Canada needs an "own the podium" attitude to innovation
Friday, March 19, 2010 at 04:39PM 
It's a report card no mother, or father, could love.
One B, two Cs, and nine—that's 9—Ds on the Innovation scorecard.
Obviously, anyone performing this badly would have to put up a Herculean effort just to rise to mediocrity. Assuming there's no fundamental maladjustment preventing more acceptable performance. Chronic laziness, perhaps, or fear of failure. Substance abuse. Or something really insidious, like an unnatural need to be mothered long past the normal age of majority.
Here are some of the comments sprinkled through the report card like stinging nettles:
"… continues to be a D performer …"
"… content to plod along …"
"… ranks second to last …"
"… a small player …"
"… ranks 14th out of 17…"
"… rarely at the leading edge …"
"…remains near the bottom …"
"…continually trails its peers …"
"…a below average performer …"
What kind of underachieving, unmotivated, uninvolved drop-out on the road to ruin is this? Doesn’t this loser realize that the world is a tough, competitive place and there's no free ride? How is a pathetic, uninspiring shirker like this going to amount to anything? Rely on friends and family? Hope the neighbours will share the answers to the tough questions? Tag along for the ride, let somebody else pay, and hope nobody notices?
By now you'll have guessed that the "student" whose dismal report card is an embarrassment to one and all is none other than Canada, she of the late, great own-the-podium surge in Vancouver, and the national euphoria over a hockey game.
The Conference Board of Canada is the stern headmistress, wagging her bony finger at the failures and shortcomings of this disappointing pupil who, apparently, would rather hang around the rink than hit the books and excel.
Ranking Canada and sixteen other countries on a range of six economic, social and intellectual criteria, the Conference Board finds that Canada, in fourth from last place overall, has a long way to go to catch up to the class leaders in all but a couple of the "subjects" rated.
Innovation the key to all successes
Most damning of all is Canada's performance in Innovation, one of the many near-failing grades she earned.
Innovation is knowledge based and is defined, for the purposes of this report, as "a process through which economic or social value is extracted from knowledge—through the creation, diffusion and transformation of knowledge to produce new or significantly improved products or processes that are put to use by society."
To measure the creation of knowledge, the Conference Board looks at indicators such as the number of scientific articles written by Canadians and the number of patents and trademarks taken out by Canadians.
The transformation of knowledge is measured by examining how big a role knowledge-based industries such as aerospace, electronics, computers and pharmaceuticals play in the production of the country's wealth.
On the creation of knowledge, Canada's performance is truly schizoid. On the one hand, Canada scores its highest mark, the B, for the number of scientific articles written per one million population. In this category, Canada ranked eighth of seventeen, beating the US, UK, Germany and Japan, among others. But in the all-important area of technology exchange—the amount of money devoted to acquiring patents, designs, know-how and systems, as well as research and development—Canada ranks dead last. A mere 0.3 percent of Canada's GDP is devoted to technology exchange. What this means is that Canada is increasingly playing to stereotype: just call us hewers of wood and drawers of water. We are content to sell raw commodities to the world, let the world process them, and buy back the high-knowledge products we want from them.
This is a sign that Canada is not getting full value from its resource base—Canada sells raw materials to be processed elsewhere. Nor is Canada keeping up in a global economy that values technology supply chains.
This view of Canada as a resource economy with little else going on is reinforced by the numbers of patents taken out by Canadians, where the rank is dismal: fourteenth of seventeen. The rank for new trademarks taken out by Canadians, a new indicator of a country's innovativeness for this year's report, is even worse: Canada ranks second from the bottom.
Why does this matter? Because countries with a lot of patents and trademarks are in a better position to pioneer new technologies to sell to the rest of the world.
Canada, put simply, has the knowledge base—the universities, hospitals, research facilities—to create knowledge, as seen in the high number of scientific articles written by Canadians, but lacks the will to turn that knowledge into innovation. As the Conference Board points out, that "will" is largely a matter of public policy.
The Conference Board's verdict on Canada's performance in this area:
Canada does not measure up in commercialization—extracting the maximum value from its innovation investments by taking new ideas to market and turning them into new or improved products and services.
Patenting reflects public policy choices. U.S. patenting increased during the 1980s as the result of policy reforms to protect national intellectual property rights. Many countries in the Organisation for Economic Co-operation and Development followed suit, Canada among them. But Canada’s general policy approach to innovation remained unchanged in that the major share of public funding continued to strengthen the science base rather than the commercialization of innovative products and services.
Consequently, Canada has shown improvement in academic publishing, but little relative improvement in patenting. And even as Canada has improved, its peers have continued to raise the bar for excellence in patenting.
Taking it to market
Compared to Canada, the U.S. presents "the profile of an inventive country that knows how to translate new knowledge into business value." The U.S. is a leader in world patents and knowledge-intensive services and industries. Switzerland is another success story, a leader in research and patents and trademarks, which it translates into exports of pharmaceuticals and scientific instruments.
A bright spot in the Canadian performance is the aerospace sector. While Canada's rank in the category is a C, most of her peers rate D. Only France, the US and the UK rate As, putting Canada in fourth place overall. The reason for this relatively strong performance is that the industry has close ties with the country's universities and the National Research Council. The industry has focused on research and development and on the export market. Aerospace R&D comes in at about 10 percent of revenue in this sector, making it the highest in the country. Researchers and companies have collaborated in successfully pursuing world markets and building a competitive advantage for Canada in terms of aerospace exports. Aerospace is now the only advanced technology sector that produces a steady trade surplus.
Innovation affects every sector of a nation's economy: manufacturing, education, health care, environmental protection. Without innovation, society stagnates, and Canada, the Conference Board cautions, has been slow to adopt leading-edge technologies. With today's pace of technological change, only early adopters stay ahead of the game, while slow adopters never catch up.
Needed: a massive change of attitude
Grim as the report's findings are, the solution to the problem is daunting, what the Conference Board calls "a management challenge." The challenge? Coherence. "Coherence distinguishes the leaders from the mediocre. Canada’s peers demonstrate that coherence is a management challenge, not just a technological one."
In other words, Canada has to seriously change its attitude and think big. We need a national "own the podium" attitude to pulls us out of the no-gold-medals-at-home cellar and land us on top with more gold medals than anyone in history. That sports inititiative was expressed in a simple statement of vision: For Canada to be a world leader in high-performance sport. And as everyone can now see, it worked.
In the Conference Board's language, the country needs to "commit to becoming an innovative country and to dealing with the economic and policy challenges that requires."
The key to success, as a successful wag once said, is to study successful people and do what they do. We know what makes the US successful: top science and engineering schools, deep capital markets and an entrepreneurial culture that transforms good ideas into good products. Japan made efficiency and new product development a national mission. Switzerland, the top-ranked country in this year's Conference Board rankings, specializes in pharmaceuticals and leads the world in that sector.
There is no reason that Canada could not improve its standing and become the world leader Canadians love to believe that they are. The talent and resources are here. What we need is the will.
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