Re-thinking innovation in Canada

OTTAWA―Innovation in Canada right now looks something like a half-cooked dinner.

At least that’s what American innovation activist John Kao thinks.

He spoke last week at a conference in Ottawa.

“Canada already has most of the right ingredients in place,” Kao says, listing off a good global reputation, plenty of resources and financial power.

But as the global innovation race heats up, Canada is going to need a master chef to whip it all together.

Kao, who has worked as an advisor in regions ranging from Abu Dhabi to Finland, says at least a dozen nations have appointed “chief innovation officers” to develop and oversee strategies.

Officers can be individual heads, ministries or councils, he explains.

Germany has a chancellor in charge of innovation and in Sweden, there’s a government agency appointed to the task.

“We’re seeing it even in smaller nations like Rwanda and Singapore.”

The idea of an innovation officer is still new, but it’s been picking up steam over the past five years. Kao sees it becoming a much bigger trend in the years to come―one Canadians should be aware of.

“When I visit Canada, I hear over and over again from people about how they’re not satisfied with the state of innovation,” Kao says.

Although Canadians aren’t doing as badly as they think, he says the country is underperforming for its potential when it comes to measures such as the availability of early stage capital, private sector level of investment in R&D, and willingness of people to start companies.

An innovation officer could be just what Canada needs.

Kao says countries are also re-thinking the term “innovation” to include more than just industry.

“If you have a government sponsoring innovation at a policy, educational and cultural level, it’s going to have a big difference [on industry]” he says.

Another strategy is to re-think business entirely. This is especially important for manufacturing, where companies are offering the same product but at cheaper prices and faster rates.

“IBM is a great example of this. It was a high tech manufacturer but saw the market was changing and transformed itself into a service company. I’m not saying manufacturing is dying, but companies can’t just stick to same thing they’ve been doing. They need to think in an alert manner about how they’re going to re-invest their resources,” he says.

But investments shouldn’t fall solely on industry’s shoulders, says Jim Stanford, chief economist with the Canadian Auto Workers.

Stanford says with the right government support, Canada’s auto manufacturing sector could be a global innovation leader.

Canadian plants are already more advanced in terms of technology such as automation, quality control and labour standards.

“But the fact is, all our automakers are headquartered outside of Canada and I think that’s undermining research and engineering efforts here,” Stanford says.

Canada could stimulate more R&D by demanding a portion of GM and Chrysler operations take place north of the border―a tactic the German government uses with Volkswagen.

The federal government could also use its shares in Chrysler and GM to leverage more investment in innovation, he says.

Help from the Canadian government would also propel innovation in Ontario’s broader manufacturing base, says Sandra Pupatello, the province’s Minister of Economic Development and Trade.

“The best thing the federal government could do is improve its Scientific Research & Experimental Development (SR&ED) credit,” she says.
The SR&ED provides refunds or tax credits to businesses for R&D spending.

“Companies find it cumbersome and it takes too long to get the money back,” Pupatello says.

She says other strategies to spur innovation include incentivizing workplaces to take up information and communication technology and finding new ways to incorporate management education.

But even with increased government assistance, it’ll be up to industry to take the lead.

“What we need now are innovation leaders to step forward in each sector, examine best practices and talk about new ways of doing things,” she says.
The Public Policy Forum, the Ottawa-based research group that organized Kao’s lecture, is working on doing just that.

The forum invited Kao to speak in Canada after conducting a series of roundtables with industry, academia, and government that found Canada needs a stronger “culture of innovation”.

President David Mitchell says it was important to get a global perspective on innovation in Canada. The next step will be researching how to promote more partnerships on innovation between Canadian business, government and research facilities.

“In countries like Singapore, Korea, and Israel, there’s far more collaboration across sectors compared to here. We want to dig deeper to find where collaboration is happening in Canada and then identify best practices,” he says.

The forum also plans to start measuring how Canada compares globally and benchmarking innovation within the country on a sector-by-sector level.

“We’ll be looking at manufacturing, natural resources, the financial sector and government,” Mitchell says. Results from their research are expected later this year.