A new report by a former senior innovation policy official is calling for "a smart combination of microeconomic carrots and sticks to create a more comprehensive, pro-innovation business climate" that bolsters Canada's productivity performance. Commissioned by the Montreal-based Institute for Research on Public Policy, the report by Andrei Sulzenko uses the 2011 Jenkins Report as a jumping off point to assess the current policy environment and instruments and propose changes that extend beyond the standard input metric of R&D performance.

Building on the work of Peter Nicholson and the Council of Canadian Academies, Sulzenko says productivity "consists of three interrelated elements: the quality of labour; capital intensity; and …multifactor productivity (MFP) … a proxy for innovation". But he also notes that the CCA recently concluded that Canadian companies are only as innovative as they need to be — an approach that is now breaking down due to a confluence of falling commodity prices, skills shortages and trade deficits.

"All of the recommendations (in the Jenkins Report) are geared to one main objective, which is to help scale up high-growth companies," says Sulzenko. "It's the last major innovation report on Canada and it got short shrift. Politicians and senior public officials looked at the recommendations but they often don't read documents or the policy rationale behind them."

Entitled Canada's Innovation Conundrum: Five Years after the Jenkins Report, the Sulzenko report notes that the previous government implemented many of the Jenkins Panel's recommendations. A notable exception was the recommendation to consolidate about 60 government innovation programs into a single Industrial Research and Innovation Council (IRIC) anchored by the Industrial Research Assistance Program, which would be severed from its current home at the National Research Council.

"The machinery recommendations were not acted on as governments don't tend to like these changes," says Sulzenko.

Three core recommendations

To enact the kind of changes required to enhance productivity, Sulzenko is recommending policy and program changes in three areas:

• Quality of labour — work integrated learning starting at the primary and secondary levels through collaboration between industry and academia;

• Risk financing and capital — larger amounts of risk capital to follow through on initial early-stage investments, with government participation; and,

• Ecosystem support — Maintain current policy emphasis on networks and clusters but focus on a smaller number of strong candidates rather than "going for equity over excellence".

Window of opportunity

Released just days prior to the launch of the Innovation Agenda consultation, Sulzenko's observations and policy prescriptions are being debated widely. Perspectives range from questioning the need for yet another innovation policy paper to enthusiastic endorsement. Regardless of opinion, the paper is serving as a potent counterweight to the government's pronouncements on how it hopes to stimulate productivity and jobs growth with a fresh policy and program mix.

Although the Sulzenko paper had a secondary objective to "offer advice for the proposed innovation agenda", it was written prior to its release. Sulzenko says its subsequent launch has given his paper a high profile which he describes as unusual for a report of this nature.

"We already have an R&D system so don't change it. That's not where the sore thumb is," he says. "The innovation agenda appears to be targetting change at the margins."

Avoid previous mistakes

Sulzenko cautions the government to avoid the mistakes of the 2002 innovation agenda exercise, which became bogged down with internal wrangling and political interference leading to the strategy being split over two departments — Industry Canada (innovation) and Human Resources and Development Canada (skills and learning).

"I tried to push a broader-based agenda including skills and smart regulation," he says. "It failed because it lacked coherence. There were too many authors and PCO (Privy Council Office) got involved and re-wrote every word."

With the latest attempt to craft a workable and effective innovation agenda, Sulzenko says he hopes his observations and prescriptions will be considered.

Nobina Robinson, CEO of Polytechnics Canada and a member of the Jenkins Panel, says the report is a "masterful synthesis" of the current innovation ecosystem as well as an astute analysis of the main thrusts of the Jenkins Report.

"Sulzenko has galvanized the thinking about innovation ... His report provides a sharp focus on a couple of things — R&D alone will not get you innovation and Canada's problem is a lack of innovation in all spheres," says Robinson. "It picked up on procurement and the use of regulation to stimulate innovation but it also offers a new thing, a focus on skills for innovation linked to applied education."

The report's emphasis on the need for innovation to be demand-driven is the paper's core contribution to the discussion, says Robinson.

"We need to change the demand, outcome and target measures such as the number of students helping companies innovate. Sulzenko also makes a gentle call for business acceleration as a talent strategy for innovation," she says. "How do we scale up for both SMEs (small- and medium-sized enterprises) and colleges and polytechs, which have a need for greater funding? This is an opportunity to talk about it. The return on investment potential is huge."

Yet without changes to the machinery of innovation — namely a consolidation of the plethora of existing innovation programs — any changes are likely to fall short of expectations.

"Look at all the federal R&D programs beyond the granting councils and consolidate, making it easier for companies to find us," says Robinson. "Also embrace the question of how colleges can play a bigger role. ... The last few years have been a huge pilot that colleges can do it. We proved it."

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