Inclusive Innovation, SME Productivity and Much More

A collection of reading recommendations.

Photo by Sincerely Media on Unsplash

Happy Friday! We’ve made it through another week. Given everything going on right now, that is worth celebrating.

No longer essay from me today, but instead a mammoth selection of quick hits and reading recommendations (including one opinion piece by me). There has been a lot of interesting and important stuff published over the past few weeks, and I’ve not included as much as I’d like in past newsletters, so today is catch-up day. Hopefully, there are some interesting and relevant pieces in there for you.

Inclusive Innovation

Moving from inputs to outcomes: reimagining Canada’s innovation strategy - Earlier this week, the Hill Times published an op-ed by me on the need to reimagine Canada’s innovation strategy. If you’re a regular reader of the newsletter, you’ll be fairly familiar with some of my arguments. I set out how we need to move away from a focus on innovation inputs and instead focus on outcomes. We should do this by first focusing more on the innovation outcomes we want through greater use of demand-side policies that create and shape markets for certain kinds of innovation. Second, we need to respond more to local conditions, with bottom-up local and regional innovation strategies nested within a wider national framework rather than imposing a top-down approach. And third, we need to recognize the importance of incremental innovation and technology adoption. Broad-based gains from innovation rely on more businesses adopting and utilizing existing technologies to boost productivity. As I ask, “How can we become innovation leaders if we don’t get the basics right across more businesses?”

From Hype to Hope: How Networked Neighbourhoods Can Make Innovation Work for Everyone - This UK report from Rachel Coldicutt dives into the importance of place-based and community innovation. Coldictutt’s work, in general, is around the need to make innovation accessible to everyone and make the innovation economy work for everyone. This gets into the weeds of how to do that by looking at the role of networked neighbourhoods and connected organizations within them that can bring together a wide range of people to “build relationships and use innovation to create social and economic benefit, solve problems, grow businesses, and acquire skills.” This hyper-local and inclusive thinking is so often absent from innovation conversations, so it is great to see this work.

Government Technology Talent

Canada’s Got Tech Talent: Examining tech jobs in Canada’s federal government - As I’ve repeatedly argued, state capacity matters if we are to meet this moment and the huge range of challenges we face. In part, state capacity depends on having the right people, with the right skills, in the right roles. Given that, this timely report from the Dais helps us understand the state of play by providing some detailed intelligence on technology workers within the federal government - their fourth report on Canada’s wider tech workforce. This is some helpful information, but it makes me want to know more about the wider tech literacy of government decision-makers.

Geoff Mulgan

wrote in the fall about the importance of better training for politicians and officials on tech issues, arguing:

The failure to handle AI is a symptom of a much bigger problem. Ever more of the issues politicians face involve science – from climate change and pandemics to AI and quantum. Yet they are about the only group exercising serious power who get no training and no preparation. It’s not surprising they are easily manipulated, and that politicians who don’t understand science or technology glibly promise to ‘follow the science’, to have an ‘innovation-led’ approach to AI, or to use AI to quickly transform public services, without grasping what this means. AI is still talked about as if it is magic, almost a religion.

There is also a need to rethink skills for officials. Some good initiatives have started in the US and Europe to introduce officials to AI, but these need to become much more systematic, recognising that while law and economics remain important, public officials need to be just as adept at understanding science and technology.

Perhaps a topic for the Dais’s fifth report.

Management & SME Productivity

Unlocking SME Productivity: A Deep Dive into Management Practices - SMEs are a massive part of Canada’s economy, employing 46.8% of the private labour force and contributing 48.5% of the GDP generated by the private sector. Canadian SMEs also have a massive productivity problem - lagging not only larger Canadian businesses but also US companies of similar size in the same industries.

This report on UK SMEs, which also face similar productivity challenges, is an interesting read. It highlights “the critical importance of leadership, strategy, and data-driven management in fostering productivity” and provides some actionable recommendations.

The connection between management, leadership and Canada’s productivity challenges is a topic that I think is incredibly important but also undercovered. The scale of the issue was well put by Dan Breznitz in his Globe and Mail series in the fall when he pointed out how “our business and public leaders managed to take the world’s most-educated and hard-working people and employ them in ways that so dramatically underutilized their skills and creativity that they became less productive.”

It’s also a topic that I’ve been diving a bit into recently with a couple of super collaborators, so watch this space for more!

A Blueprint for Canada’s Future

Overly centralized federal government and “meek” civil service are unable to improve Canada’s productivity - Speaking of Dan Breznitz, he recently spoke at the Munk School on that five-part series. The link above is the Research Money write-up, and you can also see the recording of the full event here.

Breznitz is characteristically scathing in his comments, pointing to the federal government's failure to create the conditions for Canadian innovation to thrive. He highlighted the government’s lack of operational capacity to implement policies rather than just writing cheques, its failure to utilize new knowledge, technology, and solutions, and its lack of a serious industrial strategy to guide policy decisions. He also speaks of how innovative Canadian companies have been allowed to be bought out by foreign companies, characterizing Canada as “asleep at the wheel”, along with lots more.

As with his original series, this is worth reading/listening to. If we’ve been asleep, the threat from Trump and the US is the wake-up call. We need to meet this moment.

Trump, Tariffs, Attacks on Science, How to keep your sanity…

How Not to Respond to Trump’s Tariffs - In this piece, the economist Dani Rodrik argues, similarly to Dan Ciuriak, that tariff retaliation is not the way to respond to Trump. Though the instinct might be to retaliate and confront Trump with determined opposition like the schoolyard bully he is, Rodrik makes the case that Canadian tariffs would only harm our economy. Instead, the best response is “to remain calm, back away, and let the bully keep punching himself”.

Some worry that Trump might feel vindicated if others do not mount a strong response. But the surest way to put him in his place is to downplay his threats and treat him as weak. The most effective message America’s trade partners can give Trump is: “You are free to destroy your own economy; we do not plan to do the same. We will turn instead to other, more reliable trade partners, thank you very much.”

Rodrik also points out that tariffs are not the only instruments that can be used to respond, suggesting tools such as profit taxes on domestic subsidiaries or Gabriel Zucman’s idea of a wealth tax on Elon Musk and making Tesla’s market access conditional on paying it. I think Rodrik, and Ciuriak, are bang-on when it comes to the economics of this. However, whether the federal government could avoid the domestic political pressure to punch back with tariffs is another thing entirely.

Tariff Turmoil: A Team Canada Response for Economic Sovereignty - A thoughtful piece from the Canadian Council of Innovators’s Director of Policy and Research Laurent Carbonneau. Laurent argues that “federal and provincial governments need to take the explicit view that economic policy, security policy, and innovation policy are totally inextricable and act accordingly” - something I agree with completely. Too often, different policy areas are viewed in silos, resulting in outcomes that equal less than the sum of their inputs. Laurent’s arguments that we need to abandon laissez-faire libertarianism and an unstrategic jobs-first approach of chasing FDI to instead bring labour and industry together to enable long-term strategic economic policymaking is bang on.

Exclusive: how NSF is scouring research grants for violations of Trump’s orders - The entire scientific enterprise in the US is under an unprecedented attack by the Trump administration, with one researcher saying in this piece that the “United States is not a stable place to be a scientist”. The National Science Foundation has been freezing grants to review whether they comply with a Trump executive order to terminate funding for diversity, equity and inclusion-related projects. It is also facing mass layoffs and funding cuts along with other science-based federal bodies such as the National Oceanic and Atmospheric Administration. These are actions that will have huge long-term consequences.

These are also developments that have their Canadian imitators, with a recent paper from the Macdonald-Laurier Institute advocating to roll back EDI research and reforming the tri-councils to eliminate EDI-focused grants and removing equity targets. Given that papers like that lay the groundwork, it is not too hard to imagine Trump-like attacks on Canadian science and research under a future government.

Meditations in an Emergency - Finally, a piece from

Don Moynihan

, a must-read writer on state capacity and understanding what is happening to the US government. As he says at the top of this article:

So much is happening, so quickly. The purpose of shock and awe is to bewilder and overwhelm. It is important not to look away, or get discouraged. Try to discern the what is a big and real threat. Here is my best effort to do so.

Moynihan examines Musk’s data grab, the shuttering of USAID, the push for deferred resignations from the public service and more.

As I have argued before, the purpose of the avalanche of announcements is to distract and disorient. If we want to respond and not be overwhelmed, as individuals in such a hostile news environment and as a country, then we need to ensure we’re focused on, as Moynihan puts it, the big and real threats.

Anyway, that’ll do it for this newsletter. I hope you all have a great weekend!