Centre for Business Innovation digs into the details of firm-level innovation

Conference Board of Canada initiative

Too few Canadian firms actually track and measure their innovation performance and many appear to have little interest in markets outside of North America. Those are just two key findings of a forthcoming report by the Conference Board of Canada's Centre for Business Innovation (CBI) examining firm-level innovation. It confirms and expands upon the observations of previous reports that found that lack of an innovation culture and weak benchmarking translate into the weak competitiveness and poor productivity that plague Canadian business.

Although the report has yet to be finalized, CBI executive director Bruce Good has been previewing the findings at forums such as the recent ACCT Canada conference in Ottawa. Good agreed to discuss its findings with RESEARCH MONEY to explain why Canada's commercialization gap is not an innovation gap but has more to do with metrics and management.

"What we found was quite surprising although more work is required to validate our findings," says Good. "We were surprised at how few companies actually measure and track innovation and it was surprising how successful companies were that went outside of their traditional regional boundaries."

The report on firm-level innovation is the first in a slate of three reports now being finalized by CBI. It sampled approximately 1,000 firms of various sizes and sectors to determine what policies and practices were most effective in achieving company growth and market expansion.

Observations included:

* Canadian companies effectively pursuing innovation did so across a wide spectrum of dimensions, not just products and processes;

* the financial performances of firms correlated well when they had proper innovation management processes. Firms that spent a lot on R&D but were not managed properly actually had worse financial performance.

* companies that utilized between six and 10 performance metrics performed better than those using more or less, although certain metrics were proven more effective than others;

* internal corporate politics and lack of metrics are the biggest obstacles to adequate financing for company innovation; and

* innovative firms had a properly aligned innovation culture in which failure was deemed to be a positive learning experience.

The report determined that the most competitive companies understood customer issues, recognized that the performance and quality of products and services are as important as the range of those products and services, displayed cultural attributes related to employee skills, dedication, leadership and the culture of innovation, recognized that R&D capabilities, speed and cost of development come afterward.

One observation it considered worrisome is the low ranking companies afford commercialization aspects such as market channels, brand and marketing. Good says he's confident the report will assist firms in developing the required management attributes and metrics to become more innovative.

"Think outside of your own territory, change the culture and adopt commercialization skills," he says. "There's been too much focus on problems. We're coming with solutions and international benchmarking."

In addition to its report on firm-level innovation, CBI is finalizing studies on capital markets and human capital. Together they will form the basis of discussion at a upcoming CBI Business Innovation Summit February 19-20 in Toronto. Entitled Innovation for the Corporation, the summit will be international in scope and showcase CBI's latest research (see chart). Other areas of CBI's five-pillar research strategy in which it has yet to launch initiatives are innovation metrics and management, and public policy.

The mission of CBI is to determine why Canada is not an innovation leader, develop business strategies for firms and capital markets to improve firm-level innovation, generate evidence and promote public policies. To date, it has secured 30 investors, many of whom sit on CBI's board of advisors.

"These companies are a broad range of the top GDP-producing industries in Canada. The networks they touch amount to about 250,000 people in leadership roles," says Good.

Formed in late 2011, the CBI is five-year initiative that grew directly out of a recommendation contained in a report by the Coalition for Action on Innovation. That report — An Action Plan for Prosperity — contained 10 recommendations including one that would see governments, business and academia "collaborate in the establishment of an independent advocacy body with the single mandate of encouraging innovation by Canadian business". Such a body would "have the capacity to conduct or commission cross-country, sector-by-sector benchmarking of Canadian business to global best practices" (R$, October 14/10).

"We were recommendation number 10. That's exactly what we did here," says Good, who was instrumental in the formation of the coalition and the development of its report. "These (Conference Board initiatives) are usually private enterprise but we went a step further and included government in this ... Academic investment is coming."

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