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Maclean’s published a great article on Canada’s preparation for the Olympics, using innovative technology and a goal of being number 1, likening the secrecy behind these advancements as a new cold war (especially fitting for a winter Olympics).

We all look forward to seeing our athletes on the podium soon and I’m hoping that will inspire us as a nation to drive to be most innovative nation in the world.  Right now the Conference Board of Canada ranks our performance in Innovation a “D”, we’re ranked 13th worldwide in innovation; 6th among the G-8 countries.  An OECD survey ranked Canada 14th in R&D spending relative to GDP.  As exciting as it is for us as a nation to be cheering for our athletes to be first and win gold, especially as a host nation,  our standard of living in Canada depends directly on innovation and we can choose to aim for the gold there as well, if we focus on it.  We can be the most innovative nation in the world if we’re willing to invest in research and innovation.

The Minister of Industry, Tony Clement, promised a High Tech Plan to promote business innovation by year end, and we’re still waiting.  It looks like leadership in this area will come from the private sector, through a local technology hero Sir Terrance Matthews who is in addition to all his corporate accomplishments, spokesperson for CATA.  Every world class athlete needs a world class coach and mentor and we’re fortunate to have such an accomplished technology entrepreneur speak up for innovation in Canada.  CATA president John Reid is tapping into social media to get feedback on Mr. Matthew’s comments about a structural deficit in innovation; he is specifically quoted as saying, “While we recognize that there have been a number of distractions and that significant discussions are occurring on whether a structural budget deficit exists, everyone agrees that Canada has a structural deficit in innovation that continues to impede growth in many of our communities across the country.”

A structural deficit means that spending > revenue over the long term. This term normally applied to public sector deficits, is used here to draw attention to Canada’s Innovation Gap.  Thus, the supposition is that Canada is systematically spending more on innovation than the revenues or benefits that we derive from it.

I agree with this supposition.  Not because Canadians are not innovative, but because others benefit more from our innovations than we do.

For example, think of all the intellectual property developed by Nortel and Bell-Northern Research, most of it in Canada supported by GoC research tax credits. With the demise of a “star athlete” in Canadian R&D, most of this innovation has now been auctioned off to foreign ownership for pennies on the dollar. Also consider the many start-ups launched here, although some will inevitably fail, of the ones who succeed, most are bought by foreign companies; thus practically all of the wealth generation potential leaves Canada. Think of it this way; let’s say we design the best hockey skate in the world that gives players a significant competitive advantage, but then only team USA gets to use them in the Olympics; it is like this all too often in the world of technology start-ups.  Thankfully there are exceptions to this such as RIM, our new star athlete in R&D and global competitiveness, but these exceptions are too few.

I personally believe that Canada needs to spend more public and private funds on innovation, but the bigger challenge is to find ways of nurturing the wealth generation opportunities to maturity at home. We used to talk about the brain drain to the US, but the real problem is the drain of home grown wealth generating ideas that are just starting to bear fruit. The brains can often be encouraged to come home, bringing more experience and wealth on the return trip, but it is much harder to bring back the profits from our ideas once they’ve crossed the border.

There are a lot of good discussions about improving programs like IRAP and SR&ED, but there would be even greater benefit if we had “Buy Canadian” policies in government. Naturally we can’t disregard trade agreements, but many start-ups would have a much greater chance to grow organically at home if they could get a little preferential treatment with government procurement processes. Certainly the majority of government spending should be focused on best value for money spent, but a portion reserved for higher risk purchases in support of Canadian innovators would go a long way in reducing our innovation deficit.

If we can support our athletes to go for gold, let’s support small business and start-ups in Canada to also go for gold, to be the best in the world at what they do.  It’s not just about national pride, but the standard of living for the next generation of Canadians depends on it.