Innovation Canada: A Call to Action

The Context of the ReviewChapterThe Context of theReview2The purpose of this chapter is to provide a briefoverview of the principal concepts as well asfacts and figures regarding business innovationin Canada and in relation to our peer group ofhighly developed countries. It draws on reportsby the Council of Canadian Academies (CCA)and the Science, Technology and InnovationCouncil (STIC), work by Statistics Canada andthe Organisation for Economic Co-operationand Development (OECD), and backgroundresearch conducted for the Panel.Innovation andProductivity GrowthThe material standard of living of a societydepends on productivity — the value of goodsand services produced per hour of work. A highlevel of employment is clearly important, andfavourable movements in the world prices of acountry’s exports — for example, certain naturalresources in Canada’s case — can boostprosperity, at least for a time. But over the longrun, it is labour productivity growth that drivesincreases in average per capita incomes andbusiness competitiveness. Productivity growth,in turn, is primarily the result of innovation.In a phrase, innovation means “new or betterways of doing valued things” (CCA 2009,p. 21). Innovation is not synonymous withinvention, although the spark of inventionor creativity is a necessary precedent forinnovation. Business innovation occurs whena new or improved “something” — a good,a service, a process, a business model, amarketing tool or an organizational initiative —is put into practice in a commercially significantway. In more technical terms, the Oslo Manual(OECD and Eurostat 2005, p. 46) reflects thecurrent international consensus that definesinnovation as “the implementation of a new orsignificantly improved product (good or service),or process, a new marketing method, or a neworganizational method in business practices,workplace organization or external relations”(see also Box 2.1).The means by which an idea or prototype istransformed into a market-ready product isoften referred to as commercialization and is atthe core of the process by which inventionbecomes business innovation — the processfrom “mind to market.” Commercialization is amulti-faceted and multi-stage phenomenonthat, depending on the product, often involvesdesign, engineering, production planning andthe related research and development (R&D).Moreover, it almost always involves capitalinvestment, market assessment and salesplanning as well as financial and legal analysis,among other activities.Some innovations — like the automobile, theInternet or penicillin — are game changers. Butthe vast majority of innovation is incremental —the continuous improvement of products andprocesses. Innovations must of course startsomewhere but, unless and until an innovation2-1