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Two interesting perspectives on the innovation economy

January 25, 2011

Today, two thought-provoking articles about how to build an innovation economy.

First, a Canadian perspective. Glen Hodgson, Senior VP and Chief Economist at the Conference Board of Canada, has written an article arguing that Canada is at a “tipping point” in our struggles with innovation. He argues. as others have, that Canadian industry’s lack of innovation stems from a lack of need. Our reliance on commodities, soft currency, and anti-competitive business practices led to the establishment of a branch-plant mentality and the generation of managers rather than entrepreneurs (one note: we do generate entrepreneurs, but too many of them head south to American innovation hubs).

Hodgson argues that structural forces are changing, and thus demanding innovation from Canadian firms. These forces include a strong Canadian dollar, a weakened US market, a diversified global market, and slowed workforce growth. These factors are forcing Canadian firms to innovate t0 compete. And he provides data, including increased speding on machinery and equipment and the number of patents filed, to support his contention that we may finally be seeing the industrial innovation Canadians have been lacking for so long.

There’s a lot here I agree with. This is the push and pull of innovation I wrote about previously. The government does what it can to spur innovation, but there’s only so much it can do. Adjusting competitive conditions – allowing a stronger Canadian dollar, increasing foreign competition for Canadian firms, and so on – are just as important, and likely more so, than politically-attractive regional development programs nominally related to “innovation”.

The second article is from the New York Times columnist David Brooks, who is speculating on the content of Barack Obama’s State of the Union address tonight. Brooks argues that government must change its approach to building an innovative economy. He argues that 21st century economic competition is a co-operative process akin to the competition between universities – they compete while collaborating in a common quest for knowledge. Government should play the role of university administrators, who know that they can’t possibly direct the cutting edge research in their departments of physics, geography, or religion. Instead, they take care of infrastructure, recruiting, fundraising. They are, in fact, the “powerful stagehands”  who make possible the work of the professors and other university members.

And so should it be with an innovation economy, argues Brooks. Government should establish tax and regulatory regimes, should work to concentrate talent in regional innovation hubs, and should guard social equality, but should otherwise let the entrepreneurs and executives handle the details of the economy.

These ideas are absolutely relevant to the Canadian situation. There’s only so much government can do. It should create the right environment (some conditions of which are involved in the tipping point mentioned above). And it should work to encourage areas of innnovation instead of diluting the impacts of investment by championing regional concerns over excellence. Government’s role is one of oversight and assistance, not hands-on direction. The number and variety of government business innovation programs suggest we haven’t yet figured that out.

3 Comments leave one →
  1. Jim permalink
    January 25, 2011 16:56

    The role of (university) research administrators should be to get out of the way (be invisible) and to facilitate the work of their faculty, enabling them to conduct their best research and achieve their full potential. However, (and this is not limited to Canada) administrators tend to self-aggrandize and serve their own offices before those of their true masters (since without researchers and teachers, they’d have no purpose). Ideally, research administrators should be led by people who remain active investigators (leading from the front, sensitive to the real issues, etc). In this respect, it is good that the CIHR Institute Directors have to maintain active research programs.

    This doesn’t address the innovation gap though. The best research isn’t really driven by need. It’s driven by ideas (that’s what is so hard to manage). Innovation is often driven by external pressures and is very much drawn by needs or advantages. Perhaps (and I know this is sacrilege), one cannot expect both in the same environment? The systems that nurture ideas are not the same as the systems that promote innovation. This doesn’t relate to public/private sector – both contribute to both worlds. But if we recognized that these are two worlds with different needs, instead of one amalgam, we’d have more examples of innovating thinking?

  2. SpongeBob permalink
    January 31, 2011 15:28

    I think there is no clear cut between research and innovation. For instance, the whole field of biotechnology has its origin in the work of curiosity-driven research on thermophiles, from which strange enzymes acting on DNA were discovered. On the other side, the late Pierre-Gilles de Gennes once said that he never undertook a research program for which he could not see an application.
    Some innovation is disruptive and comes from the opportunity captured by an entrepreneur (e.g. RIM), sometimes innovation is incremental. In the end, the bottom line is always the big driver. Out of the top 10 R&D spender in Canada (total expenditures) (http://www.researchinfosource.com/2010Top100List.pdf), 6 are in the area of communications, where the competition is fierce. Suncor and Imperial Oil are in 13 and 25th place, and spend only 0.7 and 0.4 % of their revenues in R&D, but they do invest in infrastructures to dig and process the tar sands.
    My naïve understanding is that to increase the bottom line, you either: develop new markets or your market share, increase your production, or increase your productivity. In the first case, you have to invest mostly in R&D, in the second, mostly in equipments and infrastructure. In the third case, you could do both, but you can also delocalize to emerging countries.
    As the economy is heavily governed by the trade markets, it will be very difficult to come up with a strategy to foster innovation, especially if we put too much emphasis on the process (let’s design a new program), rather than on the results, a typical Canadian illness.

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  1. Innovation vs. Invention « Researcher Forum

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