Accelerating Business Episode 9 | Understanding Hamilton's Innovation Park with Ty Shattuck, CEO, McMaster Innovation Park

You are listening to "Accelerating Business", a Gowling WLG podcast Season 1

Louis: Welcome, Ty.

Ty: Thank you very much. I'm delighted to be here.

Louis: For those viewers not familiar with McMaster University in Hamilton, Ontario, or its Innovation Park, or indeed the workings and importance of university led research and innovation ecosystems, I think it's important to provide some background. Let's begin with the fundamental understanding of what value an academic institution like McMaster would have, economically, in its collaboration with private industry beyond their education of future knowledge workers.

Ty: If you look at things at a macro level, if you think about what does a company need to grow, outside of capital it really, really needs three things. Number one, it needs markets to sell your products and services into. It needs new ideas. New ideas for your products. New ideas for how you sell those products. New ideas for how you produce and service those products. Then the third thing is you need talent in order to do those three things. What a university and colleges do is they offer two of those of things. They offer ideas and they are also a source, obviously, for talent as you pointed out. Those are the things that they bring to bear, from an economic gross perspective, and the purpose of a research park is to facilitate that. Universities are brilliant at doing research and teaching. The purpose of a research park is to take those raw ideas and act as a bridge, or a transition zone if you will, to advance them to a point where industry, or investors, can incorporate them into a product. Our purpose is to be that bridge. Take brilliant ideas and transform them into impactful business realities.

Louis: What are some of the challenges that a university like McMaster would have in fostering commercial applications for the research, doing the things that you just referred to?

Ty: Let me say that, again, a university is focused on research. Their goal is to come up with that brilliant discovery. The issue is that companies, businesses and consumers, you don't buy ideas. You don't go to Walmart and go to a shelf and say, "I'm going to buy that idea." Intellectual property, or brilliant research, only creates economic value when it's incorporated into a product or service. What you have is universities and colleges generating ideas, but you have businesses that want to buy products and services. There becomes a gap. The challenge is how do you curate and advance raw ideas, as brilliant as they are, to a point where some consumer, be that of an individual or a business, would say, "Ah. I know how to generate economic value out of that." That's where research comes into play.

Louis: One of the concepts, of course, across this business spectrum that is often talked about leaders is the challenge and problem of culture and its alignment with business strategy. To what extent is the academic culture an obstacle to doing just that in terms of the interconnection between universities generation of ideas and the commercialization of that technology?

Ty: I don't want to say university or academic culture is an impediment. It's part of the ecosystem. Universities are an 800-year-old invention so they're somewhat fixed in their ways. Let's be clear that people that went into academia chose to go into academia. They didn't choose to go into business. Our purpose as a research park is not to turn a university into a business, nor is our purpose to take academics, who very specifically chose to stay in academia, to turn them into businesses or entrepreneurs. Our job is to promote collaboration between academia and industry. The cultural challenge is really about finding overlap and alignment. What I think, if you kind of look at the culture, the commonalities of culture, academia very much wants to have an impact on the world. If you think about McMaster's Brighter World initiative, it's all about how do you impact the world in a positive way. Similarly, industry and business is trying to have an impact as well. There's a whole scene about impact investing. They have that in common. Culturally the challenge is to say, "Listen, we don't want to turn every academic into a businessperson, nor do we want to turn business into academia. But what we do have in common, culturally, is a real passion for having an impact." The culture challenge is getting the alignment between different cultures and taking advantage of their relative strengths, as opposed to just making one homogeneous. Cultural alignment that spans institutions, regions and stuff, that's the cultural challenge.

Louis: We'll return to that in a second, but I think if we're going to explore this particular challenge in the context of McMaster University in Hamilton, Ontario, we should talk about McMaster's academic and research strengths. Can you describe those for us?

Ty: Let me say that McMaster, as a whole, is a research powerhouse. The university leads the country in industry led research, in absolute dollars, and in relative dollars it is the most research-intensive university in the country. It is a research powerhouse and they do all sorts of things. If you kind of wanted to pick the three that are most applicable to industry, and from a commercialization perspective, it would be life sciences and bio-tech. We have a huge life science school at McMaster. The second would be advanced manufacturing. Advanced manufacturing unto itself is broad because it could be advanced manufacturing in biotech, or in automotive, in aerospace and sorts of things. The third category is ICT or kind of the software stuff. That's another area. That third pillar is really applied to the first two pillars. The way I ask people to describe it, or think about it is, everybody talks about AI, for example. If you want to find who's doing research on the next generation of AI algorithms, stuff that maybe has commercial applicability in 15 years, frankly, don't come here. I would go check out MIT, or in the Canadian context, go check out some of the amazing things being done in downtown Toronto. If you want to know who's applying AI, state of the art AI technologies, to real world commercial problems today, such as automotive and aerospace and life sciences, you come here. The research priorities, again, are life sciences, advanced manufacturing and ICT, with that third pillar really being a support pillar of the first two.

Louis: The mediating element, the institution or group that you lead that serves this purpose is, of course, McMaster's Innovation Park, where we're currently located. I'd like to start with a little bit of the biography for the Park. Can you tell us when it was first established?

Ty: As a research park it opened 12 years ago. But it stands on a legacy over 100 years old. The Park itself sits on a 53-acre campus that was an old Westinghouse campus. The original building was built in 1913. During the First and Second World Wars they made torpedoes and tanks at the Park. Some of the amazing companies that you might be aware of, for example, your familiar with L-3 Wescam. Wescam stands for Westinghouse Camera. It was actually invented in this building on the 3rd floor. Now it's a pillar of technology. The largest technology employer in the region. Also, Gennum, which is now Semtech, revolutionized digital hearing aids. Again, that was a Westinghouse invention that occurred in this actual building. While the Park is only 12 years old it really stands on the shoulders of over 100 years of innovation. About 15 years ago Westinghouse, under the brand named Chemco, sold off the properties, put it up for sale and the university acquired the land. After 3 years of renovation, they turned this building which was a factory and a little dusty, and they turned it into the first building of the Research Park, and they opened up 12 years ago.

Louis: Why don't you then describe for us the Park as it exists today in its size and in its functioning.

Ty: Again, it's a 53-acre campus. One third of that campus has been developed. There's 513,000 square feet under management. It's focus really, this is kind of the main hub of the building, this is where you're going to find most of the support resource. Whether it's financers or incubators, accelerators, we're home for Innovation Factory, which is a regional innovation center for the Hamilton area. We're home for the Forge, we're home for Ontario Centres of Excellence Funding, for the IRAP Group, this is kind of the hub. In addition to that we have Canmet which is a national laboratory for material science. We also have what we refer to as the warehouse, which is just across the street. While we say it's a warehouse it's actually comprised of a number of buildings. On one end it's BEAM Centre with a bio-medical engineering facility. On the other end is MARC which is McMaster Automotive Research Centre, the largest automotive research centre in North America and two more facilities that are in the process of being built. A commercialization zone for life sciences and an advanced manufacturing centre. That's where we sit here today. Two new buildings are about to break ground, one of which is a new emerging technology center where Gowling will be the anchor tenant, which you are well familiar with, and a brand-new hotel. That's kind of where we sit here today.

Louis: When you look at the Park as it exists now and compare it to other institutions across the country that seems to be serving similar functions, how would you compare and contrast this Park in its approach to such entities as Communitech, MaRS or DMZ?

Ty: I think we all have a similar mission, if you will, which is to help companies grow. Let's talk about Communitech and MaRS. Those are probably the best two known entities out there. They're both what are known as RIC's, or Regional Innovation Centres. We have an equivalent of that which is Innovation Factory. Certainly, MaRS and Communitech are bigger and better known, but from a pure content delivery and function, our partners in Innovation Factory do the same. What I would say is unique about the Park is that the RIC's are very focused on startups. That's important. Startups are one commercial mechanism to bring an idea to commercial reality to commercialize stuff but not the only option. Sometimes you want a partner with a large-scale company. In our case it would be Pfizer or a Fiat Chrysler or some other company that's already well establish. Another group would be the mid-market or small medium size companies. While Communitech and MaRS are really focused on the startup zone, what's different in MIP is we have that plus we have a focus on large scale companies and medium sized companies. I think that's where it differentiates us. One of the things that I like to draw people's attention to, I'll give you a stat that I find interesting, in 2017 80% of Canada's economic growth came from only 1.6% of Canadian companies. When you look at those 1.6% of companies that generated all this growth, none of them were startups. Nor were any of them large scale companies, multi-nationals. They were all mid-market small medium size enterprises. That mid-market SME sector is the engine of the Canadian economy. It's very unique for Canada that that's the engine. But that's the way it is. If we want to impact the economy by helping companies grow that's the biggest part of the Canadian economy. So, we have a strong focus on supporting mid-market small medium size companies. That's very unique in the Canadian context and I would argue it's very unique in a global context.

Louis: You're coming up now on your first anniversary as CEO of the Park. The search that led to your hiring was a pivotal one for McMaster and the evolution of the Park, Ty, and one that saw, as I recall, a considerable number of very credentialed leaders seek the role. Why did you want to be the next CEO of this Park?

Ty: You know what? You probably have more insight into who the competition was then I do. You know what, Lou, it was kind of like planned serendipity if you will. I think you know that I've got a little bit of a history at the Park. When the Park first opened 12 years ago, Trivaris, which I was a partner in, was a founding tenant. We were a venture capital company situated actually right here as we sit. The boardroom across the way was our boardroom. Let me say that I drank the Kool-Aid from the very beginning about what a research park could and should do for the Hamilton area. At the time I never envisioned that I would actually be part of it. My career started as an engineer designing products. I went to the dark side and went into business investment and went from designing products to designing businesses. When the headhunter that was doing the search called, at first I thought it was a bit odd. I was like, "Well, isn't it really just a real estate facilities management play and I am not one of those folks." But what they shared with me is that the university and the board of directors really wanted to have a big, new, bold strategic vision and they wanted it to be focused, not just on the real estate, but how do you leverage that real estate towards the strategic purpose, to be that bridge. You know what? That idea grew on me. It grew on me and so I went back to them and said, "If you're serious about this, if you really want to do this, this sounds like a really exciting project." I go from suddenly being an engineer designing products to a business guy designing businesses to a guy designing ecosystems. It seemed like a natural evolution. Took a little while for that to sink in but over time I got really jazzed about it. You know what? The board was keen about it as well. It's been a very interesting year ever since.

Louis: Having been onboarded, what were the immediate challenges that you identified as necessary to overcome?

Ty: You know, I think as I look at the Park and the broader ecosystem, I think one of the bigger things is just we need to walk with a swagger. We do amazing things in Hamilton and the region. McMaster does amazing things from a research priority. Mohawk does amazing things from a college research. The city itself is phenomenal. It just strikes me that Hamilton has forever been the city of potential that's never realized. What I realized in joining the Park a year ago is that there's a bunch of new leaders, including yourself, both as individuals and institutions, that are really starting to focus on how do we bring that potential to life. For me the Park, I think the biggest challenge, was to get people excited about, you know what, we can and should play a major role in that and to articulate a vision that was clear, concise and compelling that moved us out of gosh, are we a landlord to a bunch of companies to we're playing a leadership role. That cultural challenge within the organization itself, kind of letting them, it's not something that I needed to other than kind of let them be free to do what they've always been thinking about. That was the major thing. I have to say that the board, and everybody I've met, was hugely supportive. It wasn't incredibly hard other than to try and galvanize what everybody wanted and to take a bunch of thoughts, that perhaps hadn't been condensed into something clear, concise and compelling, but we did that. We put a strategy together and everybody said, "Yeah. That's what we want to do." Then you take advantage of the natural motivation that they already have. But the biggest thing was to just get people to go, "You know what? We can do that, and I want to be part of it." That was the major challenge for the first year. Now we have the daunting task, of course, we've got to do all these crazy things but that's okay.

Louis: We'll get to that in a second but you did allude to some of the other regional actors and regional assets that will be key to the success of this center, and the region generally, and you touched on a couple of them. I'd like to explore that a little bit further with you because it is a region that is uniquely gifted in terms of some of the institutions that are found here. Can you describe what you think those are and how you would propose and aspire to work with them more effectively to get us all where we need to be?

Ty: Yes. Maybe before listing them let's talk about ecosystems. Ecosystems, it's a very common phrase. Everybody talks about when we developing an ecosystem. But if you actually asked somebody to say, "What is an ecosystem and who's part of it?" a lot of people's eyes kind of glaze over. You can describe a biological ecosystem which is grasshoppers eat grass, rabbits eat grasshoppers and foxes eat rabbits and so on so forth. But overall an ecosystem is the environment that entities operate in and it becomes sustainable. When you look at the Hamilton ecosystem, there's a whole bunch of amazing things that are here, frankly, enough to have a critical mass. From an educational perspective we obviously have McMaster and Mohawk, two of the leading academic institutions in Canada for the generation of ideas. That's part of it. What other things do we have? We have Hamilton Health Sciences. We have St. Joe's. We have not just a place where life sciences are taught and researched but actually where they're practiced. We also have a bunch of, speaking of advanced manufacturing from the Stelco to the classic ArcelorMittal, we have businesses that rely on advanced manufacturing. They've been building on that. Some of the things that are also out there that we need to compliment are capital. We need to attract capital, whether we like it or not in our environment, capital is what makes ideas flow between entities. You ask what makes capital flow? Well there's certainly investors but then there's support organizations. Gowling is a great example that you play a critical role in that. Whether it's access to clients or capital or any of things that you need, not just locally but globally, it's there. The trick is not do you have the pieces. It's kind of like of having a bag of Lego. You actually have to put them together before you make something that accomplishes a function. What I would say is we've got all those pieces, what we as a group are doing, is trying to fit them together so that the whole is greater than the sum of the parts. It's really about that alignment of culture. One of the things that I would say is introducing the business arm, or the business piece of Hamilton, into the public sector is something that we need to go. Because our real goal is to create impactful private companies. We have to create, or introduce, the private players into the ecosystem and get some alignment there.

Louis: That's a great segue then into your vision and strategy for the Park's future in fostering that connection, the assembly of those Lego pieces into a coherent whole that functions. How is that you're proposing to do that? Describe for me what you're thinking about in relation to that?

Ty: The phrase that I borrowed from The Economist is something called "spatial alchemy". It's the notion that it's the art and science of creating that magical mix of people, passions, capabilities where magic happens. What I want to say is its creating that environment. The ecosystem, again, is the environment. Just like a learning institution, or frankly any entity, you can't by force of role create an idea or force an idea to come together. What we can do though is create an environment that facilitates that. What we want to do under the banner of spatial alchemy is really three things. Number one is we want to have the right mix of people, companies and talents. By that I mean, and let's use a company analogy, have you ever heard, I'll pick on legal system, have you ever heard of any successful company that was comprised entirely of lawyers? Even within your legal firm you have administrative people, you have marketing people, you have facilities people, you have different talents. Why is that? Because to work as a company, to succeed, you need different diverse set of skills and capabilities. Just like in a hockey team. You can't have all left wingers and expect to win the Stanley Cup. The Park has that similar what is the right mix of capabilities in order to bring an idea to life. We have strong technical talents in the form of researchers and engineers but we now have to compliment it with other stuff. We need to bring capital to the Park. We need to bring legal to the Park. We need to bring regulatory folks to the Park. We need creative disciplines that can help us tell the stories. The first strategy under spatial alchemy is to change the mix, to have a broader set of capabilities. That means bringing different companies and different individuals to the Park with a different set of skills. One of the biggest pieces is that we need capital. Whether they're venture capitalors or private equity or commercial banking, we need them here. Whether they reside here or they visit here. We need those here. The second strategy is let's assume that we have a good mix. How do we animate it so that they can come together? You asked about a challenge. It's a silly analogy but when I arrived here about a year ago, the Park reminded me of, well, did you ever go to a dance when you were grade 7 or 8?

Louis: Sure.

Ty: Right. Yeah. I see that cringe that we all share. Let me tell you my story. When I went to my first dance in grade 7, before I went I imagined that we'd all be just dancing. It would be like on television movies. I was going to meet Molly Ringwald. It was going to be amazing. But when I went, it was in the gym, they dimmed the lights a bit, there were some streamers and balloons. But there wasn't a whole lot of dancing. Instead all the boys were lined up on one side of the gym and all of the girls on the other side of the gym. Then there was the jocks and the troublemakers and the nerds, like me, and we kind of sat there. We didn't get out and dance. After an hour and a half of kind of sitting in the gym not talking to anybody I slunked away. Thinking that's not what I expected. What does that have to do with the Park? First and foremost you have to invite people to the dance. I described how we're going to do that. The second is how do we effectively spike the punch so that all those engineers and scientists get out and start to mingle, or collide, which is the modern vernacular, with other folks. You do that through programming. You do that through events, whether it's speakers. You do that through some sports, it sounds silly, but Bocce ball and stuff like that or concerts or anything. I mean you do that through amenities so that people are brought together. There's a whole theory about how innovational curse and coffee shops. The whole process by which you and I happen to be in line to get our coffee in the morning and we say, "Hey, I had this idea." What we're trying to do under this second pillar is to animate the Park by providing amenities and programming such that this diverse mix of people start to collide and ultimately collaborate. The third pillar is, frankly, to promote what's going on at the Park. As I said, there's amazing things going on here. We need to market ourselves. We need to market ourselves to the community so that they realize what's going on here. We need to market ourselves to the universities and colleges, McMaster and Mohawk, so that they know what we offer. We need to market ourselves to the globe because we have amazing things to bring to the world. But most importantly we need to market to ourselves. We need to believe that we are as remarkable as we are, and kind of walk with that swagger so when we get out on that dance floor, we're not doing it with our tail between our legs. So, again, change the mix, animate the Park, promote. Those are the three strategies.

Louis: An increasing area of focus corporately around the world, particularly in such areas as recruitment and branding, is the resolve to create value around positive social impact. In describing for me the ways in which you are proposing to do that, the output at the end of the day would seek to really leverage McMaster's advantage and profile as being a university that has global leadership around positive social impact. How do you see the work of the Park focusing and leveraging on that ambition and aspiration going forward?

Ty: Right. Well, again, you pointed it out but McMaster, I think they were ranked #2 on impactful universities in the world. #2. That's a remarkable thing. Being part of the McMaster family we need and want to be part of that. Remember, we're the commercial arm of that. The question that we're trying to do is how do we impact the world from a commercial, from a business perspective? What I would say is, and there's a whole scene that's going around here, there's a strategy, a thought, that the world's biggest problems are also the biggest profit opportunities. Personally, I think that capitalism in business, for a long time has had kind of a negative view from some folks. That's partly because, frankly, a lot of businesses are all about how do I take advantage of the ecosystem? How do I drain as opposed to put back in? But a lot of modern thinking is that you really can have your cake and eat it too. That you can create a business but that business exists in an ecosystem and if it's an unhealthy ecosystem, then eventually it's going to be problematic. So today's world, whether it's triple bottom line or the notion of balanced scored cards, is that businesses are judged. Not just are they profitable and sustainable, financially, but are they profitable and sustainable on a whole other dimension. That's absolutely what we're trying to support. If you look at the faculty of engineering, their school of entrepreneurship, it's all about sustainable entrepreneurism. The notion of how do you not just go in there, flip something for a quick profit, but how do you do good. I would argue, there's a phrase I heard recently, sort of an unapologetically Canadian approach to doing well by doing good. I think that's what we're trying to do at the Park is to install folks, yes, this is a business, a place to do business. But business could, can and should be doing good for the community and for the world itself. We're trying to install that into our companies.

Louis: Let's talk for a few minutes about the university and the Innovation Park's relationship with Gowling WLG law firm. While in its early days, and not yet widely communicated, the university and this law firm have partnered, really to advance the ambition that you've articulated, and with a view, also, clearly to commercialize technology and to help the region and McMaster and other private entities benefit from the universities research. In doing that we've co-developed the construction of a facility at the Innovation Park, which you referred to earlier, which will be home to our office in this region from which we hope the partnership will evolve, the commitment that the firm has made to do this with you is really to leverage our law firm's global network of relationships to support the vision and ambition that you have. Can you explore with me how you see taking advantage of that partnership and that network to fulfill the objectives that you have as a CEO of the Park?

Ty: Sure. Let me go to what I said earlier about the first pillar of our goal forward strategies, getting diversity, diversity on all dimensions. What I would suggest is that as we're trying to attract other companies, groups to the Park, even if there in a different domain such as legal profession, or in food and beverages, or anything, we want them to be innovators. It's not like we want to be innovative but just in the areas where we wear white lab coats. But we're going to be old fashioned and everything else. We want the Park to be comprised of innovators in all of their own domain. Innovation is not the sole domain of researchers and engineers. It can be anything. I think, as you're well aware, look Gowling is an innovator in its own domain. Number one, form a cultural perspective, it's a perfect fit. Number two, but where does that fit within the broader context? I would say, certainly there's legal services that are required by the companies here, that's obvious. But we need to take advantage of it. I think what's more exciting is the global network that you bring to the table. We often think about innovation as a technology. There's kind of a law of innovation that says for every technical innovation there has to be a corresponding business model innovation to bring it to life. Otherwise it's just an idea. That means you need to find a business partner, or business vehicle, to bring it to life. The research that's done at McMaster, for example, the researchers in health sciences are not trying to solve cancer for Hamilton. They're trying to solve cancer for the world. The right commercial partner for any given discovery, it could be in Hamilton. It could be Dubai. It could be in Beijing. It could be anywhere in the world. We need to have a global network to reach out so that when you have an idea we can find where the problems that can be solved with that idea and where are the right commercial partners. As a research Park we don't have that. We have some of a global network. One of you guys said you have a global network. The idea that by combining your global network to people with problems, to people with expertise in those geographies, not only is it a great idea, it's essential to connect our brilliant ideas and researchers to problem spaces anywhere in the world. If our mission is to impact the world, to make a brighter world, it's not a brighter Hamilton, it's a brighter world. Then we need partners across the globe and you guys really represent a global partnership that gives us reach to the entire world. To me that's the brilliant thing.

Louis: As you and I both know, from many long discussions, the idea of collaborating in this fashion is quite innovative in and of itself. It also requires that not just you, but those within a law firm, behave in a slightly different way because the ambition and aspiration is to facilitate connection, which in and of itself, isn't something that necessarily generates revenue. We hope by doing that to be a trusted partner and to put our clients together in a way that gives us the opportunity to service those interests downstream. If you had to make the business case to my colleagues around the world about the importance of doing this for our business, the legal business, and the success and health of our firm, how would you make that argument? What's in it for us to the extent that my colleagues need to know what that is.

Ty: I think it was Wayne Gretzky that said

Louis: The great philosopher.

Ty: The great philosopher, Wayne Gretzky said, the secret to success is to not skate where the puck is but to skate where the puck is going. Frankly, what we're doing here at the Park is defining where the puck is going, in life sciences, in advanced manufacturing and so many areas. As a legal firm if you want to grow, which you obviously do, and you want to create value, both for yourselves and for clients, what's the equivalent of skating to where the puck is. You're going to see emerging technologies, emerging businesses in emerging geographies. It's an opportunity to participate in where the puck is being shot to, and to participate in it, as opposed to being reactive. It's an opportunity for you guys to participate in that definition, and in the gross, as opposed to being reactive. I know that's a very high level but you get to define the future, participate in crafting the future, and then participate in the business that comes out of that.

Louis: Looking ahead then, Ty, 7 to 10 years down the road as you see the strategies that you created to advance the vision begin to come together, how would you describe success for you and the Park?

Ty: I'm going to add one more dimension. I'm going to say for the region. Let me be clear, our job at the Park is to help companies grow, Gowling is one of those companies. We have no success beyond the success or our partners. What is the success of the Park look like? Well, certainly it's expanded, facilities and expanded Park, but more importantly it's successful companies. 10 years from now what I would hope is the companies at the Park including Gowling, including the companies that are being built out of the Forge and innovation factory today, including the companies that are going to come take up residence in the Park, including companies all over this city and the region, have benefited from the gross. They look back and say, "You know what? MIP helped them grow." That's our mission. I would argue, in my happy place, that the Park is viewed as a global leader in how to transform brilliant ideas into commercial realities. What we're doing is hard. There is no recipe book. It's not like you go to the local book store, or Kindle store, and say buy a recipe book for how to do this. We're figuring this out together. I think the hallmark of success is can we transform the Park, the companies at the Park, and the region that we're in to demonstrate corporate gross and the economic prosperity that comes from that. I'd love to see a Harvard business study about how we did it from 10 years from now.

Louis: Well, maybe they'll write one someday.

Ty: That's the plan.

Louis: Ty Shattuck, thank you very much for your time today.

Ty: Thank you so much for having us and thank you for being part of this revolution.