By Dr. Andrew Maxwell
The recent Federal budget has focused attention on the role of innovation in driving wealth creation in Canada. This is a welcome focus and encourages us to look at investing in innovation in order to generate a return to Canada. The government has already announced and continues to announce a number of steps in line with the priority. While I don’t wish to underplay any of these welcome initiatives, they only represent small steps in a journey that requires great leaps. Further, they suggest that the government is still heading in an outdated direction when a change in orientation is required.
The government continues to focus on inputs and not enough on outcomes. Too much on increasing the availability of resources and too little on stimulating the adoption of innovation, with the consequent impact on both productivity and wealth creation. While to some extent this is inevitable, as innovation outcomes can only be measured several years after the initial investments is made, continuing along a path which has had limited success in the past may not be the best alternative.
In fact, the current governments profound understanding of the challenges of innovation should lead them look at alternative ways innovation can be supported. Specifically, while the recent budget highlights a change in funding for NRC/IRAP and the support of venture capital – the provision of investment money and the encouragement of further technology research will do nothing to increase the success rates of technology entrepreneurs or stimulate innovation in larger companies. There are two reasons for this. First, the key ingredient for enhancing the success rates of entrepreneurs their development and training, and the establishment of an entrepreneurial culture with advisers and other support mechanisms. Simply encouraging more technology research and, making more money available is only a small part of the answer. We need to look at the entrepreneurial process, what factors influence the likelihood of success and how we can help entrepreneurs reduce the likelihood of failure (we have already started down this path with the VentureStart program). This approach will increase the quality of technology entrepreneurs not just the quantity, and lead to enhanced outcomes.
On the stimulation of more innovation in larger companies, we need to be clear that this will come from the adoption and new technology processes to improve productivity. While this can be partly achieved by fostering new technology ventures – addressing the well documented productivity gap requires a much broader adoption of new technologies and ways of doing business in larger companies. Unfortunately, today we have few programs to encourage companies to be more innovative. Organizations who wish to change their level of innovation must change the way they make decisions and behave. This is what being innovative is all about. Government can play a role in stimulating innovation by providing incentives to both the public and private sectors. For example, by encouraging companies to adopt new technologies that will enhance productivity, wherever the source of that technology, by making it easier for Canadian companies to license and share IP from universities and government labs, and by stimulating partnerships between large companies and sources of innovation to encourage first customers. We need to move our thinking from technology research to the dissemination of our understanding of how innovation happens in practice – embedding our findings to increase the rate of innovation in larger companies. The good news for government is that innovative large companies have a more rapid impact on wealth creation and can also stimulate the next generation of technology companies by becoming their first customers.