Now is the time for Canadian innovation

  • Andrea Richardson

    Andrea Richardson

    Senior Programme Manager

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16 Nov 2020

Andrea Richardson, Canadian Prize Manager at Nesta Challenges, analyses Canada’s innovation rankings

Innovation is the driving force of productivity and economic growth. Faced with the devastating consequences of the Covid-19 pandemic, coupled with the urgent need to achieve net zero emissions by or before 2050, there is no question innovation is now more important than ever to future jobs and prosperity. And in a country that prides itself on diversity, we need innovation that is open and inclusive.

But how is Canada doing? 

We’re used to sitting at or near the top of impressive global rankings; GDP, happiness and education spending, among others. But when it comes to innovation, something has changed. Looking back across the last decade, Canada has slipped from eighth place in the Global Innovation Index, to 17th. At the same time, the UK, a comparable economy, has overtaken us, rising from 10 to 5, reaching as high as 2nd place in 2014 and 2015.  This year, Canada has also dropped in the respected StartupBlink rankings for startup ecosystems, with Toronto and Vancouver falling down the global tech hub rankings – now no Canadian city features in the global top 20. As a proud Canadian, this causes me a lot of worry. 

But there is good news – the Canadian innovation landscape is set-up for success.

With the US suspending its H-1B visa programme this year, aimed at fast-tracking tech talent (and entrepreneurs generally leaving a hostile US environment), there is opportunity for Canada to be the go-to destination for start-ups and scale-ups in the private sector. In the public sector, the federal government has been a vocal champion for innovative approaches to drive both public good and economic growth, with a particular focus on outcomes-based funding.

Launched in 2017, Impact Canada is a Government of Canada-wide effort to help accelerate the adoption of innovative funding approaches to deliver meaningful results to Canadians. Working closely with our team at Nesta Challenges, the Canadian government has embedded challenge prizes across national government departments to make them an integral part of innovation policy. 

Traditional grant and procurement funding tends to favour established organisations, with funding upfront for process rather than actual solutions. Challenge prizes have a unique ability to unlock innovation and solve large problems. They reward solutions only after they are proven to work, de-risking investment in unknown entities and allowing new ideas, companies, and innovators to break through. Rather than pursuing an unfocused policy of ‘innovation for the sake of innovation’, the challenge prize method ensures innovation is supported and promoted in the areas most in need of solutions, and ensures the benefits are felt by the people who need them most. And it seems to be working – after hitting a low of 18th place on the Global Innovation Index in 2017 and 2018, 2019 was the turning point. Canada is on the climb.

As the Government of Canada understands, innovation does not just happen; it needs a finely balanced ecosystem to make real impacts. It needs financial support, political support and an active, healthy market in which to launch new products. Too often, markets are stifled by the over-reliance and dominance of a few big incumbents, denying entry for small, agile disruptors – disruptors Canada’s Innovation Economy Council suggests can drive the recovery from Covid-19. Challenge prizes unlock and unleash the potential of those innovators.

The federal government’s embrace of innovative approaches like challenge prizes is a great start, but it will only get us so far. A widespread adoption of challenge prizes by our provincial governments and by Canada’s dynamic private sector, to promote untapped talent and disruptive market entrants can release a wave of much-needed innovation. As Canada develops its plans to build back in the wake of Covid-19, it’s time to consider what problems might be best addressed by challenge prizes – specific problems with defined desirable outcomes that would benefit from new ideas and new innovators. Done right, the mission of a challenge prize will lead to collaboration and build momentum, igniting innovation just when Canada needs it most.

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