There has always been considerable discussion about the need for more support for innovation in Canada. This author has gone beyond the discussion to ask leaders what it will take to remove the obstacles to developing a culture of innovation and to in turn provide the focus and resources that will enable innovation. Readers will learn how to remove those obstacles and create the enablers.
“Canada’s prosperity gap is a productivity gap….Canada’s productivity gap is an innovation gap.” Canada’s Innovation Imperative, Institute for Competitiveness & Prosperity, June, 2011.
It is easy to feel somewhat gloomy about innovation in Canada. Recent studies conducted by The Conference Board and The Council of Science, Technology and Innovation, show that Canada lags behind many countries. Findings from Canada’s Innovation Imperative support this concern: “Our businesses under-invest in technology….Business R&D lags in Canada….Canadian businesses produce fewer patents….Our management is among the best in the world but it still trails U.S. counterparts….Canadian managers consider uncertainty and risk as the key roadblocks to innovation….Canada trails the U.S. in public investment in education…in ICT investments…and in R&D.” The report also points out that, although our prosperity lags behind our most significant trading partner, the United States, “Canada continues to be a world prosperity leader… More innovation is an imperative for Canada’s prosperity.”
But this picture can be brightened and the challenge for Canada is to find out how to do so going forward. Several leaders this author interviewed suggested that we need to frame the innovation challenge in a way that helps us identify successes and build on them. For example, Dr. Chad Gaffield, President of the Social Sciences and Humanities Research Council, said that, “Canada has a history of innovation, which explains us becoming one of the world’s most successful societies. We need to focus on how Canada became successful…then draw on those insights and build on them in the 21st century.”
Mark O’Connell, CEO of Interac, said that innovation must fit our culture and ethos. “Canada has done well at borrowing on others’ contributions, improving them and applying in a superior way.” But we need to do more. “Sober second thought and scrutiny have served us well…but the pendulum has swung too far….we’ve become too ponderous and paternalistic.”
Stephen Bolton is VP, Sales and Service of Libro, a financial services company which has grown 1300 percent in just over 20 years. He said that “…we have come through a period where people are looking in versus out…and not taking advantage of opportunities; the financial crisis created a focus on cost reductions to survive. There are pockets of innovation. We need to find out what it is about those cultures that supports innovation and apply it more broadly.”
And Bonnie Patterson, President & CEO of the Council of Ontario Universities, believes that “…innovation is tied to the entrepreneurial actions of individuals, educational levels of management and investments in R&D and technology that allow talent to be used. The key is to bridge the gap in R&D investments and build stronger public-private sector partnerships to access talent.”
While these diagnoses and recommendations may be accurate, obstacles and enablers of their implementation remain. This article will summarize these obstacles and enablers, and synthesize the recommendations offered by the leaders the author interviewed .
Obstacles: What stifles innovation?
Obstacles are grouped under four perceived deficiencies: a) a culture of innovation, b) a strategic, entrepreneurial focus, c) financing, and d) inter-disciplinary/sector collaboration and partnership.
1. As Interac CEO, Mark O’Connell, pointed out, “Canada’s colonial history and utilitarian ethos prevent us from investing in and celebrating innovation successes unless they are for the collective good…as in medicine.” He also cited inertia, love of the status quo versus net new, and fear of risk…a “can’t do attitude.”
Interviewees agreed that, without a corporate culture that values innovation, there is often insufficient leadership and creativity to drive any innovation beyond the product or marketing functions to the entire enterprise. We don’t expect, support and reward innovation in a significant way. Steve Farlow, Executive Director of Wilfred Laurier University’s Schlegel Centre for Entrepreneurship, pointed to the lack of alternative career options and the fact that we do not teach people how to innovate and build entrepreneurial skills. This results in loss of creative talent. Bolton said: “If we don’t allow people to grow, provide innovative ideas and take risks, innovation won’t occur.”
2. The lack of a strategic focus, along with the organizational agility, entrepreneurial skills and productivity to deliver on the strategy, was identified as a second obstacle. Victoria Hubbell, Senior Vice-President of Strategy and Stakeholder Relations, Healthcare Of Ontario Pension Plan, cited the lack of a crisp strategic intent across the organization and little risk appetite as hindering innovation. “If we understand innovation only as a cost, we can’t afford to innovate or make mistakes.”
3. A lack of financing was cited as a major obstacle, but also the fact that we often don’t assess the cost of not investing. COU’s Bonnie Patterson said that 40 percent of R&D funding is in the university sector. “The universities’ focus is on knowledge creation. Transfer of knowledge in universities is not as directed as in the private sector…so the number one priority is more private sector investment in R&D… supported by more government funding.” She also pointed to the high amount of private sector R&D that is being driven outside Canada.
4. The last obstacle highlighted was insufficient interdisciplinary/cross-sector collaboration and partnership generally. Helen Pearce, Chair of Fanshawe College’s School of Design, travels to oversee projects in Europe and the Middle East. She worries about “the disconnect between education and what’s happening in the workforce….Each side should learn from and collaborate more with the other…and value both humanistic and economic aspects of innovation.”
Enablers: What makes for successful innovation?
Interviewees had many valuable insights about enabling innovation. Three key categories emerged: a) societal awareness and intent, b) strong public-private sector partnerships and investment, and c) a culture of innovation.
1. The will to act must be strengthened, and to do so we must build a greater awareness of the importance of innovation. We can do this through sound study and by creating an effective dialogue on the costs of lagging behind other countries and the benefits of promoting sustainable innovation. If we aspire to be globally competitive and prosperous, we will come to see that innovation is truly a business and societal imperative which requires strategic focus and smart government policy.
Fanshawe’s Helen Pearce believes that, “Society is more open to seeing creativity and innovation in areas outside the arts; the current generation in higher education is somewhat conflicted about sustainability, but they are now more open to innovation and creativity…they care more and are willing to take more risks and get involved.” Conversation about 21st century skills now includes the skills of innovation and creativity, as well as competencies in internationalization and social media.
2. Partnership and investment go hand in hand when we talk of fuelling innovation. COU’s Patterson, the former President of Trent University, called for business and education to work together on four things: a) A corporate business strategy for investing in R&D; b) An expansion of graduate programming; c) Incorporating entrepreneurial skills in to curricula to prepare students to contribute to a more innovative economy; and d) An attack on productivity. Her prescription includes investing in the best talent in Canada and globally, developing strong managers, building engaged teams, and investing in information and communication technology.
Wilfred Laurier University’s Farlow added that we need to ensure that there is capital to create early-stage business successes and the appropriate tax incentives to support such partnerships. He described the Waterloo Region as “an ecosystem in which academics, businesses, service providers and local governments form collaborative partnerships for the benefit of the broader community.”
3. Interviewees’ comments on the final category of enablers, creating a culture of innovation, yielded many insights on how to do this, such as a) strategic focus on innovation; b) leadership strength; c) emphasis on learning, creativity and design; d) healthy workplaces; and e) teams that click, perform and implement successfully.
1. Strategic focus on innovation: On a national level, Interac’s O’Connell said that government needs to create a more fertile environment for private sector innovation, primarily by “streamlining systemic infrastructure and removing paternalistic approval gates and barriers.”
HOOPP’s Hubbell said of strategy-making, “We always start with blue-sky thinking that sets no limits and elicits innovative possibilities. We then narrow this to reflect business realities, and close on the critical few…the golden nuggets. Our staff strategic forum then provides feedback to our executives. Divisional SVP’s run workshops so all employees can be educated and understand how they, their roles and goals fit into the strategy. SVP’s personally hand the completed strategic plan to individuals with thanks for their involvement. Strategic focus and alignment is further supported through HOOPP’s intranet site.”
To foster an innovation mindset, COU’s Patterson pointed to GE’s innovation tool kit, which includes tools and processes to evaluate, finance and monitor progress against the innovation strategy. SSHRC’s Gaffield, in talking of productivity’s role as an enabler for executing innovation, said “Technology can help…but we must get the learning or business process right…then acquire the right technology, but only after first asking: What are we trying to achieve?”
2. Leadership strength: There is a consensus on the importance of several leadership elements: strong, emotionally intelligent leadership…leadership talent throughout the organization, resilience, diversity, cultural alignment and empowered, engaged staff. Leaders drive the tone and model, through their words and actions, the support that enables innovation. Patterson advised asking “to what degree has the board identified innovation as a priority….Each business must then define the relevant innovation metrics before seeking an investment strategy from the Board. This means focusing more than ever on the customer and service orientation.”
Hubbell said that leaders must create “an empowering culture, where people feel, if they come up with a sound idea, that there is a good chance it will get adopted.” She cites three other leadership success factors: First, leaders must “build agility and flexibility into the organization’s structures and processes; secondly, they must attract, keep and deeply engage talent by providing interesting work, a supportive environment and work-life balance. And very importantly, they must be open to new possibilities…to stay with an idea to explore its value.”
Hubbell referred to HOOPP’s state-of-the-art liability-driven investing (where the plan’s investment strategy is based on the future income needs of its members) as a good example of innovative work that keeps people motivated and engaged. HOOPP’s emphasis on resilient, emotionally intelligent leadership throughout is well-supported in their results. In 2010, it was identified as one of Canada’s top ten most admired work cultures. Employee engagement and member satisfaction statistics exceeded 90 percent and turnover remains extremely low. Sustainable, multi-level change has resulted in HOOPP being 102 percent funded, an industry high. (The plan has enough assets under management to meet current and future pension income needs of all plan participants). Factors contributing to these results include: a robust strategic planning process, significant stakeholder outreach and symposiums, training focused on resilience-building and change support to individuals and teams, an internal leadership academy, wellness initiatives, and energizing efforts around corporate social responsibility.
Bolton urged leaders “to allow people to be empowered to trip and fall, and to operate with fewer boundaries…all of which requires a high degree of trust.” As an example, he cites a board strategic planning process, where he pulled together a team of young staff to analyze the competitive environment. With very little direction, the group prepared an in-depth analysis of the competitive landscape and produced a video presentation which the board said strongly supported their conversation. It was fascinating to see the pride the group felt. An innovative solution was created for the board and the depth of leadership talent was also demonstrated.” Bolton said “having creative, emotionally intelligent people, with the right mix on the team, both left- and right-brain,” is key.
“Leaders,” said Farlow, “need to celebrate and share successes and winning stories so innovation can be valued. Optimism is a powerful enabler! Studies on emotional intelligence show EQ skills are the most likely to advance the enterprise.” A recent MIT study also shows that harnessing EQ and IQ contributes to the quality of decisions.
SSHRC’s Gaffield stated that “In Canada, there is a greater realization that diversity is not a problem to be solved, but rather the basis on which to build resilience and fight vulnerability. Leaders are learning to harness the entire pool of potential talent. To do that, leaders need to take a focussed approach to innovation, embrace a people strategy and develop a strategic plan that reflects shared thinking of the team.”
3. Emphasis on learning, creativity and design: It’s no surprise that interviewees emphasized education as critical to innovation. Farlow’s Centre for Innovation “offers programs in innovation and enterprise creation in the arts and music, taking advantage of tax incentives. We give people tools and experiential learning beyond the traditional university or college ….To promote creativity and innovation, we are building more emotional intelligence training into our curriculum.” Gaffield agreed. “We are just beginning to unpack the complexity, diversity and creativity of human beings…and learn from neuroscience.”
Fanshawe’s Pearce added that, “Design is everywhere…and designs keep changing. Invention sets a boundary…something new comes along and the boundary moves. Design, creativity and innovation move society forward. The trick is to have the skills to keep current.”
4. Healthy workplaces: The estimated $51 billion dollars lost annually in Canada in productivity and health care costs associated with stress and depression is powerful evidence of the need to address mental health, according to Bill Wilkerson, Founder of the Economic Roundtable on Addiction and Mental Health. We need healthy people in healthy, supportive workplaces to promote innovation. Neuroscience tells us that people need protected time to think, create and innovate. People must feel comfortable offering the multiple perspectives that are so necessary for innovation. Increasingly, the evidence is showing the importance of sustaining mental, emotional and physical balance in our personal and work lives.
Teams that click, perform and implement successfully: Teamwork was seen as highly essential to innovation. “Teamwork is everything,” concurred Hubbell. “We build on each other’s creative ideas and on the energy in the room or organization. You need one to two people on a team to get sparked, to get started. You select people who are open to new ideas, who can be ambassadors of the change…and you work hard to get the best match of talent and task.” Hubbell explains some of HOOPP’s team successes and rapid jumps in employee engagement. “You’ve got to touch their hearts and give them meaningful work to engage them.”
HOOPP, said Hubbell, offered significant training to strengthen leadership and to support employees early on in a multi-year period of fast-paced, multiple-level change. “The Resilience training was different…people came through the program understanding how physiology and the physical-mental-emotional balance affect how they think, behave and perform. They were given tools, strongly grounded in medical, bio-medical and neuroscience, to help them bridge the gap between knowing and doing. You have to change individual and team behaviour when implementing change and doing innovative work.” HOOPP’s employee engagement scores jumped 29 percent in the first year of this innovative training, and team cohesiveness and team-to-team collaboration improved. The changes have been sustained over four years, with current engagement and member satisfaction scores exceeding 90 percent.
What’s to be done to promote innovation?
Interviewees offered recommendations for advancing innovation in Canada. They are synthesized below under: Awareness, Intent and Actions.
Awareness: Society needs to seriously understand human thought and behaviour. Within organizations, we must build an understanding of innovation and of the fact that it is everyone’s job. Innovations can be big or small, creating a new revenue stream or improving a process. We need to value both humanistic and economic approaches to innovation. One often enables the other. Fanshawe’s Pearce urges that we “teach people how to collaborate more within and across teams, how to influence others and work towards common goals.”
Strategic Intent: Organizations who wish to innovate need to make it a strategic priority and ensure that there are the mechanisms to support, measure and reward innovation. They must invest sufficiently, through multiple channels, rather than rely too heavily on government and tax support. We must reform our tax system and encourage growth. Libro’s Bolton said that companies looking to innovate “must have a corporate objective around innovation, one that is built into fibre of the company…and we need to look outside industry to formulate it. Long-term, consistent effort is required.”
Actions: Interviewees cited twelve key actions for enabling innovation:
- Review how a government bill becomes law to identify and streamline inefficient processes and reduce bureaucratic hurdles.
- Invest sufficiently in private-sector research and development and information communication and technology; fund innovation and productivity in both start-up and established firms.
- Attract skilled investors.
- Develop larger international markets; explore smart/emerging economic sectors and take advantage of our connections with global research centres.
- Increase education, business and government collaboration; enhance learning and partnership across boundaries and disciplines.
- Create geographically clustered industries in regional economy environments that will help us to realize mutual benefits.
- Attract, develop and retain the best talent globally, which means more graduate programs and more international students/workers.
- Acquire and develop senior managers with a competitive orientation, a global mindset, an entrepreneurial orientation, technical literacy and expertise in marketing and risk assessment.
- Foster emotionally intelligent leadership by rewarding it; promote management styles that encourage autonomy and open, candid debate.
- Promote cohesive teamwork and team-to-team collaboration; create innovation-focussed teams which cooperate with core business units.
- Promote greater social- and for-profit-sector collaboration and learning.
- Attract more 20-30-40-somethings to participate public life
A quick review of interviewees’ insights suggests what’s good for innovation is good for organizational and societal performance. The reverse is also true. Working to enable innovation strengthens performance, productivity and learning; it engages employees and satisfies customers, stakeholders and investors. If done in a balanced way, innovation contributes to the bottom line, be it profits, patient safety, greener energy or tax-payer value…and to sustainability in the world.