Innovation from an oil and gas platform: Calgary
An Innovation Systems Research Network Integrated Document
Cooper .H. Langford
Ben Li
Camille D. Ryan
March 2010
1
Innovation from an oil and gas platform: Calgary
An Innovation Systems Research Network Integrated Document
Langford, Li and Ryan
Outline:
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Industry Structure
The Current Qualitative Study
The ‘Creative Class’ in Calgary
Firm innovation and the paths of knowledge flow in Calgary industry
Innovation in the not-for-profit (mainly a services) sector
Linkages of the private sector to innovation in culture, charitable, and
civic organizations
Governance in the context of an oil and gas platform
Concluding Remark
2
Innovation from an oil and gas platform: Calgary
Cooper H. Langford
Ben Li
Camille D. Ryan
“…For Calgary has its own unique blend of site and circumstance,
which has perpetuated a frontier image of individualism, freedom,
and opportunity set in big sky country. …The history of Calgary has
tended to mirror the ebullience and unpredictability of the frontier
experience.”
– Forran and MacEwan Foran (1982)
…never start into a business in [Calgary] that doesn’t have direct
implications and impact on the oil and gas business. This is an oil
and gas town...”
– Interview with a successful entrepreneur
Industry structure
Discovery of oil and gas in the Turner Valley region south of Calgary early in the
20th century, followed by construction of pipelines in the 1950s, re-invented
Calgary’s economic, political and social structures. Alberta was transformed from
one of the poorest provinces in Canada to one of the richest over several
decades. Exploration and development in oil and gas have largely spurred the
rapid growth of the Calgary census metropolitan area1 (hereafter, “CMA”).
“Calgary’s phenomenal growth after 1947 has been almost entirely
due to its position at the forefront of Canada’s burgeoning
petroleum and natural gas industries… Calgary found the
prosperity that was denied by the cattle industry and railroad
development… [It] enabled Calgary to transcend the… dependence
on a limited agricultural… hinterland.”
– (Foran and MacEwan Foran (1982)
1
A census metropolitan area is defined by Statistics Canada as a core city of over 100,000 and
the surrounding communities with a large fraction of the work force employed in the central city.
The Calgary CMA includes Airdrie, Beiseker, Cochrane, and other areas of the Rocky View
municipal district.
3
Through the ’70s, ’80s and ’90s, Calgary’s energy sector attained critical mass
attracting the sector’s national head offices. Now known as Canada’s Global
Energy Centre, Calgary is home to main offices of 87% of the country’s oil and
natural gas producers (CED, 2006). Relatively few well sites remain near
Calgary. Starting from initiatives of Imperial Oil, Calgary temporarily enjoyed
hosting oil refineries, but this activity has migrated to Edmonton. What remains
in Calgary is expertise in management, finance and technology that provides a
knowledge base for oil and gas exploration and extraction in its hinterland, the
Western Canadian region and globally. Calgary’s economy had become a
knowledge economy.
What was termed "phenomenal growth” in 1982 has continued through the “oil
boom” of 2006-07. The civic census of 1981 reported Calgary’s population as
591,857. The 2006 census (Statistics Canada, 2007) reports a population base
of 1,079,310; nearly double that of 1981 numbers. In-migration from the rest of
the country has been an important factor in this growth, generally outweighing
healthy natural increase.
Figure 1 shows a power law representation
(Bettencourt, et al. 2007) of net in-migration to Canadian CMAs. The slope of
significantly greater than one (1.3, R2 = 0.82) indicates that larger CMAs grow at
rates beyond typical biological growth, which is suggestive of increasing returns
to scale from network effects on attractiveness. Positive network effects appear
to be fundamental to attraction to all of these cities. This captures the general
feature of the “gravitational” attraction of cities. That talent and activity attracts
talent (Bettencourt et al., 2007), reveals little about the specific character of a
city. However, it is clear that Calgary is a positive outlier2 experiencing distinctive
in-migration, whatever the overall form of the relationship to size.
2
Others are Edmonton, Kitchener-Waterloo and Oshawa. Edmonton (barring government
activity) has similarities to Calgary. Kitchener-Waterloo has a vibrant high technology sector, and
Oshawa is the closest CMA to Toronto. The three largest CMAs of Toronto, Montreal, and
Vancouver are experiencing major growth in suburbs and exurbs and Oshawa may be a
beneficiary of this trend.
4
Figure 1. Net migration, 2001-2006, to Canadian CMAs with population over
200,000 (source: Statistics Canada, CANSIM, 2008). The largest positive
deviations are Calgary and Oshawa.
Within the overall net migration figures for 2001-2006, Calgary leads all CMAs in
Canada in the rate of domestic in-migration of science and engineering
professionals (just ahead of Ottawa-Gatineau), business and finance
professionals (at almost twice the rate of Hamilton, which is the next leading
CMA), chefs and cooks (just ahead of Windsor) and construction trades (just
ahead of Edmonton).
Calgary’s in-migration rate for arts and culture
professionals (third) is close to the those numbers experienced by leaders
(Moncton and Ottawa-Gatineau) (Spencer and Vinodrai, 2007). The influx of
chefs, cooks, and construction workers may be seen as predominantly yielding
basic employment serving internal needs of a rapidly growing CMA. The
attraction of the other three groups contributes directly to that part of the ‘creative
class’ as defined by employment (Florida, 2005) who are considered key players
in the non-basic segment supporting the outward reach of the CMA. What will be
seen as central below is that these sectors are extensively engaged in oil and
gas activity and offer a great deal in terms of related variety3 (Boschma, 1999,
3
A community may have industrial diversity where there is a low level of exploitation of
overlapping knowledge, or it may have diversity (measured by conventional industrial categories)
that involves industries sharing the utility of many types of knowledge in common. The latter is
captured by the concept of related “variey”.
5
Asheim et al. 2009, Frenken et al. 2007) through the mix of diverse professionals
focused on one overall outcome.
Calgary’s industries are significantly clustered (Spencer and Vinodrai, 2009). By
these metrics 42% of Calgary employment is in clustered industries compared to
a Canadian average of 22%. The cluster definition of Spencer and Vinodrai
(2007) with location quotients4 (LQ) as a core criterion identifies seven clusters
defined by standard industry classifications (NAICS codes). The dominant cluster
is the oil and gas cluster with an LQ of 5.02. The closely related mining industry
is second in employment LQ at 1.81, but the structure of employment (with firms
in only 38% of sub-categories) does not satisfy the Spencer-Vinodrai cluster
definition. The sum of these two (NAICS code) industries accounts for only 6.5%
of the labour force. Clusters appear to exist in ICT manufacturing (1.06) and ICT
services (1.15) as well as finance (1.00) and business services (1.44) The latter
three of these have close links to the oil and gas cluster. In fact a conventional
qualitative cluster study (e.g.those in Wolfe, 2003), would include large parts of
these clusters within oil and gas as suppliers (vide infra). This may be better
seen as providing related variety that channels knowledge into innovation.
Others are in construction (1.64), which is related to rapid growth as well as oil
and gas, and in logistics (1.19). This overall structure is scored at 0.77 on the
Conference Board of Canada’s diversity rating where 1 is the maximum
(Conference Board, 2009) indicating a high degree of diversity. Is this consistent
with the strong indication of oil and gas dominance? The question of what is the
best indicator of diversity – in the context of the Calgary CMA - is treated at some
length up below. The statistically revealed differences in employment distribution
compared to the rest of Canada lie mainly in the higher percentage of
employment in clustered industries, most of which converge on support of the oil
and gas activity.
The current qualitative study
Under sponsorship from the Innovation Systems Research Network (ISRN) 5
study of the social dimensions of innovation in Canadian cities (CMAs), an
examination of Calgary was undertaken based on questionnaire guidelines
developed by the national project for interviews with: firms (Theme I), creative
talent (Theme II), and civic, cultural and governmental organizations (Theme III).
The instruments were edited to support semi-structured interviews of
approximately one hour in length that could begin with open questions. As
4
LQ is defined as the ratio of a sector parameter to the value of that parameter for the CMA
divided by the ratio of sector parameter to overall parameter in national statistics. It measures the
intensity of localization of the parameter normalized to the national averaged ratio. The most
commonly used parameter is employment.
5 The ISRN (http://www.utoronto.ca/isrn/) with management centre at the University of Toronto is
a national network of groups interested in innovation studies. The CMA based projects are
supported by a Major Collaborative Research Initiative grant from the Social Sciences and
Humanities research Council of Canada.
6
respondents proceeded, interviewers probed to ensure coverage of the guideline
questionnaires. The interviews (123) were transcribed and coded, tagging full
phrases referring to particular issues. At the first level, this coding involved
identifying statements responding to questions raised in the guidelines. Beyond
this, the process involved tagging across the ‘questions’, for example, correlation
of innovations and their associated knowledge factors, or the positive and
negative concerns expressed by representatives of creative talent with respect to
Calgary as a place to pursue their careers and its attraction in relation to
alternative locations. The primary characteristics of innovation and the character
of requisite knowledge inputs in all three of the for-profit, not-for-profit and
government sectors are summarized here. Similarly, the factors in expressed
preferences of creative individuals for location in Calgary are reviewed.
The ‘creative class’ in Calgary
A theme throughout the interviews of senior officers of firms, organizations, and
institutions was the role played by creative individuals in their innovations. There
was no doubt that a concern for the ‘creative class,’ as defined by Florida 6
(2005), was pervasive. In order to select interviewees representative of that class
the qualitative method enabled identification going beyond usual statistical
indicators such as employment category, educational credential, or earning level.
Interviewees were selected by asking firm and organization senior officers to
identify individuals, in or associated with the organization, whose contribution
would be ‘difficult to replace’. The term ‘creative’ was avoided since it tends to
elicit responses limited to the sub-category of arts, graphic design and writing.
The suggested candidates’ profiles were probed to eliminate those who were not
easily substitutable simply because they occupy organizational nodes that imply
long learning curves. Rather, interviewees were selected for having substantial
control over the direction, management and quality of work and commonly
employing abstract concepts as a primary vocational tool. Some interviewees
were added to the sample based on publicly available information demonstrating
this role7.
Interviews with the identified creatives (Langford, et al. 2009) were examined and
28 categories of expression characterizing the features of Calgary they described
as attractors or negative features were isolated in the transcripts. These were
grouped around seven major hypotheses about attractors. Among these were
references to the positive business climate of a young city (‘entrepreneurial spirit’
was especially often mentioned):
“…creative class is the shorthand I use to describe the roughly one-third of …workers who have
the good fortune to be compensated monetarily for their creative output.” Florida (2005, p.4).
7 For example, the Tuesday, January 1, 2008 edition of the Calgary Herald featured an editorial
on the “20 Most Compelling Calgarians”.
6
7
“It’s a young, modern city. There’s tremendous opportunity. It’s a
fast city... the financial centre, the oil centre, the business centre…
It’s a wonderful place, especially for young professionals. There’s
so much opportunity here…”
“There’s an entrepreneurial spirit in the city… an open-for-business
attitude… you can’t duplicate that anywhere in the world…”
Similarly, that the physical environment supports an outdoor lifestyle.
“Calgary… you’ve got so much available—the mountains, right next
door! If you’re into that kind of thing… the camping, skiing, climbing,
etc.”
“I moved here to be near the mountains, to ski and to mountain bike
and to do all those kinds of things…”
Professional and personal (e.g. family) networks also figured often, as did, of
course, the availability of job opportunity. There was little explicit mention of
social factors such as inclusiveness (where cited, some comment was a bit
negative), but some interviewees seemed to have difficulty understanding what
was asked. .
The single most striking feature was that almost all interviewees gave
prominence to a number of different factors that make Calgary personally
attractive or not. The average number of factors mentioned by an interviewee
was 12. Examination of perceived factors in semi-structured interviews
emphasizes the complex character of attitude formation among creative workers.
Nevertheless, questions about alternative locations supported the interpretation
of the identified factor matrix as characterizing preferences of meaningful
significance to attraction and retention.
Essentially all the interviews in all themes firmly support wide recognition of the
importance of a ‘creative class’ defined by the nature of their work and the
presence of a thick labour market in Calgary (with the exception of health
services). As will be discussed below, the richness of this labour market
depends in significant measure on the wide range of professional and technical
competences required to supply needs of the oil and gas activity. Recognition of
diversity and the importance of its maintenance is incorporated in policy
documents from the City of Calgary.
[Calgary’s] “vibrant and diverse economic sectors as well as the
diverse needs of its citizens [are identified by the City of Calgary
as follows:] “Professional Scientific & Technical Services,
Finance, Insurance, Real Estate and Leasing, Business, Building
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and Other Support Services, Health and wellness, Research and
learning, Information and communication technologies,
Transportation and logistics, value-added Manufacturing,
Environmental technologies, Creative industries, and, Tourism
The City of Calgary recognizes that these activities will continue
to attract international in-migration, population growth and
demand for housing, services and travel, and the consequent
demographic changes, along with the employment opportunities
such activities will create” (City of Calgary, 2007).
The municipal plan continues:
To that end, the City of Calgary has committed in its planning to
“create a competitive and enduring city and economy” which: “[is]
resilient and adaptable to future economic cycles and
unanticipated shocks, supports the financial strengths of the
municipality; and creates a good quality of life for its citizens”.
The implementation of these goals depends on changes in land-use policy and
the planning for the transportation infrastructure. The direction is toward
increased population density and development of transportation corridors and
activity centres with target populations around local commercial and employment
centres. The general thrust is to favour energy and ecologically more
conservationist city structure. The accomplishment of economic goals depends in
large measure on the thesis that the changes will support the continued
recruitment and retention of the labour force to support business and economic
growth. But city documents make clear that success also depends on responses
to the initiatives by businesses, civic and charitable organizations, and citizens
individually.
On the whole the interviews paint a picture of Calgary as a suitable site to pursue
creative careers, but it is essential to appreciate that any individual’s reasons are
typically diverse. Important interests range from the opera to a motor-cycle club.
No “magic attractor” characterizing Calgary emerges. It may simply be that the
positive deviation from the trend of CMA attraction is only describable as a
greater concentration of the “mass” that creates the “gravitational” attraction of a
city (Bettencourt et al. 2007). No single dimension characterizing that “mass”
emerges clearly from the multiple attractions expressed by the individuals.
Firm innovation and the paths of knowledge flow in Calgary industry
The qualitative work on innovation by firms was based on 29 interviews (Li et al.
2009) with senior executives of firms chosen to represent approximately the
distribution of firms among conventional sectors (by NAICS codes) The
interviews were coded to isolate significant innovations by the firms and the
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connected knowledge inputs. The innovations described in the set of interviews
were at various levels in the categories of new to the firm, new to Canada, or
new to the world and it was difficult in many cases to classify the reported
innovations accurately on this basis. The present goal was to link innovations to
knowledge resources. It seemed more useful to classify by the type of problem
that the innovation ultimately addressed for the firm. To the extent that there is a
degree of fractal character to the innovation process, it is reasonable to suggest
that the composition of knowledge sources may be approximately scale
independent. The problem classes used were: satisfying a client need, firm
capacity building, overcoming a market barrier, or new market creation. As well,
problem classes were each categorized according to orientation of either
attaining individual firm advantage or yielding collective advantage.
Knowledge inputs were classified as internal (to the establishment), local (the
CMA), or non-local (a category dominated by ‘pipelines’ for knowledge within the
industry’s area nationally and globally). They were also classified as primarily
codified or primarily tacit. Tacit knowledge was not limited to inherently noncodifiable, but also included those elements of know-how that it may have proved
not economical to codify. Table 1 illustrates this partition with examples of
members of each class.
Table 1. Location oriented knowledge typology
Knowledge
Type
Codified
Tacit
Internal
Local
Manuals,
formal
procedures,
etc.
Embodied, mentoring,
etc.
e.g.
Local
literature, etc.
Non-Local
grey
Mentoring, workshops,
networks, etc.
Scientific literature,
trade papers, etc.
Training workshops,
Conferences trade shows,
Invisible colleges
A compendium of our results is outlined in Table 2 providing a break out of
knowledge factors identified and coded according to the aforementioned
features.
Table 2. Problem types, knowledge sources, and collaborative vs firm
advantage.
Knowledge type Internal
Local
Non-Local
Total
Advantage
CA FA Sum* CA FA Sum* CA FA Sum* CA FA Sum
Client Need
19% 81% 34%
29% 71% 45%
25% 75% 21%
25% 75% 100%
Capacity Building 11% 89% 28%
23% 78% 47%
12% 88% 25%
17% 83% 100%
Market Barrier
7% 93% 28%
26% 74% 36%
5% 95% 36%
13% 87% 100%
Market Creation
27% 73% 25%
45% 55% 45%
32% 68% 30%
37% 63% 100%
Average
16% 84% 30%
30% 70% 45%
19% 81% 26%
23% 77% 100%
CA – Collective Advantage; FA – Firm Advantage; Within a column: Green=highest percentage in
a column, yellow=2nd; *Percent out of total sum for problem type
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Results indicate that solving problems (by developing innovations) for firm
advantage figured high across all knowledge types. Local knowledge, indicating
a strong local system, was also deemed as a key resource relative to internal
and non-local sources. Of course, results were differentiated across knowledge
types. Client need was reported to be the primary catalyst for innovation in firms
followed by the development of new markets8.
The most difficult issue that arose in examining knowledge flow was the question
of inter-sector flow. If this were addressed on the basis of conventional industrial
classifications such as those used in the statistical cluster definitions cited above
(e.g. NAICS codes), it would yield an extremely rich but noisy pattern, low in
information content. The pattern would imply only that inter-sector
communication is rich, complex, and extensive. This would be a misleading
conclusion. The dominant oil and gas activity, which does not actually handle
much oil or gas in Calgary, is not limited to activity within companies that are
classified in the oil and gas NAICS codes. Strong linkages from the sector to
professional scientific and engineering services firms are obvious. ICT services
play a key role in oil and gas. The less widely appreciated aspect is that creative
financial arrangements have been crucial to the growth of the oil and gas
industry. Examination of the Canadian input-output tables (Statistics Canada,
2008) shows that inputs to the oil and gas industry are concentrated in a very few
sectors - mining and inorganic materials on the goods side. On the services side,
business services (including professional and scientific services) and financial
services are important components. In a qualitative study of a cluster, a large
share of firms in these sectors would be identified as closely linked suppliers to
oil and gas firms. The literature has confirmed that customers and suppliers lead
all other sources of ideas for industrial innovation (a review is found in Salter and
Martin, 2001). As well, a significant share of the construction cluster is closely
linked to oil and gas customers. The common attitude about the degree of
integration of firms was captured in (perhaps) extreme language by a successful
and widely influential Calgary entrepreneur.
“I’ve learned over the years never start into a business in Alberta
that doesn’t have direct implications and impact on the oil and gas
business. This is an oil and gas town...”
“You can’t do anything in Calgary if it’s not connected to oil and gas.”
The reach of oil and gas activity in Calgary belies the apparent diversity of the
regional economy. The non-basic activity in the city is concentrated in the
construction of the managerial, technical and financial knowledge to manage
resource extraction in its Alberta hinterland, regionally across Western Canada
8
Across the sample set of interviews examined and coded for this particular study, 77 individual
innovation data points were identified. Twenty nine of those were associated with addressing
client need, 22 with developing new markets, 19 for capacity building and the remaining six were
associated with addressing market barriers.
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and globally. The focus of this activity is knowledge. In contrast to usual
perceptions oil and gas activity in Calgary, is a knowledge-intensive multidisciplinary activity. It is best conceptualized as an integrated platform (Cooke,
2007, Cooke et al. 2007). This insight will provide a guiding theme for
understanding the structure of the governance coalition that frames the policy
discussion for Calgary.
In consequence of the close integration of many firms into the oil and gas
platform, the analysis of inter-sector knowledge flows represented in our
interview data was based on four “sectors”. The oil and gas platform is the most
important. It is defined from the indications of the linkages and specializations of
firms found in the interviews. A group of firms in environmental services that
were not dominated by oil and gas was identified in the data. Similarly, a group of
firms in advertising and multi-media could be characterized. The remaining firms
are simply treated as “other”. Table 4 displays the identified contributions of local
knowledge supporting innovations in terms of the sector of origin to sector of use.
Table 3. Intra- and inter-sectoral knowledge inputs (percentages of
knowledge received from originating sectors).
Receptor sector
Oil and Gas
Environment
MM/Adv
Other
Contributing sector’s share of
all inputs identified
Originating Sector
Environ
Oil and Gas
ment
79%
1%
7%
38%
4%
1%
-
Multim
edia
61%
-
Other
53%
Not
listed
20%
55%
35%
46%
Total
100%
100%
100%
100%
24%
14%
14%
39%
100%
9%
The dominance of the diagonal of this matrix supports the partition adopted on
independent grounds as identifying knowledge communities9. The oil and gas
platform is the largest supplier of innovation support knowledge to other sectors.
This is even more evident in analysis of knowledge flows into the not for profit
sectors. The low numerical impact of these inter-sector exchanges does not
imply low value of such “weak links” (Granovetter, 1983). These links can be the
source of fresh insights not in common circulation among those linked strongly
Jacobs, 1961). The origin many of these inter-sector flows may emerge from one
of the features seen in the interviews with individuals (theme II). Many of the
attractions of Calgary were activities and organizations from sports to motorcycle
clubs that do not recruit members from any particular professional activity. These
provide rich opportunity for development of strong personal links with
accompanying weak professional links.
One interesting feature of the
environmental services firms not integrated to the oil and gas platform is that they
9
The magnitude of the diagoinal element in a knowledge flow matrix may offer an interesting
approach to characterizing a cluster.
12
report advantage created by expertise honed in work with oil and gas problems.
To some degree this is an oil and gas spin-off. Spin-off does also occur into the
‘others’ category (vide infra).
XXX 3:30 02/03
Innovation in the not-for-profit (mainly a services) sector
Innovations in the not-for-profit (cultural, civic, charitable, and government
organizations) sector were classified by problem type in a manner parallel to
firms. The problem classes used were: providing a client service, organization
capacity building, overcoming a social barrier, or introducing new models or
exemplars. The first two are very close to those for firms. Barriers were not to
access to markets but, more appropriately social barriers to delivery of some
service that needed to be overcome and exemplars (models) was the term
chosen to categorize introduction of entirely fresh types of services. We chose
the term exemplars (Kuhn, 1977) because the new services were often found to
be approaches that were readily used as models by other organizations in way
that might evolve to a new service paradigm.
The work on the not-for-profit sector, using a framework parallel to that for work
on firms described above, suggests several contrasts between innovations in
Theme III and Theme I organizations. Of the four varieties of innovation in notfor-profit organizations, the highest numbers of innovations were in capacity
building, and in implementing new models or exemplars. Innovations to
overcome social barriers were the least identified category of innovation for notfor-profit organizations. In contrast firms primary inspiration was customer need.
This suggests that not-for-profit innovators have been working toward bringing
new kinds of capabilities into Calgary, while innovators in firms deliver
capabilities to end users.
Table 4 Problem types, knowledge sources and collaborative vs
organisation advantage in not-for-profits
Knowledge type
Advantage
Client Services
Capacity Building
Internal
C
O
A
A
53% 47%
50% 50%
Sum
*
33%
37%
Local
C
O
A
A
50% 50%
48% 52%
Sum
*
36%
38%
Non-Local
Sum
O
*
CA
A
57% 43% 31%
47% 53% 25%
100
%
0% 17%
Total
C
O
A
A
53% 47%
48% 52%
Su
m
100%
100%
Social Barrier
78% 22% 39% 70% 30% 43%
78% 22% 100%
New
models/exemplars
57% 43% 36% 57% 43% 36% 61% 39% 28% 58% 42% 100%
Average
59% 41% 36% 56% 44% 38% 66% 34% 25% 59% 41% 100%
CA – Collective Advantage; FA – Firm Advantage; Within a column: Green=highest percentage in
a column, yellow=2nd; *Percent out of total sum for problem type
13
Breaking down the local sources of knowledge, we find that in industry, local
knowledge is responsible for 71% and 78% of knowledge input to client need and
capacity building innovations (top two kinds) for firm advantage in Table 2, while
in analogous Table 4 for not-for-profit organizations, local knowledge is
responsible for 48% and 57% of new models and capacity building (top two
kinds) for collective advantage. A similar (perhaps stronger) pattern holds for
internal sources of knowledge, which in not for profits includes board members
and volunteers, indicating the importance of internalization of knowledge in the
Calgary innovation system via knowledgeable individuals.
With respect to the scope of the innovations conducted by the not-for-profit
sector and firms, we find a significant contrast in so far as it is possible to
classify. There appear to be firms innovating for a global market whereas not-forprofits are limited to bringing new ideas from the outside, especially elsewhere in
Canada.
Table 5. Scope of Innovation
Firms
Not-for-profit
New to organization
38
9
New to sector
13
6
New to city
17
17
New to world
13
0
Innovations generated by firms were significantly oriented toward exploiting new
knowledge in the organization. A number of innovations identified as new to the
world included inventions eligible for patents, and innovations gained from basic
science research. By contrast, half of the not-for-profit sector’s identified
innovations were new to the city, but not new to the world. This finding is
consistent with the varieties of innovation brought to Calgary by firms and not-forprofit organizations in their roles: Internally-focused firms innovate for competitive
advantage, while not-for-profit organizations in Calgary are not inventing new
things as much as bringing such new things to the city to be shared. Important
linkages for this are with national and international associations concerned with
the problem area. Such pipelines to outside specialized knowledge seem to be
even more important than they are in the private sector. Perhaps because the
private sector obtains much specialized knowledge by recruiting talent and later
describes this as internal.
Linkages of the private sector to innovation in culture, charitable, and
civic organizations
Both the role of board members as internal knowledge sources and the
differences in innovation problem focus and scope are indicators for the
relationship between innovation in the two domains. Representatives of not-forprofit organizations regularly referred to the contributions from private sector
figures as board members and volunteers. A number of the innovations by those
organizations were identified as dependent on the contributions of private sector
14
board members. This was especially true for innovations in business models
where private sector practices served as analogs. However, the contributions
were not limited to business models. In fact one interviewee who had become an
officer of a charitable organization had started as a volunteer employed in the oil
and gas industry. The commitment of private sector volunteers is highly
regarded. In contrast, there was only one, rather specialized reference (from an
advertising firm) to a not-for-profit role in private sector innovation. (This may
hide subtle way that volunteers bring their experiences back to their firm.)
The attitude and motives within the private sector for linkage to the not-for-profits
were often expressed clearly. The most prominent descriptor was a desire to
“give back”. This was applied to both the firm and the individual. The expected
role of the “economy of love” (Boulding, 1973) was therefore present. However,
there was a second commonly expressed motive. Executives of firms recognized
support to not-for-profit as important to retention of talent. Policy governing firm
financial contributions commonly followed interests of employees.
“…Beyond that we have community investment policy... we give
out a certain amount. We spend maybe 2.7 million dollars in
community investment. STARS, the Children's Hospital... we
match dollar for dollar everything that the employees donate...”
Firms do recognize that their employees’ interests extend over a wide range
beyond the job. The diversity of this was seen the wide variety of factors of
attraction to Calgary found in the interviews with creative individuals. The
employers’ donation policies are well adapted to recognizing diverse motivations
of employees.
Convergence around the idea that quality of life and satisfaction of a diverse
spectrum of interests is important to the attraction and retention of the talent that
supports economic growth has been articulated by city government
spokespersons.
Governance in the context of an oil and gas platform
Policy outcomes… [are] the product of a complex pattern of interaction
between several levels of government and an array of social and
economic actors in the community where the policy is implemented.
– (Wolfe, 2009)
The data collected from the interviews in this project reasonably reflect the array
of social and economic actors in the community. To understand their roles in the
“complex pattern of interaction”, we borrow a concept from actor-network theory
(Latour, 1987). A functional network must be stabilized around congruent goals.
Stabilization is achieved by bringing actors together through a number of means.
15
In some cases it is through coercion (Callon, 1986), but enrolling actors can also
be through proposing that the route to their specific goal is best approached
through the goal articulated by the actors seeking to enroll those others in their
network (Latour, 1987,112). In some cases networks form as a consequence of
the entrepreneurial skill and persuasive force of a champion group, and often
championing is accomplished through, or in the name of, a specific
spokesperson (Latour, 1988, 14). It is this that leads to effective “grand” regional
plans. No evidence of such an effective entrepreneur has emerged 10 in the
Calgary study. Nevertheless certain common themes around which divergent
groups of actors could converge did emerge from the interviews. These have
significant consequences for policy.
The larger issues related to integration and governance emerged most directly
from interviews, with spokespersons for organizations around which various
segments of the community converge. (Nothing in the interviews with
representatives of the individual members these organizations contradicts the
message from these collective organizations.) The interviews directed attention
to documents from such organizations in the form of publications, reports and
goal statements. These are found in the form of both papers and websites.
Examples of key organizations included: The Calgary Chamber of Commerce,
Calgary Economic Development and Calgary Technologies, Inc., who represent
a group, related by their common goal to advance the cause of economic
development and growth. There are also important organizations supporting
informal contacts that bring together like-minded individuals who share these
economic goals, an example is the Petroleum Club. As one interviewee noted
there is an influential informal set of “200 Calgarians who make things happen”,
coming mainly from industry. Excerpts from characteristics statements capturing
goals are represented by the following samples from Calgary Economic
Development and Calgary Technologies, Inc. The role of the City in these two
organizations indicates significant city government endorsement of the goals.
Calgary Economic Development (CED) was established by the City of Calgary in
October 2002 to provide new leadership and a new direction for the Calgary
Region's economic development activities.
Working with stakeholders from business, the community, and
government, CED capitalizes on Calgary's abundant energy and
entrepreneurial spirit to facilitate sustainable economic growth.
The organization’s mission and mandate are to foster business
growth for community prosperity and to lead, facilitate and
advance Calgary’s economic development efforts. Vision:
Calgary is the location of choice for people and business.
10
Former Alberta Premier Peter Lougheed may have been such an entrepreneur. The network he
built may persist in the convergence described below.
16
Mission: To foster business growth for community prosperity
within the Calgary Region. (CED, 2009)
Calgary technologies, Inc was founded as a partnership between the City, the
University of Calgary, and the Chamber of Commerce in 1981 with a key figure,
Alistair Ross, as its first Board Chair. Mr. Ross was a prominent figure in the Oil
industry who was committed to economic diversification.
[Calgary Technologies. Inc. has the mission] “to accelerate the
success of the advanced technology community by helping
companies to build, grow and connect”. [A key item in its vision
statement is] “achieving greater economic diversification in the
Calgary region” (Calgary Technologies, Inc. 2009).
The Calgary Foundation, Imagine Calgary, (Plan-it, the city’s long range plan),
The Epcor Centre and The United Way are representatives of another category,
related by their common goals to advance the cause of a healthy and sustainable
community.
As major coordinator of philanthropy (affiliated with Community Foundations of
Canada), the Calgary Foundation articulates this vision:
VISION: A giving and caring community that values sharing,
collaborating and learning; A community with citizens engaged
in community building at all levels; A healthy, vibrant
community that embraces diversity and supports all of its people;
A strong and sustainable charitable sector serving the existing
and
emerging needs of the community.
The Calgary Foundation publishes an annual “Vital Signs Report Card” on a
number of features of the community. Interesting 2009 grades include: a grade of
C for overall financial well-being citing the factor of 9 between 10th percentile and
90th percentile incomes and the share of income to food. A grade of C (reflecting
improvement) is awarded for sustainability citing improvements in green building,
availability of locally grown food, and increased use of sustainable transportation.
(Calgary Foundation, 2009) The report is coordinated by a committee
representing a broad cross-section of organizations and draws on a citizens’ poll
(which happened to draw a majority of women respondents).
The clearest expression of a sustainability goal comes from the Imagine Calgary
Plan. Imagine Calgary, an on-going project, was launched as an 18-month public
engagement project in 2005 to achieve a 100 year vision. 18,000 citizens
contributed to the visioning exercise. Over 50 organizations, mainly in the public
not –for-profit sector are formally affiliated. A few of the ‘100 year goals’ are
(Imagine Calgary, 2006):
17
Energy: The energy used by Calgarians comes from a diverse
portfolio of resources that are renewable, have a low impact on
the environment and contribute to the positive development of
our society. Calgarians use energy in an efficient and responsible
manner.
Transportation: Calgary is built at a human scale with a
transportation system that serves the access and mobility needs
of all people through a choice of convenient, comfortable,
affordable and efficient transportation modes.
Economic well-being: Calgary is a city with a vibrant, resilient,
environmentally sound and sustainable economy that fosters
opportunity for individual economic well-being.
Several organizations associated especially with economic development
participate in the quality of life/sustainability organizations. A major example is
the Calgary Chamber of Commerce whose individual public positions always
include core business issues such as low taxes and limiting government
involvement in business. The two streams of goal formation are not entirely
independent of each other. Positions of the City of Calgary commonly reflect a
synthesis (see City of Calgary, 2007 above).
How are the two goal streams reconciled to produce policy outcomes? First, it is
clear that the streams converge not only around the need to attract and retain
creative talent, but also to the recognition of the requirement for a good quality of
life covering many dimensions in order to achieve this goal. Policy initiatives in
this direction are emerging in the City’s long-range plan (Plan It Calgary, 2009).
The plan deals explicitly with the two major areas of city jurisdiction, land use
regulation and transport. Policy for both is oriented toward making the city more
compact with infrastructure favourable to alternatives to the automobile, with
neighbourhoods combining residence and work and supporting the development
of an atmosphere of social connection, basically in the tradition of Jane Jacobs
(1961). Since 1998, principles of sustainability have been built into city policies.
However, it is clear that the ambitions behind the development and growth plans
extend beyond the areas of direct city jurisdiction. The success of the overall
direction for the growth of the city will not be realized without the continued
creativity and innovation documented in this study in the charitable, civic and
cultural sectors, illustrated by the work of the Calgary Foundation, The United
Way, and the Epcor Centre. For example, it will be necessary for support to
gather around the efforts of Calgary Committee to End Homelessness in order to
implement innovative solutions. Moreover, these sectors will depend on the
continued support in both money and talent they receive from private sector
actors, as illustrated by the work of the Chamber of Commerce on
homelessness. This support clearly reflects the convergence with the private
sector interest in talent retention.
18
Second there is a goal that has a long history in Alberta that implicitly recognizes
the dominance of the oil and gas platform and the still limited role in the Calgary
community played by industries independent of that platform. This is the goal of
diversification of the economy. It has support at the Federal level in the activities
of Western Economic Diversification and has been a part if Alberta policy since
the era of the government led by Premier Peter Lougheed (Marsh, 2005). The
current provincial government strategy prioritizes established industries in
energy, agriculture and forestry, but does focus on enhancing value added
opportunities and on commercialization of the products of Alberta research
institutions. Leading the statement of five priorities for Albertans is “creating
opportunity”:
Enhance value-added activity, increase innovation, and build a
skilled workforce to improve the long-run sustainability of Alberta's
economy. (Priorities Alberta, 2008)
In the context of the city, diversification is not a goal that meets resistance from
any quarter.
The historical context provided by the development of a knowledge platform
focused on oil and gas with development. over time, of a rich fund of related
knowledge in engineering technology, IT, capital management,
structuring
strategic alliances and risk management strongly indicates a regional policy
based on exploitation of the oil and gas related knowledge platform as a basis for
diversification. This has already happened in Calgary several times. Closest to
the oil and gas industry, Calgary firms now export geophysical knowledge for
application globally. Other important examples include: a wireless
telecommunications industry forming the core of the IT manufacturing activity
(Langford et al. 2003), The Nova Chemicals Corporation in polymers (Nova, n.d.)
and a global positioning systems industry (Langford et al. 2003). A specialized
example is Atco Frontec that operates frontier worker housing and facilities. It
now has a global military service business. A recent example illustrating the
reach of the knowledge base from the oil and gas platform is a digital x-ray
company, IDC, that has been listed among Canada’s fastest growing companies
in 2008. Its core technology is in image processing which is important in the
geophysics of reservoirs.
In support of a platform policy (Asheim et al, 2009), the provincial government
focus on value-added is a useful component. The focus on commercialization of
products of the research institutions may give too much emphasis on the input.
analytic (science based) knowledge (Asheim and Gertler, 2005) end of the
spectrum with insufficient attention to the synthetic (engineering based)
knowledge richly represented in the technology and finance elements of the oil
and gas knowledge platform.
19
To articulate further the strategy and platform policy options for exploiting a
resource knowledge platform to foster diversification, the Second Banff Summit
was held in September, 2008. It was organized by The Centre for Innovation
Studies (THECIS) with a report edited by Richard Hawkins 11 (THECIS, 2009).
The concept of the summit was to bring together an invited group of industry and
community leaders, senior government officers, and selected academics to carry
out a discussion under the “Chatham House Rule”12: “….participant are free to
use the information received, but neither the identity nor the affiliation of the
speaker(s) nor that of any other participant may be revealed” (Royal Institute of
International Affairs, 2002). The Summit was organized around four
conversations: (i) critical re-examination of the dynamics of the status-quo, (ii)
exploration of a vision (10-20 years) of sustainable diversified prosperity and
internal or external affecting factors, (iii) exploration of possibilities and pitfalls of
achieving goals through added-value to resource based commodities, and (iv)
exploration of
the possibilities and pitfalls of striking out in entirely new
directions.
The report is titled “The Banff Consensus” because a high degree of
communality of thinking emerged from these expert conversations. The sub-title
was “The Natural Resource Industries as Engines of Diversification”. The
“summiteers” agreed on key advantages and problems of the Western Canadian
resource economies. Relevant to the Calgary context, they found an established
sensitivity to the intellectual resource created by the breadth of the related
knowledge accumulated around oil and gas. They particularly emphasized that
oil and gas firms have extensive managerial and financial experience in creating
value from entrepreneurial risk. Indeed, as noted above, there is a growing pool
of experience in creating successful high value added enterprises of global
reach. The experience with government-industry articulation has been limited but
mostly positive. Especially, the Alberta Oil Sands Technology Research Authority
(AOSTRA), which represented an identified large-scale target approached with a
multi-dimensional strategy of government subsidies.
Key problems were also identified. A leading problem is the of a ‘rip and ship’
mentality that takes commodity prices at the lowest level of value added. On the
side of government policy, it was regretted that Federal policy from the 1960s
had favoured employment stabilization over innovation. The recent emphasis on
innovation policy was welcomed. A final area was gaps in present capacities that
must be filled within ten years. The leading item is developing the capacity to
convert threats to resource-based wealth into opportunities to innovate and
diversify. The “summiteers” also recommended development of a sophisticated
futures capacity employing foresight and life cycle analysis.
11
12
Member of the ISRN Calgary project team
Chartham House is the home of the Royal Institution of International Affairs.
20
Concluding remark
Innovation in Calgary depends critically on two dimensions of human
performance:
creativity
(talent)
and
entrepreneurship
(including
“intrapreneurship”). Nurturing the former is achieved through a coalition of
agencies in the not-for-profit sector with the support of the for-profit sector.
Coalition members share the interest in a multi-dimensional quality of life (from
the opera to the motor-cycle club) satisfying a wide variety of citizen interests. It
is recognized by all that maintaining the economic status to attract and retain is
essential. A central agency of coordination is the city government. The success
or failure of entrepreneurship is largely a matter of attitudes in the private sector.
Will these favour rent seeking innovation or can it favour productive innovation
(Baumol, 1990)? The Banff summit articulates a productive strategy.
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