Two interesting perspectives on the innovation economy
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.