Everybody knows Thomas Edison invented the light bulb – it’s in the history books and ingrained in the popular psyche.
But what most don’t know is that in 1874, a medical student in Toronto named Henry Woodward and a local hotel keeper named Mathew Evans patented a nitrogen-filled light bulb that lasted longer than any others during the period. Unfortunately, Woodward and Evans couldn’t get financing for their work. It was five years later when Edison, the American, invented his light bulb and bought the Canadians’ patents.
That story is still playing out 137 years later. Today, Canadians still struggle to keep their own bright ideas right here at home. Too often, the support available to business innovators is too hard to find, too hard to access, or too little to matter.
Business innovation is the ultimate source of any country’s long-term economic competitiveness and quality of life. Sadly, studies have repeatedly documented that business innovation in Canada lags behind other highly developed countries. To ensure success and prosperity in the decades ahead, Canada must become an innovation leader. With this in mind, the federal government last year appointed our panel to prepare a review of federal support to research and development.
The charge was to provide advice about the effectiveness of federal programs to support business and commercially oriented R&D, the appropriateness of the current mix and design of these programs, as well as possible gaps in the current suite of programs and what might be done to fill them.
As a panel, we conducted wide and extensive consultations, hearing from Canadian success stories who said that federal programs have served them well, as well as others who indicated that these programs need improvement. We heard that the government should focus more on helping innovative firms to grow, particularly small and medium-sized enterprises (SMEs). We heard that programs need to be more outcome-oriented, more visible and easier to access. We were told that whole-of-government co-ordination must be improved and that there should be greater co-operation with provincial programs. People told us that innovation support is too narrowly focused on R&D, and that more support is needed for other activities along the continuum from ideas to commercially useful innovation.
We believe there is an urgent need for action. We believe the federal government should focus its efforts on growing innovative firms into larger enterprises, rooted in Canada, facing outward to the world and equipped to compete with the best. Our panel’s report outlines six broad recommendations that form a framework for action.
1. Create an Industrial Research and Innovation Council, armed with a clear business innovation mandate. This Council would be the centrepiece of the government’s efforts to help entrepreneurs bring their innovative ideas to the marketplace and grow their companies into internationally successful businesses. Its role would be to enhance the impact of programs through consolidation and improved whole-of-government evaluation.
2. Simplify the Scientific Research and Experimental Development program by basing the tax credit for SMEs on labour-related costs.
3. Make business innovation a core government procurement objective. The government should make better use of its substantial purchasing power to create opportunity and demand for leading-edge goods, services and technologies from Canadian suppliers.
4. Transform the institutes of the National Research Council. The entities under its purview should be evolved into a collection of large-scale, sectoral collaborative R&D centres involving business, the university sector and the provinces, while transferring NRC public policy-related research activity to the appropriate federal agencies.
5. Help high growth, innovative firms access the risk capital they need through the establishment of new funds where gaps exist. Too many innovation-based Canadian firms that have the potential for high growth are unable to access the funding needed to realize their potential. The government can help in this area with the establishment of new funds through BDC, with incentives and governance designed to ensure strong private sector participation and leadership.
6. Establish a clear voice for innovation, create a whole-of-government Innovation Advisory Council of external experts, and engage in a dialogue with the provinces to improve co-ordination and impact.
Canada has a solid foundation on which to build. We have a strong financial sector, attractive corporate tax rates, a diverse, well-educated work force, significant natural resources, and institutions that safeguard the rights of individuals and encourage initiative and entrepreneurship.
And yet challenges remain. Our panel believes that our six broad recommendations, if implemented, would result in a Canadian business sector that stands shoulder-to-shoulder with the world’s innovation leaders. Ultimately, this will mean a more productive and internationally competitive economy that supports rising living standards for all Canadians.
Tom Jenkins is chief executive officer of Open Text, and chair of the Expert Panel – Review of Federal Support to Research & Development