By Prasanthi Vasanthakumar, Institute of Corporate Directors
Canada’s COVID-19 vaccination drive has picked up steam in recent weeks, but it started at a snail’s pace. In the early days, our vaccine woes were largely due to a lack of domestic production that left us at the mercy of overburdened foreign supply chains. But this inability to produce homegrown coronavirus vaccines is a symptom of our mediocre innovation performance, writes Rohinton Medhora, President of the Centre for International Governance Innovation (CIGI.)
Indeed, Canada’s innovation and productivity is falling behind that of peer countries. Since the turn of the century, Canada is the only G7 country guilty of spending steadily less on research and development (R&D). In terms of private-sector R&D expenditure, we are already dead last. The numbers on inventions patented aren’t much better; here, we’re in a tight race to the bottom with Italy. 1
Why is our innovation picture so disappointing, and what can we do to turn things around? Catherine Boivie, ICD.D, and Medhora have some ideas (video).
Are we too nice? The side effects of stability
Canada’s culture may contribute to our lacklustre innovation performance, says Boivie, who is Chair of the AnitaB Artificial Intelligence Committee and a board director at Vancouver Women in Tech. Unlike the U.S., which has dealt with a firestorm of political and social upheaval, Canada has enjoyed relative stability.
“We are stable, we are nice, we carry on as we have,” says Boivie. “But innovation and patents are the result of competition and challenges. If Canada’s businesses don’t feel challenged, they will accept doing things better, faster and cheaper, rather than innovating and creating new products.”
Boivie cautions against focusing on historical value drivers like scale, scope and efficiency. “That’s not innovation, that’s the cost of entry,” she says. “Boards need to make sure their organizations are innovating to prepare for the next five years. They should be agile and keep up with changes in the business and social environment, such as Black Lives Matter and Indigenous diversity inclusions.”
Conversation starters
Indeed, social, environmental and demographic megatrends can be a good way to spark the board-management dialogue. Discussing trends like extreme weather events, an aging Canadian population, the rise of robotics and drones and a growing preoccupation with sustainability can prompt new ideas on products, services and opportunities for change. It can also help organizations revisit long-standing assumptions in the strategic plan that may no longer be relevant.2
As with any productive conversation, boards should be collaborative, rather than confrontational with management. This approach can turn the board into a catalyst for change and a close partner – one that can add value earlier in the process, contributing to the rough sketch instead of simply approving the final picture.3
Questions for the board
As directors discuss innovation at the board level, a number of questions could guide the conversation: Why does the organization exist? Do we have leaders with vision, and if not, do we need to adjust our leadership succession and development criteria? Should we ask management to share strategic options that were not chosen and why? Do we have performance metrics that reward innovation, but do we also recognize that failure is a necessary part of the process?
“Ask yourself, who would miss the organization if it no longer exists?” says Boivie. “This is one way to look at innovation from the board level, and it would be the primary focus of building it up.”
Going back to basics could help map a path to pre-emptive innovation, and possibly, survival. As one leader aptly puts it, “you have to self-disrupt before you self-destruct.”
Problematic policies
Part of the innovation challenge lies with policies that make it hard to ditch the status quo. For example, critics argue that pandemic policies like the Canada Emergency Wage Subsidy (CEWS) prop up zombie firms that would otherwise fail, and stifle innovation by acting as a tax on revenue growth, artificially reducing labour costs and deterring automation. What we need instead are policies that help promising businesses adopt or invest in technology to further the innovation agenda and economic recovery. 4
On this note, Medhora cautions that certain international trade agreements can also be problematic, because they favour countries that export intellectual property (IP). These policies can have profound implications for homegrown innovation.
As a net importer of IP, Canada is missing out on the wealth of the IP-,digital- and data-driven economy. However, the federal budget’s commitment to conduct a comprehensive IP review is a step in the right direction.
“We have to be wise about how IP works globally, how it affects Canada, and what kinds of policies we need, federally, provincially and locally, at universities, for example, to maximize the equity and prosperity benefits that come from it,” says Medhora. “As most IP is held privately, business leaders will be an important part of this strategic review.”
A better economy
Innovation matters for all Canadians because it fuels productivity, which sets our standard of living. As difficult as it has been, the pandemic presents us with an opportunity to reinvent the economy and say goodbye to business as usual. Nothing highlights the importance of this more than our current vaccine conundrum.
“In Canada, we are on the receiving end of vaccine diplomacy, and to make up for this, we’ve overpurchased vaccines, succumbing to vaccine nationalism,” says Medhora. “In the process, we may have become numb to the importance of domestic innovation. But vaccine development is important because the real money lies in holding the IP. It would also enable us to proactively pursue our humanitarian and other goals. What we have instead is a net result that is not efficient, effective, or equitable.”
Canada has the smarts to be an innovation power player. We just need the collective will to become one.
The reference shelf
Compiled by Heather Wilson, Director, Research Services
1,4 Centre for International Governance Innovation. Why innovation and technology adoption need to top the agenda (2021)
2,3 Harvard Law School Forum on Corporate Governance. Leading boards rethinking strategy and enabling innovation (2020)
Australian Institute of Company Directors. The role of the board in innovation (2015)
Corporate Board Member. Boardroom innovation: the role of boards in driving strategic growth (n.d.)
Directors & Boards. Innovation starts in the boardroom (2014)
Harvard Business Review. The board’s new innovation imperative (2017)
IMD. Innovation governance: how proactive is your board? (2015)
Innovation Management. Governing innovation in practice – the role of the board of directors (2013)
The Globe and Mail. COVID-19 recovery must involve global connections, not more vaccine nationalism (2021)
Originally published in the Director Lens Communique by the Institute of Corporate Directors.