The ICT industry is a tricky one from an economic development perspective. Because the industry is a perfect example of Joseph Schumpeter’s process of ‘creative destruction’ you get a lot of failure. In fact, I read once that most VCs won’t touch an ICT entrepreneur until they have failed at least once.
In New Brunswick, we have witnessed a lot of ICT firms going down over the years – basically 90% of the eLearning industry but there have been many more. And some of these firms – most in fact – did receive some government assistance.
Gerry Pond says our ICT industry needs more of this ‘scar tissue’. More trying and failing. More creative destruction.
The issue is what is the role of government?
The government doesn’t handle failure very good and the media doesn’t handle government money going into failure any better.
I refuse to believe those who say there is no role for government. There is a public interest in New Brunswick having a a strong and successful IT industry. It creates good jobs, attracts workers from across Canada and beyond into exciting careers. It offers above average wages translating into more tax revenue for government.
But looking at the ICT industry in the same way as, say, the call centre industry doesn’t make much sense. The government needs to look at ways to grow the industry that are tailored to the industry.
Help with organizing, trade, attracting R&D funds, etc. would be good roles for government. Expanding the NBIF’s early stage funding program might be one way to provide access to ICT startups without the risk aversion challenge. In that program, the NBIF lends small amounts of money for an equity stake. Many will fail – a few will prosper and over time if it is set up properly the program should yield a good ROI on government investment.
The bottom line is that New Brunswick has a whole department working on the ‘fish’ sector. A laundry list of programs and services, regulation, legislation, inter-provincial cooperation, international development, resource management, etc. The ICT industry is rapidly becoming as important to the New Brunswick economy as the fish industry and it gets very little government focus.
The raw material of the ICT industry is not fish stocks – it is human capital. But the thinking behind managing the fishery has parallels in the ICT industry. You need to understand your talent pool, you need to track its growth/decline and you need to promote it to ICT firms here and abroad.
I’m not saying we need a whole new government department but we do need to understand where the private sector growth is coming from (and could continue to in the future) and have good public policy to foster it.