Time for Canada to up our innovation game

The good news is Canada moved up in the Bloomberg 2021 Innovation Index. The bad news is we moved from 22nd to 21st—barely overtaking Slovenia. Proof that complacency breeds mediocrity. The question is: what are we going to do to really up our innovation game? More of the same will not get Canada into the Top 10 by 2025—which should be our aim, at a minimum. For political parties desperately seeking a post-pandemic economic agenda, boosting innovation is one of the few sure ways to rebuild Canada’s growth engine. And a focus on expanding Canada’s “societal innovation infrastructure” would be a no-regrets place to start. The upside is clear. As entrepreneurial talent and creative tech firms begin exiting California, can we make the destination of choice Toronto-Waterloo, Montreal, or Vancouver, rather than Austin, Texas? Can we get a jumpstart on attracting and retaining exceptional global talent before U.S. President Joe Biden reverses the Trump H1-B visa ban and the allure of the vast American market reasserts itself? Can we reverse the brain drain to the South of graduates from our world-class universities in critical skill disciplines like software engineering and make it attractive for them to stay home with exciting opportunities? We can, but it will take more than targeted tax breaks, new IP regimes, and tweaks to existing programs. Here are five areas of social “innovation infrastructure” we believe could boost our innovation performance and long-term growth potential. First, create a nationwide experiential learning advantage for new graduates. Firms want work experience in new hires, students want skills experience from their university courses, and the digital revolution is a game-changer for both. One approach would be the widespread adoption across Canada’s research-intensive universities of co-op programs. We have an enviable starting point: the University of Waterloo is home to the world's largest co-op program. Co-op programs give students hard skills, real workplace experience, and put money in their pockets to help pay for tuition. It is time to direct more operating funds to university co-op programs across the country and encourage the majority of Canadian businesses to participate. Canada should aim to become the gold standard in the world for co-op/experiential learning. Second, create a strong global talent magnet by rapidly expanding the Global Talent Stream visa program and by significantly increasing the intake of economic class immigration. Talent is the fuel of an innovation economy, and creative ideas are its oxygen. We need to expand greatly programs to bring more skilled workers into the country, to make the process faster and simpler than our competitors such as the U.S., U.K., and Australia, and to provide greater certainty to employers of an expedited visa process when they find desperately needed talent outside of Canada. Third, create a government procurement advantage for innovative Canadian startups, and challenge large corporations to follow suit. Procurement can be one of the most important parts of a government’s policy toolkit, yet it is rarely used effectively. All too often, procurement processes are risk averse, favouring large, established incumbents with existing products—which are usually foreign, rather than support domestic companies with new, innovative goods and services. The federal government has a $600-billion procurement budget, provinces and municipalities even more. We need smarter risk management policies and government commitments to direct a specified percentage of procurement dollars to innovative domestic firms. In this Buy American era, it would help innovative Canadian firms expand at no incremental cost to governments. Large Canadian firms should be challenged to make similar procurement commitments. When startups find it difficult to make early sales in Canada, and they do, it increases the risk of their migration to other markets, or their sale to foreign tech companies. Fourth, create a Canadian innovation network advantage to offset the U.S. scale advantage. Canada is home to a number to outstanding incubators and accelerators from coast to coast. But they are mainly local in orientation, relatively small in scale, and only informally linked together with the unfortunate result that the whole is less than the sum of the parts. By establishing more formal networks and joining them together across the country, we can achieve the density and mass through network effects that our American competitors enjoy through physical locations such as Silicon Valley. Moreover, we can combine this with an expansion of the brilliant C100 concept, which links Canadian entrepreneurs in Silicon Valley with each other, with local contacts and with Canada, across the United States using Canada’s extensive consular network and excellent trade commissioners. By working together through such networks, we can not only help Canadian innovative startups expand at home but also assist them finding new markets in the United States. And fifth, create an innovation adoption narrative across Canadian business and governments by seizing on the pandemic crisis as an imperative to do work differently. Retailers and restaurants are going online at a survival pace; industry is frenetically automating with robots and AI; health care and education are going virtual; and supply chains are digitizing. Such innovation and tech adoption were the exception before the pandemic, in many sectors and countries, while today it is a matter of survival. Canada is a prime example of this imperative to change and embrace innovation investments as we ranked globally far worse in the business adoption of existing technologies pre-pandemic than we do in the overall Bloomberg Innovation Index. The McKinsey Global Institute recently observed that, post-pandemic, firms will be completely reimagining how they work, and Canadian firms cannot afford to ignore the innovation adoption imperative as the world of work pivots. Our innovation deficit is real, but can be overcome with a greater public lens on its consequences and new strategic thinking on its solutions. Deepening our social innovation infrastructure is one low-cost, high-return approach. This rethinking of infrastructure involves creating more partnerships between students and future employers; letting Canadian firms do more of the active immigration searching as they know the skills in immediate demand; directing more existing procurement dollars to innovative domestic start-ups; building more networks to link our incubators and accelerators and entrepreneurs together; and using more peer pressure to encourage more Canadian firms to adopt best-in-class innovations for their survival and growth. These can jumpstart our journey to the Top 10. Kevin Lynch is former vice-chair of BMO and former clerk of the Privy Council. Paul Deegan is CEO of Deegan Public Strategies and former deputy executive director of the National Economic Council of the White House. The Hill Times