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January 4, 2016

Do we understand why we have an innovation and commercialization problem in Canada?

At the heart of pretty much every article on Canada’s innovation performance (a rather disastrous performance) is a focus on government and what programs and initiatives the government can offer to improve business R&D spending and, hopefully, commercialization.

Barrie McKenna’s piece in this weekend’s  Globe is case in point: “Ottawa needs to put innovation high on its list of resolutions,” he tells us. No kidding… But again the solution focuses on a government led program – in this case the development of Fraunhofer like consortiums of academic, industry and government expertise developed in Germany. We’re fans of this and have included these models in several of our reports over the past 3 years (see this and this)

But in so doing we’re missing the far more important issue that’s at the heart of our economic and competitiveness challenge: Why aren’t businesses investing? Why do we need government funding and government infrastructure to build bridges between business and academia? Why aren’t businesses compelled on their own to invest, partner and aggressively seek to win new markets? Unfortunately these are true at every size of business in Canada. From our largest spenders to our largest cohort of SMEs, the problems are broadly speaking the same: we’re not playing to win.

I’m certainly not saying there’s no role for government. In every high-output innovation economy, government plays a major role. However Canada already offers its private firms with some of the most generous support for innovation in the world. And yet those firms exploit those incentives far less than in other jurisdictions. Why?

And it’s not just about incentives. It’s also about sheer competitive spirit. Why does GM invest $500m in Lyft because it understands its disruptive nature yet the best a Canadian bank can do is to start an innovation lab? Why does a German SME aggressively build links in China and aggressively invest in capital machinery while the Canadian equivalent doesn’t?

Ultimately, we can create as many new programs as we want, but until we understand the motivational and ambition related issues that have so far kept businesses from wanting more, we’re not going to do a great job at solving the problem.

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