ANALYSIS & OPINION

By Andrew Maxwell

 Dr. Andrew Maxwell is the Bergeron Chair in Technology Entrepreneurship in the Lassonde School of Engineering at York University.                                 

The election is over, and a new Parliament has been chosen. Now the real work begins. Among the most urgent challenges facing Canada is one that transcends party lines: how to reverse our declining innovation performance and build a future of sustainable prosperity. As highlighted by multiple experts, without decisive action, Canada risks “becoming a stagnant, middle-income country.”

Innovation is not merely a buzzword; it is the lifeblood of economic dynamism, resilience and global competitiveness. Yet history shows that despite good intentions, governments have struggled to foster and sustain effective innovation policies.

It is time to break this cycle. Regardless of who holds power, Canada’s leaders must come together across party lines to establish a permanent, non-partisan institution to guide, measure and steward innovation policy for the long term. This is not about political credit. It is about securing Canada’s future prosperity.

Below, I revisit the critical reasons why governments have historically struggled with innovation — and why now, post-election, is the moment to act boldly and collaboratively.

Uncertainty and failure: A political risk few will take

Innovation, by its very nature, is a leap into the unknown. Novel ideas often don’t pan out, experiments fail and promising prototypes can turn into dead ends.

In the private sector, entrepreneurs accept that “the process of innovation involves trial and error, and often failure;” indeed, Silicon Valley’s mantra is “fail fast, fail often.”

But in government, failure can be political poison. Ministers who back a bold new initiative only to see it flop face a firestorm of criticism. Wary of headlines about “wasted taxpayer money,” elected officials become risk-averse. It is, as one commentator noted, easy to see why public managers shy away from high-risk bets – “the risk/reward ratio just isn't in their favor.” ​

This fear of failure leads governments to support only incremental innovations, rather than the transformative innovations that carry high uncertainty and require a tolerance for failure.

When government avoids risk at all costs, it also forgoes the breakthroughs that come with taking risks.

Contrast this with agencies like the U.S. Defense Advanced Research Projects Agency (DARPA) or its new British counterpart, the Advanced Research and Invention Agency (ARIA). These organizations explicitly embrace high risk in pursuit of high reward.

The UK’s ARIA, for example, was designed to fund “high-risk, high-reward” research and explicitly anticipates that “most programmes may fail in achieving their ambitious aims" – a radical stance for a public agency.

The payoff of tolerating failure can be enormous: DARPA’s willingness to back uncertain ideas not only helped land humans on the Moon but also led to the internet and GPS. In the long run​ governments that fear failure, by contrast, often end up perpetuating the status quo.

Measuring what’s easy, missing what matters

Another fundamental problem is how governments measure success. Political leaders like metrics they can point to: dollars spent on R&D, number of grants given, glossy announcements of new innovation “hubs” or tax credits.

These are input measures – the resources put into the system. But innovation is ultimately about outcomes – the new products, services and improvements that emerge – which are notoriously hard to predict or quantify in advance.

A groundbreaking invention may germinate for years before it boosts GDP or creates jobs, making it difficult to capture in a quarterly report.

As the Organisation for Economic Co-operation and Development (OECD) has observed, traditionally policymakers rely on easy tallies of inputs and outputs, but this “does not properly capture . . . outcomes” of the innovation process. In short, governments measure what’s measurable, not necessarily what matters.

This focus on inputs breeds a false sense of progress. A government can boast about raising R&D spending or launching X number of innovation programs – yet the outcome may still be that no world-leading companies are created or productivity remains flat.

Canada knows this disconnect too well: we rank high in educated talent and research spending among OECD countries (inputs), but low in commercialization and productivity growth (outcomes).

Politicians, however, get credit simply for “writing cheques,” as innovation scholar Dan Breznitz at the Munk School of Global Affairs & Public Policy quips – whether or not those cheques truly spark innovation. The result is policy geared to visible inputs (like funding announcements) rather than the harder task of ensuring those inputs turn into real innovation on the ground.

We end up with, as Breznitz  put it, “short-term solutions that are based on writing [cheques] . . . or bold announcements never followed up with action.”​

To craft effective innovation policy, governments must shift focus to outcomes – and accept that meaningful outcomes can take time to materialize.

Short-term cycles vs. long-term horizons

Time is the enemy of innovation policy in a political system. Genuine innovation often unfolds over a decade or more. A new technology might go from blue-sky research to mainstream adoption in, say, 15 years – far longer than the four-year election cycle or the average tenure of a minister.

This creates a structural mismatch. Elected officials naturally hunger for quick wins they can claim before the next vote. Long-term investments whose payoffs will only be reaped by a successor government hold much less allure. Why pour funding into a moonshot that might only show results in 2035, when your political fortunes hinge on the economy in 2025?

But the consequence of this short-termism is that many innovation initiatives are abandoned too soon or never launched at all. Programs get announced with fanfare and then quietly shelved when a new government comes in. Or they are not funded at the scale or duration needed to make an impact.

Yet, as innovation experts emphasize, “a long-term time horizon is required before certain policy initiatives can show economic benefits.” Patience is key: for example, public investments in mRNA vaccine research took decades to pay off – but when COVID-19 struck, that long-term bet yielded lifesaving results.

Some countries have tackled this by building continuity into their innovation systems. The U.S., again via DARPA, ensured stable funding through administrations. Germany’s Fraunhofer Institutes have been sustained over many decades.

Here in Canada, we lack similar long-term pillars. Our innovation “strategy” has been reset every few years, lurching from one new slogan to the next. To break out, we need mechanisms to lock in long-range innovation agendas beyond a single electoral cycle.

This is precisely where a non-partisan innovation institution could help, by providing consistent stewardship that outlasts any one government’s mandate.

Technological complexity outpaces policy capacity

Innovation today is often tied to cutting-edge technologies – AI, biotech, quantum computing, clean tech and beyond. These fields are complex and fast-moving. Keeping abreast of them is a challenge even for experts; for busy policymakers, it can be overwhelming.

The result is that those drafting laws or programs may not fully understand the technologies (or novel applications of existing tech) they are trying to regulate or support. We’ve seen this gap in everything from social media to cryptocurrency – governments scrambling to react to innovations that have already outpaced the regulatory frameworks.

As the World Economic Forum bluntly noted, “technology is literally creating the world we live in, and policymakers can’t keep up.”​

This knowledge gap matters for innovation policy. If lawmakers don’t grasp the science or the industry dynamics, they may err in both directions – either smothering a promising innovation due to unfounded fears or hyping and funding a trendy technology without understanding its real potential.

At times, well-intentioned programs falter because the implementation (by a civil service that may lack specialized expertise) can’t match the complexity of the task. For instance, evaluating AI research proposals or designing incentives for biotech manufacturing requires a depth of understanding that generalist officials often haven’t had the training or experience to develop.

The issue is compounded by the relative scarcity of STEM backgrounds among political leaders. Few elected officials are former scientists or engineers, and advisory bodies are not always equipped to fill the gap.

Some countries have responded by bringing technologists into government – for example, the U.K. and France have created chief scientific advisor roles and “digital councils” to guide policy.

But Canada’s efforts here have been ad-hoc. What’s needed is a systematic way to inject deep technical and innovation expertise into policymaking. A new innovation policy institution could house such expertise and serve as a crucial bridge between the tech community and the government – ensuring policy is informed by real understanding of technological possibilities (and limits).

The lobbying gap: When innovators lack a voice​

One reason innovation policy skews toward the status quo is that policy is shaped by those who show up. In practice, that often means well-established industry players with lobbying clout and institutional players with an interest in maintaining the status quo.

Large incumbent firms, institutions and industry associations have the resources to engage with government – to attend consultations, propose regulations and press their interests in Ottawa. Many disruptive innovators, by contrast, are small startups or research spinoffs without government relations teams. Entrepreneurs are busy building their businesses and often don’t have the bandwidth or know-how to navigate policy debates, or even to view the ecosystem as a whole.

As a result, the voices of emerging innovators, or independent experts are too often missing at the policymaking table.

The impact of this bias can be seen when you consider how intellectual property and data policies in Canada have often mirrored the asks of large multinationals, potentially disadvantaging homegrown innovators. Or how small firms struggle to get procurement contracts while big contractors (with lobbyists) dominate.

True innovators and entrepreneurs rarely have dedicated advocates pushing their needs – such as access to risk capital, better talent pipelines, or lighter regulatory sandboxes – in the halls of power. We need to correct this by actively bringing innovators into the policy process.

A dedicated innovation council or agency could act as an inclusive forum where startup founders, researchers and new-venture investors have a voice alongside incumbents. Otherwise, we risk policies that protect today’s industries at the expense of tomorrow’s.

Misunderstanding the innovation process

Even when policymakers earnestly support innovation, they may not understand how innovation actually happens.

Innovation is not a single event or a linear path from lab to market – it’s a multi-stage, iterative process that spans idea generation, R&D, prototyping, testing, commercialization, and scaling up. Each stage has different needs and obstacles.

Few outside the innovation profession truly grasp these nuances. This can lead to well-intended but ineffective policies that target the wrong stage or apply the wrong tools.

A common mistake is equating innovation solely with invention (the early-stage creation of a new idea or product). Canada has been especially prone to this, pouring resources into research and patents – invention – while neglecting the later stages of scaling and diffusion.

As Dan Breznitz observes, “Canada has long mistaken invention for innovation.” In his work, Breznitz outlines four broad stages: invention, design/engineering, product improvement, and production/marketing.

Canada, he argues, focuses too heavily on the first stage and consequently “continuous[ly] fail[s] in innovation” ​because we don’t capitalize on or commercialize our inventions.

We’re world-class at generating ideas in our universities, but far less successful at turning those ideas into high-growth Canadian companies.

This points to a lack of understanding in policy circles of the “innovation funnel” and the dreaded “valley of death” – the gap between research and a viable product where many projects stall for lack of support.

For instance, government might offer R&D tax credits (benefiting research) and later big export programs (benefiting well-established firms), but nothing in between to help a prototype become a product (e.g. mentoring, seed funding, regulatory approvals).

Effective innovation policy would provide a continuum of support across stages, from lab bench to global market, including user testing and refinement (since innovation must meet user needs, not just exist technically).

Unfortunately, few policymakers have hands-on experience with product development cycles or human-centred design, so these subtleties are missed. The result is fragmented programs that don’t add up to a coherent pipeline.

To fix this, Canada should look to models like Sweden’s VINNOVA which explicitly bridges academia and industry and is tasked with strengthening the entire innovation ecosystem.

VINNOVA serves as the government’s “expert authority in the area of innovation policy,” with a mission to boost Sweden’s innovation capacity for the benefit of society. Its approach includes funding collaborative projects and even guiding startups through stages of growth.

A Canadian innovation agency modelled in this vein could ensure that policy is informed by those who do understand the innovation process end-to-end. That means involving engineers, product managers and innovators in crafting policy, so that we support not just invention but innovation – the whole journey from idea to impact.

Disruption and the inevitable resistance to change

Truly innovative ideas are often disruptive – they can upend existing industries, displace workers or challenge regulatory norms. This is the essence of what economist Joseph Schumpeter called “creative destruction.”

But what’s creatively transformative from society’s viewpoint can feel destructive to specific stakeholders. And those stakeholders, if they are powerful or numerous, will fiercely resist. This creates strong political headwinds against innovation.

Politicians hear loudly from groups that fear change – whether it’s an incumbent business that doesn’t want a new competitor, a labour union worried about job losses from automation, or even consumers uneasy about a new technology’s risks.

It’s often easier (and more immediately rewarding for an elected official) to mollify these voices and slow down the change than to push forward an innovation whose diffuse benefits may only appear later.

History provides plenty of examples: when ride-sharing and home-sharing platforms emerged, taxi associations and hotel lobbyists moved quickly to constrain them via regulation.

Renewable energy innovations often encounter resistance from traditional energy producers and even local communities (the “not in my backyard” syndrome).

In Canada, attempts to introduce fintech innovations have been met with pushback citing consumer protection – sometimes legitimately, sometimes as a way to shield incumbents.

Every disruptive innovation creates winners and losers, and the losers often have a louder political voice. As one government innovation veteran ruefully noted, “When officials announce an effort to do something new and unproven, powerful constituencies emerge to argue against it.” ​Change is hard, and those invested in the status quo know how to leverage the system to defend their turf.

The challenge for innovation policy is to anticipate and manage this resistance. It requires political courage to stand up to entrenched interests – and also thoughtful policies to help ease the transition for those affected (for example, re-skilling programs for workers displaced by new tech).

Too often, governments either cave to opposition and abandon the innovation, or plow ahead insensitively and face backlash that sours public opinion on innovation generally.

A smarter approach would be building coalitions and public understanding around the benefits of innovation, while addressing legitimate concerns.

This is another area where a neutral, non-partisan body could help – by transparently assessing the impacts of disruptive innovations, advising on mitigation strategies for negative effects, and keeping the focus on long-term gains.

In short, we need to treat innovation policy as change management, not just technology management.

Toward a new consensus – and a new institution – for Canadian innovation

Given these challenges – risk aversion, short-termism, complexity, lobbying pressures, process missteps and resistance – it’s little wonder Canada has struggled to sustain a winning innovation strategy.

But we can also learn from what has worked elsewhere. Around the world, there are models of innovation governance that have overcome many of these hurdles:

• Mission-driven agencies like DARPA in the U.S. and its imitators embrace risk and have political cover to fail occasionally, as long as they succeed spectacularly sometimes.
• Independent innovation authorities like Israel’s Innovation Authority blend public funding with private-sector expertise to nurture startups. Not coincidentally, Israel’s high-tech sector now accounts for an astonishing 20 percent of its GDP (versus approximately 10 percent in the U.S. and six percent in Europe) – a testament to long-term investment and insulation from day-to-day politics.
• Arm’s-length advisory councils like Finland’s SITRA innovation fund or Sweden’s Innovation Council (and historically Canada’s own Economic Council in decades past) build consensus across parties and stakeholders, providing consistent guidance on innovation priorities through political transitions.
• National innovation agencies like VINNOVA (Sweden) or Innovate UK focus on the entire innovation system, coordinating efforts across ministries and industry, and explicitly aiming for sustainable, inclusive outcomes rather than just input metrics.

Canada now needs its own tailored solution building on these best practices. The new Parliament is an opportunity to forge a cross-party commitment to innovation that outlasts the election cycle.

The cornerstone of this commitment should be the creation of a non-partisan Canadian Innovation Council (or Agency) – a body empowered to monitor, advise, and even implement innovation policy with a long-term perspective.

This institution must be endowed with a clear mandate and sufficient autonomy to rise above the fray of partisan politics and lobbying influences.

As the Information Technology and Innovation Foundation recommended, Canada should “establish an independent Canada Innovation Agency” with a mandate to spur innovation, led by experts, and kept “outside the reach of the short-term whims . . . of government.”

In practice, that means a new agency or council created by statute, reporting to Parliament (perhaps like the Bank of Canada or Auditor General does) rather than being micromanaged by ministers. It should have multi-year funding locked in, so it can support initiatives that may only bear fruit a decade from now.

Such an institution could play multiple roles. At the strategic level, it would continually assess Canada’s innovation performance (much as the former Science & Technology Council did with its public reports), ensuring we measure outcomes and progress on the things that truly matter – productivity growth, business R&D, startup scaling, etc.

The new institution would advise the government of the day on policy changes needed, acting as an early warning system when we fall behind and a repository of bold ideas (for example, identifying “mission-oriented” innovation challenges Canada should pursue, akin to DARPA’s moonshots or the EU’s mission-driven projects).

At the operational level, an innovation agency could consolidate and deliver programs in a less partisan way. Rather than political leaders announcing scattered initiatives, the agency could provide a one-stop, expert-driven shop for innovation support – be it grants, challenge prizes, or advisory services – much like Israel’s Innovation Authority or the proposed Canada Innovation Corporation (which, tellingly, was conceived to merge and refocus existing programs).

The key is agility and expertise: the ability to start or stop specific programs based on what works, without needing a new law or election mandate each time. This experimental, adaptive approach is exactly what our current system lacks.

Crucially, a new Canadian Innovation Council must also engage the broader ecosystem – convening innovators, business leaders, researchers, and provincial representatives to build a shared vision. Innovation is a team sport across society.

A non-partisan council could host regular innovation foresight forums, coordinate between federal and provincial efforts, and ensure that even voices outside government (including SMEs and startups) are heard in policy development. Over time, it would cultivate an innovation culture in policy circles, increasing understanding and reducing the fear of doing things differently.

Imagine if every federal budget and every election platform were informed by this council’s evidence-based recommendations on innovation – we might finally break out of the rinse-and-repeat cycle of grand announcements followed by underwhelming results.

Canada stands at an inflection point

Productivity and innovation are no longer academic concerns; they are the determinants of whether our children inherit a thriving, prosperous nation or a lagging economy.

The good news is that Canadians across the spectrum – business, academia, and yes, even politicians – are waking up to the urgency. There is a nascent consensus that our traditional, input-driven, politically siloed approach isn’t delivering. The stage is set for bold action.

What is needed now is leadership to channel this consensus into an institutional reform that endures.

By establishing a non-partisan innovation council or agency – one that spans mandates, de-risks bold bets, brings technical savvy to policy, and holds everyone accountable for outcomes – Canada can finally build the innovation engine it so desperately needs. Business and opinion leaders should rally around this idea, pressing all parties to commit to it.

Our country has the talent and ideas to be an innovation leader. What we need is the political will to modernize how we govern innovation itself. We must not let uncertainty, short-termism, or vested interests continue to hamper our future.

Instead, let’s create the mechanisms that encourage ambition, patience, and collaboration in innovation policy. With a dedicated, non-partisan innovation institution in place, Canada can turn innovative ideas into lasting prosperity – and ensure that “innovation policy” is no longer an oxymoron, but a real driver of our national success.

It’s time to act, and to act together, for Canada’s innovation future.

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