Innovative proposals for an innovation minister

By Dr Robert Luke

As countless reports and expert panels have shown over the last decade, Canada is a chronic underperformer with respect to productivity, innovation and competitiveness. The new federal government has set its sights on a new Innovation Agenda. The stakes are high. Get it right and the Canadian economy will successfully pivot from over-reliance on resource extraction into one that embraces digital disruption, green and clean tech and the creative economy.

Get it wrong, and we will be debating what to do on innovation policy for the foreseeable future, while other countries' economies outpace ours. On the plus side, other countries are in the same boat as Canada, so policymakers can learn from their mistakes just as very smart people in other countries are looking at our experiences and learning what to avoid. No matter the course of action, there will always be naysayers who have grown too comfortable with the status quo.

The new government, with a majority mandate and a commitment to doing things differently in Ottawa, should be willing to take some risks and make decisions that might upset some small but vocal communities, for the benefit of new, stronger, Made-in-Canada innovation. The key is to move quickly. Most new government programs take years to implement and the current economic outlook shows that Canada needs help now. Whatever action the government takes as it builds an Innovation Agenda, they need to do it fast, which itself will be an innovative challenge for the Minister of Innovation.

In this spirit George Brown College offers the government some innovative proposals to consider for the upcoming Innovation Agenda. Rather than simply identifying the same problems, we have taken it a step further and provided fresh, concrete solutions for consideration.

Scale-up, and Stay up

While Canada has done some remarkable work helping start-ups, we need to turn our attention to enabling these start-ups to scale up and to stay up, and to grow into globally competitive firms.

Work-Integrated Learning & industry innovation

Prime Minister Trudeau spoke to the World Economic Forum about how the Univ of Waterloo "stood out as a source of graduates with sparkling new ideas for Silicon Valley". While Waterloo and the co-op education model is something Canada should be very proud of, we should not be celebrating the fact that so many graduates relocate to firms in Silicon Valley upon graduation as a Canadian success story.

If these firms and talented people are based in Silicon Valley, so too are their revenues and taxes. These people and firms will continue to leave the country until we figure out how to enable and empower people with entrepreneurial drive and innovation skills to stay and compete from Canada.

Homegrown talent

To stem this exodus of talent and firms, Canada should be providing strategic financial assistance to firms who have the potential to grow into global leaders. Continuing to incentivize firms to co-invest in R&D with university and college partners helps to de-risk the research and innovation enterprise while ensuring students from across the credential spectrum gain key innovation literacy — the skills and competencies required for the 21st century economy.

Place matters

The government could provide significant loans that are forgivable as long as the company stays headquartered in Canada and grows, but which are due in full with interest the moment the firm leaves the country. Provide enough funding to make them succeed as global leaders, while creating a sufficient barrier to exit so that the investment that Canada makes in their success pays off in Canada. The government could require a certain percentage of the loan be spent on R&D activities in Canada in order to help foster a made in Canada innovation. If the absolute value of the loan is high then the percentage allocated to R&D can be low but still be impactful.

Anyone who participated in the program, and still wants to exit Canada, must make sure the accounts are settled up before the moving van departs. The government can then strategically reinvest those funds into new Canadian firms.

De-Risk personal innovation investments

We can provide tax breaks to individuals wishing to invest in Canadian start-up firms, made directly to the investor who puts money in an early stage company or who funds early stage investing. It encourages the development of investor pools closely linked to local economies: if people from a region invest in a start-up that then creates jobs in that region as well as individual returns, then there are greater rewards to the region.

Engage First Nations communities

Better education and economic opportunities for First Nations people can be initiated by linking those in remote and rural communities to opportunities where markets are, helping foster educational outcomes that are linked to social and economic development. An investment in the Internet infrastructure required to connect all Canadians with high speed bandwidth would pay huge dividends in education. It will also enable people living in remote and rural communities to participate in commercial opportunities through remote presence and work.

Enhance Academic Productivity

Canada currently spends more per capita than other G7 nations on public sector R&D. We are last in the G7 for private sector R&D spending, and we fare even worse on commercialization of intellectual property (IP) generated by our leading basic research labs. This is a complex issue that results in a staggering deficit for Canadian IP revenues. According to World Bank data, Canada's cumulative loss of IP exploitation has been $56.5 billion from 2005 to 2014. As some reports have noted, this may be due to a misalignment between academic motivation and private-sector demand for solutions.

Pool IP from public R&D

IP created in an academic environment can be commercialized through the many university technology transfer departments. But a lot of IP does not go this route, instead it is published (and therefore given away) or just simply languishes as there is no ready market or a lack of resources to find one. Where IP is created by public money, it should be pooled with other ideas to make the collective more commercially viable. A national clearing-house for public-financed IP – perhaps administered by the National Research Council – could be established to bundle, commercialize or otherwise find industrial receptivity for this IP.

Bridge the Academic-Industry divide

Academic institutions can also be better socialized to working with industry. Colleges offer a demand-driven applied research environment that is linked specifically to industry needs. Funding for this model should be increased. Universities can also be encouraged to continue to engage with industry. Further incentivizing clusters and collaboration between colleges and universities and industry will help build a healthy innovation ecosystem, linked to industrial clusters and sectors, resulting in resilient regional economies ready to realize opportunity in global markets.

Innovate machinery of government

The time has come for the government to make some bigger bets. One solution is to reallocate funds from chronically undersubscribed or ineffective federal government programs to one centralized program with potentially higher risks, and higher rewards.

If the machinery of government were to change, over time these changes will incentivize more players to join the innovation ecosystem, and provide the substantial level of support needed to create global leaders, and their supply chains, here in Canada.

Open Innovation

These proposals offer effective short-term pain for long-term gain. While that logic may not coincide with the traditional motivations of political life, the government has signalled an intent to build and prepare the country against long term goals. An open innovation framework coupled with bold new approaches to old problems will promote Made-in-Canada global leaders.

Dr Robert Luke is VP Research and Innovation at George Brown College.