Opinion: Stop putting “lipstick” on Canada’s innovation mess and solve early-stage funding gap

Guest Contributor
January 27, 2021

“The innovation situation in Canada is beyond catastrophic,” Dan Breznitz said in a story in the December 9, 2020 issue of Research Money.

Breznitz, co-director of the Innovation Policy Lab at the University of Toronto and the chair of innovation studies at the Munk School of Global Affairs and Public Policy, adds his unvarnished voice to many other experts in finally and bluntly assessing Canada’s innovation ecosystem. An immediate fix to this public policy embarrassment is particularly urgent as Canada struggles to get a COVID-ravaged economy back on its feet.

Unfortunately, Canada’s “innovation ecosystem” is largely a dysfunctional mess. It is leaderless, outlandishly expensive, and worst of all, lacking a thoughtful public-policy framework. Consequently, it is failing to create growth, jobs and spur exports – precisely what Canada needs in these critically challenging times.

Over the years, endless consultations, piecemeal solutions and other cognitive flotsam have done nothing to solve innovation’s early-stage funding gap – a crucial step in making Canada’s innovation ecosystem a productive and competitive global contender.

Incessant rudderless tinkering and grossly misdirected innovation funding have landed Canada in 22nd place in the Bloomberg Innovation Index — one place behind Slovenia. It is, by any measure, a national disgrace: Canada’s abundance of smart, educated and motivated people are being systemically choked by a politically constructed innovation ecosystem that’s out of sync with markets and human potential.

As with many other things, it all boils down to money.

Fat-cat companies, many foreign-owned, gobble up multimillion-dollar cheques as cameras click and politicians smile. Meanwhile, the genius outliers, startups and thousands of smart SMEs with high intellectual capital potential are ignored, with no hope for critical early-stage innovation support.

The only bright star in this otherwise bleak innovation firmament is Mitacs, a federal program providing scientific and engineering assistance to innovation entrepreneurs via highly qualified academic resources. If anything, these invaluable resources should be expanded and made more accessible. Mitacs is straightforward. Got a bright innovative idea? We’ll help you move it forward.

Canada’s bewildering jumble of 92 innovation programs, costing billions every year and each with its own rules and comfortably situated bureaucratic teams, is of virtually no utility to early-stage individuals or SMEs wanting to pursue their idea, solution, innovation or invention – the very cornerstone of building a business. Ottawa’s systemic disregard of this fecund cohort amounts to an indefensible neglect of human capital and motivation. Yet Ottawa continues to pour millions into its remarkably inequitable “programs” while manipulating reality with lame talking points.

Ottawa’s expensive and inept innovation programs need to be thrown into the dustbin. Period. No amount of “lipstick” will set it right. The notion of government playing the innovation card, as presently constituted, is a hackneyed idea that needs to be retired. The clock has run out. We’re in a new phase of economic consciousness made starkly evident by the COVID-induced carnage besetting Canada and the rest of the world.

A much-needed innovation realignment will be painful for those deeply invested in the status quo. For them, there needs to be an adult recognition that their game is over. What’s needed immediately is a functional recalibration at the juncture of money and human ingenuity.

What ought to be a simple success formula has been mauled by Ottawa’s convoluted, expensive and often impenetrable suite of innovation programs such as the stillborn Superclusters oddity and the recently announced Net Zero Accelerator. Try applying if you’re a smart startup with a revolutionary idea clocking in at Technology Readiness Level 1 (basic principles of concept are observed and reported).

Needed is a private sector-driven, egalitarian, widely accessible funding model that can drive innovation right from the proof-of-concept stage. Quite simply, post-COVID Canada needs a high-growth entrepreneurship support framework especially for early, risky-stage companies – the foundation of economic growth.

Given proper support, these early-stage efforts can potentially outperform all other businesses by generating extraordinary employment and growth.

Nobel Prize-winning economist Paul Romer uses the metaphor of cooking in the kitchen to explain the process of innovation that undergirds economic growth. He writes: “Human history teaches us that economic growth springs from better recipes, not just from more cooking.”

For a better recipe, I am developing a private sector-led innovation model that can resolve the proof-of-concept funding gap. For a draft copy of the white paper on this model, register here.  Your name and contact information will be held in confidence. The white paper will be open for comment and discussion.

Michael Nitefor is president and founder of Air Lab, Inc., a Toronto-based mobility innovator developing a vehicular zero emission pneumatic powertrain.


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