Thinking Beyond Innovation Policy
Moving Beyond Silos to Connect Innovation with Social Mobility, Skills, and Competition
Happy Monday! One quick programming note: there will be no newsletter on Friday 18th or Monday 21st. I’ll be back to normal posting starting next Wednesday.
Today, I want to make the case for thinking beyond innovation policy when we want to increase our innovation outcomes in Canada.
Most of the folks who read this newsletter are involved in the innovation economy in some way, and most of my writing here is about different aspects of innovation policy. But that said, one of my consistent themes is the importance of thinking more broadly about the type of economy and society that we want to build—about the need to go beyond innovation policy.
One point I try to consistently make is that any given singular innovation is by no means guaranteed to be a net positive for our economy or society. Similarly, innovation writ large—while the long-term driver of increased living standards and undoubtedly important—is also the root of our current climate crisis, the emergence of a gig economy, and so much more. As much as innovation is fetishized, it is a tool as much as anything else and can be used for great harm.
Innovation needs to be put to work as part of a wider values-driven approach. Neil Lee puts this best in his excellent book Innovation for the Masses:
There is no point being "one of the most innovative countries on earth," "a leader in the fourth industrial revolution," "winning the global race for innovation"-or whatever hyperbole is currently in fashion-unless innovation translates into broadly shared prosperity. The US model, despite its great strengths, is problematic: the true purpose of technological leadership is not to win Nobel prizes or develop the most disruptive technology but to increase living standards. Policy for innovation should aim to create good jobs and ensure prosperity is widely shared. Innovation itself is vital but only half the answer.
Yet innovation policy is often siloed away. Innovation policy practitioners often have narrow mandates focused on innovation inputs, with increasing access to capital and talent being two dominant ones in various guises.
Having a narrow view of pursuing innovation without consideration of its value or where it leads can take you down the path we are now seeing in the US, where the White House has removed “what it calls ‘unnecessary bureaucratic restrictions’ that had aimed to safeguard civil rights, promote transparency, and regulate AI procurement.”
We need to ensure we take a broader perspective on the role of innovation and its outcomes. If we get the policy framework right, innovation can be a powerful tool.
This August 2024 report from the UK’s Social Mobility Commission does a great job of explaining why this matters and what other policy areas are so important. As the authors Philippe Aghion, Richard Blundell, and Xavier Jaravel argue, “Innovation and social mobility are two sides of the same coin.” Not only do innovative firms pay higher wages and provide better career opportunities, but Schumpeterian creative destruction will also destroy the rents from past innovators.
But none of this is far from ordained. Pursuing better innovation policies alone will not result in the benefits of innovation being felt for social mobility. Instead, a more comprehensive policy agenda is required.
For Aghion, Blundell, and Jaravel, this includes areas such as:
Rethinking Competition Policy - to move beyond static criteria such as market share and instead focus more on dynamic aspects such as the impact of mergers on new entries, on rates of R&D and innovation, and on the creation of new markets.
Nurturing an Inclusive Education System - that minimizes the numbers of “lost Einsteins and Marie Curies” — talented children who may have gone on to become innovators if they had been born to wealthy or well-educated parents but who don’t because of systemic barriers and lack of exposure to innovation. Increasing access to mentorship and work experience programs are key parts of making the talent pipeline into innovation more inclusive.
Increasing the Overall Skills Level of the Workforce - to first, enable workers to take advantage of changing technologies to improve the quality of jobs and their wages, and second, facilitate technology diffusion across the economy.
There are plenty of lessons for Canada here, and fortunately, work is being done in these areas. The Canadian Anti-Monopoly Project, for example, is making a strong case for rethinking our competition policy, with its recent Agenda arguing for changes to prevent incumbent digital firms from abusing their market dominance. The Future Skills Centre, meanwhile, has done a ton of work on the skills front, funding research and pilot projects that look at inclusivity and tech adoption, among many other areas.
We need to make sure that we are actively connecting the dots between these diverse but immensely interlinked policy areas. Other areas, such as the importance of thinking about place-based policymaking, technology regulation and the role that can play in promoting certain outcomes, or state capacity and the need for governments that are capable of meeting these challenges, are also essential to consider.
Of course, ultimately, governments are responsible for connecting these policies into a coherent whole. But the messy overlapping of jurisdictions between different levels of government hobbles attempts at coherence before we even begin. That isn’t to say it is impossible, but we can’t rely on governments alone to piece it together—there has to be external pressure.
And it is here that I think innovation policy practitioners have an essential role to play in creating the space for a wider, more coherent, and more holistic agenda. While innovation policy and other policy areas in government may be siloed within teams, departments, and by levels of government, those on the ground are dealing across those silos, with different funders, and with innovators directly who neither know nor care about those policy silos.
This creates opportunities for practitioners to bring this broader lens to their interactions with government, taking an evidence-informed view of the need to consider innovation more broadly. There are also opportunities to examine programming and consider what a wider lens on innovation might mean for how organizations and intermediaries outside of government nurture more inclusive and innovative outcomes.
It is no easy feat to bring together these threads or to make more proactive cases to funders. But I really do feel it is essential work.