How to solve Canada’s abysmal productivity and innovation record

March 3, 2010

By Stephen Murgatroyd                    
Columnist
Troy Media

Dr. Stephen Murgatroyd
Dr. Stephen Murgatroyd

EDMONTON, AB, Mar. 3, 2010/ Troy Media/ — The Canadian government will be releasing its budget tomorrow and it looks likely that a key part will focus on investments related to productivity and innovation.

There has been some – substantiated – concern that Canada is losing the innovation battle: according to the Conference Board of Canada, Canada is 14th out of 17 nations when it comes to innovation.

In the past, Canada has invested in university research, development and commercialization activities in the vain hope of producing great commercial outcomes. The reality, of course, has proven the opposite. The roughly $14-billion annual investment in R&D to our universities has produced only modest returns, the result of the fact that universities, by and large, are simply not designed to create commercial value from ideas and that they lack the incentives to do so.

Focus on business

So what should the budget contain?

It is obvious that the solution is not to continue to spend even more on our universities to try and fix the path to commercialization.

The real solution is to focus energy on where innovation really takes place – business. Rather than boost spending on R&D in universities, the government must use any new funds to significantly boost IRAP – the Industrial Research Assistance Program – and to create incentives for private and public partnerships. More specifically, it must seek to make focused and strategic investments in key industry sectors it wants to grow and minimize investments in dying industry sectors.

The government must also boost funding for post-graduate student placements, especially those with a co-op component with business or leading to a post doctoral position within business. It is worth noting that those countries ahead of Canada in innovation have a higher per centage of post-grads working in business, which is key to leveraging ideas and innovation.

Third, the government must invest in applied research where it is currently taking place, that is, in the colleges and polytechnic institutions. It is these institutions, after all, which are most closely aligned to industry, providing it with both the skilled people and the critical (and relatively inexpensive) applied work it needs. Their work on the innovation agenda should be recognized and funded accordingly.

Fourth, the real lack of tier one venture capital in the country must be addressed. Whether situated in Ontario, BC or Alberta, companies need to be “fed” two things – risk capital, supported by expert managerial talent, and realistic current market intelligence. Tier one venture firms supply both; banks and angel investors do not.

Further, the government needs to partner with the provinces in developing appropriate local innovation strategies; it needs to simplify the processes it uses for securing IRAP funds; it needs to start pooling its intelligence; it needs to stop believing its own press releases and start getting realistic about the challenges facing Canada over the next 25 years. It’s time for some leadership and courage on the innovation file.

Stand firm against the US

Finally, the government needs to stand firm, in the interests of Canadian firms and researchers, against the persistent demands of the WTO and the US as they relate to intellectual property, demands which would retrospectively extend patent protection and toughen Canadian copyright laws. While fulfilling the demands would lead to more protection for the creators, it would come at the expense of those who wish to use the creations to generate wealth. Canada must, in partnership with other countries which are also balking at the hegemony of intellectual property law demands of the US, show what a 21ST century collaborative intellectual property regime could look like: A focus on open access, open source, rapid but short patent life for technology-based patents and a regime of copyright which is fair yet innovative.

There is a lot to do. We will see tomorrow whether or not the government understands the challenge and has the courage to act. Don’t hold your breath.

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One Response to "How to solve Canada’s abysmal productivity and innovation record"

  1. ideafactory   March 6, 2010 at 7:43 am

    Good column but your recommendations will fail unless we start to teach our current batch of business leaders "how to innovate."

    I do not believe that enough know the basics –

    1) THEY are the ones who are creating our productivity issue.

    2) THEY should be investing in training and innovative thinking to build a culture of ideas and innovation.

    3) THEY should be developing strategies to add value in all sectors, not just the obvious ones.

    4) THEY must invest in R&D, if they are manufacturers.

    5) THEY must also invest in "innovation" in the service aspects of business, such as marketing, HR and all other internal systems to ensure they can take their products to international markets. .

    6) THEY must make the hard decisions, on of which is to look beyond the USA border to global markets. That's where our future should be.

    So what's wrong with our current executives? Perhaps you could explore what is lacking in our generation of managers.