The following post lists my concluding observations on the previous blogs looking at different economic indicators and trends related to Ottawa’s high-tech sector and how the sector has performed relative to other key Canadian technology cluster centres. I also list some random impressions which are not directly the result of the analysis of performance indicators but are still reflective of my general impressions from reading the media articles and other literature.
- “The report of my death was an exaggeration” – Mark Twain (1897)
There has been considerable attention in the media identifying which city has replaced Ottawa as Canada’s new “Silicon Valley North” (also read Financial Post article here). The analysis of selected economic performance indicators indicate that Ottawa technology cluster and start-up ecosystem have remained resilient despite the fall of Nortel, the dot-com bust and the Great Recession (as well as the more recent federal government’s spending cuts). Ottawa has been able to maintain its strong ranking against the larger metropolitan areas such as Toronto, Montreal and Vancouver as a high-tech growth centre.
- The Technology Triangle (Waterloo-Kitchener-Cambridge) as emerged as a prominent technology growth centre
The selected economic performance measures clearly illustrate the recent emergence of the Kitchener-Waterloo metropolitan area as an important cluster in the Canadian technology landscape. The serious challenges faced by RIM/Blackberry and subsequent cutbacks in jobs does not appear to have negatively impacted the region’s technology community and entrepreneurial ecosystem . The region’s importance as a technology cluster will also gain strength over the long run as the local economy becomes more integrated with the Greater Toronto Area spurred by the proposed investments in transportation infrastructure.
- Cluster of Many Things
Ottawa’s technology cluster has historically been based on the telecommunications and to a lesser extent, photonics industries. The region’s technology sector is now broader in scope. Invest Ottawa for example identified several different technology clusters that demonstrate the greatest potential future growth: aerospace, security and defines; clean technology; digital media; wireless and telecommunications; photonics; life sciences, and; software. Quite a large number of clusters given the overall size of the technology sector.
The initial development of the telecommunications high-tech sector can be attributed to presence of federal government research labs such as the National Research Council which spun off Bell Northern Research and eventual acquired by Northern Telecom (Nortel). Nortel and other startup companies like Mitel became the anchor for the telecommunications cluster and helped to foster entrepreneurship and investment in the region.
The fall of Nortel and the Internet bubble collapse during the early years of the new millennium did not diminish the strength of technology entrepreneurship in Ottawa even though Venture Capital funding did effectively disappear. The local technology base is less dependent now on a few large anchor firms. However, to try to identify all the different specialized clusters may by useful for marketing and local boosterism, such efforts seem to miss the main strength of Ottawa’s entrepreneurial community. New companies and new ideas can spring up in any different form as long as there exists a supportive local entrepreneurial environment and collaborative network.
Ben Spigel observed the following:
The most visible change in Ottawa’s technology economy over the past decade has been the shift in informal entrepreneurial institutions away from supporting growth-oriented entrepreneurship and toward emphasizing life- style entrepreneurship. This reflects a desire among many new entrepreneurs to spend less time growing their firm into an international leader and instead dedicate more of their energy to outside pursuits. This change is not simply the outcome of a decade of economic crisis and entrepreneurial malaise, but rather reflects broader changes in the social nature of entrepreneurship.
(Ben Spigel, (2011),”Chapter 3 A Series of Unfortunate Events: The Growth, Decline, and Rebirth of Ottawa’s Entrepreneurial Institutions”, Gary D. Libecap, Sherry Hoskinson, in (ed.) Entrepreneurship and Global Competitiveness in Regional Economies: Determinants and Policy Implications (Advances in the Study of Entrepreneurship, Innovation & Economic Growth, Volume 22), Emerald Group Publishing Limited, pp. 47 – 72)
- The hype over being the current / next “Silicon Valley North” is irrelevant.
Economic development practitioners like to promote their communities as Canada’s high technology capital as a form of local boosterism to attract new investment. Rather than be self-centred, it is more important to recognize that the factors that contribute to dynamic technology clusters and startup ecosystems tend to be unique to that place. Furthermore, the success of one community can also have positive benefits on other local economies. For example, RIM established its primary R&D facility in Ottawa even though the company originated and is headquartered in Waterloo. Ottawa born QNX Software Systems Ltd. was acquired by RIM to develop the company’s operating system (Financial Post). The reasons for investing in Ottawa included the availability of skilled people, presence of high quality universities and overall quality of life.
Ben Spigel from the University of Toronto, for example, looked at how regional culture influences entrepreneurs’ decisions to start technology firms in Ottawa, Waterloo and Calgary. The results of his PHD thesis research did show that there were statistically significant differences between the three regions. The reasons were shown to be associated with the regions’ unique entrepreneurial fields which create the social and economic structures that promote different entrepreneurial practices related to the startup process.
- The futility of “Top Ten Lists”.
While doing the background research for this posting, I came across several rankings or “Top 10” lists of so-called Smart Cities, Entrepreneurial Cities, Cities of the Future etc. etc. These lists are so oversimplified and subjective that I thought that they can’t possibly be looked at seriously by companies or entrepreneurs when deciding where to invest or where to call home. However, one finds examples of top ten claims on many city economic development / marketing internet sites (Invest Toronto example). These are just a few examples of Top 10 lists found on economic development sites for Canadian cities: New York based Intelligent Community Forum’s The Smart 21/Top 7 Intelligent Communities, CFIB’s Canada’s Top Entrepreneurial Cities, Telefónica Digital/ Startup Genome’s Global Startup Ecosystem Index, fDi Magazine (Financial Times of London) Top 10 American Cities of the Future and, 2thinknow’s Innovation Cities Index. In 2011, representatives from the City of Windsor spent $240,000 to wine and dine judges from the Intelligent Community Forum with the Province of Ontario pitching in another $204,000 to support the bid to be listed in the top Cities of the Future. City officials pointed out that Waterloo’s 2007 high ranking by the Forum was a “key development tool that allowed the city to attract new business and retain what was already there”. Windsor did end up making the “Top 7” for 2011.
The Innovation Cities Index developed by the Australian company, 2thinknow, is an often referenced measurement. According to their website, the Index is based on 162 economic indicators that are standardized to allow comparisons between cities. Cities are placed in 5 hierarchical classifications based on their benchmark scores: nexus (the most dominant innovation city), hub, node, influencer and upstart. According to their latest 2012-2013 rankings, 3 Canadian cities made it into the highest ranking Nexus classification consisting of a total 35 cities worldwide: Toronto (11), Montreal (31) and Vancouver (35) – fair enough. Quebec City (67), Edmonton (124), and Calgary (unranked) made it to the second highest ranking classification of a Hub innovation city. Ottawa’s Index score was the same as Winnipeg, Halifax and Hamilton, all under the third highest classification of Node city. Kitchener only showed up even further down in the 4 classification of Influencer together with Fredericton-St. John and London. Clearly these rankings do not reflect the performance indicators and trends examined in my previous posts.
Closer to home, the Canadian Federation of Independent Business prepares an annual City Entrepreneurial Index based on 14 indicators. The 2013 rankings listed Greater Calgary as the number one entrepreneurial Canadian city with Greater Toronto coming in at number 7. Ottawa shows up at a lowly ranking of 42 while Kitchener-Cambridge-Waterloo’s ranking is even lower at 53.