Diana Carney

Needed: Innovative Thinking on Innovation

November 25, 2011

The facts about poor Canadian productivity and innovation performance are easy to rhyme off. The discussion about how to address these issues is less easy. Successive governments have done a good deal, yet progress is as elusive as ever.

What makes Canada a less entrepreneurial country than the US? Why are Canadian university graduates less focused on bringing their ideas to market than their counterparts in the US? And can we change that or, at the very least, encourage Canadian entrepreneurs to stay here, rather than setting up shop south of the border?

Our organization’s discussions around this topic indicate that good ideas have no boundaries and that, as Canadians, the last thing we should do is fear the US. Instead we should actively seek to link with US companies and clusters (e.g. around medical innovation in the Minneapolis/Winnipeg corridor), and draw on those resources.

In particular, there has been much hand wringing in the past about the lack of adequate venture capital financing in Canada. But why waste time and energy in trying to nurture such an industry and bring it to scale, when pools of capital already exist in the US? Canadian innovators need to become more skilled at accessing those resources.

Federal and provincial governments also need to think cross-border (which raises all sorts of security and other issues) and make sure that both the hard and the soft infrastructure for cross-border innovation – such as attorneys and accountants – are in place. What is required from governments – as enablers of innovation – is constancy of purpose, which should be reflected in the way they use their own purchasing power to support innovation. Being the launch customer is important; governments are better able to bear that risk than private clients.

Making government support to innovation more transparent (and accountable) would also help. At present, as the Jenkins Panel noted, the Government of Canada delivers a far higher proportion of its support to innovation through indirect tax credits than other countries. This results in long-term but opaque funding. Grants and loans would be far easier to track – and cancel if they were not working – and more likely to have a stimulating effect.

A further option for government is to become more strategic in supporting those sectors in which Canada has clear advantages (not just natural resources, but agriculture, aerospace, infrastructure and education, for example). This would require a change in culture: regional sensibilities have militated against such support in the past. It would also require more attention to stimulating trade.

All mature economies wish to increase their trade with the dynamic Asian countries: what can take Canada to the front of the queue? Our natural resources clearly provide us with leverage, but we cannot take that for granted. If we want to ship gas and oil to Asia, we must make sure we have the domestic infrastructure (think pipelines and shipping terminals) in place. But we have to bring more to the table. We have to collaborate and cross-invest in the development of innovative energy products and services. We have to strengthen ties and mutual understanding through educational links between our countries. We have to find ways to help Asian countries respond to their own pressing challenges, including resource issues but also social and environmental concerns.

Government’s role in all this is to support, to stand behind, to commit and, above all, to curate complex networks of relations that influence our overall place in the global economic order. But we have to rely on the entrepreneurs themselves to take the first steps.

BY: Diana Carney and Eugene Lang, Canada 2020.
Globe and Mail, Friday November 25, 2011.

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