Impactful Innovation Comes From a Portfolio Approach
Canada continues to score below comparable G20 nations on all indicators of innovation, particularly on productivity – an undeniable economic stimulator. Historically, we are also relatively slow adopters of technology and, according to research from Compass, our cities are slipping on the list of desirable locations for the world’s best start-ups.
The new federal government has signaled a greater focus on innovation in their agenda with dialed-up discourse on the topic. As they say themselves, innovation is the key driver to inclusive growth. More importantly, though, the Trudeau government is also recognizing the need for more “innovative thinking” when it comes to fueling innovation, as seen in action by the recent hire of tech entrepreneur Nathan Gunn as a top adviser to federal minister of innovation, Navdeep Bains. This is among some of the signs of change in 2016, but the real proof will be when the government unveils their innovation agenda later this year.
The federal government’s innovation model has often been shaped by placing big bets on specific sectors or companies. This strategy has created a few winners, but hasn’t recently yielded widespread or lasting benefits to the economy, nor has it created meaningful momentum on the innovation front. To create both immediate and long-lasting benefits, the government needs to invest in creating conditions of innovation, which requires a portfolio approach.
In other words, the Trudeau government should complement its investments in pure sciences and commercialization with a reevaluation and reinvigoration of the conditions that allow for small “i” innovation, including technology adoption by small and medium-sized businesses (SMBs). The goal is not only to create new ideas, process and technology, but also to accelerate the adoption of prior innovations to drive broader productivity gains and improved human capital. Things the private sector can do now.
So what would a portfolio approach to innovation include?
For one, it would include increased funding, as well as improved performance measurement tracking, for incubators like MaRS and Communitech. Measuring success is the responsible approach for any initiative, but it can’t be the “interim action” to support innovative and growth-oriented businesses. Incubators are motivated to close the productivity gap and find new opportunities for growth. Plus, they have the critical X factor: a competitive hunger to get ahead. This allows them to be true cultivators for short-term innovation and growth which often results in long-term change. We’ve seen this in sectors like e-commerce, an industry catapulted forward by hundreds of close-range innovations in technology.
It would also include a priority for the government to continually examine and update policies like taxes and R&D credits to encourage the right kind of private sector investments. Budget support, including the $800 million to help develop innovation networks and clusters between research firms and supply chains, shows the prioritization of creating synergies. However, this won’t truly be effective unless creating an environment where government policies and regulations support these synergies is prioritized in tandem.
Last, and probably the most impactful across all industries, a portfolio approach to innovation would include a commitment to removing barriers to and promoting established programs that support the wider adoption of innovative ideas and technology. This means identifying areas of business where Canadian companies are already succeeding and finding ways to help them scale by getting out of their way.
When we talk to the SMBs trading on eBay, they consistently raise one particular issue: Canada’s de minimis threshold, which they see as a key barrier to the growth of their e-commerce exports for many reasons (the complexity and cost of offering a global return policy, being one). At $20 CAD – a threshold originally set in the mid-1980s – Canada is out of step with global peers including the U.S. ($800 U.S.) and Australia ($1,000 U.S). Public policies should be updated to drive, not hinder, technology adoption, and support programs for SMBs need to be more accessible and widely-known.
The government is headed in the right direction with initiatives like CanExport – the new $50 million program offering financing and incentives for SMBs to grow through exporting – but again, when we talk to SMBs, it’s rare that they are familiar with, let alone take advantage of these types of programs. Creating a one-stop-shop web portal to consolidate all municipal, provincial and federal funded programs, with investment to raise awareness and drive SMBs to it, is a practical and impactful first step.
The federal government should be applauded for putting a focus on innovation, but there is more work to do. As Minister Bains and his colleagues fully define their government’s innovation agenda, they should be encouraged to take a portfolio approach that fosters both big “I” and little “i” innovation. While not “sexy”, basic, foundational changes will create momentum and incremental innovation to close the productivity gap, which is really the end goal.
Andrea Stairs is Managing Director of eBay Canada. She recently participated in a panel discussion on Executing Innovation at The Economist’s Canada Summit, which also featured keynote addresses by Prime Minister Justin Trudeau and Federal Finance Minister Bill Morneau.