Answering the call for consultation on the digital economy

Is the digital economy the new speed skating?

What role do you think Canada will  play in the future digital economy?

Industry Canada wants to know–it’s inviting all Canadians to take part in an ongoing discussion about shaping Canada’s digital future. Visit this online forum to share your ideas, perspectives and suggestions with Tony Clement, Minister of Industry, and vote on ideas shared by your neighbours.

Questions from the ministry range from the intangible, like public policy, to the tangible, like infrastructure. Over the next few blogs, I will share my opinions on some of these questions. If you’d like to participate, visit here for more information.

Should Canada focus on increasing innovation in some key sectors or focus on providing the foundation for innovation across the economy?

This reminds me of the age old debate nature or nurture.

Instead of adding to the noise, I want to provide a different framework: a sports analogy. In many ways, sports analogies are more appropriate because many nations are participating, the objectives are clear and the rules are standardized. This voids all variables but one: performance.

Consider the Olympics.  In the first two Olympic Games that Canada hosted, she never won a gold medal. Determined not to let it happen for the third time at the 2010 Vancouver games, the Canadian Olympic Committee (COC) pledged to make Canada a top medal winning contender.

After 16 days of competition, Canada made history by winning the most gold medals–14–of any host country at a Winter Game. COC’s “Own the Podium” program not only unified Canadians, but also achieved a level of excellence the world had never seen. How did we do it? Did we focus on “key sectors” or did we focus on providing the “foundation” across all programs?

First of all, did all “sectors” receive equal funding? No. Canada’s hockey teams received the most funding ($1.3M) and netted two medals. Speed skating, on the other hand, received the fourth-most funding, but netted 10 medals. What does this mean? It means not all medals are created equally: $250K for a speed skating medal and $1M for a hockey medal. Does a hockey medal equal four speed skating medals? The answer really depends on preference. For instance, 13 of South Korea’s 14 medals were in one category: speed skating.

The question is then: how does one maximize return on investment? Not all categories are equal, just as not all ICT sectors have the same potential. No matter how much funding hockey receives, there is only one gold medal to win in that category – unlike speed skating, with 12 gold medals for contention. There is diminishing return on investment at some point.

At the 2010 Winter Games, Canada “owned the podium” by achieving excellence across the board. No single category contributed more than 20% to Canada’s total medal count. On the other hand, speed skating contributed over 90% for South Korea. Did South Korea get lucky when it decided to focus on a single category? Or was it hard work and perseverance?

If South Korea wished to match Canada’s 14 gold medals, how could they do it? First, they could cast a larger net by expanding into other categories. Even if South Korea placed first in all their speed skating events, they would still be two gold medals short of Canada’s 14. Should hockey be one of the programs it expands to, since South Korea already has some of the fastest skaters in the world? The South Korean government could finance the same $1.3M that the Canadian national hockey teams received, but that does not replicate the attitudes and rounded skills that some Canadians players developed as kids playing outdoors in sub-zero weather.

Final thoughts

Asking Canada if one should focus on key sectors or provide a foundation is similar to asking Canada if one prefers two hockey medals or 10 speed skating medals. Just as medal favourites could miss the mark when it counts the most, some ICT sectors will take longer to ripen than others. The best way to predict the future is to create it, but leading ICT companies are not sharing their technology roadmaps. This is why it would be prudent for Canada to provide the foundation for innovation across the economy. Although one could focus on “key sectors” such as consumer electronics manufacturing, in the end, a firm or nation is more competitive when its attitude is increasing productivity across all sectors. There is no telling how any market will evolve over time in an uncertain economy.

Market inertia will be dampened by debt, but the long-term vision should be Canadian businesses “owning the digital economy network”. This includes, for example, a world-class Canadian search engine, a Canadian online media service destination and a Canadian-controlled global advertising network. Canadian digital goods and services can be as much an international brand as Belgium chocolate or Swiss watches.