Innovation Improving in Canada but Urgency of Necessity Lacking

NEWS ANALYSIS

Minister of Innovation, Science and Economic Development Navdeep Bains at his Parliament Hill office on May 1, 2018. The Canadian Press/Justin Tang

Canada is doing its utmost to promote itself internationally as an innovation leader with its initiatives to attract investment and talent.

And for Navdeep Bains, the effort includes superclusters, a Strategic Innovation Fund, venture capital (VC) initiatives, and promoting Canada’s diversity and openness. The minister of innovation, science and economic development just completed a two-day trip to the biggest tech hub in the world—Silicon Valley—to build cross-border partnerships.

Canada has deep roots in Silicon Valley. Ministers have been making the trek to California for years. The C100 non-profit association of Canadian entrepreneurs, executives, and VC investors in San Francisco supports Canada’s innovation economy; it hosted a reception for Bains on May 14.

“We’re living through a time of great transformational change powered by artificial intelligence, quantum computing, and regenerative medicine. Canada continues to be a leader in these fields and has the opportunity to further partner with innovation ecosystems like Silicon Valley to further our global role,” said Bains in a press release.

But Canada’s biggest innovation challenges may be cultural instead of structural. While a less competitive tax regime and red tape make Canada a relatively worse environment for business than the United States, the high standard of living in resource-rich Canada may be dampening the urgency for innovation.

Contrast the situation with conflict-ridden Israel, ranked as one of the world’s most innovative countries, where an adversity-driven culture fosters an intense environment of innovation and entrepreneurship.

In their 2009 book, “Start-Up Nation: The Story of Israel’s Economic Miracle,” Dan Senor and Saul Singer describe the country as being replete with stories of “tenacity, of insatiable questioning of authority, of determined informality, combined with a unique attitude toward failure, teamwork, mission, risk, and cross-disciplinary creativity.” That doesn’t sound like Canada.

Meanwhile, Canada has abundant natural resources, proximity to the United States, and a stable geopolitical and economic climate. “History has shown that Canada can live comfortably without being innovative leaders as long as they continue to save, invest, learn, and work,” according to “Innovation Policy in Canada: A Holistic Approach” by Daniel Schwanen, vice president of research for the C.D. Howe Institute.

In describing Israel, Senor and Singer say, “Adversity, like necessity, breeds inventiveness.” By comparison, Canada’s situation seems like a country club.

Doing What It Can

The Canadian government is taking an active role in helping the country succeed in the global innovation race and has definitely made inroads in the competition for global talent and dollars.

Toronto-area tech firms witnessed a surge in international interest and hires in 2017 compared to 2016. MaRS Discovery District conducted a survey of over 100 high-growth tech firms and found that the government’s expedited visa program was a major factor in helping them hire skilled workers.

Navdeep Bains, Minister of Innovation, Science and Economic Development announces proposals under the $950-million Innovation Superclusters Initiative in Ottawa on Feb. 15. The Canadian Press/Fred Chartrand

Companies surveyed reported hiring predominantly from the United States (82 percent). And it’s not just technical talent, as the top positions for hiring included sales (67 percent) and marketing (63 percent). The “brain drain” for tech talent is from the south to the north.

Capital is flowing north as well. VC funding hit a record high of $2.7 billion in 2017 with artificial intelligence and fintech being key sectors. Salesforce, the customer relationship management giant, is quite bullish on Canada and plans to invest $2 billion in its Canadian business over the next five years. Salesforce Ventures announced a $100 million fund to invest in Canadian startups on May 3.

Tech actually plays a bigger role in Canada than it does in the United States, with 71,000 tech companies responsible for more than 7 percent of economic output and 5.6 percent of total employment, according to a 2016 report from the Brookfield Institute for Innovation + Entrepreneurship.

Innovation is quite topical in Canada and a celebration of it kicks off with the first annual Canadian Innovation Week starting May 22. The Rideau Hall Foundation, a charitable organization established by former governor general David Johnston, has launched the Canadian Innovation Space to “keep innovation top-of-mind year-round,” according to a May 16 press release.

The potential of tech is unquestionable and keeping it top-of-mind is a worthy objective for the government, but the one thing it would struggle to do is to make it necessary for a broader range of Canadians.

Follow Rahul on Twitter @RV_ETBiz