By Jock Finalyson

Three years ago, the Business Council of British Columbia launched an ambitious project under the banner of Outlook 2020.¹  The objective was to help shape a realistic vision and agenda for British Columbia’s economic future.

The project identified four desired hallmarks of the British Columbia economy by 2020:

1. Open and connected to the world, in terms of trade and investment, as well as the transportation and communications linkages necessary to support the province’s role as a gateway economy;
2. A successful exporter, with more enterprises engaged in trade across a spectrum of goods-and-services-producing industries and a diversified export mix;
3. A recognized leader in combining smart environmental and energy practices; and,
4. An innovation-led economy, as reflected in the behavior and strategies of firms and institutions in the public and private sectors.

It is the fourth hallmark, innovation, that is key to both the theme of this issue of PeopleTalk and fulfilling our 20/20 vision of the future.

The rapid pace of scientific and technical change is reshaping the economic landscape. From health care to energy, manufacturing and environmental remediation, the development and application of new knowledge generated by science and technology is redefining the way business is done. This has profound implications for the ability of countries, regions and even cities to prosper. As the principal science and technology advisory body to the federal government recently observed:

“Strength and leadership in science, technology and innovation is the price of entry to full participation in the knowledge-based global economy of the 21st century.”²

Science and technology are closely linked to innovation.  Innovation involves new or better ways of doing things that have economic value. New ideas and technologies that stay in the lab may increase the stock of knowledge, but only when they migrate to the commercial world do they produce significant economic benefits.

Innovation in a business context can be thought of as activities that fall under the following umbrella:

• Product innovation – developing and bringing to market new/improved products.
• Process innovation – making changes in the way goods/services are produced.
• Direct investments in research, development, and the acquisition of capital goods and software that embody advanced knowledge.
• “Soft” innovations at the level of the enterprise – changes in management and organizational practices and functions that lead to improvements in productivity, quality and customer service.

British Columbia has a decent, but far from stellar, record of innovation. The province ranks 4th in Canada in R&D spending as a share of GDP. Business investment in R&D is low, a finding that is linked to the province’s industrial structure (weighted heavily toward resource extraction, construction and real estate, and service industries). Government support for front-end pre-commercial research, particularly in universities and teaching hospitals, has increased over time, but relatively few businesses are directly involved in R&D.

Indeed, for most BC enterprises, innovation has nothing to do with research and development. Instead, it means using machinery, equipment, software and other assets that embody advanced technological knowledge; deploying novel marketing or inventory management strategies; and adopting human resource and other organizational practices that lead to gains in productivity, efficiency and market share.

Innovation is not limited to science, nor does it always entail visible advances in technology. Human behavior is at the heart of successful innovation. As the Council of Canadian Academies noted in its landmark 2009 report: “Innovation…is the manifestation of creativity, the uniquely human capacity to transform the imagined into the real.” Innovation matters to society, the Council added, “because it is the means by which problems are solved and new opportunities are created.”³

Creativity is the production of new ideas that are fit for a particular economic or business purpose. British Columbia is a fertile environment for the formation and growth of creative industries; the province also boasts a substantial “creative class.” However, from the perspective of the macro-economy, the challenge is less to spur the growth of creative industries than it is to stimulate all industries to be more creative and innovative.

British Columbia is well-positioned to further leverage its significant public investments in R&D by devoting resources and attention to commercialization and to facilitating user-driven innovation. A strong entrepreneurship infrastructure can increase the birth and success rates of innovative firms. The BC government is already a large contributor to the province’s entrepreneurship infrastructure, through its funding of the Regional Science and Technology Network, universities, specialized incubators like Genome BC, and business competitions like New Ventures BC. In recent years, governments have taken many steps to encourage commercialization. Federal and BC government support provided to the Centre for Drug Research and Discovery (CDRD) at the University of British Columbia is an excellent example: CDRD’s mandate is to commercialize new life sciences products and technologies developed by small and medium-sized innovators.

In the post-Olympic decade, BC would benefit from a multi-pronged innovation strategy that sets goals for improvement and seeks to optimize the substantial public resources already dedicated to innovation and commercialization. In this connection, it is critical that the province coordinate with the federal government – leveraging Ottawa’s funding of both pre-commercial and applied research, technology and industrial development, and defense procurement. Provincial dollars allocated to innovation will deliver greater results if they are linked to federal priorities.

¹ More information on Outlook 2020, including the papers references in this essay, can be obtained from the Business Council’s web site: www.bcbc.com.
² Science, Technology and Innovation Council, State of the Nation 2008, Ottawa (2009), p.5.
³ Council of Canadian Academies, Expert Panel on Business Innovation, Summary Report (2009), p.3.

Jock Finlayson is the executive vice-president of the Business Council of BC.

(PeopleTalk Winter 2011)