Mandates, Mandates Everywhere

and not much time to think

One of the most powerful forces for systemic change arises when a top-down mandate to reach some target outcome meets a bottom-up movement of people with domain expertise willing to do the work, squeezing out the sticky middle that usually exists in opposition to such change. Examples abound, but probably the most salient one I’ve discussed to date newsletter arose from the meeting of Bayh-Dole’s mandate to commercialize public funded research with PTIE initiative that has transformed more than 75 American research institutions into innovation engines in recent years.

The last couple of weeks present such an opportunity for Canada. PM Mark Carney’s mandate letter to his ministers arrives close on the heels of a number of grassroots initiatives to change how Canada approaches innovation.

The 7 priorities in the PM’s letter lay out high level target outcomes without getting into the weeds of how. This is as it should be: in practice, a top-down mandate usually works best when it prescribes target outcomes and the reasoning behind them (the what and the why), while implementation details (the how) are left to the people on the ground who have the domain expertise to deliver. Below, I comment on each of the 7 priorities highlighted in the mandate, pulling from my work as well as that of CCI and others to provide some perspectives on what I hope to see on the implementation side.

The stars appear to be aligning toward real, systemic change, as all the conditions exist to make this possible - but it remains to be seen if this government can follow through.

Reading between the lines

PM Carney’s letter is short and to the point, as is most of his communication to date.

In the first few densely-packed paragraphs, PM Carney positions Canada within a quickly changing international trading system, calling on the ministers to redefine our commercial and security relationships, become an energy superpower, address the housing crisis, and secure our borders. He dedicates two entire sentences to AI adoption, an enormous emphasis given the scope of what is passed over as a set of items in the list above.

Before we get into the content, it’s worth flagging what is by far my favorite part of the letter: all the ministers were all sent the same letter.

This has been a somewhat polarizing choice, from the discussion I have seen so far, with the main criticism being that by not clearly delineating responsibility for these missions, the PM risks conflicts over jurisdiction. Far from being a problem, this is both intentional, and brilliant.

A system as large and complex as the Canadian government does not exist in siloes, no matter what the org chart says. Any decision made at the ministerial level has ramifications beyond just that portfolio.

The message that underlies the uniform mandate letter is loud and clear: all of these missions involve all ministries. As the innovation community has been saying since at least 2011, if not before: none of what needs to happen to change Canada’s trajectory will be possible without whole of government leadership. It is my sincere hope that this marks the beginning of the dismantling of ministerial siloes that has plagued Canadian policy development in recent years.

A (set of) Generational Challenge(s)

Priority 1: Establishing a new economic and security relationship with the United States and strengthening our collaboration with reliable trading partners and allies around the world.

This first point is entirely as expected, and in line with what his government has been doing since he took over from Trudeau. Obviously, the scope of what is involved in this sentence is vast and I won’t attempt to fully unpack it, focusing instead on the role played by intellectual property in delivering on this priority.

Intellectual property is what exists in the intersection of economic and national security with innovation policy. I have written previously about the importance of a thoughtful approach to foreign direct investment, an issue which takes on entirely new dimensions in light of recent American collective insanity policy shifts. CCI gets into it as well, calling on the new government to “protect Canadian ideas and our capacity to innovate by taking a sovereign, security-informed approach to IP, data, and other intangible assets to maximize freedom to operate.” as well as to “Better protect Canada through economic security by bringing the Investment Canada Act into the 21st century.”

This is also a mission to which the work of the SAIL team is intended to directly contribute by making it easier for Canadian startups to access valuable intellectual property arising from publicly funded research. The Simple Agreement for Innovation Licensing (SAIL) and the rapidly evolving set of projects building on the framework seeks to create conditions in Canada that promote domestic value creation and retention of valuable intellectual property by making it possible and desirable to build in Canada. All of this will contribute directly to security issues, but under a siloed mandate would fall under innovation policy rather than security policy. With a mission that spans ministries, the scope and potential impact are greatly broadened.

Priority 2: Building one Canadian economy by removing barriers to interprovincial trade and identifying and expediting nation-building projects that will connect and transform our country.

Again, entirely consistent with what was already happening. The CCI report similarly calls for “tackling internal trade barriers and creating a single market for public procurement from coast to coast to coast”.

While this priority has been heavily focused on barriers to interprovincial trade, there are two other key elements that fall under the heading of “nation building” that I would like to highlight here.

The first relates to emerging technologies that require multi-level engagement and scale to demonstrate utility. Climate tech (specifically carbon capture) is a perfect example: while most truly innovative carbon capture tech is being pioneered by small startups, it is only by reaching massive scale that they can be relevant to the problem they seek to solve. This is not trivial: Park et al. do a very good job discussing the challenges to scaling climate and cleantech, flagging a need to coordinate across multiple stakeholder groups at the municipal, provincial, and federal government level and in the private sector. These represent enormous internal barriers to adoption of innovative technologies. In climate tech, the private sector is already leading on this front, with Deep Sky providing a scaleup environment for an enormous variety of carbon capture technologies that bears some thematic resemblance to the foundational work that established Canada’s quantum valley in the early 2000s.

The second focus area must be on removing the competitive nature of provincial support for innovation. A good example of this lies in the existence of early stage investment tax credits in some provinces but not others (30% BC, 45% SK and MB). Every province should have these, and they should be the same everywhere, or at least offset at the federal level to bring them effectively in line. We should not be competing internally to attract talent from other provinces through zero-sum internal competitions. We should be focused on competing at a national level with the rest of the world to bring talent to Canada.

Priority 3: Bringing down costs for Canadians and helping them to get ahead.

I’m not sure this one deserved its own priority line, and the vagueness of this priority contrasts oddly with the focused and specific tone of the rest of the letter.

While it does not hurt to make this explicit, all else being equal this will be a natural byproduct if the rest of the priorities are delivered.

Priority 4: Making housing more affordable by unleashing the power of public-private cooperation, catalysing a modern housing industry, and creating new careers in the skilled trades.

Housing is directly connected to innovation issues. I’ve written previously on the connections between the lack of private sector investment and the housing crisis: investment allocation across asset classes being zero-sum, any incentive to invest in real estate is a disincentive to invest in innovation.

Tom Goldsmith

recently put out an excellent piece discussing the disincentives to innovation created by high profit margins in stagnant and uncompetitive industries, and housing certainly qualifies as sector that Canadian policy has allowed to turn a complete lack of productivity into what is effectively a regressive generational wealth transfer.

More explicitly, one of many reasons that Canadian private sector capital is risk-averse is because they can make so much more money investing in safe real estate or by continuing the uncompetitive status quo. Anything that makes housing less attractive as an investment will directly incentivize investment in other sectors while driving down housing costs.

The mention of public-private cooperation is also key, and I am somewhat disappointed to see it buried in a single priority. I have long (relative to the existence of this newsletter, that is) advocated for the importance of public sector leadership as catalyst to innovation, and public-private partnerships are central to proven risk-sharing models that work elsewhere. While it will certainly be an important part of addressing the housing crisis, I would have liked to see this element of the mandate elevated to a more general position that spans all of them.

Priority 5: Protecting Canadian sovereignty and keeping Canadians safe by strengthening the Canadian Armed Forces, securing our borders, and reinforcing law enforcement.

In recent history, there has been no greater drive of innovation and economic development than the threat of war, and if we must deal with a more volatile geopolitical landscape, let’s at least not waste the opportunity to build. Defense procurement and the building of a Canadian defense industrial base is an enormous opportunity for innovators and those seeking to commercialize emerging technologies.

Canada’s first-in-class quantum technologies, our untapped ability to project geopolitical power through food production, our foundational work in AI development, our CANDU reactor technology, and the host of dual-use technologies that are emerging from Canadian research institutions could all contribute to a renewed focus on domestic defense procurement.

Priority 6: Attracting the best talent in the world to help build our economy, while returning our overall immigration rates to sustainable levels.

I wrote recently about the immediate opportunity before us to poach American scientific talent. As they seek to flee a regime hell-bent on imposing ideology on science, Canada stands to benefit enormously.

Almost.

As I noted in my previous article, we do not actually have in place any way to turn the output of these scientists into economic and social benefit, and without that, there is not much point. Dan Breznitz went somewhat further in a series of op-eds to the Globe and Mail, he makes the point that Canada’s total factor productivity, the nonlinear increase in productivity that arises above and beyond the linear contribution of additional capital and labour, is effectively nil, and was actually somehow negative from 2000-2008. Let that sink in: we have been so inept at effectively employing the people we bring into Canada that we have actively hindered their contribution to productivity.

If priority 6 is to serve the interests of priority 3 and 7, the outcomes laid out here are far from being isolated to immigration. They touch on housing, on innovation, on economic policy, and on security. Good thing all the ministers got the same memo.

Priority 7: Spending less on government operations so that Canadians can invest more in the people and businesses that will build the strongest economy in the G7.

Having laid out all the ambitious priorities to this point, this final priority lands very effectively.

While the word “innovate” appears exactly zero times in the letter, this last point makes it clear that this is a mandate to innovate (well done, Laurent, on the prophetic naming of CCI’s report). Not only are the ministers being asked to deliver solutions to multiple, intersecting generational challenges, they are being asked to cut costs while doing it. In other words, this set of priorities demands outside the box thinking. It will not be possible to deliver on any of this while reducing costs, without fundamentally changing how things get done.

Delivering on this will require acting on a large number of low-hanging fruit: building efficiency into public service offerings. The EU’s Only Once Principle and related implementation would be an excellent example to follow that also ties directly into Priority 2. AI adoption will also likely be top of mind given the top billing it got in the mandate letter.

Wrapping Up

The ministers have their mandate, but to deliver it, they will need support from people on the ground with domain expertise to address implementation details. There is no shortage of bottom-up support on the execution side. The CCI report, A Mandate to Innovate, lays out clear action items for ministers, offering a highly dense compendium of specific action items with which I mostly agree (to be picked apart in a future post). Upstream from CCI’s focus, the SAIL initiative serves as a vital grassroots movement to fill the input end of the economic development funnel and drive value creation from publicly funded IP. An enormous number of people and organizations have weighed in on topics like SR&ED reform, patent boxes, the capstone agency, the Canadian innovation corporation, and more (See QIC, CCI, FORPIQ, and my own submissions here and here for a (very) non-exhaustive sampling). The challenges are, for the most part, well understood and solvable across the entire innovation pipeline. Translation into policy is the bottleneck.

With these mandates set in motion and momentum steadily building from the ground up, let's hope the government can navigate the coming challenges by listening to the people on the ground, and avoid the risk of continuing Canada’s aimless drift through increasingly stormy geopolitical waters.