Strawman arguments against government support for startups still leave tough questions to answer

Last July, I mentioned that "there is increasingly a mood in Canada that we've been wasting too many resources on small startups that will never become large firms." In the months since, there's been a lot more written on that theme, much of it aimed at government policymakers.

There can be more than a touch of theatrical performance in these pieces. Often, the intended-but-not-explicit message is "why government needs to provide more funding for things we do ... and less for things those guys are doing"  (or, "why government should have funded what we do and not that tripe they chose to fund instead").

But, motivations aside, the ideas will stand or fall on their own. The pieces I've read have largely been rebuttals of strawman arguments for why startups are supported in the first place and come from a highly hands-on view of government's role in building businesses.

It's not unreasonable to question whether we should skew our limited resources toward startups per se. Most new businesses in Canada are in such sectors as local services, real estate, retail, and so on—many started by people who want to generate an income and run their own show (which is great—I've done it a few times myself) but aren't really looking to grow a business. They often don't sell to customers outside of their local region, let alone the province or the country. And they never will, and they have no plans to get much bigger than they are now.

In our little tech bubble, we hear "startups" and have in mind innovation-based companies like those at the Communitech Hub or the Accelerator Centre, but those kinds of startups are far from representative of new businesses in general. Tech startups don't even comprise 5% of business startups in Canada (that partly depends on how you define "tech", but by any common definition it's a small number).

In a report last year, the Toronto-based Institute for Competitiveness & Prosperity bemoaned that much public policy was based on "an exaggerated sense of the importance of all smaller businesses" and suggested a distinction between small businesses and "entrepreneurial businesses," which it defined as ones with an "ambition to grow." Y Combinator co-founder Paul Graham even tried to define "startup" as "a company designed to grow fast," saying that "being newly founded does not in itself make a company a startup." I can't go along with that, but within the tech field, the difference between new and growth-oriented is going to be less than in most sectors.

There are exceptions, but most tech startups at least have ambitions to grow, and—even better from an economic development perspective—hope to do so through sales in international markets. Other than some service businesses, it's difficult to sustain a tech business by selling only within your local area.

But that doesn't let tech startups off the hook. You could say that ambitions are nice, but as things turn out, many tech startups won't grow or will quickly plateau. These days, we tend to find that out more quickly and inexpensively than before, but it is usually the case that startups don't grow to be very big.

Daniel Isenberg, writing on the Harvard Business Review website, ("Focus Entrepreneurship Policy on Scale-Up, Not Start-Up," November 30) claimed that pro-startup policies are based on "a narrow conception of entrepreneurship as consisting primarily in the starting-up of an enterprise."

According to Isenberg, government has supported starups because they "equat[e] entrepreneurship with start-up"—something I don't think has actually been done by anyone anywhere. It's true that you'll hear the word "entrepreneur" tossed around a lot in discussions of startups, and there's no question that one way to support entrepreneurship is to encourage more people to choose that path—which begins with a startup. But no one equates the two. Governmement provides far more funding for established companies with growth plans than it does to startups—it's not even close.

Look at the Public Accounts of Ontario for the 2012 fiscal year and you'll see dozens of established companies receiving millions of dollars each (sometimes tens of millions). It's the same story at the federal level. Startups don't get that kind of funding—and they shouldn't and don't need it. When you look at the numbers, it's hard to see how anyone could reasonably conclude that government is equating entrepreneurship with startups. If anything, it's the long list of established companies receiving government funding that brings out the cries of "corporate welfare"—or corporate extortion as companies threaten to move jobs to whichever jurisdiction agrees to pay them.

It's an issue where different people will come to different, reasonable conclusions. Some will oppose direct government support of businesses of any size. I don't go that far down the hands-off path, but I have a much easier time justifying the relatively small amounts spent to support startups than the millions given directly to well-established businesses.

Most startups don't have cash and can't pay for expertise or hire a full management team. They may have nothing on the balance sheet other than goodwill and a few thousand dollars in computers and furniture, which makes borrowing money very difficult. They have ideas, but those aren't worth much in themselves.

Established companies don't have any of those excuses. We've seen companies with billions in the bank get millions from the government. Companies that could raise millions more if they needed to, but—understandably—would prefer the cheap money that government is willing to provide.

It doesn't take millions to help startups. The entire government budget to support the startup ecosystem is far less than many of the payments made to single established companies. A bit of coaching and networking through the early market validation stages can go a long way, especially with tech startups where the founders often have technical skills and a vision of a product but no experience in testing their ideas through interaction with their target market. The marginal cost per startup is very low. A little help goes a long way, which isn't true for established companies.

Returning to Isenberg for another strawman argument, he says that funding for programs to help startups is based on the common fallacy that "the most difficult and important task of the entrepreneur is launching." And again, I've never heard anyone say this—not even startup entrepreneurs, who would be the most likely suspects. I'm pretty sure we all realize that becoming BlackBerry (or your nearest 75-employee company, for that matter) is a lot more difficult than launching a startup.

One of the suggestions has been that, when it comes to early-stage companies, we should only support the ones that will grow to be big. That sounds good, but in some ways it's like saying we should only buy winning lottery tickets. That sounds good too.

Startups give you much better than 14 million-to-one odds, but in the early stages, it's not possible to know which will be big and which won't (some that won't may be fairly clear). You could always wait until companies are well on their way to growing big and then support them, but by then they will already had to have cleared lots of hurdles—including some that are much easier to navigate with a bit of mentoring and feedback. The longer you wait, the more likely you'll be "helping" companies that either don't need your help or shouldn't need it, if our expectation is that companies need to stand on their own two feet at some point.

The Institute for Competitiveness & Prosperity says people defending support for startups evoke "information asymmetry" as an argument (which it then tears down), but that's yet another strawman. The issue isn't that someone has better information than someone else, it's that nobody knows, and nobody can know at that point which startups will succeed and which won't. You can do all the "due dilligence" you want, and while you will be able to filter out some companies, it's still going to be a gamble. Too much of a gamble for banks or other sources of support that established companies can turn to. Those options aren't available to most startups.

So there seems to be no shortage of folks eager to misrepresent the reason for supporting startups—people who create simple-minded justifications that are easy to attack. Unfortunately, the pro-startup responses also tend to be simple-minded and easy to ignore. Some of the biggest offenders are those that talk about how "small businesses" (most of which are not startups) account for some very impressive percentage of something-government-cares-about. That may be a useful sentence, but now you have to fill up the rest of the page, and it's those other paragraphs that are going to make the difference in your argument.

In that blog post last summer I wrote that "the task ahead is to explain to policymakers and Canadians in general why having a thousand microbusinesses that few people outside of our little enclave have ever heard of is a sign of a healthy industry that is worthy of support and investment." That's still the big challenge.

Startup communities in Canada and around the world are full of tiny businesses that hardly anyone outside of that community has heard of. And there's dozens more with every graduating cohort of any of the who-knows-how-many Y Combinator-ish accelerator programs now operating. They'll all have cool names and logos and hardly any revenue. The majority of them will never have 10 employees, let alone 50 (which would still be considered a small business). Should we be concerned that only a tiny percentage of our startups ever grow to be even a larger small business?

I've seen hundreds of startups over the last 10 years—in one of the best startup communities in the world—and many of them are doing very well, but I'd guess that I could count on my fingers the ones that have more than 50 employees today. Is that a problem? There could be another 20 new startups in the next month. That's seems pretty good. Is it? Even if none of them grow to any significant size? Are we only supporting startups to catch the ones that will grow to 50+ or 100+ employees, or if we constantly have hundreds of microbusinesses, is that okay too?

These are the tough questions for startup supporters—at least for those relying on government funding (there are some trying to avoid that, but government-funded initiatives are a big part of the current ecosystem in Ontario). Without good answers, we may leave our fate in the hands of those who will come up with poor answers ... just so they can show how poor they are.

My lean (ugh) startup guru

I had my introduction to management consulting in the 1990s—the peak of the management fad era that had begun the previous decade. One of the biggest fads was "reengineering"—so popular that it became the euphemism of choice for "layoffs" which, in practice, was already a euphemism for job cuts. There were a lot of those in the 90s, and you couldn't go long without hearing about some company's new "reengineering" strategy.

Veteran consultants told me there really wasn't much that was new about reengineering other than the label—which they would often roll their eyes at. But it was new to me (just about everything was), and became one of the many management philosophies and methodologies I immersed myself in through the decade.

Somehow, I've now become one of the experienced guys, and today I think back to those times whenever I hear "lean" around startups. Eye rolling is often involved.

I'm a big supporter of many of the core concepts that now fall under the "lean" banner—they've been fundamental to much of the work I've done with startups over the last 10 years—but the label itself always grates.

Much like those veteran consultants from 20 years ago, I think the problems I have are that too much credit goes to the person who came up with the label and that the newness of the label can lead people to believe that the concepts are much newer than they really are.

I'd probably be fine if the bulk of the credit went to Steve Blank. And much of it does. Though many of the concepts didn't start with him, he was the one who brought them together and synthesized them in a modern tech startup context. His "customer development" (never roll my eyes at that one) approach is not only the foundation of lean, but its four walls as well. Maybe the ceiling too. When tech people talk about "lean" not only should Blank's name come first, there shouldn't be anyone else mentioned in the same sentence or even paragraph. But he isn't the one who came up with the "lean" label, so that often isn't the case. In some circles, derivative and often dumbed-down versions of Blank get more recognition than the original.

But Blank wasn't my lean (ugh) guru. For years, from the time I started working with startups in the late 1990s, the voice I could often feel myself channelling belonged to Joe Cossman. If you're old enough to remember Cossman at all, it's likely from his 1980s infomercials. That's where I came across him, when I was either a high school student or undergrad. The big winners that he talked about from his career included the ant farm and the spud gun. He wasn't exactly launching or running Fortune 500 businesses with products that change the world, but then that's true for most startup entrepreneurs.

Cossman lived to see the web—he died in 2002—but his biggest business successes, and certainly his infomercials, were pre-web. If he'd been born later, I think he would have loved the Internet. He would say that all you need to start a business is a typewriter, stationery, postage and perseverance. The Internet has since replaced the first three, so today you could translate his requirements as the Internet and perseverance, which is the foundation for a lot of startups.

But Cossman wasn't encouraging blind perseverance. One of his key points—and one that stuck with me for years to come—was that entrepreneurs too often wasted money building products without putting them to the test of the marketplace first—and that this was something they could have done inexpensively, and should have done early on.

I don't have much from Cossman to pull quotes from, other than memories (possibly misty, water-coloured ones), but this brief excerpt from one of his infomercials—recorded with my first VCR—is definitely proto-customer-development:

"This is where most people go astray. Unfortunately, someone will design or create a product and they become emotionally involved over that product. It's almost like it's one of their children. And that traffic light is flashing red, red, red and all they see is green. And before you turn around, they've hocked the family jewels, they've made inventory, they've made tools and molds and then they're looking for a way of selling it.

Only a week ago, a man came to me and he had a good product, but he had put $300,000 into that product and ran out of money. Yet, when he came to me a week ago, truthfully, I could have showed him where to be at the same position he is today for less than $2,000. Because I won't allow a man or woman to make more than one of anything. Don't make 10,000, don't make 5,000. One sample—I call it a prototype—can give you the same answers as a large inventory. Because, when you have a good sample, you can photograph it, you can put out a publicity release, you can take it to department store buyers and get an opinion on it, you can show it to mail order houses, and that's all you need is one sample."

He's not talking about software and someone who doesn't easily see the view from 10,000 feet may not spot it at first, but the key concepts at the heart of "customer development" are in there and in many other things Cossman said. He was talking lean (blech) 30 years ago, and there were no doubt many others before him.

I'm not suggesting that anyone today needs to read Cossman or seek out his infomercials. The world has changed. I've had decades to let Cossman's ideas evolve in my head with the times and seeing them now for the first time would be jarring. There's more than enough resources available from a current perspective (Blank's Four Steps to the Epiphany is still the best place to start).

But Joe Cossman was the one who put these thoughts in my head all those years ago and someone whose ideas I've remembered every year since.

Yes, the ant farm guy from the infomercials. He was my lean (eyeroll) guru.

Spinning the unemployment numbers

Statistics Canada releases its Labour Force Information report every month, and while each edition contains many new numbers, almost all of them play a barely-audible second-fiddle to the unemployment rate.

I live in part of Middlesex County that falls within the London census metropolitan area (CMA). This area had a panic attack when the March figures were released a couple of weeks ago. You'll quickly see why when you scan the unemployment rates of the 15 CMAs in Ontario covered in the report:

Guelph	6.0%
Ottawa	6.1
Hamilton	6.1
Thunder Bay	6.3
Kingston	6.3
Kitchener-Cambridge-Waterloo	7.2
Barrie	7.3
Brantford	7.7
Greater Sudbury	7.8
St. Catharines-Niagara	7.9
Toronto	8.4
Oshawa	8.6
Windsor	9.0
London	9.6
Peterborough	10.2

You might think it would be hard to put out a positive spin when your number is second from the bottom (and as close to the bottom as it is to the one ahead of you). But when you look at the numbers—all of the numbers—it turns out that it's not so difficult to find a silver lining.

And that got me wondering how hard it would be to find something strongly positive to say about each of the 15 CMAs—based solely on their Labour Force Information stats—no matter how bad their unemployment rate is. I was particularly thinking of what municipal politicians might say to put the best spin on their local numbers.

Obviously, the ones with the lowest unemployment rates are a piece of cake:

1. Guelph: We have the lowest uemployment rate of any CMA in Ontario.
2. Ottawa: We're neck-and-neck with Guelph for the lowest unemployment rate in Ontario. The 22,400 net new jobs we created last year was second only to Toronto.
3. Hamilton: We're neck-and-neck with Guelph for the lowest unemployment rate in Ontario.
4. Thunder Bay: We have one of the lowest unemployment rates in Ontario.
5. Kingston: We have one of the lowest unemployment rates in Ontario and are second among all CMAs in Ontario in net new jobs created per capita since the last municipal election.

Let's see what we can come up with for the 10 remaining CMAs that won't be able to brag about their current unemployment rates.

6. Barrie: We've created more jobs per capita than any CMA in the province since the last election and have seen the largest drop in unemployment rate among all Ontario CMAs. (I like that one.)
7. Kitchener-Cambridge-Waterloo: Among the CMAs with a population over 200,000, no one has created more jobs per capita than we have since the last election—nearly 15,000 net new jobs.
8. London: Outside of the huge urban areas of Toronto and Ottawa, no CMA in the province created as many jobs as we did last year. (See! We got something.)
9. Toronto: Since the last election, we've created more new jobs than all the other 14 CMAs in Ontario combined, and are in the top four even on a per capita basis.
10. Windsor: Since the last election, we've had the second biggest drop in unemployment rate among the 15 CMAs in Ontario.
11. Greater Sudbury: Since the last election, we've created the third most jobs per capita among the 15 CMAs in Ontario and have the third highest drop in unemployment rate.
12. Brantford: Among the less urban CMAs in Ontario—the seven with a population under 200,000—only Barrie created more jobs than we did last year.
13. St. Catharines-Niagara: Since the last election, we've created a net 12,300 new jobs— only two CMAs in Ontario have created more jobs per capita than we have. Our drop in unemployment rate makes us one of the top four performers in the province.
14. Oshawa: Since the last election, our unemployment rate has dropped from 10.1% to 8.6%—a performance that puts us in the top third of all CMAs in the province. (Showing some stretch marks but still okay.)
15. Peterborough: You know, these labour force numbers aren't the be-all and end-all.

Cyborg Trading receives largest IRAP contribution in Canada in Q3 disclosures

Just a few weeks after Cyborg Trading received $381,500 through FedDev's Prosperity Initiative, the company got another big boost, this time from IRAP—a long-time supporter of the company. Cyborg has received $842,000, the largest contribution made by IRAP anywhere in Canada in the quarter (it actually happened late in IRAP's Q2, but was disclosed with the Q3 contributions).

Also receiving six-figure contributions (or thereabouts) were Pyramid Farms in Leamington and Waterloo Region's Accelerator Centre, Clearpath Robotics, and Miovision Technologies.

Disclosed IRAP contributions, Q3 FY2013:

Cyborg Trading Systems	London	$842,000
Pyramid Farms	Leamington	$203,265
Accelerator Centre	Waterloo	$125,000
Clearpath Robotics	Kitchener	$103,000
Miovision Technologies	Kitchener	$99,999
Innovation Guelph	Guelph	$80,000
Sarnia-Lambton Economic Partnership	Sarnia	$80,000
Guelph Chamber Of Commerce	Guelph	$65,000
Ball Media	Brantford	$50,000
Applied Comfort Products	Cambridge	$50,000
Intelligent Health Solutions	Fergus	$50,000
West Furniture Co.	Hanover	$50,000
Horizon Furniture Distributors	Kitchener	$50,000
London Economic Development Corp.	London	$50,000
Nexus Solutions	London	$50,000
Scisense	London	$50,000
Trac Rail	London	$50,000
SP Stalls & Storage	Mount Brydges	$50,000
System-On-Chip Technologies	Waterloo	$50,000
Sport Systems Unlimited	Waterloo	$50,000
Maplesoft	Waterloo	$50,000
Sandvine	Waterloo	$50,000
Bioinformatics Solutions	Waterloo	$50,000
Virtek Vision International	Waterloo	$50,000
Giftopia	Waterloo	$50,000
Avenir Medical	Waterloo	$50,000
WEtech Alliance	Windsor	$49,750
Essex Weld Solutions	Essex	$49,000
Aeryon Labs	Waterloo	$49,000
Digital Boundary Group	London	$48,400
Cennatek Bioanalytical Services	Sarnia	$48,000
Cedarline Greenhouses	Dresden	$47,517
Integra Medical	London	$46,500
Windsor Machine & Stamping	Windsor	$41,800
Mahle Filter Systems Canada	Tilbury	$40,050
Sparkmatrix Technologies	Waterloo	$40,013
Enviro-Stewards	Elmira	$40,000
Karos Health	Waterloo	$40,000
Brunato Farms	Leamington	$39,965
Six S Partners	Waterloo	$33,892
City Media Network	London	$30,000
Lamko Tool & Mold	London	$28,772
Tesla Digital	Windsor	$28,000

Lots of familiar names on the list. The economic development groups for London (LEDC) and Sarnia (SLEP) both received funding, as did the regional innovation centres for Guelph (Innovation Guelph) and Windsor (WEtech Alliance). I don't include them in the Southwestern Ontario group, but Hamilton's Innovation Factory received one of the larger contributions in the quarter—$100,000.

Also see FedDev Q3 fundings.

FedDev Q3: Big contributions for Southwestern Ontario topped by Western's $13.7M

FedDev has disclosed its contributions for the period ended December 31 and it was a strong quarter for Southwestern Ontario, which accounted for five of the top seven new fundings.

The largest contribution in the province was the $13.7 million for Western University to go toward the Fraunhofer Project Centre and a new centre for commercialization of advanced manufacturing technology. That funding, under FedDev's Prosperity Initiative, was announced in November.

FedDev's second largest funding in the quarter also went to Southwestern Ontario—$7.3 million to the University of Windsor, also under the Prosperity Initiative program. I haven't seen an announcement for that one yet. Windsor had been looking for FedDev funding for its new Institute for Border Logistics and Security, but I don't know if this is related to that or something else.

Disclosed FedDev fundings in Southwestern Ontario:

University of Western Ontario	London	$13,700,000
University of Windsor	Windsor	$7,291,785
Communitech	Waterloo	$6,448,772
Lambton Conveyor	Chatham-Kent	$3,111,667
exactEarth	Cambridge	$2,490,740
Waterloo Accelerator Centre	Waterloo	$945,000
Wilfrid Laurier University	Waterloo	$216,842
Southwestern Ontario Angel Group	London	$100,000

The third largest contribution was announced last week: Communitech receiving $6.4 million under the Technology Development Program to go toward the development of two new satellites. Cambridge's exactEarth is receiving a $2.5 million repayable contribution for a related project (last week's news release has the details).

The $3.1 million repayable contribution to Lambton Conveyor to help it set up a new facility in the Wallaceburg area of Chatham-Kent was announced in December. That was also under the Prosperity Initiative.

The other big contribution in Southwestern Ontario in the quarter was $945,000 given to the Accelerator Centre in November as part of FedDev's Scientists and Engineers in Business program, which helps STEM grads and grad students launch startups. Under the same program, Mississauga's RIC Centre received an additional $2.5 million in the quarter, which is on top of the $5 million it was given just over a year ago. The RIC Centre has worked with startups in Waterloo Region and across Ontario through its VentureStart program, and Waterloo's Canadian Innovation Centre has also been involved in the delivery of that FedDev-funded program. Also falling under the Scientists and Engineers in Business program was an additional $500,000 in the quarter for OCE. It was originally allocated up to $1.1 million a year ago.

Under FedDev's Applied Research and Commercialization program, which provides funding to universities and colleges to do research-related work on behalf of companies, the University of Windsor saw its funding bumped by $250,000 in the quarter, which means that its total funding under the program ($1.5 million) is now on par with that provided to UW, Conestoga College, and University of Guelph (which received an additional $50,000 in the quarter)—and well above that received by Western University. That's particularly impressive given that Western initially received 55% more funding than Windsor, but while Western had the biggest drop between initial and extended funding among all ARC-funded universities in Ontario, Windsor clearly made the program work and had the biggest gain.

The $216,842 received by Laurier in the quarter was under FedDev's Graduate Enterprise Internship program, which helps companies hire recent STEM graduates. There was some rejigging of the amounts allocated under that program in the quarter, with the Research Park in London (-6.2%) and the University of Waterloo (-9.5%) both showing small reductions to their funding, but with the new money provided to Laurier.

Bolton-based PerspecSys ($742,500) and Toronto's TopHatMonocle ($750,000), which both have Waterloo connections, received funding under FedDev's Investing in Business Innovation program, which partially matches angel group/VC investment in companies. The same program provides funding to angel groups, and London's SWOAG got its $100,000 during the quarter.

Population densities in Southwestern Ontario and the urban/rural divide

It's municipal budget season again, which brings a slew of reports and presentations related to short-term and long-term funding needs.

Earlier this week, Chatham-Kent council received a consultant's report comparing population densities among various Ontario municipalities. Population density can be a significant factor in municipal expenses and tax rates as low-density areas have to figure out how to provide services to a population spread out over a wider area.

The report showed Chatham-Kent at the bottom end of the density chart, completely dwarfed by every other municipality shown. I expect Chatham-Kent to have a low density, but having spent the last couple of years living and working in low-density areas, it wasn't clear to me that it was really that much of an outlier.

It turns out that it isn't. When you look at population density figures for all top-tier municipalities in Southwestern Ontario, Chatham-Kent's is comparable to that of surrounding small urban and rural areas (and higher than Middlesex County, where I live, although I live in a denser-than-average part). Whatever challenges come from low density, there are a lot of us in Southwestern Ontario in the same boat. Obviously, cities are more dense, but the graph really shows the urban/rural divide.

The cities of Kitchener and Waterloo aren't on the graph, since they're part of Waterloo Region. If they were, they'd take the top two spots. The City of Waterloo is hardly the densest place in the world, but it still has more than 35 times as many people per square kilometre as Chatham-Kent and more than 60 times as many as Middlesex County.

Low density is another of the challenges faced by small urban and rural Ontario that I hadn't been accustomed to, coming from Toronto and Waterloo. Although, having said that, looking at the graph it seems pretty clear that the magnitude of the challenge doesn't correlate (inversely) with the height of the bars.

(Statistics Canada population density numbers are essentially an average across a municipality. As with any averages, they have the potential to be misleading. For example, a municipality could cover a wide area but have most of its population packed into one or two small parts. That's often the case. There's typically a lot of intra-municipality deviation from the average. What Statistics Canada calls the "population centre" of London—which excludes much of the area near the 401—has nearly twice the density of what's shown above. The population centre of Chatham has more than 30 times the density of Chatham-Kent.)

Ontario Jobs & Prosperity Council emphasizes exports, productivity, innovation

Advantage Ontario, the full report of the Ontario Jobs & Prosperity Council—chaired by Royal Bank CEO Gord Nixon—was released on Wednesday. It focuses on five areas: exports, productivity, innovation/entrepreneurship, skills/training, and regulation.

The report mostly repeats a lot of familiar observations at a very high level, so we get the usual (which isn't to say incorrect) plaints about how Ontario businesses underinvest in R&D, how the regulatory burden is an impediment to growth, that our companies need to focus more on exports to emerging markets, that government business support programs are too fragmented, immigration is vital, manufacturing is critical to the economy, not enough parents and students appreciate careers in the skilled trades, and so on. All things we've heard many times before.

Which would be fine, if the report facilitated action on fixing these issues, but in most cases the recommendations are only a notch or two above "something should be done about it" (or, in many cases, "something has been done, but we think there's need for more"). The report is heavy on obvious exhortations and light on anything that will change what anyone does tomorrow morning, and there are rarely specifics that would make their implementation any easier today than the last dozen times the same ideas have been suggested.

On innovation and entrepreneurship, the council suggests the creation of a "business-led commercialization voucher" to encourage collaboration between businesses and public research institutions. (How this would be different from the many existing subsidies for industry-academic partnerships isn't specified.) It says that funding in the Ontario Network of Excellence (ONE) program should be "better aligned" with the needs of "regional clusters with the greatest potential for growth"—which is one way to allocate increasingly scarce resources, although now that I've expanded my horizons from two of the biggest "have" clusters in the province (Toronto and Waterloo) to some of the "need-to-have" regions, I'd be worried about taking this approach too far. There's a lot of potential for strengthening the economy through innovation improvements in areas outside of the leading clusters.

The report also encourages the elimination of barriers to crowdfunding, and supports the exploration of other measures such as an angel investment tax credit.

The council wants the province to replace its current "too fragmented and too complex" business support programs with a "one-window" model that focuses on exports, productivity and innovation. The programs would be delivered through a Jobs and Prosperity Fund, which the report suggests should start at $150 million a year and expand as existing programs come to an end with those expenditures (minus spending cuts) then allocated to the fund. Incentives for foreign direct investment would be funded separately from the Jobs and Prosperity Fund.

Initiatives to help university and college students start their own businesses (Ryerson's Digital Media Zone and U of T's DesignWorks are specifically mentioned) are lauded by the council, which also recommends the creation of "entrepreneurship high schools" and more entrepreneurship education in secondary schools.

From a council with heavy representation from business (RIM's Mike Lazaridis and Linamar's Linda Hasenfratz were among the members), the section on productivity is disappointingly short on discussion that would be of value to business managers and is mostly written at the usual "sitting in my office crunching StatsCan data in a spreadsheet" level that has repeatedly been shown to be every bit as ineffective in shaping management decisions as you should expect.

The council was not enthusiastic about a proposed tax credit that would reimburse employers 10% of salaries of new hires in their first year of employment. And the report floats the idea that expanded user fees may be necessary to pay for all the infrastructure improvements the province will need to remain globally competitive.

Pages 29-35 summarize the report and its recommendations. The focus on productivity, innovation and exports captures much of the current "state of the province" thinking, and if the report doesn't exactly clear many new paths, it's useful in pointing the direction we're heading.