Improving Coordination in Canadian Innovation Funding
BOREALIS is the latest proposal in a long line of proposals, and for it to move the needle, we need to learn from past mistakes
Several months ago, the office of Senator Colin Deacon produced an excellent report reviewing federal innovation funding initiatives, finding nearly 140 programs that aim to support innovation in Canada. As someone who makes a point of staying on top of Canadian innovation trends, I had heard of less than half of them.
While I am happy to see additional resources being earmarked for innovation via defence spending, the search for efficiency through deep cuts to the size of public sector before first finding it in underperforming innovation programs suggests that we have somehow still not learned the critical lesson.
Recently, the Information Technology & Innovation Foundation (ITIF) picked up the thread in the form of an excellent op-ed by Lawrence Zhang. Today I draw your attention back to this critical debate, highlighting his analysis and re-examining a well-established issue in light of the priorities of a new government.
Policy fragmentation
Lawrence Zhang’s assessment of the federal Canadian innovation ecosystem is blunt, and more or less echoes themes that thread through most of the articles in my own work:
“For decades, we’ve treated innovation as a policy file, not a system. We’ve staffed it with generalists and managed it through siloed programs and compliance. The result isn’t progress, it’s paperwork. No agency is mandated to steer strategy across departments, sequence support, or commercialize. […] These programs matter, but they operate in isolation—stranding firms, fragmenting funding, and stalling technological advancements.”
This is a dense paragraph that points to many problems. “Staffed with generalists” references a perennial challenge with the public service arising from a mismatch between the experience of many program administrators and the realities of the programs they administrate (a topic for another day). Endless paperwork bogs down the system, causing innovation support programs and to move too slowly to effectively support innovation. A lack of cross-cutting mandate and “whole-of-government leadership” leads to isolation and fragmented funding
This fragmentation has many consequences. As Lawrence points out, it often leaves firms, especially early-stage and pre-revenue firms, stranded in the gaps at precisely the stage where support is most needed. Even when funding is available, the complexity of access stretches timelines beyond the timescale required for innovation Canadian technologies to be globally relevant. I recently wrote about the opportunity costs of these issues: a prime opportunity for Canada to reverse its brain drain and benefit from America’s misguided recent research policies, likely to be completely missed because we are not prepared to capitalize on their mistake fast enough to capture any of the value.
I would add one more core issue to the list: an unwillingness to cut existing programs.
The result is what we have today: 134 fragmented programs. While there are no doubt gems among them (I have written previously about the good that Lab2Market, Mitacs, and organizations like IPON are doing for emerging technologies, for example, and while there is much that could be improved about SR&ED, I suspect it does more good than harm), many of the existing programs do not collect or report data that correlates specific programs to long-term outcomes, and an overreliance on job and revenue-related metrics prevents an objective assessment of program efficacy.
As Lawrence points out, numerous proposal have been tabled to address the issue, with the current thinking around the issue being established in 2011 with the Jenkins Report and repeated in the Bouchard Report. In an echo of the innovation policy frameworks it sought to change, the report generated mostly paperwork and little progress, though not for lack of excellent recommendations. Over the subsequent years many solutions have been proposed: the CIC was floated as an agency intended to streamline and coordinate scientific funding across the three main siloed research funders (NSERC, CIHR, and SSHRC), but was delayed and is now unlikely to see the light of day, even though I still hear about it occasionally on conversation with policy makers. The ambitious CARPA (modeled after DARPA and proposed in the 2021 Liberal platform) met a similar fate. The proposed capstone agency for tri-council funding appears to be in bureaucratic purgatory.
Shortly before the ITIF op-ed was published, the Carney government announced the Bureau of Research Engineering and Advanced Leadership in Innovation and Science (BOREALIS), which appears to be the latest in a long line of ambitious announcements. I am reserving judgment on the follow up for the time being.
Lawrence proposes a combination of past attempts:
“What’s needed is a combination of the two proposals—an institution that takes responsibility for the system itself. That’s why we need a Canadian Innovation and Industrial Transformation Agency with the authority to coordinate strategy, steer delivery, and close the structural gaps that hold back deployment.”
Lawrence does not directly address BOREALIS, but much of what he advises can be directly applied to any attempt to execute, especially his admonition that any such program aimed at delivering long-term innovation must be at arm’s length from the government:
“It must be a Crown corporation. Not a secretariat or special office. Only a Crown can operate outside standard government HR, IT, and procurement constraints while maintaining strategic accountability to Ministers.”
He suggests that the new agency should coordinate delivery of (at least)
“National Research Council’s Industrial Research Assistance Program (IRAP) and its 350 staff; the Strategic Innovation Fund (SIF); Innovation Solutions Canada (ISC); the Department of National Defence’s Innovation for Defence Excellence and Security (IDEaS) program; and design and appeals functions related to the Scientific Research and Experimental Development (SR&ED) tax credit”.
This would be an excellent start, and would fit the definition of “do more with less” that has been the hallmark of what PM Carney has asked, directly or indirectly, of the various programs under funding review.
Demolish first, build after
While I agree with pretty much all of Lawrence’s advice on what Canada needs to change about its approach to innovation, There is perhaps only one point on which I disagree. Lawrence asserts that “This isn’t about replacing programs. It’s about governing them coherently, strategically, and at speed. ”
Whatever is built next, be it the CIC, CARPA, BOREALIS, or Lawrence’s Canadian Innovation and Industrial Transformation Agency, I think it should be about replacing programs. 134 federal innovation programs are not something to preserve for the sake of avoiding stepping on toes, and very little in the current system is able to “govern coherently, strategically, and at speed” in the current siloed approach. It is abundantly clear, and has been for at least a decade, that what we are currently doing does not work.
Answering the question of what to cut, what to reform, and what to merge is of course much harder than the suggestion to do it.
We should not treat any program as sacred. My litmus test for what should be cut or repurposed revolves around the quality of the data on which an objective assessment can be based, and the degree to which it is explicitly and intentionally connected to other, complementary programs.
A program for which value cannot be demonstrated quantitatively (or at least concrete progress toward value creation, given timeline considerations) from metrics that same program collects should probably be slated for at least reform of how it collects and reports impact. A program that does not obviously connect to both upstream and downstream support should probably be restructured to explicitly align with what comes before and after to ensure no gaps. A narrowly scoped program that provides funding for just one piece of the puzzle without working hand-in-glove with complementary programs should have their mandate updated to be an active participant in ensuring that support recipients have access to the rest of the resources they need. A program that is unwilling to engage with pre-revenue companies should have its risk tolerance recalibrated.
We are being asked to balance conflicting goals that will play out on different timescales: build a self-sufficient Canada powered by innovation, invest in defence and the NATO Alliance, and at the same time tighten our belts to weather the short term economic storm caused by our neighbors to the south. As defence spending ramps up and Canada seeks to build economic resilience and reduce economic dependencies, we must take a long view of what it will take to achieve this. Innovation today lays the foundation for economic resilience and security tomorrow.
If we work to increase cohesion and demonstrable impact across the board, efficiency will follow.