Transcript
Transcript: Examining Innovation and Productivity in Canada
[00:00:00 Animated CSPS logo appears on screen. Text on screen: Welcome.]
[00:00:07 Caroline Pitfield appears full screen.]
Caroline Pitfield: Hi, my name is Caroline Pitfield. I'm an Executive Faculty Member at the Canada School of Public Service. I'm very happy to be moderating today's event and looking forward to the conversation.
[00:00:17 Text overlaid on screen: Caroline Pitfield, Executive Faculty Member, Canada School of Public Service.]
Caroline Pitfield: Before we begin, I would like to recognize that I'm speaking to you from the traditional unceded territory of the Algonquin Anishinaabe people, and I want to express my gratitude to the original caretakers of this land, both past and present. I'm very grateful to be here. Recognizing that you are watching today from all different parts of the country, I'm going to pause for a moment and give you the time, as well, to think about the territory you occupy, and your relationship to it.
These days we are particularly reflective when it comes to the privilege of being Canadian. Both as individuals and as public servants, we are thinking a lot about our strengths as a nation and how we can leverage those. But we are also thinking about some of our vulnerabilities. In that regard, our country is widely admired for its research institutions, its educated workforce, its public investments in innovation, as well as our abundant natural resources. And yet, when it comes to translating these strengths into tangible economic impact, our story is more complex.
Despite ranking 17th in the Global Innovation Index in 2025, Canada continues to face persistent challenges in boosting productivity, commercializing innovation, and scaling ideas across our diverse regions and sectors. Today's discussion asks a critical and very timely question: How can policy, institutions, and knowledge systems better support innovation that leads to sustained inclusive economic growth?
[00:02:00 Caroline Pitfield, Shiri Breznitz, Richard Gold and Catherine Beaudry appear in video chat panels.]
Caroline Pitfield: To also help us explore this question, I am pleased to welcome 3 Canadian scholars on innovation. The first is Shiri Breznitz. Hi, Shiri. She's the Roz and Ralph Halbert Professor of Innovation at the Munk School of Global Affairs and Public Policy, and Director of Research at the Munk School at the University of Toronto.
Our second panelist is Richard Gold. Hi, Richard. Richard is from McGill. He is the distinguished James McGill Professor, Faculty of Law, Faculty of Medicines and Health Sciences at the Bieler School of the Environment. He's also the Chief Policy and Partnerships Officer at Conscience, a nonprofit devoted to establishing open science drug discovery network.
Our last speaker today is Catherine Beaudry. Catherine is the Canada Research Chair in Management and Economics of Innovation, as well as a professor in the Department of Mathematics and Industrial Engineering at Polytechnique Montréal. Catherine specializes in measuring how science and R&D spending translate into economic outcomes, especially through collaborative networks, startups, and industrial innovation.
These three bring very unique perspectives on how innovation systems, IP policy, and research networks intersect to influence Canada's productivity performance and economic trajectory. Today, we are the lucky beneficiaries of the rich insights that come from hearing them together in conversation. What we're going to do is start by having each panelist do a short presentation. We're then going to move to a panel discussion where I get the privilege of asking the questions. And then a Q&A session with questions from you in the audience.
We're going to get to the Q&A session a little later in our discussion, but I would encourage you to submit your questions for our panelists using the webcast interface when they occur to you. There's no need to wait. If you ask your questions early on, then they'll be ready when we start that Q&A session. To do that, please simply click the chat function icon, which is at the top right corner of your screen.
[00:04:11 Caroline Pitfield appears full screen]
Caroline Pitfield: You can ask your questions in the language of your choice, and we will get to as many as time permits.
[00:04:22 Caroline Pitfield, Shiri Breznitz, Richard Gold and Catherine Beaudry appear in video chat panels.]
Caroline Pitfield: So, with that, I am first going to turn the conversation over to Catherine,
who's going to give us a little bit of a primer on our key terms, things like productivity and innovation. Catherine, over to you.
Catherine Beaudry: Well, thank you for the kind introduction. Good afternoon everyone.
[00:04:34 Catherine Beaudry appears full screen. Text overlaid on screen: Catherine Beaudry, Canada Research Chair in Management and Economics of Innovation and Professor, Department of Mathematics and Industrial Engineering, Polytechnique Montréal.]
Catherine Beaudry: I have the boring parts of the talk, enunciating a number of definitions. You can see productivity as a ratio between outputs and inputs. It aims at measuring economic efficiency. It compares the amount of goods and services that are produced with the amount of resources at the disposal of the firm, for example. It's generally measured in dollars. If you divide dollars by dollars, then you get a percentage.
Why are we talking about productivity and innovation? What is the link between the two? You can think of innovation as contributing to both parts of the ratios, both on the numerators and on the denominators. We can improve the numerator by introducing product innovations on the market. We can improve the denominator by introducing business process innovation. And, ideally, we tackle both and this is how we improve productivity.
What is product innovation, at the numerator? It's basically the introduction of new goods or services, or significantly improved products and services to meet customer demands, solve problems, add value. Basically, it drives growth by new features, functionality, or by introducing entirely new products that didn't exist before.
At the denominator, we can tackle business process innovation. Do things more efficiently. It's the implementation of new, significantly improved production logistics. And maybe you can show the first slide that here you have the different definitions of innovation.
[00:06:20 Shared screen: Catherine Beaudry and slide, as described.]
Catherine Beaudry: You can see that there's product innovation on one side and then business process innovation is separated into 6 different types. Production, logistics, marketing, information systems, operational methods that all aim at enhancing efficiency, reducing costs, increasing value. So, it's redesigning the workflows, adopting new technologies, restructuring processes, and all of that is aimed at boosting productivity. And the important part of innovation is that it needs to be used. Otherwise, it remains in the realm of invention or patents.
And there's the orange part, social innovation, we can come back to that in the discussion. Next slide, please.
[00:07:14 Shared screen: Catherine Beaudry and slide, as described.]
Catherine Beaudry: Let's start by a very simple problem. You mentioned that we were a resource-rich country, so let's start with a simple problem that does not have a simple solution, unfortunately.
So, we are near the top of the OECD ranking. I heard that, on the innovation ranking, we were like 17th. Well, it depends on the different types of ranking. We have the best universities in the world. We are lucky to have plenty of natural resources, fertile land for agriculture. However, we don't seem to turn this luck into revenues and returns that we would expect from such a knowledge economy.
So, if we continue to dig the minerals from the ground, harvest the crops and export them directly, we basically forego the multiplier effect of innovation, from the product innovation mainly all along the – you can see the transformation chain of these critical minerals, these rare earth elements, the proteins from the crops – so we're de facto reducing the value of productivity by design. By exporting too soon, we tank the productivity equation there and then. So, let's explore what the Growth Lab at Harvard University says about Canada. The figure you see on the slide, I think you can go to the next slide.
[00:08:38 Shared screen: Catherine Beaudry and slide, as described.]
Catherine Beaudry: These come from analyzing the HS codes for Canadian exports. Those that don't know what HS codes are, they're basically a harmonized system, HS code, that is used to measure goods that pass the frontier.
So, it's the customs authorities that classify the different traded products into different types of technologies, and that's used to identify products and more importantly, to determine the duties, the taxes, the regulation, the tariffs that are so popular with our Southern neighbour. This is what HS codes are used for.
So, the Growth Lab using these codes calculate a complexity index, and you see on the map what— well, actually on the previous slide you had the complexity index. Here what you have is the different types of technology. If you go back to the previous slide, sorry, I had a wrong instruction.
[00:09:47 Shared screen: Catherine Beaudry and slide, as described.]
Catherine Beaudry: So, in the text you can see that we have dropped 8 positions and now rank 35th in the world. So, what does that mean? And what is it due to, more principally? It's basically due to the fact that we export more and more, less and less complex products, so basically we drop down in the rankings, i.e. we are exporting raw materials. And if we depend too much on the prices that are defined by the world market, then our economy goes like this because we have such a high percentage of our economy that is exported.
So, what do we export? This is when we need to go to the next slide. Sorry about that. If you go to the next slide, please.
[00:10:42 Shared screen: Catherine Beaudry and slide, as described.]
Catherine Beaudry: Okay, that's it. We export, in brown you see crude oil; in gold colour, funny that, we export gold; we export crops, the big yellow part that you see. And most of these are untransformed or barely transformed material that constitutes a large part of our exports. In a nutshell, we are partly a resource-based economy, in the sense that we export a lot of natural resources and agri-food without much transformation, and sadly not much value added here either.
So, what are the consequences? We dig it from the ground, put the content in a container, we ship it elsewhere for transformation. Basically, we offshore the value added without capitalizing on our resources. The results from innovation in the extraction are minimal. Without this multiplier effect of innovation all along the value chain, we don't develop the technologies, we don't develop or protect the IP that goes with it. For the critical minerals, refining that are non-polluting or decarbonized processes, this is what we need to do because basically we kind of export a bit of the pollution that comes with the transformation of these critical minerals.
[00:12:00 Catherine Beaudry appears full screen.]
Catherine Beaudry: Just to give you an example, I think China holds about 80% of the patents that are related to refining these critical minerals, and Richard will come back to this.
[0012:08 Text overlaid on screen: Catherine Beaudry, Canada Research Chair in Management and Economics of Innovation and Professor Department of Mathematics and Industrial Engineering, Polytechnique Montréal.]
Catherine Beaudry: And the remaining 20% is of these intangible assets is basically United States, Europe, Japan, maybe Korea. So, it's therefore not surprising to see that China controls more than 90% of the processing of rare earth elements, and that limits our freedom to operate. I'm pre-empting what Richard is going to talk about.
[00:12:37 Shared screen: Catherine Beaudry and previous slide.]
Catherine Beaudry: Canadian firms also underinvest in research and development compared to other countries. In 2023, Canada's gross domestic spending on R&D as a percentage of GDP was 1.8% when the OECD average was 2.7%. Sweden was 3.6%. Korea was 5%. And the portion that is attributable to business R&D is only 1.1% when the OECD is 2%, Sweden 2.7%, and Korea is nearly 4%. The consequences of not really working on improving product innovation, i.e. the numerator of this famous productivity equation, is that we need to work extremely hard on business process innovation, the denominator, where we can act on the denominator.
So, without selling high value-added products, improving or thinking to improve productivity is almost impossible. And if you look at the digital transformation of firms that contribute to improving productivity, well, Canadian firms are late, both in terms of adopting advanced digital technologies, in providing training to their employees to be able to fully exploit these technologies. So Canadian firms lag other countries in terms of adoption of these basic digital technologies.
In a lot of firms, they have semi-automated machines, but the data remains in those machines. And without data, you can't do artificial intelligence. You need a huge amount of data to be able to do artificial intelligence. I think that the survey of advanced technology that dates back to 2022, yes, pre-ChatGPT, only 3.1% of firms had adopted AI. And still, they haven't quite understood what AI can actually bring to them in terms of productivity, so we have a big problem there.
I've spoken a little bit about Korea, which has almost no natural resources. They had, and still have, a deliberate government policy to invest in infrastructure, education, industrial complexes. They had family-owned conglomerates like Samsung and Hyundai and Daewoo, and these became the backbone of the strategy. These companies received support from the government, in terms of subsidies, tax breaks, they had access to foreign loans, and basically that helped them to establish themselves globally. And they had these policies dating back from the '50s. And by the '70s, South Korea was exporting everything from textile to steel. And you can see their rapid increase in improving their economy.
So, I think, Richard, I've seen that Korea was in, or Korea's IP was on one of your slides. I think I can pass the floor to you. I've spoken too much about IP, so I'll pass it back to you. I hope I didn't go too much over time.
[00:16:03 Caroline Pitfield appears full screen.]
Caroline Pitfield: Great, Catherine. As she said, Richard, over to you. She's deferring to you on the IP question. Can you tell us a little bit more about that?
[00:16:09 Richard Gold appears full screen.]
Richard Gold: It's always dangerous to do that. By the way, this gold is not being exported to the United States. I'm keeping this in Canada, at least in the raw form.
[0016:15 Text overlaid on screen: Richard Gold, Distinguished James McGill Professor, McGill University.]
Richard Gold: So, Catherine did a great job of just laying out the problem. It's really hard to do that in such a short period because it's actually very complex. There are lots of things going on, so thank you for that. Let me just take one aspect forward about this, and that's, as Catherine indicated, intellectual property. Just to give you a snapshot, I'll get to the slides in a second. Patents are granted on a country-by-country basis, and in Europe, regionally in some places in Africa, but basically country-by-country. Canada has its patents that operate within Canada. And if you're a business in Canada, you're subject to Canadian patents. If you're in the United States or acting in the United States, it's U.S. patents.
Each country issues its own patents, and if we look at Canada's issuance of patents, 90% go to foreigners. Only 10% are held by Canadians. Guess who the biggest patent holder in Canada is? Well, it's the United States. They hold 47% of our patents now, at least in recent years. Then let's turn to the United States, the U.S. Patent and Trademark Office. Well, they issue 47% of their patents to Americans. We hardly figure on that list. Going to Catherine's earlier point, about 5% of our patents are held by Chinese firms, and then everybody else falls away.
So, we have a picture here where even in our own jurisdiction, we are not exercising our patents. We are subject to U.S. patents. Let me go to the next slide, if you can, Carolyn. Is it up?
[00:18:17 Shared screen: Richard Gold and slide, as described.]
Richard Gold: There we are. This is a picture from 2013 to 2017 done by Nancy Gallini and Aiden Hollis in a paper they did. And I'm just going to leave it up there for a second. On the left-hand side, the darker bar, is the number of inventors from that country. It might be one out of multiple inventors, but at least there was one patent holder, or one inventor from that country. The lighter bar next to it is the number of patents held by companies in that country. It's all controlled by GDP. That's why Israel is high even though it's a small country.
So, you see that, just from that chart, we're somewhere in the middle. South Korea, which has a much higher GDP than we do, is doing among its best. Israel is doing very well. You'll notice that they have not quite twice as many inventors as they do firms, and that's because Israel's policy around innovation was really to focus on the research side and then to work with other firms in other countries for the commercialization. But you can just see that the whole thing is very high compared to their economy. Carolyn, if you can take us to the next slide.
[00:19:56 Shared screen: Richard Gold and slide, as described.]
Richard Gold: So, my less lovely, updated slide, which I did from updated data from 2021 to 2025, has a slight reordering here. Israel moves up, Korea down, but there's not tons of difference. You'll notice countries like South Korea and Japan, the United States, Sweden, the Netherlands all have about the same number of inventors as they do with respect to the number of companies holding patents. These are all patents held in the United States.
Canada, however, we are under 50%. That is, we have inventors who are still pretty active, we're in middle category here, but our firms don't hold U.S. patents.
So, what does that mean? It means that Canadian researchers are collaborating on research but transferring their know-how and inventions to mostly U.S. firms. We have a government that is subsidizing university research, as they must, but instead of that contributing to Canadian firms being able to grow, it's actually contributing to a foreign firm.
And Shiri has an example from Dalhousie where, I think you said it was like $600,000 or $700,000 of research grants went to a professor, he developed something and then sold it for $2 million to a US firm. So, they got this benefit of $600,000 or $700,000, a million, sorry, of research money invested by the Canadian taxpayer.
This researcher did fine because he pocketed $2 million. The university probably did fine because they took their share. But you know who didn't do well? It was us. So, we have a patent situation where we are subsidizing research and, as Catherine said, we're really good at that. And when we join in, we can create value, but we can't keep it here.
So, the question is why and what to do about it? One thing to acknowledge about patents is it does two things. Patents encourage investment. Knowing that I can charge you a little bit more for 20 years, I will be able to hopefully recoup. I have the prospect of recouping not only the costs of doing my invention, but of getting some profit. That's the theory of it.
So, on one hand, it does that. But at the same time, patents actually slow down research by other people. They do that because I'm giving the monopoly to Person A, and that person can then prevent other people from doing things.
[00:22:50 Richard Gold appears full screen.]
Richard Gold: Generally, the patent system tries to balance these two interests so that the incentive is greater than the disincentive on future researchers. But in Canada, that's not what's happening. We get all the disincentive but none of the incentive. That is, the incentive comes from U.S. patents, not from Canadian patents. The Canadian patents are overwhelmingly controlled by foreigners, which means that foreigners are limiting what we can do with that knowledge.
So, this problem is called freedom to operate. That is, Canadian firms wishing to enter into a field and doing research are suddenly faced with patents held by foreigners. They can negotiate licenses, maybe, but, as Catherine said, in areas dominated by let's say China, in terms of mineral processing, will they give us licenses? Probably not.
And so, our patent law is actually impeding the ability of Canadian firms to start in Canada and then export. And so, what do we do? It's just easier to sell to China or to sell the United States because they already have the patents. The rich get richer. It's not the fault necessarily of individual researchers. The environment is such that the incentive is actually to pass on this knowledge.
So, what we have to do in policy, and we can talk about this in discussion, is enlarge the scope of freedom to operate. And there are a number of things that can be done that other countries do but we do not because we're trying to copy the United States. Remember, in the United States, 47% of patents are held by Americans, so there the balance is pretty good. But yet they have greater protection for freedom to operate in many domains than we do.
One example is: there's a lousy patent out there, and there are a lot of them, it's much easier to challenge that in the United States and get rid of it early, than in Canada. Europe does the same thing, but we don't. What we have been doing from a policy perspective is trying to copy the United States, but only that part that protects patent holders, the exact people who are constraining our innovation. We can come back to it more in the discussion, but [it's] time for Shiri to jump in.
[00:25:17 Shiri Breznitz appears full screen.]
Shiri Breznitz: Thank you, Richard. So, we learned what productivity is. We learned how innovation is connected to productivity. We learned the importance of the fact that we are mostly concentrated on extraction. And the big issues that relate to the fact that a lot of our inventions are tied to non-Canadian firms. So, what do you do with that? And how do you approach this thing? I think one thing the three of us agree upon is the scale of how you need to approach productivity, and that is regional innovation systems. And that's what I want to talk to you in the next few minutes.
So, we know – well, we can wait with that slide for a little bit – but we know that there's a disconnect, between the fact that we have highly skilled labour and very progressed research. The world is buying our research. But we want to understand, what is the role of universities in innovation, and how it's tied to productivity?
If you think about a scale to look at, that's what is regional innovation systems. But before I go to regional innovation systems, I want to talk to you about one important thing, and that is knowledge.
In today's economy, and if you didn't get that with what Catherine and Richard were telling you, knowledge is the most important resource, and learning is the most important process for economic growth. Organizations need to create and not just process knowledge. Remember Catherine's two parts. Innovation is not just an information processing. It's an inside-out process of new information creation. We need those inventions, process or new products.
Think about Canada. We have these different combinations of actors in different areas that create different learning and different avenues that influence innovation processes differently. What do I mean by that? It's easy when we talk about oil and gas, we know exactly where that is, because that's connected to where the resources are. But regenerative medicine, that's in Toronto. The gaming industry is in Montreal. Why is that? They're not everywhere, and that actually applies to anywhere in the world, not just to Canada.
[00:28:05 Text overlaid on screen: Shiri Breznitz, Visiting Scholar, Canada School of Public Service.]
Shiri Breznitz: So, the institutional relationship in the region, the number of players, the size of those companies or organizations, their links with each other, determine the level of innovation in a region. So, if you think about the fall of RIM in Waterloo. We would've expected to see, like in other places in the world, a lot of new other companies. It didn't happen because of the way RIM's relationship with the other companies in the region. Richard can talk more about that freedom to operate that happened through that.
It's also important to think about the role of individuals in the process of innovation because it's influenced by the institutional setting, where you have all these different players and the role that they can play. So, if you think about a university lab in which research is influenced by the idea of individual researchers, one of our most famous or internationally known researchers is Professor Geoff Hinton, father of AI. It is thanks to him that Canada is very, very strong in AI and Toronto has such a strong concentration of companies working in AI.
Why is looking at this problem through a system of innovation important? You have rapid technological changes in the economy that demand these different players to support each other, both in knowledge sharing and in learning in order to keep innovating.
If you look at the existing systems, I gave examples of regenerative medicine and gaming and AI, they are all on regional levels. And they do require geographical proximity. I'm a geographer, so I always like to say geographical proximity is still important even in today's digital economy. And a common language, all these actors need a common language. And I'm not talking about English or French. I am talking about this shared background that individual actors and geographical proximity provides in order to promote innovation.
So, how does the regional system of innovation operate? Okay, now we can put the slide up. This is a combination of work of both public and private institutions. The public sector provides support to the private sector by enhancing product production and distribution of technology and by reducing transaction costs. This is very important. If you think about the public sector, we are supporting all of the economic activity. And... we don't see the slide. Okay, here's the slide.
[00:31:09 Shared screen: Shiri Breznitz and slide, as described.]
Shiri Breznitz: This is a small example of kind of players you have in the regional system. And this is where universities and research institutions play an important role. So, if you see in the slide, you have the research institutions, you have the universities, you have the civic society, you have the private firms. You have the financial institutions. We forget about them a lot of times, the banks, the venture capital.
And if you think about each region, I understand people here are from different parts of Canada, so if you just think about these players in your region, how many are there? What is their quality? Even between universities and research institutes. How many government organizations are in your region and what do they specialize in? All of these things, and their relationship with one another, impact the regional innovation system. And this is one of the things that we believe you need to think about when you think about productivity in Canada.
And back to you, Caroline.
[00:32:19 Caroline Pitfield appears full screen.]
Caroline Pitfield: Back to me for a minute and then back over to you. Because what we're going to do now is transition into a couple of questions. You've all given us a lovely background on each of these little pieces, and I have a couple of questions which I'm going to throw out to all of you and invite you to jump in as you see fit.
[00:32:38 Caroline Pitfield, Shiri Breznitz, Richard Gold and Catherine Beaudry appear in video chat panels.]
Caroline Pitfield: The first is quite timely, pulling a little bit on where we are at this moment in time, Canada's concerns about its productivity and innovation. So, in Canada in particular, Internationally as well, governments are exploring major projects and investments in areas like quantum technologies, artificial intelligence, things like that, to address productivity challenges. We hear a lot about that in Canada.
From your perspective, I'm curious what role these types of initiatives can play in supporting innovation and productivity? Is that a good bet? Is that going to work? I'm also curious if there are any challenges you see, maybe drawing on some of the things you've talked about, and how those projects will roll out. And I'll turn to any one of you, whoever wants to jump in first.
Catherine Beaudry: Okay, should I go?
Caroline Pitfield: Sure, Catherine, thanks.
Catherine Beaudry: Why not? Well, these major projects on AI, they probably need to recognize the role of technicians in collecting and structuring data. So, I think this is one of the major challenges we have in AI and quantum.
[00:33:52 Catherine Beaudry appears full screen. Text overlaid on screen: Catherine Beaudry, Canada Research Chair in Management and Economics of Innovation and Professor Department of Mathematics and Industrial Engineering, Polytechnique Montréal.]
Catherine Beaudry: No university-trained data scientist that I know is going to put his or her hands in the dirty data that remains in the machines that I spoke about earlier. I was visiting a firm, and the CEO was telling us that their technicians, they still have the instinct of using their screwdrivers to kind of fine-tune the machines when you need to completely reprogram the semi-automated machine, nobody put the screwdriver in there. So, you need to have a completely reskilling that needs to be done with some of these technicians.
So, I think we have a tendency to focus mainly on universities for AI and digital transformation.
[00:34:43 Caroline Pitfield, Shiri Breznitz, Richard Gold and Catherine Beaudry appear in video chat panels.]
Catherine Beaudry: We probably need to have a sector level or regional ecosystem approach, like Shiri was talking about, to develop what type of skills, at all levels from high school to PhDs, are needed. And as I mentioned, firms are not yet convinced of the potential value of AI for their businesses.
And again, maybe a sector-based approach is needed because AI is going to be used in all sorts of different types of sectors, so it's not the same technologies that are going to be developed. I would encourage to work with the innovators and the early adopters of these technologies for them to lead the way and show the example. Quantum and AI will not necessarily directly solve the problem of exporting our natural resources too soon. For that to happen, firms would need to patent new, green technologies that allow them to transform the critical minerals without polluting, using net-zero processes.
Yes, AI can be used to help identify which type of new materials can be developed. There are firms and universities that have developed technologies for that, and this is a niche to be occupied. So, I would say, the race for green transformation patents is open. Otherwise, we continue to offshore the pollution and the value added. We're on the wrong path for climate competitiveness.
And thinking about competitiveness, for Canadian firms to be ready to compete, we need a clear signal that there is policy stability, targeted support to back firms up. And in times of fiscal constraints like we have at the moment, or high uncertainties, the companies that take deliberate steps to overcome innovation barriers that make effective use of the available programs that exist are significantly more likely to innovate than those that stand still. Doing nothing to overcome the barriers to innovation is the wrong thing to do.
The problem we have is that post-COVID, firms seem to assume that for them to even consider embarking on innovation activities, they would require support from the government. So, we need to have a change of mentality. And I published a CD Howe Institute commentary last summer where I showed that it's the complementarity between the private initiatives and the government programs that really make a difference. But first and foremost, the firms need to take matters in their own hands to innovate. If they do nothing to overcome the innovation barriers, they fail. It's the worst strategy.
So, these big projects, I think, are there to entice companies to do something. But I hope there's a response from the firms. But with these big programs, there's a whole lot of other programs that need to come with it in support, and hence the complexity that Richard was talking about.
So, I'll stop here and leave my colleagues to add some more information.
Richard Gold: Maybe we'll go in the same order. I'm sure Shiri has something to say here too, but I just want to pick up on a couple of points that Catherine talked about. The importance of data. And we're not talking about the same data that's underlying the LLMs that we're so used to.
[00:38:20 Richard Gold appears full screen. Text overlaid on screen: Richard Gold, Distinguished James McGill Professor, McGill University.]
Richard Gold: We're talking about scientific data driving scientific processes, and that data is lacking. We had it for AlphaFold, which won the Nobel Prize a couple of years ago, on the structure of different proteins. But we don't really have high-quality, large-scale, systematically collected data in other fields. So, for climate, for physics, for materials, that data is lacking. And so, the ability to train AIs, at least using current methods, is limited.
[00:38:56 Caroline Pitfield, Shiri Breznitz, Richard Gold and Catherine Beaudry appear in video chat panels.]
Richard Gold: And this raises an issue, and there may be some disagreement among us on this, and that is we have these regional innovation ecosystems, but they're not necessarily that strong. Many of them are fragile. That's not the part we disagree on. How do we make them stronger when we have so few resources? Governments are not investing as much, certainly the private sector hasn't had a history of inventing.
And so, it presents a challenge of openness. Some things we can do better together, it's more efficient to do it together where we collect, let's say, these large databases together. At some point, however, there has to be a mechanism to take that knowledge and produce patentable objects that do make money. And we probably disagree on where that line is, but I think there is a public goods quality to the data.
So, you had mentioned at the beginning, my hat as a Chief Policy and Partnerships Officer at Conscience, one of the things we're launching with a few foundations is something called Beacon, which is a repository for large-scale scientific, in this case mostly in the biological spaces, data. And then we set up competitions because there's a ton of hype in AI. How do we know who's actually doing better? How do we learn from it?
So, that is done in the open, but we still have to figure out how do firms take that, how do they participate and turn that into something they can sell? To me, that's a huge challenge, and this is only in the areas of the major projects that are technologically driven. For pipelines and so on, it's unclear to me where the innovation opportunities are. Maybe Shiri has an answer to that.
By the way, if you stay on till 3:05, we'll have an answer to all Canada's problems. Unfortunately, we end at 3:00.
Shiri Breznitz: Exactly 3:05. Sorry. I don't have a lot to add here except to say that we need to find a way to encourage our companies to do more R&D. And I would say specifically for Canada, we need to consider what we define also as R&D under our current definition.
[00:41:19 Shiri Breznitz appears full screen. Text overlaid on screen: Shiri Breznitz, Visiting Scholar, Canada School of Public Service.]
Shiri Breznitz: Because, for some of us who study research and development and its impact on innovation, the definition of R&D in Canada is almost anything. And it's very different in other places where the emphasis is about both process and product innovation very specifically. And we don't really… support, it's not the right word. We don't really encourage, both in our taxation system, in our grants, the firms' R&D.
[00:42:05 Caroline Pitfield, Shiri Breznitz, Richard Gold and Catherine Beaudry appear in video chat panels.]
Shiri Breznitz: So, in many ways, firms in Canada are choosing the safest way to increase value, which is – we talked a lot about extraction and – but we don't have that. That's on one side. The other side is what Catherine talked about in the beginning. It's the fact that we are still an extraction-based economy. It's quite sad when you look at our innovation, when you look at our human capital, that's where I see the government coming in.
This is the place to encourage, and Richard will have to solve the patent issues around that. But we have that. The fact that we don't process wood, we don't process oil and gas. We didn't have wood during COVID. Some of us who renovated were in big trouble at that time. So anyways, I think we can move to the next question.
Caroline Pitfield: Yes, it's coming out loud and clear, this idea that we're giving it all away, whether it's the resources or the research, we're giving it all away. And Shiri, in some ways, I think your comment, or your comments, anticipate my next question.
[00:43:20 Caroline Pitfield appears full screen.]
Caroline Pitfield: Which is, basically, how can we help Canadian firms who are struggling to grow and compete on the global stage? What untapped policy levers are there? Are there regulation changes we need to make? Procurement, data, education, there's so many different aspects of this problem.
[00:43:37 Caroline Pitfield, Shiri Breznitz, Richard Gold and Catherine Beaudry appear in video chat panels.]
Caroline Pitfield: What can we do to help create conditions that would allow Canadian companies to get beyond the "we're giving it all away" to innovate, to scale, to thrive, to compete better on the global stage?
Shiri Breznitz: I can continue from what I said before. So, SR&ED is one of the biggest, if you'd like, Canadian support for innovation. And we hardly do direct investment in companies when it comes to innovation. Most of SR&ED goes to non-Canadian – well, they are Canadian because they're registered in Canada – but they're multinationals. This is an incentive policy that can be changed by the federal government and help support companies. There's also the entire bureaucratic stages of – it's very hard for small and medium enterprises to request these funds. It's very bureaucratic. And so, who can deal with this? Mostly large companies.
So, there are ways that we can make things easier. The last thing I would say in regards to R&D is, and we have started to do this in a small scale in Canada, which is the equivalent of the SBIR grants in the US. We are trying to promote the research between large to small, medium-sized enterprises and research institutes. However, the scale of our support in comparison to other countries is, again, very small.
Caroline Pitfield: Shiri, can I ask you quickly, for the benefit of generalists or people that don't think about productivity all the time, to tell us what SBIR is, and maybe even to give us a very brief primer on SR&ED. What SR&ED stands for.
Shiri Breznitz: Okay. Very quickly. SBIR is the Small Business Innovation Research program. It is now, I want to say, 30 years, 40 years old. Its funding is coming from – so all the national foundations, which in Canada is the National Research Council, in the US, NSF, NIH, DOD – all of them have to give about 3% of their annual budget to support these programs. And they are a combination of projects that have both small firms, large firms, and research institutes. There's different stages, and you move according to the stages.
But the most important part, at the end there's a procurement process. In which the government actually says, "if you develop this, we will be your buyers." And initially when we started the process in Canada, I understand we are doing better on that, but we had some issues claiming that because of NAFTA, we weren't able to do it, which is hilarious because the Americans have been doing this for years.
SR&ED is, I don't remember the acronym, but that's the tax incentives for companies who are doing R&D. But as I said, the definition of SR&ED on R&D is very different than I would say other places and what is defined as R&D.
Caroline Pitfield: Thank you. That was excellent. Richard, Catherine. Richard, I see you.
Catherine Beaudry: Richard, I'd like to have your opinion on something that I'm going to talk about from a lawyer's point of view, so bear with me.
I mentioned the obstacles to innovation that the firms had to overcome. And, the biggest obstacle, obviously it's the uncertainty and the risk that is inherent to the innovation process. And that tops the obstacles mentioned by the firms and all the survey of innovation and business strategy. It's closely followed by lack of funding, lack of skills. I talked about the skills earlier. Then the small market size in Canada and the regulatory issues appear on the radar. But for uncertainty and risk related to innovation, nothing much can be done except investing in skills and training and having more money for R&D and more time.
For other obstacles, the government can play a role, but it cannot play the entire cast of characters. So, if the firm does nothing, it's about 10 to 15% less likely to innovate than a firm that is not burdened by, for example, the lack of skills. If the firm takes initiatives and is not successful, i.e., they're not using government programs and what they tried didn't work, then it slightly improves its chances by about 7%.
[00:48:40 Catherine Beaudry appears full screen. Text overlaid on screen: Catherine Beaudry, Canada Research Chair in Management and Economics of Innovation and Professor Department of Mathematics and Industrial Engineering, Polytechnique Montréal.]
Catherine Beaudry: And I'm quoting figures from the CD Howe Institute commentary; it is still about 6% less likely to innovate than a firm that does not suffer from innovation obstacles. Doing something is better than doing nothing, even if it fails. When the initiative taken seemed to be a success, the firm's chances of innovation are equal to a firm that is not burdened by a lack of skills. The same is true if a firm uses government programs. Its performance reaches about the same level as a firm that is not facing obstacles related to lack of skills.
So, if you're not burdened by lack of skills, doing something that is successful, the private initiative, and using government programs brings you at the same level of innovation potential than firms that are not burdened by that.
[00:49:41 Caroline Pitfield, Shiri Breznitz, Richard Gold and Catherine Beaudry appear in video chat panels.]
Catherine Beaudry: So, it's the combination of private measures with a soupçon of government programs that does the trick.
And I've spoken a bit about regulation. I think the narrative about regulatory sandboxing needs to change. And I think it must be clear that the goal of these pilot studies is to test new ways of co-developing innovation and regulation. Sometimes regulation doesn't exist, it's ill-suited for a new product or process, or it's incomplete. And sandboxing is not there to deregulate, although this is what we read in the press.
You can think of the innovation regulation dyad as a kind of snake and ladder game, and this is what it's perceived as. And we've seen that during the pandemic that by sharing data – Richard talked about that a bit more – performing tasks in parallel, developing the innovation and doing the clinical trials at the same time, that helped accelerate innovation and the regulatory process. I think there's no time to lose, and I think our firms are perceiving that.
So, regulatory sandboxing should be a co-design process that helps us consider new ways of accelerating both the innovation and the regulatory process at the same time, not to bypass the regulatory process. I think the narrative really needs to change to tell the story. Innovation is a team sport, like rugby, hockey, take your pick. It should not be a relay that we pass the baton once we finished a stage. So, by doing things collectively – think of a rugby attack line where we're just passing the ball backwards while [we're] all moving forward – this is the best analogy I can have. So, Richard, I'd like to hear you on IP and regulation.
Richard Gold: No, and I agree. I think often people think the best regulation is no regulation, and that actually leads firms to underinvest because they don't know what might be happening. Having a clear set of guidelines is actually helpful for industry.
[00:52:01 Richard Gold appears full screen.]
Richard Gold: And so, there's some places where they come up with rules, but there's so little definition to them, nobody wants to enter. So, regulation, as long as it makes sense in the sense of the process, is actually really important to innovation. I fully agree with Catherine that you can't just have it imposed, like, we're not going to do this, or we're scared of this, or whatever. That doesn't work to increase innovation. It has to be done in concert with the communities involved, but it's an essential feature.
And then turning to IP in particular, going back to my intro, we have to think about Canada as almost a limit to the types of things that our firms are able to do. There are some exceptions for creating things, but often their first market is Canada and selling it.
[00:52:56 Caroline Pitfield, Shiri Breznitz, Richard Gold and Catherine Beaudry appear in video chat panels.]
Richard Gold: So, what you want are mechanisms that allow firms to easily get rid of bad patents. Right now, it's just too expensive. It costs $2.5 million+ each side to challenge a patent. Well, a small firm is just not going to do that, and therefore a bad patent will just stop them from doing anything. They'll do an initial, they may start, they'll get a letter, we're stopping. So, we need processes to do that. And as I said, the United States has these, Europe has these, we don't. The UK has something which is a fast system with limited amounts of money that can be given that give out an answer quickly. Something like that could also be good to give freedom to operate.
But the other thing is we have to enter into the United States. That's our major market, and Europe. And yet we tell firms, go ahead, go enter. Well, they don't know the patent landscape there. CIPO does provide patent landscapes for Canada, but frankly, we're 2 to 3% of the global market. We want to sell the United States. A firm needs to know, if I start developing this, will I be able to sell it in the United States?
So, they need the resources to support that. We have a patent pool that the government funds, but it's pretty small scale and only in some technologies. We need to actually have more business acumen and business support so that these firms could figure out early on, what will I face if I go on the market?
And at that point, they have an opportunity to perhaps change the direction a little bit so that they can enter into the market, understand people who hold patents may be a problem, but they could also be a distribution channel, and you set up arrangements. So, we need a lot of support in how to use the regulations as well that exist not only in Canada, but internationally.
Caroline Pitfield: Thank you all so much. So, we have time, I think, for one more question. I think that I have about 5 minutes before I'm going to turn it over to the Q&A, but I do want to ask my last question, which is, to tee it up, we've talked a lot, and Shiri you talked about this in particular, the importance of relationships in innovation. So, the relationships between the different players, the different researchers, the academic, the private, the public, the nonprofit.
A key relationship that the federal government thinks about – that we think about, as public servants – is the relationship with provinces, territories, some of our other governments. I wonder if we could take the last couple of minutes and just look at that question.
So, what forms of collaboration amongst these federal, provincial, territorial, maybe even municipal partners could effectively support our competitiveness in this kind of innovation productivity space?
Richard, you look like you've got something to say. You wanted to take that one first?
Richard Gold: My thing to say was that Shiri and Catherine certainly have something to say. Partnerships are good. My area is mostly federal, but as both Shiri and Catherine were saying,
[00:56:08 Richard Gold appears full screen.]
Richard Gold: innovation is done locally and we're not thinking about the local support. So, if I just go back to my last question, it doesn't have to be the federal government that helps firms do these patent landscapes or figure out what kind of regulations. A lot of the regulations that Catherine is talking about are provincial.
[00:56:26 Caroline Pitfield, Shiri Breznitz, Richard Gold and Catherine Beaudry appear in video chat panels.]
Richard Gold: So, how do we get them to engage, not in opposition to the federal government, which is often the dialogue. It's easy to blame the feds, especially when the feds are quiet and don't defend themselves. But how do we actually see the province as taking a leadership role on the regulatory processes but supporting locally the firms to the extent that we need shared data, what can they do to share data? I see a collaboration at least given the different jurisdictions of the federal government and the province. But I don't see that dialogue happening. I don't know where it would happen. We need to create those spaces.
Maybe I've given Shiri the chance to think.
Caroline Pitfield: I was going to say, I think you've teed up Shiri quite nicely.
Shiri Breznitz: No, I'm going to throw it back at you because with IP, we have— everybody has tried to do this.
[00:57:22 Shiri Breznitz appears full screen.]
Shiri Breznitz: So, we have Elevate IP on the federal level. We have IP Ontario. We have – I forgot the name of the IP organization in Quebec. So, sometimes we actually create multiple organizations that don't necessarily talk to each other. And for example, in IP it's really important. We think about patent pools and family of patents. This is important. Is there a way that we can cross over? I'm throwing the question back at you.
[00:57:57 Caroline Pitfield, Shiri Breznitz, Richard Gold and Catherine Beaudry appear in video chat panels.]
Richard Gold: I'm sure Catherine has a great insight here. This is the problem with federalism. We need a forum where people actually talk. What's happening is we have isolated action at the federal level, isolated action in the provinces. They often copy each other, but they copy often the worst parts of each other. Getting patents for patents' sake is useless if the patents aren't serving a business purpose. Sometimes sharing is better than patenting. Universities were given, about 20 years ago, 25 years ago, the Canada Research Chairs in return for just increasing the number of patents. I remember someone representing our VP research coming in to say, oh, it's been a great year, we've got 4 patents. Oh, we have no licenses. Having a patent and not licensing it is counterproductive.
And so, we need a better coordination about what we need. We need to acknowledge, like I was saying before, freedom to operate is really important, and that's why the patent pool is here and so on. How do we create more freedom to operate in Canada for Canadian firms, and how do we enable the firms to go international?
Unfortunately, the agency that was really good at this, Sustainable Development Technologies Canada, had a great track record, but then there was the ethics problem and it's basically useless. So, the one shining light disappeared.
Catherine Beaudry: Wow. What to add to your comments? Well, first, I'm a researcher that has been studying collaboration all my career, so I would say collaboration at all levels of government is absolutely key. But in order to identify how to best collaborate or to collaborate more efficiently, if you want, we need to share data and develop the interoperability of data rather than duplicate the data collection effort.
[01:00:07 Catherine Beaudry appears full screen.]
Catherine Beaudry: Without it it's going to be very difficult to identify who does what, and which program has what effect, and which program is complementary to which program without knowing what each entity is doing. We only have part of the story, so we're partially blind, by design, to design new policies, to plan their deployment, and to fine-tune these policies and the programs as they unfold. So, really coordinating joint programs across all jurisdictions is key.
I was talking to firms at some point, and one of them joked that it was cheaper for them to buy metal rods from China than to buy them from the firm across the road because the firm across the road had incentives to export.
[01:01:06 Caroline Pitfield, Shiri Breznitz, Richard Gold and Catherine Beaudry appear in video chat panels.]
Catherine Beaudry: So, I said, well, I'm not going to sell to you because if I sell to you, then I have a lower price than if I export because I've got this subsidy to export. Think of the greenhouse gasses that are avoided. It's mainly natural resources that come from Canada, sent to China to create metal rods that are being shipped back to Canada. You could have literally had two guys cross the road with these metal rods and greenhouse gas is minimal, depending on what they've eaten during the morning, but anyway.
So, I think we need to really think of the coordination of all of these programs. And I see this duplication of the research effort, and the data collection effort, and fine-tuning across government, and we desperately need coordination in that regard.
And, in terms of data, which data do we need? Very often we collect data from firms. What do we give back to firms when we collect data from them? Nothing. It's not obvious to them what the government actually does with their data. So, in a vlog in 2021– so that's a video log with a PowerPoint where... anyway, very crude, I learned from my teaching at a distance online – I was advocating in that vlog to have data-driven enterprise empowerment. So, returning something back to the firm from the data collection so that they have an idea of benchmarking, or dashboards, or where do they fit in their industry or in their region. We need to demonstrate value for the time they invest in providing these precious data.
And then if the firm decides who they share data with, then all these regulatory barriers in terms of data sharing and interoperability that we have put that prevents the collaboration and the sharing of data. This is, "that's the crux of the matter". It's just impossible sometimes to share data. It's ridiculous. We have so many barriers in sharing data.
So, if we flip that back and say to the firm, okay, you decide what data you share with which organization, which department. And by the way, looking at your profile, we think you should talk to EDC, BDC, IRAP, and maybe have a collaboration with that researcher who does exactly what you need for advancing your innovation. We need to have a data-driven intelligence response to facilitate this coordination.
And I think I'll stop here because I could talk about that for hours.
Caroline Pitfield: Thanks, Catherine. So, we have a couple of questions from the audience that I do want to get to, but Shiri, the original question, I think so much was in your area of expertise, do you want to say anything further on it? This notion of collaboration at different government levels, anything further before I move to the questions from the audience?
Shiri Breznitz: I think this is basic policy. So, when you create a policy on the federal level without thinking how this trickles down to the regional innovation system, getting to the different players, you have done just half the work. Because you created a policy, great. There's a lot of barriers, as we all talked about before.
And if you don't understand those connections, and the provinces and territories can help a lot in that because they know better what's happening, I hope, in their own regions. They know better what's happening within the smaller areas, because innovation doesn't happen everywhere equally. As much as we like, in Canada, to spread everything equally, it doesn't. We have certain kinds of knowledge in different places.
So, connecting both federal policy to provincial, and vice versa by the way, is really important because if you don't understand the challenges of submitting a CERC, for example, this is something that, yes, it's a federal policy, but the provincial government, the municipal governments, they know more about what's happening with the firms in their regions.
I think I would like to open it to the audience for questions.
Caroline Pitfield: So, in a way, you actually just did, because one of our first questions is, how can policy design better account for regional differences in innovation capacity across Canada? I'll just remind people that if they do have questions, they should go ahead and ask them by clicking on that raised hand icon in the top right-hand of their screen. We'll try to get to as many questions as possible. I did want to table that one again, just in case anyone else wanted to say something about this question. Policy design: how can it better account for regional differences in innovation capacity across Canada? Any further ideas on that one?
Shiri Breznitz: I think we already talked about it. So, in any innovation system, there's no one solution that fits all. You'll always have the strong firms or organizations that are better equipped to access resources.
[01:07:03 Shiri Breznitz appears full screen. Text overlaid on screen: Shiri Breznitz, Visiting Scholar, Canada School of Public Service.]
Shiri Breznitz: If we don't think about ways to make those connections, and you can do them better when you think about those collaborations, the smaller, younger players, if you think about an economic system, are going to lose. The weaker players. And that doesn't mean they don't have the knowledge to contribute.
[01:07:37 Caroline Pitfield, Shiri Breznitz, Richard Gold and Catherine Beaudry appear in video chat panels.]
Shiri Breznitz: I participated in a workshop in a couple of years back where there was a representative from the MIF in the US, and they talked about how they have all these organizations, they had all this money, but they had no ways to distribute that money. And companies weren't approaching them because a lot of the companies they wanted to approach didn't have the resources, or they found the process too cumbersome to get there.
I'll give you an example on the university level, which is something that the three of us know very well. Even at the university, the research office cannot tell you what a professor is working on right now. Publications are something that comes out 2 years after, in a good case. And patents, a lot of time we wait. Because you don't want to <inaudible>. So, how do you make a connection, as Catherine suggested, between those firms and the researcher that works on this specific solution? So, who knows?
A lot of times it's the multinationals that have the resources and the people and they keep the connections with the individual researchers all around the world. But a small company, a startup, how would they know how to connect? Even within Canada? I'm not saying there's an easy solution for that because if we could, a lot of universities around the world would be jumping on this. But this is part of the translation process that we need to invest in.
Richard Gold: If I can jump in, a project that Shiri, Catherine, and I, with others, are working on is basically to see this as a problem of innovation. We have to innovate our policy space.
[01:09:33 Richard Gold appears full screen. Text overlaid on screen: Richard Gold, Distinguished James McGill Professor, McGill University.]
Richard Gold: And we shouldn't assume that some academics will just come along and say, here's the perfect solution. We actually have to experiment. And so, what we've been proposing is, we look at parts of these ecosystems at a regional level. It could be gaming in Montreal, could be robotics in Toronto, could be mining in Ontario North or Yukon. And we set up an experiment where we talk to the industry, the big ones, the small ones, the universities or colleges, the government,
[01:10:06 Caroline Pitfield, Shiri Breznitz, Richard Gold and Catherine Beaudry appear in video chat panels.]
Richard Gold: and we actually say, what do we have to do here? And we actually construct it. And I don't think it can actually be done through government, but it could be supported by government because it's cross-cutting.
And so, what we're proposing to do is have a series of these experiments. This is quite common in international development economics, but it's moving into innovation economics where you actually go and you collect the data and you do analyses of this so that we can figure out, out of all these experiments, which one works.
Why should we assume we can come up with an answer that will cross all areas of Canada, all ecosystems, all industries. You have AI system communities in Montreal and Toronto. They're vastly different. Quebec is built around Mila, about the social implications. It was founded on open source. Toronto is much more proprietary. There's no one solution that's going to work for both. I think we have to get our minds around single solutions, and Canada, as a policy, has to be willing to experiment, which means they have to be willing to accept that some of those experiments won't work.
Catherine Beaudry: Well, in the vlog that I was talking about, I used to call that "precision bakes". So, precision business innovation and growth support for the firm. The innovation support targeted to the firm for what the firm actually needs.
[01:11:38 Catherine Beaudry appears full screen. Text overlaid on screen: Catherine Beaudry, Canada Research Chair in Management and Economics of Innovation and Professor, Department of Mathematics and Industrial Engineering, Polytechnique Montréal.]
Catherine Beaudry: How do we get to that? That's very different. That's very difficult. That always makes me laugh because my first research project when I was back in Manchester I was working with Silicon Valley, and the project was called "Silicon Valley and Its Imitators." And we were basically trying to see, what was the magic recipe in Silicon Valley that we could replicate? And I think the conclusion that I came to during that project is that I have recipe books from all over the world. And whenever you read the recipe books, you have ingredients that you don't know about. You Google the ingredients and say, ah, okay, I can replace that with that.
[01:12:19 Caroline Pitfield, Shiri Breznitz, Richard Gold and Catherine Beaudry appear in video chat panels.]
Catherine Beaudry: Basically, we're trying to copy everybody else's policy with the ingredients that we have locally. Well, that's not going to work. We need to write our own recipe books for each subregion that we have, for each subsector. And I think that starts at the ground up, from the firms that we have on the ground. What do we have? What are the resources that we have? What can we make? And then, if there's an ingredient that's missing, you try to find, where can I find this ingredient.
So, we need scientific scouting. I'm talking about "veille scientifique" in French. Scouting may not be the right term, but it's— maybe someone can write in the chat what is the— but anyway, you need to survey in terms of science, in terms of grants, the grants from NSERC, they're public, so you know who's been funded on what project. So, even before it's been published, you know what the researchers are doing.
So, this may be a job for the innovation intermediaries or the research intermediaries to know what goes on where. But then, that's local. How do you connect a firm that is in Beauce with a firm that has a solution in Edmonton? We need to rely on a pan-Canadian network of people at the moment. And if they don't know each other, the connection will never occur.
So, we need data to actually empower these super connectors between regions that can connect individuals. Then this is the power of data at the innovation intermediary level. So, from the firm themselves having their data feeding into the innovation intermediary group that would bring all the data together in order to do some kind of strategic planning for the region and the sector. So, we really need to think data interoperability and collective usage, I think. Excellent question.
Caroline Pitfield: Yes, and I hear the conversation too, bouncing back and forth between the very strict local individual nature of different communities and then this sort of federal objective, which is to create that interoperability. We're bouncing back between the two.
There is a question here. Which province is doing the best job to address these issues? A province is somewhere in between. Richard, you mentioned the differences between Quebec and Ontario. Are there best practices we see in the provinces that we should be pulling on?
Richard Gold: If you're directing it to me, no. Quebec has this great history of proposing solutions, some of which look promising, and then cutting off funding and moving on to another solution. That doesn't work. You need a long-term commitment.
My view, and I don't know if Shiri and Catherine agree, is this should not be done by government. This needs to be done outside of government, funded by government to help get it off the ground. If we had a mature regional innovation ecosystem you wouldn't need government to be there, but we don't, so we need to start it.
And I think it's a bunch of local conversations that need to happen that inform policy at the federal and provincial level. But what I'm seeing is too much control and saying, we're going to go this way, we're going to go that way, we're going to fund this or that, and not actually allowing the ecosystem to grow.
Catherine Beaudry: Well, building on that, Richard, I think all the different levels of government need to listen to what goes on, on the ground. A great example that I always give is aerospace in Quebec. They have everybody around the table, from ministry representatives to CCTT colleges, universities, small firms, medium firms, large firms all along the supply chain. And they collectively decide which skills they're going to need in 5 years, in 10 years, in 20 years? And what kind of stability in support is required?
I think in 2010, there was one of the first strategies for innovation and research that established 5 big projects. One was the Green Plane or the Sustainable Plane. I can't remember in English what it's called. But they had about 6 or 7 calls for projects. So, even though there was uncertainty in the system, they kept funding. And a lot of innovation – we don't have the Green Plane now, of course, but there's tons of little innovations that emerged from that sustained funding that was managed at the ecosystem level with the collaboration of the Quebec government.
So, I can't speak for the other provinces, maybe Shiri has some examples.
Shiri Breznitz: So, on the same level, not actually if we're talking about provinces, but the same level if you take a country like Finland, they do this exercise every 7 or 8 years.
[01:17:56 Shiri Breznitz appears full screen. Text overlaid on screen: Shiri Breznitz, Visiting Scholar, Canada School of Public Service.]
Shiri Breznitz: And they bring experts from all around the world, and they think about solutions for Finland. We don't do this here. But, maybe not on the entire thing, but Newfoundland and Labrador has an amazing relationship between the oil and gas firms, and research and development within the province,
[01:18:17 Caroline Pitfield, Shiri Breznitz, Richard Gold and Catherine Beaudry appear in video chat panels.]
Shiri Breznitz: because of regulations that they implemented a long time ago that requires the oil and gas companies to invest back in the province. If you're taking something out of the province, you put it back.
They are very good also on connecting the university with the region, and they have different levels now, of course. Smaller population, people will say, okay, compared to Ontario or Quebec or even British Columbia. It's way smaller. But if you think about it, they are trying to do it in a way where it comes from the ground up and comes back from top down. So, there are these connections all the way to graduate students' entrepreneurship, to firms' relationship to the large multinationals that are using resources from the region.
Caroline Pitfield: That's really interesting. Thank you. Richard, I want to— we're short on time, so this is my last question before I turn it over to the three of you to close us out.
We had a few questions off the top about risk. Catherine, you talked to us a little bit about risk.
[01:19:28 Caroline Pitfield appears full screen.]
Caroline Pitfield: Richard, I was struck by the fact you said there wasn't really a role for government, but I think Catherine said something along the lines of,
[01:19:34 Caroline Pitfield, Shiri Breznitz, Richard Gold and Catherine Beaudry appear in video chat panels.]
Caroline Pitfield: government can help with some of those risks or allay some of those risks. In the current environment, one of the risks or challenges that people are aware of is our relationship with the United States. One of the very specific questions that was asked was, how can Canada promote firm innovation and national champions as the US does, without triggering retaliatory measures from the United States? I don't want to leave that question unanswered. Does anyone want to quickly lean in on it?
[01:20:04 Richard Gold appears full screen. Text overlaid on screen: Richard Gold, Distinguished James McGill Professor, McGill University.]
Richard Gold: I can try. I'm not sure where the retaliation would come from depending on how you do it. So, we don't want to break our commitments in the agreements, even if other parties are willing to do so. But I think there's a lot we can do by emulating what the United States is doing, what Europe is doing. There are some programs that they're already practicing.
Now, that doesn't necessarily protect you. Look at our very modest agreement with China compared to the bigger one with the United States. We still get dumped on, so there's never any certainty. But I think we can do a lot. These conversations that happen at the regional level, I think, should not trigger anything.
[01:20:44 Caroline Pitfield, Shiri Breznitz, Richard Gold and Catherine Beaudry appear in video chat panels.]
Richard Gold: If we're doing patent landscaping, helping firms enter into the US market, if we assist Canadian firms to acquire IP, I don't think that's a problem. I'm not sure exactly where we would go, especially if we're doing this somewhat outside of government. I don't think there's much difference between Catherine and me. It's that I don't think government should be running the show, and I don't think Catherine either, but government is an essential actor to de-risk things. They can fund projects, they can incentivize this, and the more the government does it that way, the less the risk of any retaliation, because it's not the government acting, it's private actors getting together.
Caroline Pitfield: Thank you for that. I have one last question for the three of you to answer. Anyone want to build on that last question, though? Anything further on the retaliatory risk? If not, I'm going to combine my last question with one of the questions we had from the group.
So, some interest in what the most important institutional capacities for the public service, like what kind of institutional capacity do we need to support an innovation-driven economy?
That's the word from the question from the audience. My question would be for you while we have you here. What would you like to see us do? What is the one piece of advice you would give public servants who are looking to contribute to increasing productivity and innovation in Canada? We've got a couple of minutes left. I'll give you each a turn to share your wisdom. And I'll go maybe in the order that we started with, Catherine, Richard, and then Shiri, I'll give you the last word.
Catherine Beaudry: Okay, no problem. Well, I'll be very short. I think we need data to inform firms, ecosystems, and the various levels of government and the innovation intermediaries and research intermediaries in the system.
[01:22:44 Catherine Beaudry appears full screen]
Catherine Beaudry: Without data, we're skating blind. So, data in near real time to be able to evaluate and adjust programs rapidly. I was joking when I was talking about AI adoption and SIBS, it dates back from 2022.
[01:22:59 Caroline Pitfield, Shiri Breznitz, Richard Gold and Catherine Beaudry appear in video chat panels.]
Catherine Beaudry: It's pre-ChatGPT. It's ridiculous. So, we need more data but not duplicate the data collection effort. And we need to test ways of co-developing and evaluating policies within an observatory of innovation of some sort or a research institute that provides strategic intelligence for decision makers to have the information that they need to take the best decisions.
And decision makers here, it's the firms, it's the orchestrators of ecosystems, it's the civil servants, all of us are using the same data to make different decisions to help firms in Canada innovate more, better, more rapidly, more efficiently. So, I would say data skills, but without duplicating the data.
Caroline Pitfield: Thank you, Catherine. Richard, closing word.
Richard Gold: So, I echo that. I think the proper attitude of civil servants is if someone says, oh, they're doing this in Silicon Valley and it works, or it's going on in Boston, the first reaction should be, yes, what? Let's do our own thing. It's to reject, whether you're implementing IP, whether you're doing whatever policies, you can get inspired at a general level, but don't go to the micro level and think it works.
And the other thing is to listen and to set up places where we can actually listen and experiment, and that might be through government, but it might also be government actually supporting, as Catherine was saying, an observatory or group of researchers. Obviously I'm biased here because I'm one of those, but I think being part of the conversation but not necessarily being upfront and having to take responsibility for justifying it to your minister.
Caroline Pitfield: Thank you, Richard. Last word to you, Shiri.
Shiri Breznitz: Thank you. So, I would ask that they [do] just what Richard and Catherine said. But also, importantly, to think about how we direct investment in these collaborations between these different players on the regional level [and] not being afraid that the benefit will not be in our province, it might be somewhere else in Canada. So what? We're still benefiting from it. So that's one.
And the other thing is, I think we had a little question about risk averse in Canada. I don't think we are risk averse. I think, if you look at our innovators, we are innovating, as Richard has shown, in a nice scale compared to the rest of the world. Our problem is we need the incentives and that's where I would push the policymakers to think about the incentives we currently give and how we can improve them and be ready for failure. It's okay to fail. At one point in just the last few years, we tried to create an innovation agency to allow these kinds of failures. And we should do something, whether it's in an agency, whether it's on the provincial level or in different projects, but be willing to take the time because these things take time and be willing to fail.
Caroline Pitfield: Thank you so much. Thank you, all three of you. Unfortunately, we are out of time, but I want to thank you for helping us today unpack this complicated relationship between innovation and productivity. Honestly, I think you've just whet our appetites for more of the same.
[01:26:51 Caroline Pitfield appears full screen. Text overlaid on screen: Caroline Pitfield, Executive Faculty Member, Canada School of Public.]
Caroline Pitfield: And in that regard, I want to invite those of us watching, those of you watching today, I want to invite you to continue following Shiri's work, in particular, with the School over the next year or so as the Jocelyne Bourgon Visiting Scholar. You will have the opportunities to hear more from her during her tenure and through future events and discussions.
I, again, want to thank you all. Thank you, Catherine. Thank you, Richard. And thank you, Shiri, for a great conversation. Thank you.
Catherine Beaudry: Well, thank you for having us.
Caroline Pitfield: Yes. And thank you to the audience for joining us for today and for some really wonderful questions.
[01:27:24 CSPS animated logo. Text on screen: canada.ca/school-ecole.]
[01:27:29 The Government of Canada wordmark appears.]
