There’s much to be proud of in our digital industries – the information and communications technology sector of the economy. We have lots of world-class talent, we are great at start-ups, and the sector is providing good jobs paying good wages. But this is not enough if Canada is to make its mark in the digital world.
Canada’s share of the global ICT market is shrinking, according to a report first reported on by Zane Schwartz of The Logic. Average R&D spending has been falling and the sector has experienced weak growth. The sector is dominated by small firms – of roughly 39,000 companies, 86 per cent have fewer than 10 employees and only 585 have more than 100. Exports of ICT products have declined, as have exports of ICT services. And in high-speed mobile Internet subscriptions per 100 inhabitants, we rank 30th, far behind leaders such as Japan, Finland, Estonia and the U.S. Moreover, much of Canada’s top talent is working in R&D branch plants creating intellectual property for companies based in other countries, not in building up successful Canadian companies.
So what’s the answer?
Budget 2017 established six Economic Strategy Tables to identify growth opportunities in sectors deemed to have the greatest growth potential. One of these is the Digital Industries Economic Strategy Table, chaired by Tobias Lutke, one of the founders of Shopify, the high-growth platform that allows small companies to become mini-multinationals by enabling them to market and sell around the world.
But he and his 15 fellow Table members face a major task in meeting their deadline – the end of this year – in developing what the federal government has promised, a long-term action plan “to meet ambitious economic growth targets for 2025 and beyond.” Their mandate is to deliver “a common vision for both industry and government that sets the course for moving forward to identify sector strengths, overcome obstacles, and improve competitiveness and growth.”
This is a highly ambitious agenda, which is to include business-led solutions, policy recommendations and public-private partnerships for immediate, medium- and long-term initiatives, set out plans to create greater opportunity for women, the disabled and Indigenous Canadians, as well as older workers in the sector, and design a mechanism to champion and monitor sector growth strategies and results.
Young bucks dominate
Lutke has executives from successful young digital companies and venture capitalists to deliver on the project. With one exception, though, they all come, like Lutke, from companies started in the past 10-15 years and most are ambitious but still mainly small to midsize companies, including Wattpad, Element AI, WealthBar, Bench Inc. and Vidyard.
But there’s no one from the communications sector, which is responsible for high-speed broadband and 5G technology, no one from established players which have travelled the scale-up and globalization process, such as OpenText or BlackBerry, no one with experience from the broader consulting world, no one with experience in big projects such as smart cities or autonomous vehicles. So despite the talent and expertise of Lutke and his fellow Table members, will they have the capability and experience to design and deliver a meaningful strategy for our digital industries?
More startups is not the solution
The Table has had at least four meetings since last November and is pursuing four priorities: How to accelerate the diffusion of digital technologies across the economy; how to leverage data and intellectual property for artificial intelligence applications, address open data and privacy issues and improve commercialization of IP; how to improve the supply of talent and increase the role of women and disadvantaged groups in the sector; and how to grow more companies to the scale and scope for global success – creating lots of startups is necessary but not enough.
Technology diffusion, building opportunity from intellectual property, expanding the talent pool and figuring out how to scale up more Canadian companies into globally competitive businesses are all important – and long-standing – challenges, to be sure. If Lutke and his partners can come up with fresh thinking on any of them, Canada will benefit. We really need some new ideas, not the reiteration of old ones. And we need to match aspirations with plans of how those aspirations will be achieved.
A look to Europe?
Lutke’s group might want to look at a recent report from the Organization for Economic Cooperation and Development (OECD) – Going Digital in Sweden. As the report says, “Sweden is among the leading countries in the diffusion and use of digital technologies” while “broadband availability, quality and affordability score among the best in the OECD.” The country is well on its way to meeting its goal of having 98 per cent of households and businesses connected to 1 gigabit per second Internet by 2025.
Moreover, as the report outlines, “the economy has the highest share of value added produced by the information and communications technologies sector among OECD countries and is among the top 10 exporters of ICT services worldwide.”
If the Digital Industries Economic Strategy Table is to push the country to a higher level, it will need much more than incrementalism. It will need to think big and be bold in its ideas.