon is a former member of NRC’s governing council and currently chairs the advisory board for the Institute of Biological Sciences. He contends that the NRC’s current institute model works well and provides a uniquely Canadian advantage to industry, although there could be more flexibility between institutes.

“The institute model builds on the concept of a semi-autonomous budgetting process. If there are going to be changes, the NRC could use new incentives but they need to be careful. Perhaps they could put 15% or 20% of budgets into a competitive pool for cross disciplinary research,” says ApSimon.

The push for more business-oriented leadership at the NRC is a logical extension of the progress the organization has made under Dr Arthur Carty.

During his 10 years as NRC president, Carty engineered a remarkable revival of an organization that had suffered under weak leadership and constant erosion of its A-base. In spite of the successes, however, NRC core funding has not grown, with most new spending directed towards new initiatives and subject to renewal after five-year terms. The cluster initiatives established throughout Atlantic Canada run out of funding at the end of this fiscal year and the recently created National Institute for Nanotechnology in Edmonton is not far behind.

There are also cracks appearing in the highly praised IRAP program. For the past three years, IRAP has not spent its full complement of granting funds. Many contend that recent internal restructuring and an overemphasis on bureaucratic issues has made it less attractive to firms seeking assistance.

“It should continue to do the same thing it always has but also give the NRC and its institutes ideas of how to better focus on Canadian needs,” says the NRC official.”

Supporters of a private sector-oriented NRC president contend that a new chief executive with the appropriate entrepreneurial skills and business mindset could help to develop an organizational culture that would be of great assistance to industry. If successful, such an appointment would assist the federal government in achieving its target of boosting Canadian R&D spending into the global top five.

“That would be a fantastic thing. The NRC would be on a winning streak,” says Dr Tony Noujaim, founder of Biomira Inc and president of ViRexx Research Inc. “It’s time for a change. Disneyland is now a business.”

Noujaim says he has received IRAP assistance several times over a 25-year career of company creation and all have been successful.

With two key vacancies to be filled, the push within NRC to become Canada’s premier commercialization organization is gathering steam. Kind words in the last Budget and the recent creation of a commercialization office — headed by Susan Moggridge and reporting to Raymont — are just the tip of the iceberg from a strategic planning perspective.

Both Raymont and Moggridge declined to be interviewed for this story.

R$