He rose through the ranks of the federal government for more than 30 years to become Canada's top civil servant, clerk of the Privy Council. Now, Kevin Lynch, who retired from public life last year to become vice-chair of BMO Financial Group, is sending a message about how improving our standard of living depends on the country's commitment to innovation.
Mr. Lynch, who sits on the board of directors of Canada's Gairdner Foundation, which administers some of the world's top medical awards, argues that as the global market becomes more competitive, strong investment in innovation is the key to ensuring the long-term growth of the country's economy. He recently shared those views at a symposium organized by the foundation, which hands out its prestigious awards in Toronto on Thursday, and spoke to The Globe and Mail about what will happen if the country doesn't listen.
Why do you think this whole idea of innovation in Canada is so important to our future?
All the work that's been done suggests that innovation is a key driver of productivity. Innovation allows you to create new products, new processes, new markets, ways of doing things differently. It makes you more competitive. You open up new market lines, like the new RIM device [the Playbook] It actually creates really dynamic economies. It actually uses intellectual property. It creates brand value. It really does drive things dynamically. It's important for productivity, it's important for growing, to have innovation for a growing economy.
Do you feel our standard of living is in jeopardy if we don't foster innovation?
I think people enjoy their standard of living and would like it to continue to rise. In a sense, it's not necessarily that we will move back. It's essential to move forward and that's what Canadians want. I also think as the world becomes more globalized, being productive - but particularly having innovative firms - is going to attract the best global talent here and keep the best global talent in Canada. It's a virtuous circle. If you become innovative and inventive, you become even more innovative and inventive.
The big issue here then is why aren't we being innovative. What's standing in the way?
We really are middle of the pack in terms of private-sector spending on research and development and on innovation, and that I think becomes a problem going forward because you want to be developing new products and new processes here and you can only do that if you invest in research and development and innovation spending. So it's a going-forward issue that kind of worries me in terms of that ability to keep growing our firms, creating new firms, creating new products, which makes an economy competitive and dynamic today.
Does this come down to the companies themselves, government funding, or is it just a psyche that we have to shake off?
The good news is that in any sector you'll find a couple of firms that are absolutely world-class in their innovation spending. … That suggests we can do it. The question then is why aren't more firms doing that in each sector. My suggestion to deal with that … is that Canada consider setting up a productivity and innovation council. The Australians have a productivity council which is not dissimilar. My thought is its role would be to benchmark best innovation and productivity performance in each sector in Canada against the five best competitors in the world and make that information available, so in essence, there would be information-driven competition in all sectors and plus knowledge. If I'm a mid-sized firm in rural Ontario, how in the world do I know what they're doing in Singapore, Silicon Valley?
What do you think would happen if we don't make any of these changes?
Canada [is]…going through a demographic change where we're aging. The proportion of the population that's in the work force will get smaller over time. If that's the case, we've got to make sure that if there are fewer workers working, they've got to be more productive. That's not that they work longer, but actually they work in a sense smarter, with better tools and produce more revenue per hour worked. That takes productivity and innovation. The other point I would make is everybody around the world, the Chinese, are investing heavily in research and development as well. It's not uniquely a U.S. or a Western issue. This issue of trying to move up the value-added chain through research and development innovation is something that most economies understand because it's the way that you raise your standard of living. It's a competitive world. We've got enormous assets, but you've got to keep changing, and part of the way you change is through innovation. There's no reason why we shouldn't be, I think, at the leading part of this curve.
This interview has been condensed and edited.