Capability-centred innovation in post-pandemic Canada more important than ever

Digitization has become a reality for Canadians a lot quicker than the experts would have predicted only a few weeks ago. Digital cafés, Google meet-ups, and other virtual remote work arrangements have enabled us to continue to be productive and social. However, we often overlook the fact that the reason a significant percentage of Canadians can work remotely is that they are part of a “knowledge-based” economy. The success of knowledge-based economies is inextricably linked to effective innovation ecosystems. Interactions and collaborations among key actors (i.e., higher education institutions, businesses, and government agencies) determine the quality of an innovation ecosystem. In Canada, we have established a sophisticated set of policies, funding mechanisms, collaboration platforms, and anchor institutions that allows us to compete globally. For example, in 2019, we conducted over $35-billion in research and development (R&D) as a country. The post-secondary education and business sectors performed the bulk of this activity. On the funding side, the primary sources of R&D support are businesses, the post-secondary education sector, and the federal government. Interconnectedness and collaboration among the top R&D funders and performers is a key attribute of the Canadian innovation ecosystem. For example, businesses funded over $1-billion in R&D at post-secondary institutions. This type of collaboration, coupled with a progressive support system (e.g., intellectual property regime), continues to propel Canada’s knowledge-based economy forward. The current pandemic may cause significant disruption to the innovation ecosystem. The federal government has been proactive in extending additional support to the system. It has announced several significant measures, such as additional funding through the National Research Council of Canada Industrial Research Assistance Program and regional development agencies. However, private sector investments in R&D remain a critical part of the ecosystem. Given significant declines in revenues due to COVID-19, the private sector will need to change priorities, and possibly at the cost of supporting R&D. Any reduction in funding support or collaboration from the private sector will have a negative impact on Canada’s innovation ecosystem. Our priority, therefore, must be to ensure that we find ways to shorten the implications for R&D and prepare our businesses, especially small and medium-sized businesses (SMEs), to remain engaged in innovation. Additionally, Canada’s post-secondary education sector is going through a significant transitory phase. Universities and colleges are at the heart of the innovation ecosystem. They are leading performers and funders of R&D, sources of new innovative startups, and educators and trainers of the future workforce. Academic institutions are currently facing financial uncertainties from two different directions: R&D partnerships with the private sector, and the expected downturn in international student recruitment due to travel restrictions. As two primary components of the innovation ecosystem face the headwind due to COVID-19, the protection and growth of the ecosystem must become one of the top priorities for the country. To identify businesses with core capabilities required to succeed in these difficult times, the Conference Board of Canada is currently developing a capability-centered innovation framework (CCIF). The new framework will provide insights to policymakers on how best to leverage and protect Canadian assets (e.g., businesses, not-for-profits). CCIF assesses core business innovation capabilities and identifies SMEs that are innovation resilient, i.e., most likely to scale-up and survive post the current pandemic. The post-pandemic “new normal” is still being determined. However, it is clear that it will be more digital than ever before. A more digital world will expedite the pace of innovation, and Canada is well-positioned to play an important global role. We must continue to support our innovation ecosystem and ensure that we identify and protect our key firms and intellectual assets. Harry Sharma is director of innovation and technology at the Conference Board of Canada. The Hill Times