Canada has the talent to compete in the global digital economy, along with numerous federal government innovation programs supporting academic researchers and startups.

But those advantages haven’t translated into commercialization of products that customers want, panelists said during a Canadian Science Policy Centre webinar titled “Innovating for a Digital Future: Navigating Economic Shifts and Global Challenges.”

“Digital today is not only powering the economy, it is the economy,” said panel moderator Namir Anani (photo at left), president and CEO of the Information and Communications Technology Council. “Digital technologies are redefining the very boundaries of what’s possible.”

“We’re at a critical juncture of our nation as we look at the international stage of things,” said panelist John Weigelt (photo at right),  national technology officer at Microsoft Canada.

Canada’s prosperity gap is a productivity gap and the productivity gap is an innovation gap, he said.

Many Canadian organizations and businesses “are comfortable maintaining the status quo, so they’re slow to adopt technology,” Weigelt said. “

He pointed to the book Technology and the Rise of Great Powers, by Jeffrey Ding, assistant professor of political science at Washinton State University, which argues that the most important element of long-term growth of a nation is how quickly and broadly they disseminate highly disruptive general purpose technologies.

Such technologies historically have included the gasoline engine and electricity; AI and quantum are current general purpose technologies.

We need to drive the dissemination of AI tools across communities,” Weigelt said. “We need to be able to unwind some of the legacy rules and regulations to allow people to use AI tools.”

Canada has several hundred startups focused on developing AI applications but no national strategy to ensure they produce products and services wanted by customers, said Soumen Roy (photo at right), executive director and country head Canada, of India-headquartered multinational tech company Tata Consultancy Services.

Only six percent of businesses in Canada have adopted AI, while Canadian industry spends pennies on the dollar on research and development, he said. “There has to be incentives for SMEs to adopt AI.”

The top countries of the world in innovation – like Israel, the U.S., South Korea, Finland, Sweden and Taiwan – spend five to seven percent of their GDP on R&D, Roy noted. Canada spends two percent.

Canada has ample hydroelectric power that can support data centres for AI development, along with inherent advantages in the agricultural sector and other sectors that could benefit from AI, he said.

 “The affordability and accessibility of health care can only be reached if it’s AI-enabled,” Roy said. “AI can improve tenfold the citizen services that government provides.”

However, government has to underscore these advantages and champion the deployment of AI technologies in targeted sectors, he said.

Weigelt agreed, saying Canada doesn’t have a large enough market to be able to do everything in AI and quantum technologies, nor can the country match the multiple billions of dollars being invested by the U.S., China and other countries.

“We can’t do it all. So I think we need to pick our sweet spots,” he said.

For example, Israel identified its cybersecurity technology as a strength and invested in specific areas of cybersecurity, Weigelt said.

 Microsoft Canada is focused on using AI for environmental applications and investing in this area, given Canada’s strengths and reputation in the environmental/cleantech sector, he said.

 If Canada wants to get into making semiconductor chips for AI development, for example, the chip-making machines are made only in the Netherlands and chip manufacturing is a very technical, complex process, Weigelt noted.

 “We need to tease out all those different elements and then pick the spots where it’s critically important for Canada to demonstrate leadership,” he said.

Perhaps Canada can carve a niche in specific chips that are quantum-based, or in the physical application of AI through robotic systems, he added.

To be a global player in general purpose technologies, Canada also needs to expand international partnerships and value chains, Weigelt said.

Canada’s “innovation paradox:” lots of research support but little commercialization

Canada does provide, through the three federal research granting agencies, a range of support for academic research, innovation, commercialization, startups and large companies, said Anne-Marie Thompson (photo at right), vice-president of research, grants and scholarships at the Natural Sciences and Engineering Research Council of Canada (NSERC).

The Tri-council tries to derisk innovation through the agencies’ various partnership programs and aims to bridge the gap between academic or applied research and industrial impact, she said.

“We do have some programming that aims to reduce the technical and financial risks for industry,” such as the Ideas to Innovation and Lab to Market programs, Thompson said.

NSERC’s core program, Alliance Advantage, is focused on academic partnerships with industry partners to bring that expertise to bear on an industrial challenge, she said. The driving idea is to foster the “entrepreneurial mindset in research.”

“We do have strong connections through our programming and researchers to the SME community, to startups and also to the major companies in Canada who also leverage the programs,” Thompson said.

However, Robert D. Atkinson (photo at left), founder and president of the Washington, D.C.-based Information Technology and Innovation Foundation, argues in a Research Money op-ed published today that Canadian industry should have more say in what research is done at Canadian universities.

“More university research must align with Canadian industry needs, while universities need to do a better job of commercializing their research within Canada,” he said.

Federal and provincial research funding agencies should prioritize university grants for researchers who have obtained hard financial commitments from industry, Atkinson said.

It is not only universities that need to be more aligned with industry needs. Businesses also need to do better in envisioning their business models and products, Weigelt said.

He was responsible for Microsoft Canada’s role within the five federally funded global innovation clusters, he said.

“Some of the proposals that came forward [from Canadian companies] weren’t able to describe the minimum viable product, to demonstrate customer value,” Weigelt said. “When we asked about potential business models that wasn’t there, either.”

The companies “didn’t have that entrepreneurial experience,” he said. “That’s where the entrepreneurial education comes in.”

One of the global innovation clusters, SCALE AI, has a mission dedicated to building the next-generation value chain, helping businesses to adopt AI, and boosting industry performance by leveraging AI technologies.

Ivette Vera-Perez (photo at right), CEO of the Organization of Canadian Nuclear Industries, said better collaboration is also needed between the federal and provincial governments, to enable Canada’s energy industry to plan and invest in projects requiring a long lead time.

 She pointed to a report by the International Energy Agency that projects electricity demand from data centres worldwide is set to more than double by 2030 to about 945 terawatt-hours, slightly more than the entire electricity consumption of Japan today.

 Canada, with its clean electricity grid and temperate climate for cooling data centres, is well-positioned to attract many of those data centres, Vera-Perez said.

Also, Canada’s nuclear industry is flexible and scalable, capable of building small-scale microreactors to small modular reactors to large nuclear reactors to provide power to data centres, she said.

But the government has to work with the private sector to streamline the long lead times for nuclear development, Vera-Perez said.

It took 10 years to obtain the construction license for Ontario Power Generation’s (OPG) first small modular reactor at the Darlington nuclear site in Ontario, she noted. OPG will still have to go through another regulatory hearing to obtain a license to operate the reactor.

When it comes to the talent needed to deploy general purpose technologies like AI, Microsoft has an “audacious goal” to skill 1.6 million people in Canada on AI this year, Weigelt said.

“You’re going to see an explosion of these AI-enabled models,” he predicted. “It’s this idea of leveraging AI to change the way we work across the board.”

Generative AI is projected to save Canadian workers up to 125 hours a year, boosting productivity by eight percent and adding $187 billion annually to the economy by 2030, according to Microsoft. Canadian SMEs alone could realize $100 billion per year in economic value by 2030.

Said Weigelt: “We need to put these models to use in ways that help our economy.”

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