Lack of innovation hurting Canada: report

Canada must put more emphasis on high-tech innovation if it wants to go toe-to-toe with other Western nations in the knowledge economy, says the Conference Board of Canada in a new report.

On Tuesday the Conference Board of Canada released its third annual innovation report: Investing in Innovation. The 76-page document outlines Canada’s strengths and weaknesses when it comes to fostering high-tech smarts in the private sector and the country at large.

In its report, the Conference Board concluded that, despite some encouraging trends and pockets of activity, Canada’s overall commitment to innovation is lackluster, and that the ramifications of that attitude is costing the country money, job-creation opportunities and slowing productivity.

The Conference Board sent a particularly strong message to Canada’s business executives, saying they have failed to show a “passion” for innovation. The report urged them to show more leadership by making more risky, but tech-savvy and potentially rewarding investments.

“Be able to try new things,” said Gilles Rheaume, the Conference Board’s vice-president of policy, business and society in Ottawa. “And not in terms of trying to copy what others are doing, but being new in the game.”

He admitted that changing the mindset of business leaders presents a tricky problem, one that won’t be easy to resolve. “These are soft issues … so they are hard to deal with,” he said.

Rheaume said executives could also engage in more concrete action, including putting more money into corporate research and development programs and placing a higher priority on worker training and education. Currently, per employee training spending in Canada is 10 per cent less than the U.S. average and 50 per cent below the European average, according to the Conference Board.

Rheaume also pointed to the operating culture that pervades corporate Canada, one that often sees executives trying to play it safe instead of making bold moves.

“(Canadians) focus a lot on the average – in that being average, we’re fine. But it doesn’t look at those who could be natural leaders,” he said.

“It’s a question of do we have enough entrepreneurs in this country … and are they encouraged to flourish and be entrepreneurial,” adding that such people are not only useful for launching businesses, but also as catalysts for rejuvenating corporate cultures in established companies.

Such investments ultimately payoff – according to the Conference Board, those companies that pour money into research tend to be those that succeed. Rheaume said the low value of the Canadian dollar versus U.S. currency have made life easy for some Canadian exporters, giving them another reason to put high-tech projects on the backburner.

As well, Rheaume said business leaders shouldn’t use the worsening economy and the aftermath of Sept. 11 as excuses to avoid innovation spending. “I would say it’s at these times we shouldn’t abandon it,” he said.

Among its many other recommendations, the Conference Board lauded the government for its R&D efforts, but urged companies to invest more in R&D. It also called on Ottawa to make national tax rates “competitive” vis-