Incubating Innovation: a University President's Leadership Lessons
Students are behind the success of the #1 university-based tech incubator in the world, but Sheldon Levy is its ultimate champion.
“Trust young people. Start with no rules.” Former Toronto Metropolitan University President and current University Canada West President Sheldon Levy is very clear on fundamental ingredients for sparking innovation and entrepreneurial success.
Innovation remains a popular buzzword, one we’re all keen to espouse for what it says about our outlook and ambition to build a better future. Yet innovation isn’t a product of happenstance, it’s the product of intent. And here, Levy is equally clear: if university leaders don’t firmly establish innovation among their top two or three priorities it’s unlikely to be successful.
The reasons for this aren’t exactly hidden. Leaders are obliged to make choices. Choices come with consequences; one consequence is cost. Where one spends resources–time and money–is a direct reflection of strategy. If innovation isn’t a strategic priority it won’t receive the resources and leadership commitment it needs to become established and thrive.
But this creates something of a dilemma. If innovation is a top priority and leaders divert resources accordingly, they’re naturally invested in its success and want measurable, positive outcomes, creating a potential conflict between “no rules” and measurement. Obvious and necessary management questions include asking how well things are progressing, and by what measures we know it’s working. But when management tinkers with the nuts and bolts of innovation and entrepreneurship–no matter how well-intentioned–there may be problems.
Resolving the measurement versus no rules challenge likely has two elements. The first, in Levy’s view, is to eliminate old rules which frustrate the idea of innovation before it begins. Where innovation is a process involving risk, failure, setbacks and alchemical changes of course, typical financial and management controls are more rigid, with harder deadlines and return on investment requirements. This isn’t to say these things aren’t important, they clearly are. But in Levy’s view, a university’s innovation metrics should be shaped by the vision animating the unique nature of the investment. This is a different perspective, and one not natural to typical university management. This explains why, for innovation to succeed, it must be practiced as a top institutional priority: changes in thinking are needed for it to work, leadership must model and champion those changes.
Levy likens the second element to a petri dish. The concept is to create the culture and foster the environment and then stand back to let nature take its course. He knows of what he speaks as the driving force behind Toronto Metropolitan University’s Digital Media Zone (DMZ). (The university was known as Ryerson during Levy’s tenure, and changed to TMU in 2022.) It is now simply called the DMZ and is ranked the “#1 university-based tech incubator in the world.” In fact, while Levy championed the DMZ, allocated budget to it, made innovation a central tenet of his tenure as president, and safeguarded it from external interference, the DMZ’s origin story is satisfyingly startup in nature.
Students were the spark, seeking administrative support for space where they could focus upon entrepreneurship. Levy backed the initiative, and the rest is history. Today, the DMZ is thriving in a particularly important measure. Sustainability for innovation ecosystems looks at the ongoing ability to spark and support innovation, with successive waves of entrepreneurs, capital and supporting infrastructure being key indicators. From inception, DMZ startups have “raised $2.19 billion in seed funding and have fostered the creation of more than 4,928 jobs.”
Further, the DMZ’s point of origin–a collaborative space to develop ideas into products–has gone well beyond tech. Toronto Metropolitan University now features 10 Zones, including fashion, law and biomed, along with an inspiring variety of success stories.
Our conversation covered a lot of ground beyond management and leadership. Here are Sheldon Levy’s thoughts on making innovation spaces work, much of which links very usefully with other Groundbreakers interviews and research.
Energy is a key indicator: hard to measure but you know it when you see it.
On the measures of success he’s looking for, and how he knows when an innovation culture is working, his response is noticeable for how closely it connects to research on the preconditions for economic complexity. Is there energy in the place, do founders “go to the guy next door” searching for answers to a problem, e.g., a coding challenge. He looks for collisions leading to breakout ideas that simply can’t happen when (a) people aren’t located together or (b) are subject to external rules and timelines which skew incentives away from collaboration. That is, if teams are co-located but they think and operate as silos, cross-pollination of ideas occurs less frequently.
Encouraging collaboration is vital to economic complexity, which itself is arguably the key to advanced economic development, an essential precondition of which is specialists coming together to solve complex problems they could not tackle individually. This generates ‘new’ know-how that feeds into developing more complex products, which at the scale of regions and nations leads to economic diversification and resilience. This effect is observable and measurable, and potentially predictive in nature. Canada, for example, ranks 10th in GDP but 43rd in economic complexity per Harvard’s Atlas of Economic Complexity, suggesting potential future economic vulnerability with decreased global reliance on natural resource industries.
On ‘measuring’ energy, “hit any ten places and you’ll know it,” Levy says, using the analogy of how a full, busy restaurant is attractive to passers-by. Still, in the DMZ’s earliest days some of this energy wasn’t present; it was all too new. Seeing this, and knowing he had to light a fire, he brought in a Facebook animation company to occupy part of the space, bringing their own energy and providing an example for early DMZ startups.
The DMZ’s arrival and growth also saw the emergence of its own culture, one in which there were no entitlements, entrepreneurs had to “earn their way to be there, and earn the right to stay.” Entrepreneurs even asked that various accoutrements like bean bag chairs and televisions be removed. What was fuelling them wasn’t decorative, it was the contagious need for accomplishment.
On starting your own DMZ.
The Groundbreakers is about innovation ecosystems. It's about building and growing each one’s scale and diversity into a sustainable research, innovation, commercialization and social progress powerhouse. Readers include people whose job is fostering innovation in their own organization or region. So it is worth noting that the DMZ success story isn’t a playbook for other institutions and municipalities; it is instructive but not prescriptive.
As Levy puts it, the creation of the DMZ happened at a unique time and in a unique place. “There is only one Yonge & Dundas,” he says, in reference to some of the most expensive yet energy-inducing real estate in Canada.
This is encouraging for innovation ecosystem builders, planners and practitioners. There isn’t a need to be the next DMZ or, at the largest scale, the next Silicon Valley. If the overall objective of an innovation ecosystem is an ever-increasing degree of economic complexity, then the means to get there is not fixed but is, usefully, connected to local conditions. When asked how current University Canada West students could start their own DMZ, Levy’s response makes intuitive sense, “They’d have to invent their own version.”
From an administrator’s perspective, answering what’s special about here–your place–and setting it on a course adapted to local skills and conditions is a crucial first step to growing a sustainable innovation ecosystem. But remain mindful of Sheldon Levy’s recommendations. Trust young people, trust the entrepreneurs, build measurement around the objective of fostering innovation and let nature take its course.
Aspects of innovation most worrying to Sheldon Levy?
His largest concerns stem from what it takes to get an innovation culture rooted and underway:
The failure to plan for a risk-taking culture.
The inability, via policy or leadership gaps, to promote the freedom to try and experiment. He sees a place where people aren’t frustrated at mistakes, seeing them as problem-solving opportunities and reason to persist.
Inadequate freedom to follow one’s passions, which he feels isn’t supported well enough.