As a result of a critical investment made by the University of Toronto over 30 years ago to hire Dr. Geoffrey Hinton (a “godfather” of modern AI and a 2018 recipient of the Alan Turing Award), Toronto has recently become a global centre of machine learning (ML) and deep learning (DL). Not only is it strong locally, but its reach is worldwide as the UofT AI graduates over the last 30 years have gone on to lead many of the largest AI research labs in the world – in both industry and academia. The creation of the new Vector Institute for AI has brought it to the “next level” on the international scene.
That combined with the depth and breadth of a highly functioning ecosystem (number of tech workers 2nd only to Silicon Valley; a high concentration of AI start-ups and venture investment; being Canada’s financial capital; and, world-leading health research) has made Toronto a place that many large global tech companies are looking to build AI labs. Over the last few years companies like Google, Uber, Thomson Reuters, NVIDIA, and Microsoft have made a strategic decision to tap into this world-class AI ecosystem to help them create transformational products and services for the future.
From 2018 to 2020, Dr. Darin Graham was chosen by two of the largest Korean technology companies, first by Samsung and then LG Electronics, to establish their new AI labs in Toronto. His background in setting up research and innovation labs in Canada and globally, and his understanding of the Toronto technology ecosystem, were critical factors in his hiring. His leadership provided a unique perspective on the opportunities, challenges, and issues of companies as they set up overseas research and innovation facilities.
Toronto is an overnight technology success…that took 30 years to happen. As a relatively new international hub on the innovation landscape, and the companies rushing to join in, it provides an exceptional opportunity to look at how to engage in a rapidly developing ecosystem productively. This case study will focus on the two specific Korean companies as examples, but it has many parallels for other companies as they look to potentially create new labs not in their home-based country.
Advantages
Location – As mentioned above, Toronto is a global hub of AI. Companies want to tap into that. The recognition that “innovation is done at a local level, but markets are global” creates a driver to take advantage of unique locations with amazing expertise. “Proximity Matters” – the closer you can get to these centres the better chance of success of generating impactful outcomes. AI researchers are in high demand and can go anywhere – where the best-of-the-best are located, and the good money is. Toronto is one of those places.
Risk Mitigation – This is related to not doing everything in-house but looking for opportunities to leverage. Even if you could build such a centre at your corporate HQ home-based country, the costs and risks of doing so could be significant. Not attracting the needed talent (as mentioned above) is one critical risk that becomes achievable with a remote lab. Extending that thought, the company can also reduce its research risk by supporting collaborative projects with a leading research university – like the University of Toronto in this case. UofT is regularly mentioned in the top 20 research universities globally, and by being close to them you can create cost-effective and closely managed research projects. Starting with Toronto, a company can quickly jump to building collaboration with other AI centres in Canada – Montreal, Waterloo and Edmonton. Toronto also has many start-up companies creating specialised AI products and services. Using a “buy” instead of a “build” mentality, a company can directly do business with these start-ups – with proximity helping build a stronger relationship, providing better guidance to develop solutions to your specific needs, and at less cost and risk than doing it in-house.
Managing the Innovation Gap – It is well recognised that there is an innovation gap in the significant challenge of getting research ideas to the marketplace, and by having them effectively integrated into a company’s products and services. Most companies have internal product research labs based near their production facilities – often in their HQ country. But it is a significant challenge to have these home-based labs work directly with remote technology hubs. With a research lab established closer to where the research is being done (such as setting up a new lab in Toronto), the company is closer to the ideas. One remote lab works on developing advanced research looking to transformational ideas, and the other home-based lab works on applied research directed to product development. The “Gap” then becomes an internal corporate manner of having two research-based groups regularly communicate and align strategies.
Challenges
Culture – Working with people from two different countries has significant challenges. Recognising this fact goes a long way to helping work towards better collaboration and successful outcomes. Using the Toronto AI ecosystem as a case in point, it is a dynamic, creative and flexible environment. Korean companies have tapped into Toronto for the benefits mentioned above, but they also try to use the Korean culture of hierarchy and project management. It becomes a challenge when one approach is forced on the other. A better approach is to tap into the ecosystem for the reasons you chose to do so – it’s new, different, and better. Then, guided by your best practices, bring ideas and solutions from the new region back to your home-based country to improve your company. That methodology will help you create the best long-term transformations for a better future.
Strategic Positioning – “Jumping on the AI Bandwagon” is a common mistake that companies make. They feel that they need to set up a lab in Toronto otherwise they will be missing out, or potentially worse, as a marketing tactic to show the world they are part of the “in crowd”. The decision to take advantage of the benefits of a remote ecosystem must be made with a strategic purpose – and with the corresponding investment for a long-term initiative. Without that, it becomes too easy to disengage and refocus to meet immediate needs. The results are wasted time and effort, damaged relationships, and not achieving the original objective of getting better ideas to successful outcomes.
Summary
Setting up an overseas research and innovation lab can be an excellent opportunity. A company can tap into some incredible capabilities that it doesn’t have in its own home country’s research and development facilities. It needs to be within the corporation’s natural strategic framework to be successful. It also needs to have “breathing room” to give it time to develop and establish value. A move to set up a new lab is a targeted decision and not to be taken likely. Equally, making quick decisions to change the direction or intent of such a lab should not be done quickly or without significant thought.
Don’t try to force corporate culture on a foreign innovation workplace, but instead look to exchanging best practices to make each better. Internal communications between the labs in HQ and the remote location is critical to success. The more engagement between the two, the more likelihood of better outcomes.
A company choosing to work in a new region does it because it’s “new”. Don’t try to make it part of the “old”. Otherwise, you could be hindering your future instead of harnessing it.
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