Vanguard Magazine

T Technology www.vanguardcanada.com FEBRUARY/MARCH 2017 33 tracts and a venture capital industry that was created from scratch by Georges Doriot, a former Brigadier General. He ensured that de- fence needs were met, while companies also positioned themselves as viable commercial companies and could attract private capital. The Internet itself was meant to be a closed emergency commu- nications system in a time of war, and it turned out to be the cata- lyst for today's globalised, connected world. Numerous commer- cial industries have been built on top of the Internet that would never have been possible without it. In regard to wireless, which became more important because of the availability of the Internet, the move to 5G wideband networks between 2020-2025 will be a key catalyst for Internet of Things (IoT). The IoT will be an always-connected sensor network that provides "live" data that will serve as the fuel for machine learning and artificial intelligence (AI), giving birth to yet another whole new array of technologies and industries, many of which even experts cannot predict. The U.S. has increasingly realised that it must source from the private sector, especially by linking up promising startups with large established aerospace and defence contractors, fast-tracking deci- sion making, and becoming the expert on various domains that are important to the commercial sector. This means not just knowing mission needs and objectives, but also understanding how access to cutting-edge technology and low-cost suppliers could be devel- oped. The establishment of such organisations as DIUx, the "De- fense Innovation Unit-Experimental" group seeks to invest and bring in key emerging technologies early in the development pro- cess and bypass the slow-moving, conservative, traditional procure- ment method that simply doesn't work in today's environment. Canada has a very solid opportunity to align its high-tech commer- cial industrial policies with what its largest trading partner's market will require, and also what U.S. aerospace and defence companies are betting on in the future. It also possesses a few things that the U.S. may want to adopt in the future. Though it may sound like it would lead to a U.S.-centric only strategy, that would not be the case. The U.S. is the common sense (and the best) benchmark for what the rest of the world is focused on and interested in. The defence industry as a whole has significantly reduced its R&D expenditures as a percentage of its CapEx over the past few decades. They became systems development companies and turned to M&A (of technology and companies) when they de- cided that an area was worth pursuing. This gives the opportu- nity for Canadian tech startups to secure potential lucrative R&D contracts and alliances with U.S. and foreign companies. It will provide exposure to overseas investors who are increasingly seeing Canadian tech startups as interesting value players and offshore R&D options to main operations based in the U.S. This can be leveraged via smart ITB policies that know how to link these com- panies with other companies that are successful in Canadian de- fense procurements and accumulate outstanding ITB investment obligations. Canada stands out globally as a country that 1) has a very con- sistent track record of not following through with procurement initiatives in a cost effective and timely manner, and 2) has not sought to benefit its domestic technology development initiatives by aggressively requiring related foreign direct investment (FDI) from companies that win such procurements. There seems to be an endless cycle of "studying" the situation, setting up advisory boards, and kicking the accountability can further and further down the road. Not being entrepreneurial and decisive in getting things done means missing opportunities — lost opportunities that far outweigh the "safety" and savings incurred from doing nothing. Areas Where canada can excel Canadian high tech has done a fairly good job at finding niche markets to excel in that benefited by having strong industry clus- ters supported by larger companies and government industrial policies. For example, this has been the case in the gaming, aero- space, and the oil and gas industries. These three later played a significant role in helping to stimulate expertise in navigation, in both hardware and software technology development. This in- cludes GPS and GNSS sensor fusion software and hardware such as GPS-jamming technology. The gaming industry, another commercial industry born from years of defence-funded research projects in the U.S. and trans- lated into commercial success in Canada, has a big opportunity to compete in the Simulation and Training space as new, low-cost wearable technologies that embed next generation MEMs sens- ing systems, as they become available over the next few years. This includes highly accurate motion capture, head and position tracking and GPS-denied and restricted area position or tracking technologies. There is a direct overlap between the gaming industry and po- sitional tracking. For example, augmented reality on the fly must have accurate PNT (position, navigation, tracking) technology that is industrial or tactical-grade in order to field usable systems. The gaming sector will also be working on the content and per- haps the software for these systems (i.e. images, etc.). These sys- tems, in turn, would be marketed to enterprise customers and, eventually, would be economical enough to market directly to the individual consumer. Canada does have special competencies in gaming, simulation and training, navigation, oil & gas, unmanned vehicles, machine learning, artificial intelligence (AI) and microsystems/MEMS (micro-electro mechanical systems), a type of semiconductor R&D. Considering the above, Canada should be well placed for emerging technology areas like virtual and augmented reality, which are still in development but close to mass market commer- cialization within the next three to five years as some of the previ- ously mentioned technologies mature. These areas clearly have high investment "multipliers" for companies making investments in R&D in Canada to fulfill their obligations under the ITB program after a successful bid on a procurement. They involve both "direct" and "indirect" value propositions and are certainly on the technology and business roadmaps of nearly every company bidding on a Canadian gov- ernment defence contract. It is essential that the government understand fully the capa- bilities of Canadian-based companies for direct and indirect ITB- enabled investment opportunities, the markets that key emerging technologies address, and which ones are optimal choices for ITB transactions that also provide high multipliers for the companies that must deal with these obligations in the future. A win-win sit- uation must be established where both Canada and the companies benefit. Collaborations between overseas aerospace and defence contractors can provide a very attractive opportunity for startups and SMEs, and the Canadian economy as a whole. Louis Ross is currently the CEO of Motion Engine, Inc. based in Montreal. He is also the Chairman of MEI Micro (US), an affiliated company. Louis has been actively managing and advising startup company operations in the emerging technology space for over 15 years and has been involved in establishing related operations in Canada, the U.S., Japan and Hong Kong.

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