The disruptions that have been challenging world leaders over the past few years—from economic and geopolitical crises to climate change and growing social inequity—are not showing any signs of abating. These forces are instead compelling governments to rethink how they prepare for the future, and many are already adopting resilience-building practices and approaches powered by innovation.
But in Canada, limitations caused by a lack of policy, programs, and funding opportunities are hindering the innovation sector, and we risk slipping ever further behind our peer nations. How can Canada get its innovation burners going?
Over the past few months, Deloitte leaders have come together to redefine the future role of government with regard to innovation. We believe the federal government can reshape the way it supports the sector to better serve the country for years to come. Our collective aspiration for Canada’s future state is to be:
This article is part of Deloitte’s future role of government article series, which examines the trends that are provoking governments to act and seeks to provide bold ideas to help Canada address the underlying issues. Read our introductory report, The future role of government: Society is evolving. So must the way it is governed, for more context.
Government-supported innovation in Canada can be traced back to the creation of the Department of Trade and Commerce in 1887, whose purpose included promoting, supporting, and developing the young nation’s economy and business community. Known today as Innovation, Science and Economic Development Canada (ISED), its function is to enhance the Canadian economy through innovation policy, market regulation, competition, and research and development (R&D).
Canadian inventions that have led to international recognition include: the Jolly Jumper, invented by Indigenous mother Olivia Poole in the 1950s; the electron microscope; the Canadarm; the first internet search engine (Archie); and the global game-changing BlackBerry Limited, founded by Mike Lazaridis and Doug Fregin.1 Today, there’s both disruptive innovation—which creates entirely new products, services, and offerings that reshape industries—and incremental innovation, which modifies existing technologies to meet current needs. One example of the latter: the use of blue light technology to disinfect phones during the peak of the COVID-19 pandemic.
In this era marked by environmental, economic, and social volatility, Canada finds itself at a crucial juncture that calls for thoughtful reflection on its current state of innovation. It needs to rekindle the drive for a forward-looking, all-encompassing plan for the future, with innovation as a core component because of its potential to have a direct and profound positive impact on the economy. It’s an opportune moment for Canada to strategically position itself for resilience and progress by fortifying its commitment to innovation as a cornerstone of national development.
The state of innovation in Canada today is marked by shortcomings that are hindering government's ability to foster a cohesive and forward-thinking internal innovation ecosystem. The lack of strategic investments in service delivery compromises the effectiveness of government functions, contributing to a disjointed and suboptimal operational environment. The risk-averse culture stifles the exploration of ideas and solutions, inhibiting the potential for transformative change. The fragmented landscape of internal operations and communication—characterized by the lack of integration of services, data-sharing, communication, and more—prevents the acceleration of innovation.
On the economic front, the state of innovation reflects the challenges in retaining innovative initiatives. Regulatory barriers deter the seamless progression of such ventures. While ideation is present, limited awareness of these initiatives reduces the distribution of innovative concepts across sectors and detracts from their full potential, which in turn delays innovation.
We’ve identified four key themes that Canadian governments should address:
All tiers of government share an inherent commitment to providing high-quality services for their citizens. Initiatives such as creation of the Canada’s Minister of Citizens' Services are instrumental in advancing the pursuit of excellence. Until they bear fruit, however, the present state of service delivery for numerous government services will remain less than optimal. Challenges stem from backlogs due to outdated technology, suboptimal user experiences, non-human-centred processes, and restricted interoperability, among other factors. Few Canadian organizations are harnessing cloud-based technologies as a foundation for innovation.2 The limited adoption of such technology within the government is a barrier to realizing the full potential of solutions like cloud data storage, and delays the positive impact it can have on service delivery initiatives.
The lack of cohesiveness and efficiency in the innovation landscape is evident through inadequate data integration, complex funding models, cumbersome procurement processes, and fragmented communication across different levels of the public sector. These issues have bred inefficiencies that extend upstream to impact government decision-making processes and downstream into the broader Canadian innovation market.
This disjointed nature is a double-edged challenge. Internally, it hampers the smooth functioning of government operations. Externally, it acts as a barrier to the organic growth and evolution of the wider innovation ecosystem. Not only does this situation restrict the potential for optimal performance, but it also obstructs the realization of the full spectrum of benefits that a more integrated and streamlined government approach could offer.
Government tends to be responsive rather than proactive due to fiscal pressures, procurement policy, public oversight, and siloed operating models. With a low appetite for risk, there are structures within the public sector that limit what is already a highly uncertain innovation environment. The current culture of government in Canada has resulted in an inability to quickly and safely adopt innovation, thus delaying the implementation of new technologies and innovative ideas that could improve the delivery of services to citizens.
The data available to support growth and innovation is limited. The enterprise gaps caused by a lack of awareness of various initiatives has led to the underutilization of resources and talent, resulting in outcomes that contradict the goals of innovation. In 2019, over 50% of Canadian businesses reported facing obstacles to innovation, naming uncertainty about the innovation landscape as one of the biggest (29%).3 The federal government's Business Benefits Finder portal aims to promote cohesion among public and private sector interest holders and provide valuable resources to businesses. However, without proper exposure and awareness of this and other existing tools, their maximum value cannot be reached.
Furthermore, even though Canada has focused on providing tax credits through the Scientific Research and Experimental Development (SR&ED) program,4 R&D has continued to decline across the country. Other jurisdictions have recognized the benefit of diverting spending to directly support programs for businesses, which has yielded more innovation and R&D activity. Canada has yet to strike a balance between tax support and program funding.
We’ve developed targeted recommendations that governments can take to address these areas, organized through four levers: people and leadership; policy and processes; technology; and collaboration.
How can individuals and leaders in government shape the future of innovation in Canada?
By its nature, innovation is highly unpredictable; organizations must be aware of and willing to take on the risk to pursue it. The public sector is typically a follower of new technologies rather than an inventor due to the traditional command-and-control models that cautiously aim to maintain stability and predictability.
Creating a culture of healthy risk tolerance matches the nature of innovation. This means building a procurement culture or managing risk through hubs focused on piloting government innovation in controlled environments. Initiatives like this encourage governments to build up their risk tolerance and participate with comfort in innovation.
Cultivating a risk-tolerant culture through leadership transformation and forward-looking models for managing risk and getting feedback from citizens will ultimately result in better public service in Canada.
What policy adjustments and procedural frameworks are necessary to reach Canada's innovative future?
How can technological advancements be adopted or developed to ensure Canada's future progress in innovation?
What kinds of collaborative effort are necessary to drive Canada to its future in innovation?
Embracing these recommendations would result in a modern, effective governing system. By using the latest technologies and boosting collaboration across departments, levels of government, and the public sector, government operations can be streamlined, better services can be delivered to citizens, and public trust can be increased, positioning Canada as a global leader in innovation.
Canada’s rich history of innovative breakthroughs—from the Jolly Jumper to the BlackBerry—underscores the country’s immense potential. The urgency of the present moment adds necessity to the aspiration to prime the innovation pump again and highlights the need for a progressive and strategic approach to innovation. Through its evolving role, government has the capacity to reshape and bolster the innovation sector amid a volatile global landscape and to harness these changes to efficiently serve Canadians.
As our vision suggests, the country can prepare for the future by transforming internal government functions and positioning itself as a global leader in innovation. This involves fostering a dynamic startup culture, encouraging research and development, and facilitating greater collaboration. Canada can rekindle its drive with a forward-looking, inclusive, and comprehensive plan for the future, where innovation serves as a cornerstone of national development and a catalyst for economic growth and societal advancement.
In our future state aspiration…
Thank you to our key contributors, Aparna Ashokumar and Sebastian Voermann.