Canada a country of ‘underperfomers’, says Conference Board

Disappointed by Canada’s poor global competitiveness ranking, theConference Board of Canada is launching a new initiative to makeCanadian companies more innovative. The Centre for Business Innovationwill explore why Canadian firms are not world leaders in innovation,develop business strategies to help companies change that, trackbenchmarks of innovation performance, and suggest public policies tostimulate business innovation in Canada.

The move to launch the new five-year initiative follows recent newsthat Canada has fallen out of the top 10 in the World Economic Forum’s global competitiveness rankings.Canada fell to twelfth, down two spots from last year and three placesfrom 2009. Switzerland topped the list for the third year in a row,followed by Singapore and Sweden. Even Japan, plagued by a massiveearthquake and tsunami that could cost its economy over $300 billion,outranked Canada in ninth place.

“There are some wonderful, innovative businesses in Canada. But if youtake the whole country we are underperformers, well below where we needto be,” says Michael Bloom, vice-president of organizationaleffectiveness and learning at the ConferenceBoard of Canada.

One of the key innovation stumbling blocks the CBI will look at isaccess to capital, he says.

“We have very large amounts (invested) in pension funds and privateequity but we don’t spend a lot on innovation.Why aren’t our capitalmarkets more open to spending on innovation?” Bloom says.

“We’ve been very weak in Canada in flowing growth capital to new andemerging SME companies. So that’s a primary drag if you don’t have thefinancial wherewithal to actually advance your business and grow,” addsJohn Reid, president and CEO of the Canadian Advanced Technology Alliance

That echoes complaints from Canadian IT startupsthat capital to grow their firms is few and far between. Venturefunding for Canadian IT startups overall fell seven per cent in the secondquarter of 2011 from the same quarter of 2010, according to the CanadianVenture Capital and Private Equity Association. The slide waseven more striking in Quebec, where Q2 VC for IT companies was down 27pe rcent, according to the Quebec VC association ReseauCapital.

The CBI plans to take an action oriented approach, Bloom says, homingin on which operational and management techniques work or fail atCanadian businesses, and examining how strategies at the mostinnovative firms can be adopted “to model a bigger picture into theeconomy,” Bloom says.

Also on slate for the CBI is a look at what role the brain drain of foreign-born talent plays inCanada’s dearth of innovation.

“We lose about a quarter of our immigrants within five years (ofarrival) and there’s no doubt we lose some of them south of the borderwhere they see bigger opportunities,” Bloom says. “We want to keep themand use their skills. We see a tendency not to hire people for theirinnovation capacity, it’s not a high hiring priority,” he said, exceptin traditional R&D-focused technical sectors like medical orcomputing related companies.

Innovation challenges faced by SMBs in particular will be examined bythe CBI as well.

“We’re looking at the relationship between SMEs and multinationalcorporations. How do SMEs work together? Do they work together assuppliers in B2B relationships? Do they create products together?Canada’s industry is so heavily weighted to small and mediumenterprise. So it’s a very big part of value and job generation inCanada,” Bloom says.

Another issue for SMB innovation is the defection of bright brain powerto bigger fish.

“Bigger companies are a big draw. So smaller firms need to compete andthere’s always a squeeze on the intellectual capital side,” Reid says.

The Conference Board will likely announce key CBI team members,financial sponsors and upcoming projects within the next month or so.Bloom expects about two-thirds of the main participants andcontributors to be businesses and the remaining one-third to begovernment-based.

The focus of the CBI is far from new, since Canadian business practicesand competitiveness have been the focus of several studies in the past.CATA, in conjunction with various government and industryorganizations, has launched its own online survey asking Canadianfirms about their innovation and commercialization practices. And lastfall, 10 pages of recommendations were put out by the Coalition for Action on Innovation in Canada(CAI), a group co-chaired by former deputy prime minister John Manley.

“We read that (CAI) document and we said that very much fits with whatwe’re trying to accomplish,” Bloom says.  “(But) mostorganizations are looking at a sector. We’re looking inside at the(individual) firm, across the board.”

At the end of the day, are Canadians just not risk takers? Wherethere’s smoke, there’s probably a little bit of fire to bolster thatargument, Bloom says.

“At times it serves us well. Our banks were less caught in the downturnthan some other banks. Being prudent is helpful.  But there’ssuch a thing as being too prudent and too risk averse,” Bloom says.

Christine WongChristineWong is a Staff Writer at ITBusiness.ca. Follow her on Twitter,and join in the conversation on the IT BusinessFacebook Page.

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