It is no secret that Canada lags behind its innovation potential, leading firms to be less competitive and Canadians sending more of their money to innovators abroad. More of the same – increasing intellectual property rights, asking universities to lead the way, tax credits that go nowhere – will not work. We need to do something radically different, building on our diversity, openness and belief in facts to turn our innovation aspirations into reality.
Not only Canada, but the world is reaching an inflection point: As successful as we have been at doing innovation – introducing new products and services – it is becoming more expensive to achieve less. The innovation system that sustained growth in the 20th century has reached what Geoffery West of the Sante Fe Institute calls a singularity: where our own success requires so many resources that the system implodes.
The evidence is everywhere. Biopharmaceutical firms are introducing fewer innovations, and those they do come at a higher price. The Canadian information and communications technology sector is, according to the OECD, suffering negative and declining rates of productivity. According to the International Monetary Fund, total factor productivity – a measure of the impact of innovation on the economy – is approaching zero in advanced economies. Labour productivity is similarly falling.
The innovation system that has given us so much – new medicines, new machines and a better quality of life – needs to readjust to this decline. The world has done this before, with the first, craft-based industrial revolution of the 18th century giving way to 19th-century industrial research firms that morphed into the 20th century’s publicly supported research and innovation system. It is time to transform the system again.
Ironically, the fact that Canada has been a laggard leaves the country with more flexibility to adopt a new way to do innovation. The Economist recently noted, for example, that Canada “has made a virtue of limited resources, developing an alternative model of innovation based on openness to unorthodox ideas.”
Canada has many of the basic ingredients to develop its own model of innovation and we know what is missing. We have a rare mixture of diversity and openness, a strong education and research base, a belief in sharing, and a strong feeling of connection to Canadian institutions, such as our universities and communities. What we lack is a deep and sustainable ecosystem to sustain innovation and a strategy to keep intellectual property in Canadian hands. Too many of our clean tech and artificial intelligence patents leave the country. We export more innovators than we attract. The interactions of our public, philanthropic and private sectors are too thin. We fail to develop capacity to think about scaling-up.
The good news is that governments are taking action. Canada took a bold move at negotiations leading to the recently renamed Comprehensive and Progressive Agreement for Trans-Pacific Partnership: it convinced other countries to drop intellectual property rules that would have stifled Canadian innovation. The federal supercluster program will deepen interconnection between sectors, despite the insufficient amounts of funding it provides. Ontario is considering a patent pool that will help keep intellectual property in Canadian hands and others may follow.
Beyond these policies, Canadians are experimenting with innovation models that build cross-sectoral collaboration, lower barriers to working together, and that create excitement and tangible know-how that attract firms and investments to Canada. The Montreal Neurological Institute and Hospital (the “Neuro”) is the world leader – in co-operation with Toronto Structural Genomics Consortium – in creating a new model of innovation called open science. This model builds on what worked in artificial intelligence: an open platform that creates community, lessens transaction costs and builds excitement.
The rest of the world is coming to Montreal to learn from the Neuro’s experiment. Research institutions, governments and firms want to learn how we did it and want to take part. Students and researchers come to Montreal because of the Neuro’s open science platform. And over the last year, the Institute gained the two largest philanthropic donations in its history.
Canada needs to be ambitious and creative in building its own models. The innovation we most need is to the innovation system itself. Canadians are as talented as anyone, are as willing to take risks, and show a greater willingness than most to advancing the global good. Our success in AI and at the Neuro show that we can be global leaders – with all the economic and social benefits this brings – in figuring out how to turn our knowledge into global firms and to draw on the talent of all Canadians of all genders and ethnicities to build a sustainable innovation system for the 21st century.