Innovation has long been a hot topic in political circles and board rooms alike, and for good reason. Building innovative businesses has helped us overcome some of the biggest challenges we’ve seen in the 21st century, from economic crises to the COVID-19 pandemic. Innovation has allowed us to adapt to new ways of living and working, and created opportunities for positive change in our social, political and business landscapes.
While it can seem like a buzzword sometimes, innovation is fundamentally an ongoing process of developing new and better techniques, products and business practices. In a globalized economy, innovation is the only real way to remain competitive and drive economic growth and prosperity. As we emerge from an unprecedented global emergency, we find both a need and an opportunity to bolster Canada’s innovation landscape.
Specific policies start with understanding the challenges that businesses encounter every day. Through Deloitte’s Technology Fast 50 program, and from members of the Council of Canadian Innovators (CCI), we hear directly from the leaders of Canada’s fastest growing scale-ups about their key challenges. These include attracting and retaining top talent, commercializing products and services, and expanding internationally. Now that parliament has resumed after the 2021 federal election, there are opportunities for government to continue making meaningful progress in addressing these challenges.
Canada’s economy needs talent for innovation. Over the last three years, 40 per cent of Fast 50 CEOs have struggled with the availability of talent, a situation that the COVID-19 pandemic has only exacerbated. Remote work has increased poaching by international companies, hollowing out the ability of Canadian firms to retain top talent. Public policy interventions are needed to urgently address this gap, including clearing the pandemic-induced visa backlog and building a streamlined digital immigration system that will be resilient in future crises.
Equally important is Canadian workforce development, which could be supported by developing a Canadian-based pipeline of technical and managerial talent. Skill-building programs, as well as offsets for hiring costs of new employees for strategic roles where Canadian scale-ups experience key gaps, could both play a role.
The shortage of skilled talent links with another concern from Fast 50 CEOs: product development and commercialization. Innovative companies working in the knowledge economy rely on human ingenuity both to develop innovative ideas and successfully bring them to market. Fast 50 participants consistently rank the development of new products and services among the top three pathways for growing their companies, but it is also among their top three challenges.
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According to the Information Communications Technology Council, the Canadian economy will have a demand for an additional 250,000 jobs by 2025. If companies can’t find those skilled workers, it limits their ability to develop products and services.
Additionally, there is an opportunity to look at improvements to help companies generate and protect their intellectual property (IP). IP ownership is linked to higher scale-up growth. But when the CCI surveyed our members in January 2021, we found that 45 per cent of our companies own zero patents. This isn’t because chief executive officers don’t understand the value of IP nor is it because they’re not generating innovative ideas and techniques that could be protected. But focusing on driving growth, recruiting talent, product development, fundraising and other concerns sometimes leaves IP as an afterthought.
Mechanisms like patent pools, which allow participants to share patent resources and protection, and best practices for technology transfer offices, which support commercialization of academic research, are critical. During the 2021 federal election we saw some politicians propose “patent box” tax structures, and even subsidies that would pay for the first five patents a company files. Now that MPs are back on the job discussing policy, all these ideas should be on the table.
It would also be in Canada’s best interest to ensure that our high-growth technology companies are successful on the global stage. This, too, is a top-three growth avenue for Fast 50 participants, especially for smaller firms. Strategies to help scale-ups leverage Canada’s international trade infrastructure, like exporter-in-residence mentorship programs, are needed, as well as updates to data residency and privacy rules that would allow Canadian companies to operate internationally with confidence.
While only a few of these challenges have been highlighted here, a deeper dive into this growing opportunity area is outlined in Deloitte’s public policy brief, Innovation at scale: Establishing Canada as a global leader. This report provides further insight into how leaders of Canada’s high-growth companies are looking to navigate the future, and how governments might continue to support our country’s innovation landscape.
Just as importantly, further insight can be found through direct conversations with innovation practitioners and CEOs – experts doing the hard work to build innovative, high-growth 21st century businesses in Canada.
We should embrace the opportunity for government and business to work together in our pursuit of innovation in the future, starting with an immediate focus on talent and people. Now is the time to put Canada on a path to prosperity and innovation leadership in the decades to come.