[...] Read alongside this the Conference Board of Canada’s sobering How Canada Performs: A Report Card on Canada (in which Canada’s innovation policy and performance was ranked a dismal “D” — see Mike’s post, “Conference Board to Canada: Start innovating”) and two things become immediately clear: [...]

How do we address this challenge (Conference Board of Canada’s report “How Canada Performs,â€? that graded Canada a “Dâ€? in innovation) and turn it into a positive opportunity that will encourage and highlight the abilities and talents within this great country? We have the talent, capabilities, and education proven by our “Aâ€? grade in the Education and Skills domain within this report. However, if these skills are under utilized this human resource will naturally move to other countries = brain drain.

Canada can lead the world in R&D and innovation and achieve an “Aâ€? rating. We can do better than simply copying the innovative strategies of other leading countries. We need to develop our own innovation strategy that leverages the resources that make us unique.

Rather than investing solely in the creation of new “high technology manufacturingâ€? companies, Canada should consider placing greater emphasis on investing in our existing primary resource industries to advance them from their perceived low- to-medium technology status to world leaders in innovation. We need to leverage these resources and begin investing in innovative and efficient ways of harvesting, processing, and sustaining these valuable assets. Focusing on turning our primary resources into prosperous and sustainable “high techâ€? industries will help Canada to achieve the respect in the world’s innovation community that it deserves.

Interesting post Mike, it took me a little longer to find the CBoC report.

There is another interesting report that you and your readers may want to check out. the report is by Joseph Rotman of U of T and an excellent analysis of innovation in Canada. Here is the link:

http://strategis.ic.gc.ca/epic/site/epc-gdc.nsf/en/h_tq00013e.html

My key take awayfrom the report is that there are two sides to innovation, supply and demand. Education, Science, Technology and Research would all be on the supply side. Commercalization and marketplace know how are demand side.

Canadians do an admirable job at supply side but struggle with the demand side of the formula.

Thanks very much for your comments, gentlemen. I read an article recently that used the evolution of the oil industry as an example of poor innovation (I really wish I could find the article again!!). It pointed out that innovative advances that saved the industry often came from outside the industry, not internal initiatives. The point being, yes we have lots of really smart people in Canada, and yes we have a terrific comparative advantage over other regions of the world due to our tremendous natural resources, however innovative developments do not naturally arise from large companies in mature, developed industries. In fact there was another report published by the Conference Board of Canada in 2001 entitled “Investing in Innovation in the Resource Sector” that highlights this as a key issue — one of the main obstacles to innovation in the resource sector is that industry leaders see innovation as an expense rather than an investment. And yet, that is exactly what is needed to remain competitive and maintain the long-term advantage from natural resources. Could this be contributing to why Canadian resource firms are being snatched up by foreign competitors of late? They’re falling behind technologically, trading at a low multiple, and so represent a good acquisition opportunity? (I have to admit, I have absolutely no basis nor expertise to support these speculations.)

So I absolutely agree with your suggestion, Tim, that Canada needs to “leverage these resources and begin investing in innovative and efficient ways of harvesting, processing, and sustaining these valuable assets.” The need arises from Canada being a high-cost location to work and from resources being limited in supply — we need to recognize these limitations, starting with initiatives like those undertaken by Ontario, encouraging the use of resource-related innovations through its green energy programs (although apparently there remain some tax issues to be resolved: http://www.thestar.com/Business/article/204253). Obviously, this sort of program needs to extend much further to encompass the broader resource-based industries.

The innovation report you mention, Ian, also highlights a key difficulty in developing new technologies: if mature companies in established industries are not the source of innovations, that means that risk-seeking entrepreneurs are. These people rarely have deep pockets, however (unlike some of those mature companies), and so access to capital is perhaps the most significant barrier in developing the demand side of the innovation equation. Canada desperately needs to overhaul its regulations on the movement of foreign capital so that risk capital (typically angel and venture financing) is more readily accessible to support legitimate new innovations.