The Canadian Innovation New Deal

The Canadian Technology New Deal

This generation of Canadian innovation certainly does stand on the shoulders of giants. There is an invention legacy in Canada that, given our population, outperforms most other countries. Our inventions have had transitional impact at a global scale — back when we took it seriously as a nation. It is time to build a culture of innovation and become the shoulders that other nations stand on again.

We are months into the pandemic and already we have reshaped our social structure to support those most affected by the shutdown of business across the country. Now there is a growing sense of unease as we wait for the brakes to ease on the safety restrictions and we can all go back to work. We don’t know what that will look like but we do know that, regardless of where you work, it will look different. We will be forced to rethink much of how we operate going forward as the old way is no longer an option.

With unemployment at the highest point in modern history, there will need to be a stimulus that gets people back to working. We will inevitably start massive infrastructure initiatives across the country — this is the time to invest in the nation and do those things that have been saved for a rainy day. I believe that Canada should also be deliberate in delivering a new innovation deal that spurs invention and rebuilds our brand as the little nation that could — and does — create world-changing technology.

Canada needs to regain our swagger by rebuilding our brand as a world leader in innovation and the pandemic has given us the excuse we’ve been waiting for.

There has been a lot of chatter around a “New Deal” for Canada to help stimulate the stagnant economy and pull us out of the inevitable recession that will follow.

Roosevelt’s New Deal was aimed to put Americans back to work and to build confidence in the economy as the world recovered from the Great Depression. At that time it meant funding the construction of buildings, bridges, highways and parks. There was funding for artists, a focus on workers rights and even ended prohibition. One of the most ambitious efforts was to pass the Tennessee Valley Act to build dams along the Tennessee River to control flooding and generate hydroelectric power for the region. Big thinking like this that changed the face of the nation.

Tennessee River

Today we are in a different situation. Sure, there is a massive need for infrastructure maintenance but that is an obvious low hanging fruit. However, most of Canada operates in the bitsphere — a place where digital connectivity and electricity drives our daily lives. Having an IP address and a screen has become our gateway to work and play and that is not going to change. In fact, this has become table stakes for where we go from here.

The real question is where do we go? The innovations that we are using to stay connected today are older than most of our parents. The cycle of pure innovation has slowed to a crawl and there’s nothing like a pandemic to force our hand.

Pure Innovation?

There is an alarming lack of true innovation being commercialized effectively today. This has become our problem. Companies, for the most part, aren’t innovating at all anymore. The technology that runs our lives has been around since the 1960’s. The ideas are even older. We have been on a slow crawl from networked computers, to desktop computers, and then back to networked computers (but we call it “the cloud” today) since the 1940’s. The only difference is that as Moore’s Law progresses, things get smaller and go from the size of warehouses, to fitting on desks to pockets to wrists. From stamps to email to SMS. From ads in newspapers to ads on TV to ads online. From census to Google Analytics.

What we need is a kick in the innovation ass and the pandemic is a perfect excuse.

Canada needs a New Deal for Innovation.

Here is our chance to build our collective brand as an innovative country. We’ve been known historically as a nice populace, a welcoming nation to those that need shelter and a new start. We were once known as the world’s peacekeepers but that hasn’t been true for over 20 years. Our identity in the world has become whitewashed and with a bold innovation strategy and bold bets on investment we can start to build our brand as an upstart nation that commercializes (and exports) world class technology.

Setting this tone requires investment. Not just “traditional” new deal investments of pavement and buildings and rails and tunnels but big bets on where technology is going. Canada is a nation that needs an identity and invention is where we must go to do so.

We (the collective “we”) invented two-way paging and we were pioneers in fibre optics that led the way to our connected world. Today we look up to companies like Facebook and Google who are, in essence, selling ads. The same thing the world has been doing for hundreds of years, they just do it better by harvesting our data and selling it to the highest bidder. Even the platform that enables them to operate, the Internet, is 45 years old. There is no innovation here, that’s just evolution. The majority of revenue earned from newspapers during their day was from ads. The same is true of Google and Facebook today. That is not innovation. We should not idealize these companies.

“If I asked people what they wanted, they would have said faster horses.”

That famous quote attributed to Henry Ford seems ridiculous today but it says so much about seeing true change happening (a car) as opposed to incremental changes (a more comfortable saddle).

Peter Thiel summed up the rate of declining technological innovation today when he aptly said “We wanted flying cars, instead we got 140 characters.”

Now is the time to lay the foundation to shift the way that the world and Canadians think of Canada. Something like this usually takes a generation to do but the way Canada reacted to the Pandemic shows us what can be done if we are motivated to make it happen.

Here’s what it will take.

A national (REAL) innovation mandate

Innovation can’t just be a word that describes what we’ve done prior. Innovation is not a retrospective. It is an active flex and needs to be defined. Canadian leaders need to articulate our national innovation mandate and the Canadian Government needs to reduce the friction to funding this future. We also need to rethink how we brand Canada. Natural resources and quality of life aside, our confidence will come from others telling our story back to us and right now we all live in igloos and hunt deer in our backyards. We need to change this perception. What do we want other countries to say about us?

A national foundation of entrepreneurship

To innovate, we need innovative thinking. That can come from anywhere but needs to flourish. Risks need to be taken in order for breakthroughs to happen. It’s hard enough gaining the courage to start something new and far flung as is. Building a business is not a natural act. We are conditioned from birth, through schooling, that the workforce is our destination. It takes someone who sees the world differently to be able to step off that track to build something none of us have seen before. We need to foster this. To support it like it is the arts.

We tend to punish the crazy thinkers until their idea succeeds and then we praise them and claim them as Canadian. Canada should be looking deeply and investing heavily into the entrepreneurial economy. We shouldn’t be glorifying the startup economy, we need to nurture and support entrepreneurs. Ideas will come and most will go, building a foundation of entrepreneurial thinking should be our goal. Innovation begins with ideas that aren’t funnelled through the lens of where we’ve been.

National access to funding

Canada is close here. We already have R&D tax credits and subsidies for unique projects that move innovation forward in business and research but we need more and we need it to be unencumbered. For Canada to compete at scale with countries like the US and China we need to rethink the way our most innovative companies get funding. Most of our great technology companies rely on venture capital and, eventually, need to find a US VC to fund the later rounds. Some companies on the cusp fight this duality of trying to find their next round of funding and building a great product. Unfortunately, most of our nascent technology industry is sold before they mature into real businesses. This hollows out our core. We seem to be permanently stuck on the early stage company treadmill. There are a few that break out but that is not the norm.

Access to early early funding to build a business while keeping the equity inside Canada means they have a chance to build a company for the long game. Making the funds available at the start of a project, not at the end of the fiscal year, means more focus on product development and commercialization.

To build a true innovative nation we need to support our entrepreneurs from the start. We can’t think of them as fringe until they move into the mainstream, we need to focus our attention on letting them build the new industries to move us forward. This will take a bold move by our leaders. It can be done, we’ve witnessed it during the pandemic. When we put our minds to it, this country can disrupt and surprise us by doing rather than talking.

Canada needs an identity beyond the nice nation. Identities are bestowed on or fought for and I’m saying we need a call to arms for a technology revolution in this country. Let’s take this time to deliberately shape our nation into something that is focused on the future.