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www.policymagazine.ca May—June 2017
Canadian Politics and Public Policy
Innovation
$6.95 Volume 5—Issue 3
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1
In This Issue
Canadian Politics and 2 From the Editor / L. Ian MacDonald
Innovation
Public Policy
EDITOR
3 Guest Column/David Johnston
Innovation: The New Imperative
L. Ian MacDonald
lianmacdonald@policymagazine.ca 4 Q&A
A Conversation With Navdeep Bains
ASSOCIATE EDITOR
Lisa Van Dusen
lvandusen@policymagazine.ca 9 Dominic Barton
Innovation Nation: Supercharging Canada’s Innovation Ecosystem
CONTRIBUTING WRITERS
Thomas S. Axworthy, 12 Kevin Lynch
Innovation Policy in an Era of Disruption
Andrew Balfour, Yaroslav Baran,
Derek H. Burney, Catherine Cano,
Margaret Clarke, Celine Cooper, 16
Linda Hasenfratz
Being Ready for Anything, or How to Innovate
Susan Delacourt, Daniel Gagnier,
Martin Goldfarb, Patrick Gossage, Amid Perpetual Change
Frank Graves, Brad Lavigne,
Kevin Lynch, Jeremy Kinsman,
Andrew MacDougall, Velma McColl,
19 Sean Finn
Une culture d’innovation industrielle
David McLaughlin, David Mitchell,
Don Newman, Geoff Norquay,
Fen Osler Hampson, Robin V. Sears,
22 Nathalie Pilon
Industry: Our Hidden Digital Champion
Gil Troy, Anthony Wilson-Smith
WEB DESIGN
25 Geoffrey Holmes and Jean-François Béland
It Takes a Country: Innovating Canada’s Clean Tech Future
Nicolas Landry
policy@nicolaslandry.ca
28
Michael Katchen
How do We Build an Innovation Economy? Support the Winners
SOCIAL MEDIA EDITOR
Grace MacDonald
grace@policymagazine.ca 31 Paul Klein and Tim Draimin
The Other Innovation: Unleashing Canada’s Capacity for Good
GRAPHIC DESIGN & PRODUCTION
Monica Thomas
monica@foothillsgraphics.ca 34
Iain Klugman
There’s no App for That: Creating a Supercluster is a Recipe
Policy 37 Sarah Prevette
Creating Future Designers: It Starts in the Classroom
Policy is published six times annually
by LPAC Ltd. The contents are
copyrighted, but may be reproduced 40 Mary Ackenhusen
Bringing Healthcare Into the 21st Century
with permission and attribution in
print, and viewed free of charge at
the Policy home page at 42 Suzanne Fortier
Résumé : L’université innovante
www.policymagazine.ca.
Printed and distributed by St. Joseph
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46 Breanne Everett
The Mental Weight of Innovation: Overcoming Doubt
Street, Ottawa, Ontario, K1A 1A4
Available in Air Canada Maple Leaf 49 Column / Don Newman
The Innovation Catechism
Lounges across Canada, as well
as VIA Rail Lounges in Montreal,
Ottawa and Toronto.
Special thanks to our sponsors
and advertisers.
May/June 2017
2
From the Editor / L. Ian MacDonald
Innovation
W
elcome to our special issue great”—and rapidly, to build Cana- cial innovators harnessing our capac-
on innovation in Canada, dian competitiveness. ity for positive change. Ian Klugman,
I
which we have produced CEO of Communitech, writes of build-
in partnership with the Rideau Hall nnovation isn’t just about high- ing innovation-based ecosystems.
Foundation, a non-political char- tech start-ups, but equally an im-
Sarah Prevette, founder of Future De-
ity established by Governor General perative for the survival and pros-
sign School, writes that innovation
David Johnston in 2012. Now near- perity of established companies. Lin-
amar CEO Linda Hasenfratz provides begins in the classroom by introduc-
ing the end of his tenure at Rideau ing the qualities of entrepreneurship
Hall, the Governor General shares his the example of her company, Cana-
da’s second-largest auto parts manu- in school. At the degree-granting
thoughts in a guest column on inno- end of the education system, McGill
vation. One of his legacies is the cre- facturer, whose products seamlessly
cross the Canada-US border several Principal Suzanne Fortier shares her
ation of the Governor General’s Inno- thoughts on the crucial role of uni-
times in North American auto as-
vation Awards, established in 2016. versities in innovation.
sembly. Hasenfratz, also Chair of the
We begin with a Q&A with Innova- Business Council of Canada, writes Breanne Everett, a winner of the Gov-
tion Minister Navdeep Bains, the that: “Customers come to you if you ernor General’s Innovation Award in
Trudeau government’s lead minister have the products that solve their 2016, writes of a personal journey
on the innovation file. He was both problems, problems they want and from her medical residency to co-
thoughtful and thought-provoking innovation is how you achieve.” founding Orpyx, a business built on
about the opportunities and impera- Sean Finn, Executive VP of CN, writes her invention of a foot sensor that
tives for Canadian leadership on of a culture of innovation and safety provides information to diabetics.
innovation. at one of the most mature industries She writes of the GG’s Award: “It is
Dominic Barton, Global Managing going—railroads. CN is the largest impossible to overstate the impor-
Partner of McKinsey & Company, is railway in North America. tance of programs that recognize in-
serving as Chair of the government’s novators for their role in growing the
Nathalie Pilon, CEO of ABB Canada,
Advisory Council on Economic innovation environment.”
writes about innovation and sustain-
Growth, which released its first re- able energy in the electricity space. Finally, columnist Don Newman re-
port and recommendations in Febru- Geoffrey Holmes and Jean-François flects on the innovation revolution
ary. Barton writes that Canada needs Béland write of capturing carbon in the news media over the last quar-
to invest heavily in skills training for directly from the atmosphere and ter century and more. On a personal
workers, attract the world’s top talent, turning it into fuel using technolo- note, I know of which he speaks.
and create innovation marketplaces gy. President and CEO of Vancouver When I began in the newspaper busi-
in key sectors and technologies. He Coastal Health (VCH) Mary Acken- ness in the early 1970s, I went on the
also notes: “Half of all billion-dollar husen provides an excellent window road with a 35-pound portable type-
start-ups in the US were founded by on innovation in healthcare. writer and a 25-pound Fax machine
immigrants. Canada’s reputation Mike Katchen, CEO of Wealthsimple, that transmitted copy at six minutes
for openness and diversity give it a asks how we build an innovative a page, provided you could find a
comparative advantage in the global economy, and says it’s not by picking phone to connect the jacks. That was
competition for talent, and one we winners, but by supporting them. before laptops, cell phones, the inter-
should capitalize on.” net, smart phones and social media
From business to social innovation,
BMO Vice-Chair Kevin Lynch, a Paul Klein of HireUp and Tim Drai- that drive the news media today in a
former clerk of the Privy Council, min of Social Innovation Generation world with no deadlines.
writes about innovation policy in an propose a 10-point plan for unleash- Today, I can write this note on my
era of global disruption. Lynch says ing Canada’s capacity for good. De- laptop and push the send button
that Canada needs to raise its game spite Canada’s comparatively secure from Montreal to our designer, Mon-
in business R&D and innovation— social safety net, they write that there ica Thomas, in Calgary, thinking
from “reasonably good” to “globally are gaps that can be addressed by so- nothing more about it.
Policy
3
Guest Column/David Johnston
Innovation:
The New Imperative
O
ne of the great privileges of see such creativity as part of who we the innovators in our midst with an
serving as Governor General are and what we do as Canadians. eye to encouraging others to follow
comes in having the opportu- One way we do that is through story- in their footsteps. With the second
nity to shine a spotlight on important telling, which is fundamental to any annual cohort of award-winners set
issues facing our country. Innovation culture. That’s why I’ve recently co- to be recognized this year, we look
is one such issue, and this special edi- authored a new book, titled Ingenious, forward to continuing to celebrate
tion of Policy Magazine, featuring in- with leading Canadian innovator Tom excellence and to foster an innova-
sights from leading innovators work- Jenkins. Subtitled How Canadian Inno- tion ecosystem that spans the coun-
ing in a range of disciplines, makes a vators Made the World Smarter, Smaller, try. Some of the world’s most creative
timely and useful contribution to the Kinder, Safer, Healthier, Wealthier, and people live among us, yet we haven’t
innovation conversation in Canada at Happier, the book highlights notable celebrated their stories or brought
a critical moment in time. innovations throughout our history. them together often enough. We aim
The light bulb, the Blackberry, the ca- to change that with the Governor
We’re at a hinge point in our history. General’s Innovation Awards.
noe, the Universal Declaration of Hu-
Not only does the 150th anniversary
man Rights, Blue Box recycling, insu- A third addition to Canada’s inno-
of Confederation offer us a rare oppor-
lin, restorative justice, the synthesizer, vation ecosystem is the Rideau Hall
tunity to reflect, to celebrate, and to
Me to We, the McIntosh Apple—this Foundation. Incorporated in 2012 as
reimagine Canada, we find ourselves
is just a sample of Canadian innova- an independent, non-partisan charity,
in the midst of a global moment of tions that have improved our lives in the Foundation is a tool we’ve created
change. And with that change, we are countless small and large ways. Our to amplify and broaden the reach of
presented with both challenges and aim with the book is ambitious: to es- the office I represent. Its aim is to gath-
opportunities. This is an age in which tablish a narrative for all Canadians, er, align and catalyze forces for positive
innovation is critical to our well-be- telling our inspirational stories and change. With priorities that include
ing. That means constantly strength- making them part of a rich “can do” innovation, education, philanthropy
ening our political, economic, social, heritage that consistently overcomes and volunteerism, the Foundation is
technological and environmental challenges. The book is one compo- already effecting positive change in
processes. Whether in the realm of nent of a suite of initiatives intended Canada. It’s my hope that the Foun-
education, governance, sustainabil- to promote the culture of innovation. dation can continue to help foster a
ity, health care, finance, technology That effort also includes a national world-class Canadian innovation eco-
or civil society, the spirit of ingenu- innovation database, an educational system in the years ahead.
ity and improvement must be part of curriculum developed by Nipissing
how we operate as a society. Put sim- University, a web site and a children’s The good news is that Canadians
ply, if change is the new constant, in- book. It’s all part of building that cul- have long been innovators. Indeed,
novation is our new imperative. ture, providing inspiring, real-life sto- what is Confederation itself if not
ries and practical advice to the next an innovation in governance among
How do we meet this imperative? One diverse peoples? This is a remarkably
generation of Canadians—who are all
of the keys will be to make innovation vast, diverse and challenging country
potential innovators.
more accessible—to make the concept to live in, and our pre- and post-Con-
C
less abstract and to ground it in real- elebration is another key federation history is full of examples
ity and everyday life for all Canadi- component in our innova- of people working creatively and col-
ans. We want to tell stories to make tion strategy. The Governor laboratively to improve our lives. As
the importance of innovation vital General’s Innovation Awards, which 21st century Canadians we must con-
and real and provide practical advice honour outstanding individuals, tinue to innovate in countless ways
to help everyone realize they can, in- teams and organizations who are cre- so that our institutions and society
deed must, be an innovator. We want ating value, building better commu- evolve to ensure continued and en-
to create a culture of innovation in nities and meaningfully improving hanced relevance in a complex, rap-
which individuals and organizations our quality of life, aim to celebrate idly-changing world.
May/June 2017
4
Q&A: A Conversation With
Navdeep Bains
it’s really about diversity of thought
and perspectives. When I’m speak-
ing to presidents of universities and
colleges, they’re noticing more inter-
est in individuals wanting to come
to Canada to study. I’m seeing that
same level of interest from businesses
as well. This is something that we
were very alive to even before the
US elections. This is an area where
I wholeheartedly believe we have a
value proposition that differentiates
us. And it’s now all about making
sure that we implement our promises
around immigration.
Policy: Dominic Barton in his article
for this issue of Policy writes, “Half
of all the billion-dollar start-ups in
“We want to demonstrate that we’re a willing partner,” says Innovation Minister Navdeep Bains the US were founded by immigrants.
in his Q&A with Policy Editor L. Ian MacDonald. Policy photo
Canada’s reputation for openness and
diversity give it a comparative advan-
tage in the global competition for tal-
Innovation and Economic Development Minister Navdeep ent.” I take it you agree with that.
Bains met with Policy Editor L. Ian MacDonald for a Navdeep Bains: Absolutely. There’s
no doubt that diversity and talent are
wide-ranging interview on the challenges and opportuni- a source of strength for us. I think of
ties of innovation and Canadian comparative advantage, my own father. When he came here
from India, literally with a few dollars
including the advantage of Canadian immigration policies in his pocket, he sacrificed a lot. He
in recruiting the best and the brightest to study and start- came here with a desire to succeed.
up new business firms in Canada. And so when people talk about im-
migrants succeeding in Canada, or in
the US or other parts of the world, it’s
no surprise. They give up a lot. I think
Policy: I wanted to begin with in- tion, recognizing that our academic
that drives them to take risks, to be en-
novation and the opportunities in institutions have a unique opportu-
trepreneurial. You know, they want to
immigration. I find it quite striking. nity to attract some of the best and control their own destiny a bit more.
First of all, is there an opportunity for brightest. We don’t have a monopoly I think that’s why being an entrepre-
Canada, given President Trump’s “ex- on good ideas. If you look at our re- neur makes sense for them.
treme vetting” immigration policy, cent global skills strategy, which is
to gain comparative advantage over about individuals that are high in Policy: Let me give you some exam-
the US as a destination for innovators demand with specialized skills who ples. Steve Jobs, the founder of Apple
and talented foreign students? can come to Canada within a mat- and famously the son of a Syrian im-
migrant, who wouldn’t be admitted
ter of two weeks, it really speaks to
Navdeep Bains: This is a longstand- to the US under Trump’s immigra-
that concept of being open—open to
ing advantage that we’ve had glob- tion policy. Sergey Brin, co-founder
ally. We believe in having an open people, open to ideas.
of Google, whose CEO is from India
mindset when it comes to immigra- When we say diversity is important, —Sundar Pichai. A Canadian, Garrett
Policy
5
Camp, is the co-founder of Uber. Satya When we say diversity is important, it’s really about
Nadella is the CEO of Microsoft. Jerry
Yang, the co-founder of Yahoo. Bob
diversity of thought and perspectives. When I’m
Miner, an Iranian, is the co-founder speaking to presidents of universities and colleges, they’re
of Oracle. Pierre Omidyar of eBay. In noticing more interest in individuals wanting to come to
Canada, Shopify founder Toby Lutke Canada to study. I’m seeing that same level of interest from
is a German immigrant.
businesses as well.
Navdeep Bains: That’s right. I was
recently talking to Toby during a din-
ner and we talked about his personal
success. What’s really interesting to
note is not only their individual suc- opportunities for everybody to up- what their needs are, where the gaps
cess, the enormous amount of wealth grade their skills. are, and we want to deal with it in a
they created for themselves and for much more timely manner.
Our focus is on lifelong learning.
the jurisdiction that they operate in, Teaching kids computer coding. Work We made a commitment to launch the
the numerous employment oppor- integrated learning. More internships. global skills strategy on June 12th—so
tunities. It`s also the fact that they More co-ops. This is an area that not next year or the following year,
genuinely want to give back. They would provide meaningful opportuni- but in a matter of weeks. And the pro-
also want to make the world a better ties to upgrade skill sets and to pro- cessing time for visas will be a matter
place. Often they become very global vide employment opportunities, not of ten working days or two weeks. If
in their perspective, and they do a lot
only for our youth, but also for adults you’re a company and you need to
when it comes to philanthropy and
who have been in the workplace for bring somebody and they need to get
mentoring.
10 to 15 years and want to go back to their visa processed—currently it can
Toby’s a great example of that. He school to upgrade their skills. take potentially months. For compa-
pushed very aggressively for initiatives nies that quickly need someone to be
around computer coding for lifelong able to make that next investment or
learning. And it’s not simply about People are worried find the next solution or to deal with
what it means for his business. He sees about their jobs, their an issue, they have that nimbleness
where society is going. He sees the role and flexibility.
of technology. He’s looking at issues of own personal opportunities
This program will make Canada an
diversity, gender equality, focusing on and the hopes and even more attractive place for top
encouraging girls to take science, tech- aspirations they have for talent. It demonstrates that we have
nology, engineering and math.
their children or a process that will be very sensitive
These entrepreneurs` contributions go to the needs of small businesses that
grandchildren. One of the
beyond their own personal success. want to grow and scale up in Canada.
They give back a lot to society. areas where we could help
Canadians deal with those Policy: And number three, create in-
Policy: Your thoughts on the three novation marketplaces.
main recommendations of the Advi-
anxieties is to provide
opportunities for everybody Navdeep Bains: We deal with this
sory Council on Economic Growth.
in the budget through the lens of the
Number one: invest heavily in skills to upgrade their skills. superclusters. We’re looking at how
training.
we can accelerate commercialization—
Navdeep Bains: That was a key com- bring ideas to the market more rapidly.
ponent of our budget. We focused on Canada is doing really well when it
innovation and skills. When we were Policy: And then, number two, at- comes to investing in research. Rela-
consulting innovation leaders, busi- tract the world’s top talent. That’s tive to our G7 peers, we’re really strong.
nesses and academic institutions, we pretty obvious. Where we’re challenged is when we
asked them: What is the number one translate those ideas into solutions that
issue? And it always came down to Navdeep Bains: It is. But at the can be commercialized, that can create
people, skills and talent. In this rap- same time, we need to do it in a very jobs, generate revenue for companies.
idly changing economy, there’s ob- thoughtful way. We want to be led by That’s an area that we want to focus
viously a lot of anxiety. People are the needs of the marketplace. This goes on. We want to accelerate commer-
worried about their jobs, their own beyond attracting more engineers or cialization. The superclusters bring all
personal opportunities and the hopes technicians or individuals with certain the key elements together: academia,
and aspirations they have for their skill sets. It could be recruiting a CEO where the ideas are generated; anchor
children or grandchildren. One of the or a Chief Technology Officer who can firms that have an understanding of
areas where we could help Canadians help a company scale up and grow. We how to grow and scale up; connecting
deal with those anxieties is to provide want Canadian companies to identify them with smaller firms; connecting
May/June 2017
6
them with civil society, different lev- But those are all great reasons to in- and ideas. When these companies
els of government; and finding com- novate in Canada. go abroad and these companies are
mon platforms that can allow them to So the question is where do we need asked, “Do you do business with the
compete globally. to raise our game. For example, while Government of Canada?” They can
We’re really excited now to go out the government and universities are say: “Yes.” And that allows them to
there and engage industry, academia leaders in R&D, private sector ranks develop additional business opportu-
in a very competitive process that 24th in R&D and as a percentage of nities internationally.
will let the best ideas come to us. Our GDP, and 22nd overall in innovation. Even though we have a very well-
objective is not to prescribe these so- educated workforce, even though
Navdeep Bains: Correct.
lutions. We don’t want to prescribe we’re ranked as a strong place to do
a path forward. We want to demon- Policy: So what do we need to do business, we can still do better in de-
strate that we’re a willing partner. about that? veloping and attracting talent. We
We’re willing to put money in so we can do better in making sure there’s
can leverage more money, primarily Navdeep Bains: There are a few more capital available. And we need
from the private sector. key problems that we tried to address to do a better job of creating more
in the innovation and skills budget. market access.
There are certain gaps that were iden-
We’re really excited tified when we went out there and Policy: Do we need to do a better
now to go out there engaged industry, academia, civil job of tracking results of government
society. Access to people and talent investments? For example, the Insti-
and engage industry,
were key issues. And access to capital, tute for Fiscal Studies and Democ-
academia in a very particularly in clean tech. racy at University of Ottawa put out
competitive process that will We brought forward measures to deal a report in March, as you know, that
let the best ideas come to us. with that: the Venture Capital Cata- the government has funded $22.6
billion for 147 skills and innovation
Our objective is not to lyst Initiative, which will be managed
programs with little understanding
prescribe these solutions. We by the Business Development Bank
of Canada. The idea behind this is: or analysis of the performance or
don’t want to prescribe a How can we continue to strengthen value for money. Do you have some
path forward. We want to our venture capital ecosystem, which thoughts on that?
demonstrate that we’re a has done remarkably well over the Navdeep Bains: Return on invest-
past few years? Last year, $3.2 billion
willing partner. in VC funding was raised in Canada.
ment is really important for taxpay-
ers—making sure that when we design
That’s an all-time high. So how do programs, they achieve the desired
we continue to build momentum? outcomes. Economic growth, more
How do we improve the access that jobs, more R&D—those are all very
And quite frankly, I think they under- Canadian companies have to working important targets. We have proposed
stand the proposition. They under- capital and growth capital and patient a path forward called Innovation Can-
stand how this would benefit them. capital? ada. And the idea is two-fold. One is
And we think this model has a lot of The other challenge we’re trying to to coordinate and streamline our pro-
potential. It’s really about focusing solve here is how do we create oppor- grams. And the other is to evaluate
on three to five areas. That also would tunities for our companies to be ex- the effectiveness of these programs.
increase the level of competition. We port oriented? One of the things that And both initiatives will be housed
want the best ideas to come forward. I’m very proud of is the Canadian Free centrally through Innovation Canada,
Policy: The budget says that innova- Trade Agreement. The whole objective which will allow better outcomes for
tion begins with smart, creative, and there is to allow companies to have ac- Canadians and Canadian companies.
skilled people, and cites Canada being cess to more customers, deal with less
red tape and position themselves well Policy: What about the role of univer-
positioned for leadership. For example, sities in all of this? Apparently about
some bullet points: number one edu- if they choose to go global. We want
to have not only strong Canadian half of our students and millennials
cated workforce in the OECD; number want to have their own start up—their
one in the G7 for business cost com- brands, but also global brands.
own start-ups and businesses. Are the
petitiveness; number two in the G7 How do we use government pro- universities going to be able to give
for openness to trade and investment; curement to support the growth of them the tools and the knowledge
number three on the global entrepre- Canadian companies? We want to base that they need to do that?
neurship index; and, second-best place identify companies that have good
in the world and best country in the ideas. And we’re going to have a spe- Navdeep Bains: If you look at aca-
world to do business, and the best cial carve-out in the federal govern- demic institutions, they are promot-
banking system in the world in the ment’s procurement budget for those ing a lot of multi-collaborative efforts.
WEF rankings nine years in a row. companies to validate their solutions They’re bringing in law students to
Policy7
collaborate with business students,
with science students. These efforts
equip these individuals with multiple
skill sets. Academic institutions are
also beginning to recognize the merits
of business accelerators and incuba-
tors. The Digital Media Zone at Ryer-
son University, where I taught, is an
example of that. It has created an envi-
ronment for businesses and individu-
als with ideas. Like you said, young
millennials want to start up their own
company, make the world a better
place. It’s not always about making
money. It’s also about innovative so-
lutions that have a positive impact on
people’s lives.
More and more, academic institutions
“Our focus is on lifelong learning,” says Navdeep Bains on the role of education in innovation.
provide mentoring services. They pro- Policy photo
vide legal advice. They even provide
opportunities for companies to get fi- inces and territories then can use that Clark to look at what British Columbia
nancing. So I think academic institu- supply base. This way, we respect edu- should propose as an idea for a super-
tions are beginning to appreciate the cational responsibilities. And at the cluster. In order to do that, he brought
role that they play. That’s really what same time, we help support the grow- in small businesses, large businesses,
we’re trying to accomplish through ing demand in the area of coding. all the sectors—traditional sectors, new
the supercluster initiative. It’s to ac- sectors, emerging players, established
celerate that commercial opportunity Policy: How do you feel about corri- players, academic institutions. When
and to make sure that our industries dors of excellence, like the Toronto- you have all these people in the room
and our academic institutions work Waterloo corridor? Years ago, Michael talking about how they can work to-
really closely together to help facili- Porter, as you know, famously wrote gether and find common areas of inter-
tate that process. in the Competitive Advantage of Na- est, it makes the magic happen.
tions about the diamond cluster of
Policy: And in terms of education, In BC , they have a neat initiative: the
excellence. What do you—you know,
how does Ottawa partner with the— Cascadia corridor between themselves
when you travel all over the country,
the provinces on what is, as we all and Washington state. They recog-
what are you seeing about that?
know, under Section 92 of the Con- nize that we’re in a global innovation
stitution, an exclusive provincial ju- Navdeep Bains: Geography, popula- race. It’s very competitive out there.
risdiction? The Canada Chairs were a tion and a sense of history are key fac- We’re too small of a country to com-
good example of brain gains for Can- tors. Even for the Toronto-Waterloo pete against each other. So how do
ada. What are your thoughts on that, corridor, a discussion is taking place. we work together? And what relation-
working with the provinces? And it’s really around leveraging all the ships can we leverage going forward?
technology and life science companies There’s east-west. There’s also north-
Navdeep Bains: We’ve demonstrated
that exist. And it’s the second-largest south. And it’s also cross-sector. It’s
that we can work with the provinces.
such cluster or corridor in North Amer- no longer just about aerospace or auto
We did so with the pan-Canadian or ships. Of course, those are impor-
ica outside of Silicon Valley.
framework on environment. We did tant areas of growth that have existed
so with the Canada Pension Plan. We Policy: That’s quite something in it- and will continue to demonstrate a lot
demonstrated that with the Canadi- self, isn’t it? of growth. But artificial intelligence,
an Free Trade Agreement, which was for example, or quantum computing
signed by all the provinces and territo- Navdeep Bains: That is a point of have the ability to really help com-
ries. Our government has a track record pride. When it comes to these cor- panies in multiple sectors. Take CAE.
of demonstrating that we can work ridors, there’s a recognition that it’s That’s an aerospace company that’s in
with the provinces and territories. all about making sure that you create
training and simulation. They’re us-
common spaces and collaboration to
When it comes to education, the com- ing that technology now for health-
help generate new possibilities.
puting coding initiative for school- care solutions. I think that just speaks
aged kids that was in Budget 2017 is a That notion of collaboration is key. For to the nimbleness and the flexibility
great example of how we can use not- example, when I was in British Colum- that exists. And the openness that we
for-profit and other organizations for bia, I met with UBC’s President (San- need to have as policy makers in how
this initiative. And the different prov- ta) Ono, who was tasked by Premier we define clusters and sectors.
May/June 20178
Policy: I want to ask you about dis- I often cite the example of Germany, they become more export-oriented.
ruptive technologies. South Korea, Japan, where automa- We sent a very clear signal to the mar-
tion and technology exist in abun- ket that clean technology is important
A study by the WEF in January, as you
dance, and yet they still have low lev- to us because of the commitments
know, revealed that 86 per cent of US
els of unemployment. What that tells we have made on the environment
job losses between 1997 and 2007
me is that, if we play a leadership role and reaching our climate-change
were the result of technology-driven
in innovation and technology, if we goals. Putting a price on carbon is im-
productivity gains, and only 14 per-
play a leadership role in technology portant, but one of the key ways of
cent because of international trade.
adoption, we’ll actually create more achieving it is through innovation—
And in this issue of our magazine,
opportunities. And if we’re a laggard, through clean technology.
Kevin Lynch writes: “Widespread de-
it’ll be to our own detriment because
ployment of autonomous trucks in There are 8,000 companies right now
other jurisdictions will out-compete
the US could put the jobs of upwards in Canada that are identified as clean-
us in the global innovation race.
of three million truckers at risk of tech companies. And their growth
technological displacement.” I won- potential is enormous.
der, do you see this kind of anxiety The message is not
about disruptive technologies with about humans versus Policy: Finally, on the CFTA, you’ve
people you meet—just in your riding said this is really about “strengthen-
technology, humans versus ing our home field advantage.”
of Mississauga-Malton?
machines. It’s about how we
Navdeep Bains: You’re absolutely Navdeep Bains: As a market of 35
can make Canada a more million people, we don’t have the lux-
right. I have Pearson International,
the largest airport in the country,
innovative economy, where ury of competing against each other.
in my riding of Mississauga-Malton. companies come here to We need to work together. I recognize
There is a strong logistical hub around build innovative solutions. there are regional differences. But fun-
it. There are warehouses and a large damentally, we believe being open to
transportation sector. I know many trade and being open to investment,
people in the trucking industry. They being open to people is how we’re go-
share these anxieties and concerns. ing to succeed in a world that’s pro-
Policy: Two more quick ones. First
We understand the anxieties that moting protectionism, that’s turning
on clean energy, renewables, and then
middle-class Canadians are facing inward. With the Canadian Free Trade
on the CFTA. Coal is not coming back.
Agreement, we are strengthening our
about their own prospects, about the You probably saw the story the other
home field advantage. And we are
prospects of their kids. The role of our day about the Kentucky coal mining
saying loud and clear that Canada
government is to say: “How can we museum that switched from coal to
is open. This is how we are going to
help deal with those anxieties in a solar power? And in the US there are
deal with those anxieties around the
meaningful way?” more jobs in solar—210,000—than
middle class, how we’re going to see
In our first budget, we brought in tax there are in coal—190,000, and—or
more growth in the economy. Because
policies to deal with that—a tax cut oil and gas extraction—180,000. And
we’ve had modest growth and we
for middle-class Canadians. Then we solar is forecast to employ 420,000
need to change that equation.
focused on the Canada Child Ben- people in the US, and wind 380,000
by 2020, where—and coal costs $140 How do we create good quality jobs?
efit. We used tax policy to deal with
per megawatt-hour to operate, solar The only way we do that is by saying
some of those anxieties. Then, we
costs $80, and wind $60. It’s pretty that yes, diversity is important and
focused on immediate job opportu-
obvious where the future lies in en- yes, it is our strength, but how do we
nities through significant infrastruc-
ergy in growth and jobs. So what are leverage that diversity for economic
ture investments. In this budget,
the opportunities in clean energy and benefits? If you have an idea and you
we’re focusing on skills and innova-
renewables? want to take risk and you want your
tion so that Canadians are ready and
able to do the jobs of the future. The Navdeep Bains: There’s a lot of po- company to grow, this is the place to
message is not about humans ver- tential in clean tech. This is an area come. We must let the world know
sus technology, humans versus ma- that impacts all sectors of the econ- that we have the best regulatory en-
chines. It’s about how we can make omy. And that is why we’ve commit- vironment. The best talent. The best
Canada a more innovative economy, ted $1.4 billion in our budget to look access to financing. The best oppor-
where companies come here to build at early-stage commercialization op- tunities for companies to succeed
innovative solutions. It’s not by be- portunities for clean-tech companies. globally because of both our inter-
ing the lowest-cost jurisdiction, but We’re looking at how we can con- national trade and domestic trade
a jurisdiction that people come to tinue to finance and provide that pa- agreements.
because the best people are here, the tient capital for companies that want Innovation and Economic Development
best ideas emerge from here, the best to make additional investments and Minister Navdeep Bains sat for this Q&A
technologies emerge from here. want to grow here. And then how can in his Ottawa office on April 13, 2017.
Policy9
Innovation Nation:
Supercharging Canada’s
Innovation Ecosystem
Dominic Barton
When the Trudeau government created its Advisory Coun- needed now is bold ambition, and a
willingness to challenge our current
cil on Economic Growth, it turned to Dominic Barton, thinking.
global managing partner of McKinsey, to chair the group.
1.
Invest heavily in skills training
After decades spent advising major corporations and gov- for workers. The automation of
ernments on how to address obstacles to success, Barton work—driven by technology—is
the single most disruptive force fac-
brought that experience to bear on Canada’s economic ing labour markets today. Nearly
strategy, particularly on innovation. half of Canadian jobs are at a high
risk of being affected by automa-
tion over the next two decades, ac-
cording to a study by the Brookfield
A
decade ago, CBC Television vation have failed to deliver. Three Institute. Furthermore, the para-
aired its mini-series The digm of work continues to evolve—
specific issues have proved difficult
Greatest Canadian Invention, the number of people engaged in
to address. First, as a nation, we do
counting down 50 inventions that temporary or contract work has
not consistently translate our good
were developed in Canada, including increased substantially in recent
ideas into revenue-generating com-
insulin, the telephone, the artificial years, and those employed full-time
mercial products and services. Sec-
pacemaker, and the zipper. Clearly, are switching jobs more frequently.
ond, we struggle to turn successful
inventions are a core part of our heri- In this changing environment, life-
start-ups into mid-size companies,
tage as a nation. long learning and re-skilling are es-
and to scale up mid-sized firms into
sential to maintaining a workforce
globally competitive players. And
Today, creating the conditions to su- that has the skills needed to thrive
third, many sectors lack a ‘burning
percharge Canadian innovation—or in an innovation-led, increasingly
platform’ for corporate adoption of
taking our ideas and inventions to knowledge-based economy. Budget
innovation, as they are comfortably
scale commercially—will be critical 2017 provides considerable new in-
profitable and do not face the in-
for our future prosperity. We face a vestment in skills development and
tense competition that has spurred
demographic challenge (rapidly ag- training. Continuing to build on a
innovation in other markets.
ing population) which, if left un- strong foundation here will become
W
checked, could cut GDP per capita more and more important in the
e believe that there are coming decade.
growth from the 1.9 per cent we ex-
eight broad actions that
perienced over the past 50 years to
0.8 per cent over the next 50 years. could help address these 2.
Attract the world’s top talent.
And, as the pace of technological challenges and transform Canada’s Three-quarters of high-growth firms
change accelerates and competition innovation economy. The Canadian in Canada say that the greatest bar-
from other countries intensifies, sup- government’s Innovation and Skills rier to growth is a lack of manage-
porting innovation will be key to Plan, detailed in Budget 2017, and rial talent. An important first step in
creating high-value, resilient middle other recent initiatives lay a strong remedying this will be to pursue the
class jobs. foundation for Canada to reach its federal government’s 2016 Global
innovation potential. That said, Skills Strategy, and to double down
Upping our game on innovation will more opportunity still exists across on other recent initiatives such as
not be easy, and several previous at- the board—to increase productivity the fast-track visa program. In the
tempts to accelerate Canadian inno- and drive inclusive growth. What is long run, attracting international
May/June 201710
students to our globally recognized Half of all billion-dollar start-ups in the US were
universities and increasing immi-
gration of skilled workers will be founded by immigrants. Canada’s reputation for
essential. Half of all billion-dollar openness and diversity give it a comparative advantage in
start-ups in the US were founded by the global competition for talent, and one we should
immigrants. Canada’s reputation capitalize on.
for openness and diversity give it a
comparative advantage in the glob-
al competition for talent, and one
we should capitalize on.
3.
Create innovation marketplaces scale innovation ‘marketplaces’ 4. Pivot focus to high-growth mar-
in key sectors and technologies. or ‘clusters’ to match the demand kets in Asia. Canada’s domestic
Canada’s innovation ecosystem is for innovation from companies market represents two per cent of
strong on many dimensions—from and governments, with the sup- global GDP and less than 0.5 per
its remarkable base of talent, to its ply from researchers and entrepre- cent of the global population. To
mix of large firms and high-growth neurs. These marketplaces can be scale and become global cham-
SMEs, to its leading researchers and flywheels of innovation and eco- pions, Canadian companies will
universities (e.g., in technologies nomic growth, especially when fo- increasingly need to look beyond
as diverse as artificial intelligence, cused on sectors where Canada has our borders for growth opportuni-
clean tech and quantum com- already developed a competitive ties, and adopt the global mindset
puting). What can be improved edge, such as ag-food, energy and common in Switzerland and Scan-
however, is the coordination and renewables, mining and metals, dinavia. The US will continue to
collaboration among these vari- health and life sciences, and ad- be our most essential international
ous stakeholders. To address this vanced manufacturing—as well as market, but as global growth dy-
need, Canada should create and around our leading technologies. namics shift, other countries—es-
Figure 1: Capital injection needs by stage in a company lifecycle
CAD MILLIONS
30
Seed Early Expansion Growth
Both number of Between For every C$1 21 percent of
25 deals and deal 2013–2015 available to Canada’s
sizes rose average deal early-stage firm, high-growth
between 2013 size fell by 33% only C$0.82 is SMEs
CAPITAL INJECTION NEEDS PER COMPANY
and 2015 in Canada directed
20 towards the
expansion stage
say that they
face financing
15 issues,
compared with
just 3% of SMEs
10
Little to no C$200–350
C$400–500 million
5 gap million total
total annual gap
at present annual gap
0
Seed Early Expansion Growth Mature Exit
STAGE IN COMPANY LIFECYCLE
Policy11
pecially in Asia—will become more ment Digital Service is collaborat- 8. Prioritize existing business inno-
and more important as markets for ing with individual departments; vation programs. Canada spends
our innovations. Companies that using design principles to lead a more than $5 billion annually on
have an explicit strategy for broad- fundamental “digital transforma- a multitude of programs to ac-
ening their international footprint tion of government,” and on a celerate innovation, enable com-
will not only have greater opportu- very aggressive time frame. Cana- mercialization, and strengthen ex-
nities for growth, but will also tap da can and should make a similar ports. We can still do a much better
into the vibrant innovation eco- large-scale, bold effort to digitize job of scaling up programs with
systems that exist in these high- federal, provincial and municipal proven impact, and cutting those
growth markets. governments as well. without. To do this successfully
will require regular assessment and
5. Create new pools of growth capi-
systematic data collection on effec-
tal to scale businesses. Starting A survey of start-up tiveness, as well as a major mindset
a business in Canada is relatively
easy: according to the World Eco-
‘exits’ in Canada and shift towards resource re-allocation
the US since 2000 found that and optimization. Also needed is a
nomic Forum, Canada ranks sec-
regular review of regulatory barri-
ond worldwide in ease of establish- only one per cent of ers—removing or re-tooling those
ing a new firm. The problem is that Canadian companies exited that create unnecessary barriers to
disproportionately few small com-
panies in Canada ever become mid-
with a valuation of more innovation.
market or larger firms. A survey of than $500 million, compared
Canada has the potential—and the
start-up ‘exits’ in Canada and the with 10 per cent of exits in need—to be an innovation power-
US since 2000 found that only one the US This is why the house in the coming decade. From
per cent of Canadian companies
government’s recent our world-class education system,
exited with a valuation of more
than $500 million, compared with announcement of a private to our diversity and reputation for
openness, to our strong existing sec-
10 per cent of exits in the US This sector-led Canadian
tors, we have all the right ingredients
is why the government’s recent an- Business Growth Fund is to attract and equip the next gen-
nouncement of a private sector-led
so important. eration of great Canadian inventors
Canadian Business Growth Fund
and business builders. Capturing this
is so important. It will help close
opportunity will be one of the most
Canada’s $200-350 million annual
important drivers of Canada’s future
funding gap faced by firms with
prosperity for all.
more than $10 million in revenue, 7.
Target government procurement
and provide the growth capital, to boost innovation. The Canadi- Dominic Barton is Global Managing
venture capital, and access to in- an government should use strategic Partner of McKinsey and Company
vestor advice and support needed government procurement to help and Chair of the Trudeau government’s
for those companies to expand. small, innovative Canadian compa- Advisory Council on Economic Growth.
(see figure 1) nies scale-up and gain credibility in
global markets. The principle here
6. Digitize government. Nearly a
must be a shift from requirements-
quarter of Canada’s employees
focused to value-based procurement,
work for government or quasi-
enabling the public sector to be an
government entities such as
important first customer for Cana-
schools, hospitals, and crown
corporations. At this scale, any dian innovations. The opportunity
meaningful national innovation here is significant: Canadian gov-
and productivity effort must in- ernments at all levels spend approx-
clude the public sector. Opportu- imately $100 billion each year to
nities abound here, particularly in purchase equipment, supplies, and
digitizing government processes services. Innovative Solutions Can-
and services. The US Digital Ser- ada, modeled after similar, success-
vice, a new federal agency, has ful programs in the US and U.K.,
a mandate to make government will provide $50 million annually
services “awesome” (i.e., better, starting with Budget 2017 towards
faster, more mobile, more social) earlier-stage products and services,
and cheaper. Another example is and if successful, should be expand-
in the U.K., where the Govern- ed even further.
May/June 201712
Innovation Policy in an
Era of Disruption
Kevin Lynch
As so many authoritative economic sources, surveys and production economy—how we com-
municate, interact, date, learn, get
corporate titans have told us recently, the nature of work news, and govern.
is about to change drastically. Automation will replace
People are totally transfixed by tech-
many existing jobs and governments are scrambling to nologies that have created self-driving
adjust their innovation policies accordingly. Kevin Lynch, cars and trucks but blissfully ignorant
of the job-displacement potential of
one of our regular contributors who is uniquely positioned such automated vehicles.
to assess the evolution of thinking on adaptation to the
Uber sent a shipment of beer 200
Fourth Industrial Revolution, outlines the opportunities miles along an interstate in a self-
and pitfalls of policy making in an age of disruption. driving truck. Elon Musk likes to be
photographed arriving at meetings
in San Francisco in a self-driving
Tesla. Amazon is experimenting
W
with drone delivery of packages in
e are in the midst of an intertwining in unimaginable ways— selected neighbourhoods. Cool tech-
era of disruption, driven a virtual revolution (Figure 1). nology, disruptive innovations and
by the extraordinary scale, new business models. A productivity
scope and speed of technological But few revolutions transpire without
and growth gain from technological
change, and spawning transformative upheaval, uncertainty, and swaths of
change, to be sure, but also a looming
innovations throughout economies winners and losers, and technological
social pressure and policy quandary.
and societies. These new technologies, revolutions are no different. This one
from big data to machine learning not only has the potential to funda- Widespread deployment of autono-
to artificial intelligence to quantum mentally transform what we produce mous trucks in the United States
computing to the internet of things, and how we produce it, but its im- would put the jobs of upwards of 3
to much more, are intersecting and pacts are being felt well beyond the million truckers at risk of technologi-
Figure 1(a): Technology is disrupting Figure 1(b): The “PACE” of disruption
things, again (time to reach 50 million users)
• Artificial intelligence (AI) and advanced robots
• New computing technologies
(quantum, neural, …) Telephone 75 years
• Blockchain, distributed ledgers Radio 38 years
• Internet of things (linked sensors)
• Big data, cloud computing TV 13 years
• Virtual and augmented realities Internet 4 years
• 3D printing
• Neurotechnologies, geo-engineering Facebook 3.5 years
• Nano materials Angry Birds 38 days
• Energy storage
0 25 50 75
Source: McKinsey Source: Citi GPS: Global Perspectives & Solutions
Policy13
cal displacement. In Tom Friedman’s There is no silver bullet for Canada’s innovation
words, this is the hollowing out of
middle-income paying jobs requiring
underperformance: no elusive tax incentive, no
middling education. More generally, reclusive venture capitalist, no exclusive intellectual
McKinsey & Company estimates that, property policy that can suddenly turn on the innovation
through a combination of machine spigot. But there is much we can and must do, starting with
learning, big data, massive comput-
a national innovation strategy.
ing power and artificial intelligence,
some 40 per cent or more of current
jobs in North America could be auto-
mated in the foreseeable future.
This highlights the duality of the venture capitalist, no exclusive intel- at least one innovation ecosystem in
policy challenge facing governments, lectual property policy that can sud- the global top 10 by 2020; half-mea-
business and society. On the one denly turn on the innovation spigot. sures will not succeed.
hand, we have a significant long-term But there is much we can and must
do, starting with a national innova- Second, we have to become a glob-
growth problem, caused by slow-
ing productivity performance and tion strategy. al talent hub, and align policies to
achieve this. Extraordinary talent
H
shrinking labour forces due to aging.
ere, the 2017 federal budget drives brilliant research, solves in-
The main driver for rebuilding poten-
provided encouraging sig- tractable problems and creates new
tial growth is innovation, which in-
nals. First, we have to set ways of looking at old things. What
creases productivity, improves com-
ambitious targets and assign account- sets successful innovation ecosys-
petitiveness, expands product choice
abilities. Building world-class innova- tems apart is that they are magnets
for customers and moves firms up the
tion superclusters has driven innova- for such talent. Recognizing that tal-
value-added curve. And Canada has
a considerable way to go in rebuild- tion and growth in other countries, ent pools are global, not national or
ing growth through improvements in ranging from the United States to Is- local, the government’s new Global
our innovation performance as even rael, Singapore and the Netherlands, Talent Visa and other measures to
a cursory examination of global rank- and the government has signalled its attract researchers and innovators
ings makes strikingly clear (Figure 2). intention to work with business, uni- should build on one of our greatest
versities, technology centres, risk cap- strengths—our diversity.
There is no silver bullet for Canada’s ital and the entrepreneurial start-up
innovation underperformance: no community to do so here on a com- Third, we have to modernize our
elusive tax incentive, no reclusive petitive basis. We should aim to have policy toolkit to support innova-
Figure 2: A global scorecard on innovation
Despite pockets of excellence, strength in start-ups and some best-in-class university research strengths, Canada is
pretty mediocre in business R&D and innovation, particularly in established firms. We have to go from “reasonably
good” to “globally great”, and rapidly, to rebuild Canadian competitiveness.
Innovation Reality
(C$ blns, except where noted)
Estimate —Forecast—
16/17 17/18 18/19 19/20
22nd 24th
Revenues 26th 292.1
70 %
304.7 315.6
4 327.7
$11,500
Canada’s ranking Canada’s ranking Canada’s ranking Canada’s business- Canadian research Per person gap
on innovation
Expenditures 315.1
on productivity
330.2 level
productivity 340.0 348.1
universities in the in incomes relative
on business
Program
spending on Spending
growth over290.9 305.4
relative to US 313.7
global top 100 319.8 to U.S. due to
R&D/GDP 1995-2012 period productivity/
Public Debt Charges 24.3 24.7 26.3 28.3
innovation deficit
Adjustment for Risk — (3.0) (3.0) (3.0)
Budget Balance (23.0) (28.5) (27.4) (23.4)
Federal Debt 637.1 665.5 692.9 716.3
As a percent of GDP:
May/June 2017
Budget Balance (1.1) (1.4) (1.2) (1.0)You can also read
