Canada has long been known for its innovative spirit and talented workforce. While it’s very un-Canadian to brag, remember that we are the proud birth nation of insulin, the pacemaker, IMAX, Java programming language, and the once record-breaking jet fighter plane Avro Arrow.
“In today’s highly competitive global tech landscape, a quick scan around the world would find Canada ranked beyond the 20th+ position in research and development (R&D) spending as a percentage of GDP.”
But in today’s highly competitive global tech landscape, a quick scan around the world would find Canada ranked beyond the 20th+ position in research and development (R&D) spending as a percentage of GDP. At the same time, other leading nations aggressively charge up their strategic positions in future-defining areas such as clean energy, telecommunication, AI, aerospace, and critical minerals production. We must acknowledge our challenges and take proactive steps to lead and win in the global tech landscape. Are we here to follow? Or can we strive to take the lead on strategic high grounds for the future? Canada’s tech ecosystem stands at a crossroads.
We need a collective effort from business leaders, policymakers, industry decision-makers, and investors to achieve this. We will explore three central themes to drive Canada’s tech ecosystem forward:
- Unifying a vision for the Canadian tech future – “Made in Canada 2030”
- Accelerating AI adoption to the masses
- Incentivizing the Investor Class
R&D Spending: Unifying a Vision for “Made in Canada 2030”
Anthropologist Joseph Campbell put it elegantly: “Myths are public dreams, dreams are private myths”. When phrases such as “the American Dream,” “the Indian Century,” or “the Chinese Rejuvenation” are spoken, it is hard not to conjure up the imagery, imagination, and inspiration associated with such public visions of a society’s goal. These grand visions provide a unifying cry and an overarching strategic direction for all those who partake in and believe in their own and collective exceptionalism as a people to achieve more.
“Canada’s R&D spending only made up 1.8% of our GDP in 2020, even outshined by smaller countries such as Estonia and the Czech Republic.”
For Canada, we have primarily relied upon the power of our enterprising free market mechanism to drive our innovation. Still, we need a grand strategic national vision powered by the state. While we have achieved much success thanks to the vibrant technology talent pool, the lack of a grand identity presents two areas of disadvantage:
1. As a nation, Canada needs to catch up in research and development spending as a percentage of GDP compared to other leading countries. Based on 2020 data, the G7 and China are averaging 2% to 3% and OECD countries are averaging 2.7%. The European Union countries are averaging 2.19%. The frontrunners’ cohort is led by Israel and South Korea at a staggering 5.7% and 4.8%. Canada’s R&D spending only made up 1.8% of our GDP in 2020, even outshined by smaller countries such as Estonia and the Czech Republic.
2. Many sectors vital to future-leading technology require full ecosystems and value chains to be created to succeed and lead. An airplane requires thousands of suppliers and sub-discipline manufacturers to collaborate to create a high-tech product; computer chip and solar panel production require critical minerals extraction and refinement that are choke points to grow. Private industries rely heavily on market trends and business profitability models to choose which areas of technology to invest in. This inherent gap for a low population density nation as Canada leaves most of these choices to Adam Smith’s laissez-faire principle, where that critical climb to win the race to the top has hurdles that are bumpy or altogether show-stopping.
This gap can be addressed by providing a unifying vision for the future – a strategic roadmap that will guide our collective efforts toward technological advancement, economic growth, and international recognition. Let’s call this vision “Made in Canada 2030.”
“The Canadian government should clearly identify ambitious national goals of “owning” the leadership role in key future-leading areas of innovation.”
1. Identify Key Industries to “Own”: The Canadian government should clearly identify ambitious national goals of “owning” the leadership role in key future-leading areas of innovation, for example, becoming the world leader in critical mineral extraction and production chains. They should then commit to increasing public funding for R&D initiatives, aiming to allocate at least 3% of GDP to these endeavours. This investment will attract top-notch researchers, foster innovation, and drive economic progress.
2. Foster Public-Private Partnerships: Collaborations between academia, businesses, and government institutions are crucial to catalyzing technological breakthroughs. The government should create an enabling environment encouraging cross-sector partnerships and promoting knowledge exchange.
3. Support Startups and Scale-ups: Provide targeted funding and support programs for tech startups and scale-ups to accelerate their growth and expand their impact. These initiatives will cultivate a thriving startup ecosystem, fostering the development of groundbreaking technologies.
AI Adoption: Paving the Way for “AI-Ready” Organizations
Artificial Intelligence (AI) holds immense potential to transform industries and redefine business operations. However, the effective implementation of AI relies on organizations being “AI-Ready,” which means having access to connected and available data.
“Establish a comprehensive national data strategy that prioritizes secure and standardized data sharing, while safeguarding individual privacy.”
1. Develop a National Data Strategy: Establish a comprehensive national data strategy that prioritizes secure and standardized data sharing, while safeguarding individual privacy. This strategy will facilitate the ethical and responsible use of data for AI applications.
2. Invest in AI Education and Upskilling: Create targeted educational programs to equip the workforce with the skills required for AI implementation. By investing in AI literacy and upskilling initiatives, we can ensure that we have a workforce that is ready to embrace AI technologies and drive innovation across sectors.
3. Promote AI Knowledge Sharing: Encourage industry-specific AI knowledge-sharing platforms and communities to facilitate collaboration, learning, and best practices. These platforms will enable organizations to learn from each other’s experiences and adopt AI technologies more efficiently.
Incentivizing Technology Investments: Empowering the Investor Class
At a macro level, the investor class ultimately drives the decisions of the management class in corporations. CFOs and CEOs at key management levels of these organizations often are more focused on the relatively immediate ROI and EBITDA margins of their businesses, and the initiatives from CTOs that drive technology uplift can often be seen to only “pay off later.”
Our economy still has a heavy reliance on traditional resource-based industries, and organizations in these industries often stand to benefit the most from technology innovation and have the highest potential to drive adoption levels nationally.
To unleash the full potential of Canada’s tech ecosystem, the investor class needs to be incentivized to actively support organizations in adopting technology and making related investments.
“Introduce extraordinary tax incentives that encourage investors and CFOs in organizations to fund technology-driven initiatives, startups, and R&D projects.”
1. Close the CFO vs. CTO Gap – Tax Incentives for Technology Investments: Introduce extraordinary tax incentives that encourage investors and CFOs in organizations to fund technology-driven initiatives, startups, and R&D projects. We can attract capital and foster a dynamic tech landscape by aligning investor interests with technology adoption.
2. Establish Technology-Focused Funds: Create more government-backed funds like the Industrial Research Assistance Program and Scientific Research and Experimental Development funds to support technology and innovation. These funds will bridge the funding gap for industry adoption of technologies, and early-stage companies, providing them with the resources needed to grow and scale.
3. Encourage Industry-Specific Investments: Promote investor engagement in sector-specific technology investments tailored to each industry’s unique needs and challenges. This approach will bolster technology adoption in traditionally slower-to-adapt sectors.
Creating A Canadian Tech Myth Will Drive Tech Innovation
As Canada stands at the precipice of a transformative digital era, shaping a thriving ecosystem for tech innovation is paramount. By creating a unifying vision of the Canadian technology future, prioritizing R&D spending, fostering AI adoption, and incentivizing technology investments, we can position Canada as a global tech leader, spurring innovation, creating jobs, and driving economic growth. To achieve this vision, business leaders, policymakers, industry professionals, investors, and tech enthusiasts must collaborate and rally behind a unified goal. Together, we can propel Canada towards a prosperous future where innovation knows no bounds and technology paves the way for progress.