A Trumpian innovation strategy

My favourite sentence in this “Innovation Budget” is surprisingly frank and accurate: “The Government of Canada’s vast array of innovation programs makes it difficult for businesses to find and secure the support they need.”

Well, good. Somebody seems to understand the nature of our current reality: We have far too many programs. We have been much too innovative with innovation programs. But let’s pause for a moment and consider the detailed implications of that statement.

We have a vast — vast! — array of programs. That suggests the federal government has been focused on innovation policy for a long time. And it has. The Prime Minister’s Advisory Council on Economic Growth, whose recent recommendations this budget adopts, thinks innovation policy has been failing for a century. So let’s not pretend, despite the breathlessness of the budget’s raptures about innovation, that this is a new issue we Canadians of the new millennium have just discovered. Governments every bit as well-intentioned as Justin Trudeau’s have put lots of time, energy and money into trying to make Canadians more innovative.

And they have failed. Canada has a very high standard of living. We give every appearance of being a successful country. But people in the tech industry, academics studying tech and almost everyone else who pronounces on this subject thinks our tech policies haven’t been working. We’re good at basic research. We’re not good at commercializing our discoveries. And so it has been basically forever.

Now, you might think that if a government had concluded it had been doing a vast number of things aimed at a long-standing goal and hadn’t come close to achieving that goal, it would take a chastened view of new efforts to achieve the same goal and instead focus its annual budget on something else. The budget does launch a new initiative to look across this vast array of programs, to see what’s worked and what hasn’t, and to rationalize them. That’s good. But reasonable people would conduct that kind of canvass first, and only then — after pondering what they had discovered — think about introducing a new innovation strategy. Of course, we’re talking about a government here, so it’s act first, ponder later.

The most startling thing about our new innovation policy is how Trumpian it is. The president’s plans for U.S. industry are clear: increase exports, favour American firms with government procurement — forget foreign steel in pipelines. So bad! — and browbeat individual firms when necessary. It’s the businessman’s typical approach to economic policy. The CEO’s job is to be hands-on and fix problems wherever he finds them. That’s fine for individual firms. But an economy doesn’t work that way. An economy works by firms and their CEOs trying many different things, with the economy then choosing via competition which ones work.

Justin Trudeau probably will not be intervening personally. But his Advisory Council on Economic Growth is headed by a primo management consultant — Dominic Barton, head of McKinsey’s global operations — and it’s populated by businesspeople. It recommended, and the government has now accepted, a goal of increasing our exports by 30 per cent by 2025. Why that number, or why any target at all, is not explained. The architecture of the new policy is a “platform,” two funds and six “tables.” The platform is “Innovation Canada.” The funds are a Strategic Innovation Fund, a Venture Capital Catalyst Initiative, and the private but strong-armed Canadian Business Growth Fund — not a vast array, maybe, but still an array. The tables are six “Economic Strategy Tables” for sectors that somehow have been identified as key: advanced manufacturing, agri-food, clean technology, digital industries, health/bio-sciences and clean resources. The tables will be trying to identify “innovation opportunities” and set “ambitious growth targets for Canadian innovators” — though why innovators will pay attention to targets is another question.

We Canadians are supposed to be the anti-Trumps. We are certainly very good at denouncing President Trump’s short-sighted mercantilism. But what is a country with a formal export target if not mercantilist? We also now have a target for high-growth small firms. We have 14,000; we’re now aiming for 28,000. Again, why is that the right number? Or a number that makes the best use of our resources? Or a number that involves the most profits for the firms involved? If you want firms to be “sustainable” — and we want everything to be sustainable these days — they have to make profits. Setting a numerical output target in this way is a natural thing for a CEO to do. But for an economy, it’s crazy.

As for our traditional opposition to the Buy America Act, Ottawa will be giving preference to Canadian innovators with good ideas. Will ordinary Canadian citizens trying to get efficient, responsive services out of their governments appreciate those governments being used as industrial labs trying out products that eventually — but not until the bugs are worked out — could help Team Canada?

Lately, Ottawa has been having trouble getting its workers their salary cheques made out correctly. Is it really going to solve Canada’s century-old innovation gap?