Conference Board report demonstrates need for new innovation indicators

The Conference Board of Canada (CBoC) is calling for a new generation of indicators that will help policy makers better understand and support Canada’s innovation performance. The recommendation is contained in its long awaited benchmarking study of Canada’s innovation performance, which was released September 29, several months after its completion.

The report — entitled Exploring Canada’s Innovation Character: Benchmarking Against Global Best — utilizes 17 existing indicators to build a snapshot of Canadian innovation in the context of the goals and targets of the Innovation Strategy (see page 4). But it cautions that the indicators are of limited use and urges increased focus on the transformation and use of knowledge and international measures to gauge innovation within firms. The report also asserts that Canada’s number one priority should be commercialization along with a new measure to capture the share of a firm’s revenue from new or significantly improved goods and services.

“Innovation is a human, organic and complex thing. It’s much more than R&D. There are lots of ways to tackle it,” says Brian Guthrie, the report’s project manager.

CBoC was commissioned to prepare the report by Industry Canada following the November/02 National Summit of the innovation agenda. The government established a series of goals and objectives and it was the CBoC’s task to compare Canada’s innovation performance with those of 10 other countries (see chart).

The Innovation Strategy’s best known goal is to move Canada from 15th to 5th in R&D spending as a percentage of gross domestic product, requiring a GERD-to-GDP ratio of at least 3.1%. The CBoC study reports that Canada’s overall R&D investment grew 30% between 1992 and 2001, while nations leading in R&D intensity boosted their investments by as much as 130%. Guthrie says it’s the opinion of the CBoC that the goal is unattainable.

“We’re pretty pessimistic. It’s a stretch target but the debate has been positive,” he says. “Is it attainable? We say no. Our trends as a country are lagging the leaders and the 3.1% target is based on other countries being static.”

Guthrie notes that while the R&D target may be wishful thinking, Canada has performed very well in several indicators gauging the innovation environment and skills performance.

“We have made progress. Canada is no longer a high tax regime. It’s now very competitive,” says Guthrie. “The strategy’s targets helped to bring out issues that had a lot of urban myths around them and that will help change international perceptions. That’s very valuable.”

For government, the report suggests that Ottawa and provinces such as Alberta and Quebec possess a growing understanding of how innovation works and how governments can serve as a catalyst. And while governments have historically viewed commercialization from an academic perspective, attitudes are shifting towards an industrial focus. In the area of risk capital, Guthrie contends that the government view is still too narrow and it’s up to statisticians and policy makers to enact behavioural change. Nowhere is this more evident than in the area of financing innovation.

“We need to ask more nuanced questions. This report represents the middle of a journey and we need to broaden our scope beyond venture capital. The OECD and Statistics Canada understand the limitations of the current indicators which are centred around input and not outputs. They don’t account for innovation internal to the firm.”

To that end, CBoC has developed an Index of Corporate Innovation and has initiated a roundtable process for commercialization that involves upwards of 30 CEOs over a two-year period. Guthrie says the roundtable will be a virtual organization that will be issue-driven. It will be aimed at creating a pan-Canadian business focus leading to a national vision on innovation that also encompasses competing visions from around Canada.

For a copy of the CBoC report, go to www.conferenceboard.ca.

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