Lost at the start-up gate

Mary Janigan February 11 2002

Lost at the start-up gate

Mary Janigan February 11 2002

Lost at the start-up gate

Mary Janigan

A truly imaginative soul sees opportunities where governments can make money—when governments themselves have mostly missed them. At 46, David Pecaut is a tousled whirlwind, a former consultant who is CEO of a new firm, iFormation Group, that finds new technology used internally in big companies, carves out a start-up—and splits the profits. Surely, he says, we could be paying a portion of our health and education costs by exporting our expertise. Why not help hospitals sell advice to other nations, setting up online centres staffed by medical personnel with expertise in other languages? Why not ensure that universities can offer degrees to people in other nations by putting lectures online? The long-awaited federal innovation agenda should be crammed with opportunities for Ottawa and the provinces. “Its great to have an innovation paper—but if all it talks about is more research money and prodding the private sector, it is only half of the equation,” Pecaut says. “The government itself is not acting innovatively.”

He’s right. And therein lies a sad tale.

The innovation agenda was born in January, 2001, in the newly elected Liberal government’s speech from the throne. By 2010, it vowed, the proportion of the economy Canada spends on research and development would move from 15 th to fifth place among the 30 members of the Organization for Economic Co-operation and Development. Ottawa would double its own contribution to research during the same period. A white paper with detailed programs would spell out how to reach that ambitious goal. The goal is likely an impossible dream—although Canada has since edged into 14th place. The most recent OECD data say Canada spent 1.83 per cent of its GDP on R and D in 1999. Front-runner Sweden spent 3.8 per cent. The U.S., in fifth place, spent 2.65 per cent. But the gap between Canada and the top group is huge. Worse, it’s a moving target: everyone will spend more over the next eight years—and the size of everyone’s GDP will change.

Meanwhile, the white paper became bogged down. Last spring, it was split in half: one paper on innovation would come from Industry Canada; one on skills from Human Resources. Terrorist attacks delayed it. The economic downturn reduced available funding. The December budget stole suggestions, such as $200 million in one-time grants to aid university research. Finally, Industry Minister Brian Tobin quit last month—partly because he was upset by the limited funds now available for such innovation projects as the extension of high-speed broadband Internet access across Canada.

The new industry minister, Allan Rock, has inherited a cold potato. It’s been demoted to green paper status: it’s now merely a discussion document which will likely be released this month. It barely brushes Pecaut’s notions of what governments should do for themselves: those matters will be raised in upcoming talks with the provinces. Instead, it has four sections. It challenges the private sector to adapt and develop new technologies, noting that private firms do about 60 per cent of total R and D in Canada compared with 70 per cent in other OECD nations. It considers how Canada should cope with the pending shortage of50,000 highly skilled workers by 2010. It discusses regulatory and business-tax changes. And it talks about broadband expansion. It is earnest. And, by all accounts, boring. “The paper is shrouded in so much jargon that the public will be totally confused about the simple reality that innovation means so much to their lifestyle, wealth and their children’s prospects,” says John Reid, president of the Canadian Advanced Technology Alliance.

What to do? For starters, Rock’s staff should work with officials to polish messages that every Canadian can grasp. The paper should not talk about how the technology works—but what it can do for Canadians. “Picture a baby with an illness in northern Canada,” says Reid. “Expert help could be at hand via the Internet.” But Tobin’s political staff did not hone such messages. They did not even build an industrywide lobby to support the innovation agenda: last fall, when it became clear the initiative would receive little funding, they drafted a form letter of support, asking industry groups to sign it and send it back. Although Tobin cut his funding request at cabinet, that message did not get out: the budget was seen as a defeat for him. It was amateur hour.

The innovation paper should also be more, well, innovative. Although there is a case for extending broadband to the most remote communities, many centres do not need public help: the cost of delivery is falling rapidly—so private-sector provision will likely be feasible in five years. And, as the e-business specialists at the Boston Consulting Group recendy reported, firms that develop smarter, cheaper ways to bridge the digital divide will reap community goodwill—and long-term profits. “Iam dead set against the idea of a government-led innovation agenda if it simply involves finding more excuses to spend more money,” says Tom d’Aquino, president of the Canadian Council of Chief Executives. “Government should be part of a plan to spend more creatively.” The green paper is simply the start of a start-up. G3

The Liberals’ Allan Rock has inherited a cold potato called the innovation agenda. It’s not very innovative.