Canada’s Innovation Gap (part 2)


In part 1, I discussed the findings described in an article entitled Canada’s Innovation Gap, which was published in the Globe and Mail earlier this year.

In short, it indicated that Canadian businesses are not investing in research and development at the levels they should be (relative to businesses in other countries), and the heavy reliance of the Canadian economy on the resource and manufacturing sectors (both beaten down heavily in the recent economic downturn) put Canada at risk of falling behind other nations in economic growth, standard of living etc.

It’s a sobering article, and if you live in Canada, you should read it, because unless there are clear changes in how we conduct business in Canada, we’re headed for some hard times ahead.

I had mentioned that in this post I would look at some of the solutions proposed by the article’s author Konrad Yakabuski. But in researching the topic more, I came across some other research from the Conference Board of Canada (an independent think tank) that provided additional context on the innovation problem in Canada.

I’ve reproduced some of the Conference Board’s research below, but as always, go to the source and get the full details there.

***Warning to readers who worry about Canada’s future. The information presented below is rather ugly.

The Conference Board of Canada publishes an annual report entitled, How Canada Performs – A report card on Canada. It measures and compares Canada to a number of other industrialized countries in 6 areas of measurement. These are: Economy, Innovation, Environment, Education and Skills, Health and Society.

The scorecard below shows the 2008 numbers and some of the 2009 data. The final 2009 data will be released soon. The grading is similar to how many schools grade students. A is the best, followed by B, C and D. I didn’t see any Fs in the scores, so D can be considered the worst mark.

As you can see, Canada does fairly well in the first 4 categories, but rates a D in Innovation.

The following scorecard shows how Canada rates against a number of other industrialized nations in innovation. Canada occupies the lowest category, along with Austria, Australia, Italy and Norway. A surprise for me was seeing Ireland with an A score. I don’t know much about the Irish economy, but I have never pictured them as a more innovative country than say Germany, Japan or even Sweden and Finland.

2008-Innovation-Countries

And finally the Conference board provides a breakout of the various categories that make up the Innovation score. The table below — you’ll have to click on it to see it clearly — makes it patently clear that Canada’s innovation problems are widespread.

2008-Innovation-Indicators-Breakout

Click the image above to view in detail

Cs and Ds across the board for Canada. What’s most surprising is that Canada only got a C for scientific articles and a D for the manufacturing category. Even with good educational institutions, it seems we’re not publishing enough new research. And for a country that has traditionally had a large manufacturing sector, most of it is clearly pretty low tech; processing for natural resources, and of course, the auto manufacturing plants in Southern Ontario.

So, what can be done? One thing to keep in mind is that what the Conference Board, and the original article by Konrad Yakabuski talk about is innovation by large corporations and universities,  Hi-tech manufacturing is not something done by startups. Fundamental research is not done by entrepreneurs. The objective here is not to simply raise Canada’s grades on national report cards.

The objective must be to create, grow and instill a business environment and culture that enables entrepreneurs, small, medium and large companies to develop and go to market with new products and services on an international scale. Our captains of industry and successive governments have enjoyed direct proximity to the world’s most affluent nation for decades, but have focused on short term profits without long term investment and growth in mind.

In Part 3, (I promise) I’ll look at some of the ways to help address the innovation problem.

Saeed

BTW, if you want to see what other Canadians think of this problem, read the comments on this article in MacLean’s magazine. The article itself is not too interesting, but most of the reader comments are spot on.

Related Article:

Canada’s Innovation Gap (part 1)

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3 responses to “Canada’s Innovation Gap (part 2)

  1. Awesome article …. disappointing but a really thought provoking article. WRT Ireland, back in the 80’s/90’s Ireland went on spree of enticing hi-tech companies to set-up shop in Ireland. Corel and JetFrom from Ottawa were two of those companies. I have not done any follow-up research, but the trend usually is that with such an ecosystem, startup companies are launched and with the proper support from public and private sources they flourish; which attracts educational institutions, which then attracts more companies. The result of this spree are the scores that they receive. Looking forward to part 3.

  2. I recall Dell and Intel set up plants in Ireland back in the 80s or early 90s. I know that Ireland made a big push for manufacturing jobs but I didn’t know that it had been as successful in spill over impact as the CBOC report describes.

  3. Pingback: Canada’s Innovation Gap (part 3) « On Product Management