A Simple Solution to Innovation Policy in CanadaTom Jenkins Executive Chairman & Chief Strategy OfficerOpenText CorporationSeptember 2011
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Innovation Nation Agenda
Motivation Reports on this topic Major insights of these Reports What to do about this
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Management Lesson
A crow was sitting on a tree, doing nothing all day. A small rabbit saw the crow, and asked him, "Can I also sit like you and do nothing all day long?
The crow answered: "Sure, why not. So, the rabbit sat on the ground below the crow, and rested. All of a sudden, a fox appeared, jumped on the rabbit and ate it.
Management Lesson:
To be sitting and doing nothing, you must be sitting very, very high up.
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Poor Relative Productivity Performance
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Impact on Standard of Living
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“A good hockey player plays where the puck is. A great hockey players plays where the puck is going to be" - The Great One
Innovation is the main driver of the economy
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CCA Innovation Architecture
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Competition: The Elephant in the Room
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Innovation Nation Agenda
Reports on this topic Major insights of these Reports What to do about this
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Innovation Related Reports
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Foundation Principle
Competition
Innovation
Productivity
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Innovation Nation Agenda
Reports on this topic Major insights of these reports What to do about this
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Source: Industry Canada
Global Value Chains: Bombardier
These value chains have changed the basis of competition in the world
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0
50,000
100,000
150,000
200,000
250,000
2006 2010 2015 2020 2025 2030 2035 2040 2045 2050
(20
06
US
$ b
illio
ns
)
G-7 and BRIC GDP
BRICs Share of GDP
66%
62%
58%
53%47%
42%35%
Source: Goldman Sachs Global Economics, "The N-11: More Than an Acronym", March 2008.
The Rise of BRIC as % of World GDP
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Canadian Exports By Destination
BRIC was only 3% of total
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Canadian Based Global Leaders
From 1985 to 2011, Canada has gone from 15 to 42 corporations which are considered global leaders.
Less than 10% of these global leaders are from sectors with protection regimes.
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• Transport
• Uranium
• Telecommunications
• Broadcast
• Financial Services
• Culture
Sectoral Regimes
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• 30 year old legislation
• Major policy concern at the time was entry into NAFTA
• Less than 10% of the North American market is Canadian
• Control of national sovereignty an understandable concern
• Selected sectors were (and are) integral to the infrastructure to Canada
Sectoral Regimes Background
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The World has Changed Dramatically
Internet Mobile Global Value Chains
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Sectoral Restrictions: Telecom Cellular Mobile Penetration Rates, 2005
0 20 40 60 80 100 120 140 160 180
Canada Turkey
United StatesJapan
Poland France
South Korea OECD
Australia Germany Denmark
New Zealand Iceland
Norway United Kingdom
Portugal Czech Republic
Italy Luxembourg
Subscribers per 100 inhabitants
Source: OECD Communications Outlook 2007.
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• The Sector Regimes were created prior to the Internet
• 30 years ago, policy interventions were surgical as sectors were not tightly integrated
• Today, the Internet now links many of the infrastructure sectors to the entire economy as well as the global economy
• Poor productivity in an enabling sector may be leading to poor productivity in other sectors
Sectoral Regimes Issues
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Logic Flow
Competition
Innovation
Productivity
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sub-optimal
sub-optimal
sub-optimal
leads to
leads to
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Canadian Firms Enjoy Higher Profits some may have flexibility to set prices to meet profit goals
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Currency - A complicating factor
A very simple view of the Canadian economy is that it has two segments identified with different regions:
“The West” – Commodity based “The East” – Manufacturing & Services
Innovation has an impact for both regions but some of the natural economic feedback mechanisms between national economies can vary by segment of the economy
While Currency can be a “productivity safety valve” by having the currency decline thereby making relative productivity higher.
In the case of a “petro dollar” the currency is instead driven by commodity demand and cannot serve as a safety valve.
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Innovation Nation Agenda
Reports on this topic Major insights of these Reports What to do about this
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• Transport
• Uranium
• Telecommunications
• Broadcast
• Financial Services
• Culture
Review Sectoral Regimes
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A Balanced Model for Innovation
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Maintain a sustained focus on competitiveness.
broad mandate: publish research and be a public advocate for competition in the public and private sectors;
independent of government: small staff and a Board of Directors with a majority of members from outside government.
The Council is arguably the most important recommendation to spur innovation in Canada.
For more information visit the Competition Policy Review Panel website: www.competitionreview.ca
Competitiveness Council
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Innovation Nation Agenda
Reports on this topic Major insights of these Reports What to do about this Conclusion
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The Innovation Policy Challenge: Getting the Balance Right
Slide 30
Society AspirationsEconomic Reality
Global Competition National Control
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Having suboptimal productivity performance at this critical juncture in history is unwise
It would not be wise to miss the Information Revolution – any part of it!
Buggy whips are not an option for the future.
We Are at a Key Moment in Global Economic History
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“Capitalism is taking us toward a future of accelerating change. The first twenty years of the twentieth century saw as much technological progress as the entire nineteenth century. Currently, industrial societies appear to be doubling their rate of technological progress every ten years. If this continues, and there is every reason to suppose that it will, the twenty-first century will experience the equivalent of twenty thousand years of ‘normal’ human progress.”*
*Walter Read in Compete to Win : Canada Global Competition Review Panel
Innovation is Driving the Transformation of the Global Economy Right Now
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Closing Thought
Our competitiveness as a country and as a society will depend on our ability to make strategic policy decisions. Think Argentina and Canada over the past 100 years. It matters.
To remain competitive and maintain our particular concept of society we must strike a balance between the open market and sector regimes.
We cannot expect to have it both ways. We must have a comprehensive debate in Canada about this.
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Thank You
Visit Tom Jenkins’ Blog: Content Shift
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