Homegrown ideas need our support
A new year, a new decade for the Canadian economy. But what is Canada’s advantage for the 2020s?
We’re not going to undercut the global heavyweights on taxes or labour costs. To win this race, we have to place strategic bets on a few important horses.
Fortunately, we’re already running ahead in a lane with critical global significance: clean tech. I don’t know of any other country doing a volume of smarter, more innovative work in this space.
But if Canadian innovators have the tech, why aren’t they already leading this race? Why are commercialization and scale such chronic problems for our startups?
Here’s one big reason: Their home market isn’t adopting enough of their transformative solutions. The problem isn’t supply, it’s demand. Demand from consumers in some cases, but also demand from Canadian business leaders, who have the capital but simply aren’t as supportive of homegrown technology solutions as they are in other countries.
For years, economists, analysts and journalists fretted over Canada’s competitiveness problem. They cite the same old causes (history, culture) and offer the same old policy solutions (lower taxes, less regulation). But the issue persists.
While taxes and regulatory policies are important, they’re too often an excuse to drive dividends and stock buybacks and line investors’ pockets.
For greater effect, they should be designed to incentivize adoption of transformative technologies — especially technologies that Canada can leverage to compete on the global stage. Like clean tech.
We often talk about commercialization like it’s a nut for startups to crack before profiting. But lack of adoption also hurts the big companies, because they’re missing out on competitive advantage. This isn’t charity — it’s fiduciary duty.
Our competitors understand what’s at stake. Look at how Germany, South Korea and the United States support their homegrown companies. Look at China, which is speed-running the adoption race at giant scale. Alibaba has 550 million shoppers. Didi, which bought out Uber’s China operation, has 20 million drivers in 400 cities. That’s what “all in” innovation adoption looks like.
Back to clean tech. One important lane for Canada is energy storage. Our country sells surplus energy too cheaply and buys peak energy too dearly. Our inability to use renewables efficiently has kept us pumping out carbon too long. We need energy storage solutions.
Fortunately, we have companies like Hydrostor, which pumps compressed air into underwater balloons at off-peak times, then releases it to run generators when the grid needs power. They did a much-publicized pilot off the Toronto Islands, but had to go to Australia to see the technology adopted at scale. That project in a flooded mine will seek electricity directly into Australia’s national grid.
Here in Canada, it took fellow innovation NRSTOR to partner with them to launch a commercial scale rollout in Goderich, Ont.
And China? It’s in the middle of a five-year plan to invest almost $500 billion in renewables. Are we waiting for the next wave of commercially viable energy storage companies to happen there? That could work out. Or we could get another Huawei. Why not buy the solutions being developed at home?
The big tech story of 2019 was venture capital froth. But the investments that really matter to most companies are when people and businesses buy their products.
In the decade ahead, Canadian businesses need to keep their eye on the products emerging in their own back yard. Competitive advantage means spending on transformational tech before someone else does.
If a Canadian company’s not in a position to do it today, it can help by championing smart policy that will make it easier to do so.
For instance, innovation-friendly policies like flow-through shares, which spurred investment in Canada’s resource sector decades ago.
What resources were to the old economy, innovation is to the new one. Picking lanes, strategic bets, adopting transformative homegrown technologies for competitive advantage — that’s Canada’s advantage for the 2020s.