The Conference Board of Canada issued a report on Tuesday on the state of Canada’s innovative abilities. Unfortunately, although we have the world’s best R&D funding program, we do not seem to rank very well on the global scale of taking the innovation we do and profiting from it. In fact, we ranked “14th among 17 industrialized nations for its ability to turn knowledge into money-making products and services.”

One of the sources of the problem suggested is that Canadian companies feel insecure about purchasing innovative products from other Canadian companies – and if a company cannot sell its products to other Canadian companies, then global companies start to question the value of the products.

Another source of the problem that is suggested is that Canada exports raw materials to be processed elsewhere instead of processing it here ourselves.

The report is not all bad news, however. It has been suggested that biofuels is an industry where Canada could become a leader.

Source

We often tell people that failed projects are embraced by the SR&ED program, and sometimes it can be a little hard to understand exactly why. I mean, isn’t the program meant to promote innovation, and to encourage technological development? If so, then why are projects that don’t result in a more innovative product or process applicable for the SR&ED program?

This goes back to the three criteria of the program: Technological Advancement, Technological Obstacles and Technical Content.

When looking at a failed project, you most likely faced a number of Technological Obstacles while working on it – these obstacles are anything that prevented you from getting to the final objective, so obviously in a failed project you faced a number of obstacles.

The technical content shows the systematic investigation that was done while trying to reach the final objective, which would be done for both failed and successful projects.

Lastly, your knowledge has been expanded in the instance of failed projects as well – in these instances, you now have the knowledge that there is no way that you have found to get to the final objective.

So yes, failed projects definitely qualify for the SR&ED program, as long as they too fulfill the three criteria of the program.

A year ago it looked like game over for Nintendo’s storied console business. The Nintendo Entertainment System had ushered in the modern age of video games, but was not bleeding market share due to newer, more powerful systems from Sony and Microsoft.

Nintendo’s response was the handheld DS, followed by the Wii. The DS two-screen touch handheld was a test study that focused on gameplay and “fun” instead of trying to compete with Sony and Microsoft on graphics and hardware.  The DS was a success, so the Wii followed suit.

Nintendo built the Wii: a cuddly, low-priced, motion-controlled machine that focused on interaction and unique gameplay.  Their strategy was to expand the target market, because to compete with Sony and Microsoft to develop the best hardware would have been suicide.  Nintendo used a cheaper and lower-powered processor for their Wii console because they firmly believed that they could appeal to children as young as 4 and adults as old as 70 if they could:

1. Make video games easy-to-play, interactive, and “fun.”
2. Sell a complete gaming system at an affordable price point. 

This strategy was an astounding success!  Families, women, children, and all grandparents all embraced the gameplay of the Wii, and the low $300 price point increased sales volumes drastically.  And because of the decision to adopt older technology, they were able to sell the console with a $50 profit margin! (Sony and Microsoft both sell their consoles in the $400 to $500 price range at a loss)

Nintendo now projects that the Wii will take a 40-45% market share in this generation.

This case study illustrates the fact that innovation and R&D is a necessary part of any business’ survival.  Businesses are constantly competing to build the better mousetrap.  However, the business that figures out how to deter the mouse from entering the house (at an attractive price point) will steal market share from their competitors.

Further information:

• Stringer: Wii business model superior to PS3’s
• The untold story of how the Wii beat the Xbox, PlayStation