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The Way Ahead

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Tom Brzustowski

Chapter 9. Preparing for the Long Term

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Qualitative change is the acid test of leadership.

1This final chapter deals with preparing to achieve higher productivity and a greater prosperity for Canada, and to sustain it over the long term. More change is required, and much of it will be qualitative change. It will not be enough to do a little more of this and a little less of that, improve some things, and abandon a few others. We will have to do some important things very differently, and some new things that we’ve never done before and perhaps never even thought of. There will be much to learn, and the time to start is now.

2Nine specific proposals for helpful change are discussed in this chapter. They are far from a complete list, of course, and others may emerge as more pressing. But I believe that even these few changes will be difficult, and they will test leaders in all sectors of this country, because qualitative change is the acid test of leadership.

3In the previous chapter we focused on improving things. Such changes can be made over the short term because they are small changes in existing systems or because the required learning has already taken place. Now we must extend our time horizon from years to decades and consider something much more difficult. We must move beyond improving a familiar local environment to creating the conditions for Canadians to succeed in a changing global environment that is barely predictable today. The thesis of this chapter is that the best bet in the face of such uncertainty is to create supportive conditions for entrepreneurial people in Canada to succeed in seizing new opportunities.

4To create those supportive conditions, I believe our country needs to decide where it is going and then prepare itself for getting there. What I mean is that Canada must develop a capacity for strategic thinking, planning, partnership, and action that builds on what we are able to do now but takes it to a significantly higher level. We need to develop the capacity for joint planning and concerted action between the private and public sectors. We need strategic coherence in the policies and programs of all orders of government. We need the capacity for investment for long-term growth. We need to develop and mobilize today’s untapped human resources. We need up-to-date science and engineering of the highest quality. And we need business leaders with the vision and skills to put these factors together and create commercial success. But we don’t yet have all the people, institutions, and processes necessary to achieve these things, so we will have to develop those first. And that work needs to be started now.

5The nine specific initiatives for change proposed here are not a complete recipe; much more will be required. But I believe that success in these nine measures would add up to a big enhancement of our capacity to succeed in the future. These proposals do not primarily involve science or engineering, but they do involve scientists and engineers, as well as politicians, businessmen, labour leaders, educators, and many others in our society. They deal mainly with the human side of things: values, attitudes, culture, trust, institutions, organization, leadership, partnership, practices, and seeing ourselves objectively.

6Here are the proposed measures. I shall describe them briefly in turn.

  • Offering government programs as a system.
  • Developing the capacity for joint government and business strategic planning.
  • Defining opportunities strategically.
  • Promoting a long-term approach to investing.
  • Developing entrepreneurial managers.
  • Developing our untapped human resources.
  • Working to become a world marketing powerhouse.
  • Growing “3-legged people”!
  • Developing a new business model for Canada.

7That eighth one sounds quirky, but bear with me. The quirky label may make an important idea easier to remember.

Offering government programs as a system

8Like the governments of all industrialized countries, the Government of Canada and some provincial governments offer a multitude of financial support programs for various kinds of research and innovation that cannot succeed without public investment. In science and engineering, they cover many kinds of activities, ranging from small grants for basic research in the universities to big investments that share the risk of large development projects in industry. The best of these programs are very well designed and administered, and through multiple audits and evaluations they have proved effective in meeting the needs on which they are focused. But however good the individual programs might be, their impact could be improved if they were managed as a system.

9As it is, there are valuable projects that can “fall between chairs.” This can happen even if funding agencies are interested and money is available. It can happen when the project doesn’t quite fit into the programs of any one agency, even if it touches upon the mandates of several. As well, the success of a project started under one program doesn’t guarantee that its later stages will be funded under a successor program. Indeed, there may be a gap between programs, or there may be a dead end and no successor program at all.

10To complicate matters further, the many separate agencies and departments through which the programs are offered have their own distinctive policies and practices. Those practices have grown more burdensome recently, particularly in their reporting requirements, under the praiseworthy pressure for full accountability in the spending of public funds. This can impose a significant administrative burden on applicants, and particularly on those who need to deal with more than one agency. In the case of small businesses, where both money and time are generally in short supply, the administrative burden may prove to be a deterrent to seeking support that might have made a big difference in the fortunes of the firm.

11There are advantages to offering government support through multiple agencies. The main one is the ability for a narrowly-focused small agency to develop the specialized knowledge of a limited client group, to understand their particular needs, and to implement appropriate criteria of quality and measures of success for their activities. Another is the ability for a small agency to be nimble and discerning in response to changing needs of the clients and changing constraints on their own operation. These are valuable attributes that must be preserved. There is no need to gather the programs into one huge agency in order to operate them as a system.

12In an ideal world, all government funding programs in a given area would fall under the umbrella of one policy, and the programs would be designed to have no gaps and no dead ends. The administrative requirements would be harmonized, perhaps by client sector, so that progress through the system would require an applicant to add new information to an existing file, not produce an entirely new submission at every stage. The individual agencies would be responsible for applying the criteria of quality and success that are appropriate to the activities that they support. Every agency and department would interpret the umbrella policy in the same way and play its assigned role in harmony with all its partner agencies. There would be no turf wars, and all would be peace, seamless service, humming efficiency, and uninterrupted progress toward national goals.

13In the real world, however, harmonization of programs across the federal-provincial divide would be extremely difficult. Even within the federal government, the research and innovation funding system would require active monitoring and coordination from the centre of government, with financial allocation to the agencies serving as the irresistible control signal. This would require changes in the machinery of government, but I am sure that it could be done if the leadership were committed.

Developing the capacity for joint government and business strategic planning

14The system just described would be essential for implementing a joint strategic economic action plan of the government and the private sector. But how would such a plan be created? At the moment, Canada does not have the institutional capacity for it, but many countries do, so there is no shortage of models for us to follow. There are successful models across the economic size spectrum from Finland to Japan, so the scale of the economy is not an issue.

15I believe that what Canada needs is a joint economic strategy committee with members from the top levels of both government and the private sector, who have the authority both to negotiate a national strategy and to commit resources for action. Both are essential, since this is where major enabling national projects would be authorized. It is important that this strategic committee be a national body with the provinces represented at the table; but given the resources and jurisdictions involved, the federal government would undoubtedly need to play the lead role. I fully realize the political challenges of setting up such a body within our federal system, and I also realize that it wouldn’t be all that easy for the private sector either. However, I will start off by believing that our political and business leaders could prove equal to the challenge of setting up a new institution for creating a comprehensive national economic strategy that links the Canadian economy with science. The alternative, namely dismissing the idea out of hand because it seems too difficult to try here, is to deny Canada an instrument that many of our competitors have been using to great advantage, and thus to make securing our prosperity that much more difficult.

16This “Joint Science and Economy Strategic Committee” (JSC) would have to be harmonized with the financial and legislative agenda of government. It would need to be chaired by the Prime Minister personally and include the Minster of Finance among its members. Given the growing globalization of economic activity, the Ministers of Foreign Affairs and of International Trade should also be at the table. It would be critical that, in producing its economic strategy, the committee not become a conduit for end runs around regulations on human rights, environment, competition, and other areas that are also important to the Canadian public. This means that the ministers responsible for these areas must also be members. The provincial counterparts of some of these federal ministers, representing several provinces, should be members as well. To ensure that they really do represent the interests of their stakeholders effectively in the JSC, and to earn the public trust for doing so, these ministers would need to develop meaningful and effective processes of public consultation on the implications of the large dimensions of the strategies considered.

17On the private-sector side, JSC should have as members several high-profile business leaders known for their excellence as strategic thinkers. There should also be some leaders of business and industry associations that have a policy mandate and funds for common pre-competitive activities and infrastructure investments. These people should have the authority to negotiate and to commit resources for projects at the strategic level. The committee could, of course, not deal with the competitive commercial activities of individual firms.

18The JSC should not operate under the rule that members “leave their interests outside the door.” These words have the reassuring sound of high principle, but they are totally inappropriate for a forum concerned with action. On the contrary, all members should bring their legitimate interests to the table, describe them openly and fully, and set about developing plans that would harmonize them and fulfill them to the greatest extent possible.

19A small dedicated secretariat would be needed to support the JSC. It should be staffed by people who are capable of learning broadly and quickly, and communicating very well. These people would have the usual responsibilities for process and transactions, but their main value would be to assemble the strategic information required. This would include market intelligence, technology road maps, science assessments, and business due diligence, as appropriate. The practice of international peer review to establish the quality of major Canadian proposals would not be appropriate for the JSC for two reasons. First, the formative stages of a national strategy should be held close for competitive reasons. And second, the quality of the science in any proposal should be established as first rate by peer review at a lower level in order to make it to the JSC agenda.

  • 1 The latest version of such a committee was announced in the spring of 2007.
  • 2 The National Advisory Board on Science and Technology (NABST) was initially chaired by Prime Minis (...)

20The proposed JSC is very different from the advisory system now in place in the federal government. As indicated in the previous chapter, over the years, there have been many advisory committees and councils of one kind or another, involving scores of competent and committed people from outside government, set up to advise the various departments and agencies of the Government of Canada on issues related to science, technology, and the economy.1 Some of these committees were nominally chaired by Ministers, and one2 was set up with the Prime Minister as chair. But Ministers quickly drifted away from these committees, showing that they thought the “real” business of government lay somewhere else.

21Advice, of course, need not be accepted. It can also be rejected or ignored. In this connection, the “arm’s length” nature of the advisory committees doesn’t just signal their independence and objectivity; it also hints at their distance from government and the low degree of likelihood that their advice will influence government action. And when the advice to government is to be made public—another feature that is principled and reassuring—it is absorbed into the priority-setting process of government communications, often introducing unpredictable delays. And finally, since the advice is directed to government and not produced within it, the government must have the opportunity to develop its own response before any action can be expected. This is a deliberate and cautious process that may involve new rounds of consultation. And that introduces another delay, stretching the whole process to the point where it might no longer be timely. The proposed JSC could not function like that. It must be decisive and prompt. It must have the authority to decide and to commit resources, with authority much like that of a Cabinet committee.

22The final distinction to be made here is between the advisory process in science and technology, and the assessment process recently launched. The independent Council of Canadian Academies (CCA) assembles expert panels to provide objective assessments of the state of knowledge in areas where scientific issues loom large, including some areas identified by government. There is no issue here of bringing interests to the table or leaving them outside the room. The interest of the expert panels and of the CCA is to develop an accurate picture of scientific knowledge in the subject areas as it exists currently, free from any biases or vested interests. This process is new in Canada, but well established in the US and other countries, and it already seems to be working very well. It could be very helpful in the work of the JSC.

Defining opportunities strategically

23The first reaction to this heading might be that this is all about SWOT analysis—the systematic study of Strengths, Weaknesses, Opportunities, and Threats. Such analysis is certainly part of the picture, but the stress here is on the “O.” On the scale of national strategies, labels and slogans come easily, but the real opportunities behind them are not at all obvious and defining them takes serious work.

24For example, it is easy to say, “Canada has the opportunity to be the green energy superpower.” That claim conjures up reassuring images of towering new hydroelectric power dams, lines of windmills swishing along high ridges, tidal power generators along our coastline, waste biomass fermenting to produce ethanol, and hydrogen-powered cars softly exhaling steam in traffic. But what exactly is an energy superpower, and how does it become green? What advantages does Canada have for achieving that status? What existing capabilities could we build on to create economic opportunities under that label? What new capacities would have to be developed? What specific forms might those new opportunities take? What might be required to seize them, and what might be the consequences? What do we need to learn to answer these questions?

  • 3 Canadian Academy of Engineering, Energy Pathways Task Force, Phase 1-Final Report, 63 pp., 2007, I (...)

25A recent project of the Canadian Academy of Engineering3 provides an example of the nature and scale of the effort required. Their “Energy Pathways” project involved several dozen expert engineers working as volunteers for the better part of a year. Some two dozen energy pathways were examined in terms of the state of scientific knowledge, the extent of Canadian practical experience, and the capacity of Canadian industry to become involved in them on a commercial scale. The outcome is a list of several national projects dealing with, for example, electricity from renewable sources and energy storage, in-situ extraction of bitumen from the oil sands, and CO2 sequestration underground. The national projects involve a mix of laboratory research, pilot-plant development, and very expensive field tests with commercial-scale equipment. They are programs for learning what is needed in the selected areas. There is financial risk in them at every level, but particularly in the field tests.

26If these national projects are funded and carried out successfully, only then will it become possible to define the “green energy superpower” opportunities in sufficient detail to guide investment decisions by government and industry. There is no reason to believe that the energy domain is extraordinarily difficult to understand, so corresponding exploratory work is likely to be required to define new opportunities in other areas of the economy. In the system proposed above, I would expect JSC to commission such work, and to use the results in developing their strategies.

Promoting a long-term approach to investing

  • 4 For example, this was one of the issues examined in 1987 by the Premier’s Council of Ontario in it (...)

27It has long been acknowledged that we in Canada are effective when it comes to creating good small companies but not very effective at growing them into good big companies.4 Douglas Barber has pointed out in some of his recent speeches that the language of investment betrays an attitude that contributes to that state of affairs. Investors talk about “exit strategies” from successful ventures as soon as a good profit can be made rather than about staying to grow businesses over the long term.

28We also have difficulties with public investments in existing infrastructure. It already exists and it still works, so there’s not much news to be made by committing to keep it working for the long term. And if there is public praise to be earned, it could come only after several years, when some big project is completed or commissioned, possibly to the credit of some future government. And all the while, the government of the day feels political heat to spend more on solving urgent problems that are very much in the public eye at the moment. Investments in existing infrastructure become urgent only when some incident, such as a massive bridge collapse, captures the public’s attention.

29There are related issues with current spending on certain preventive measures. In the health area, people generally understand the risks of failing to adopt such measures, so vaccination and inoculation programs are supported. Money is quickly found to build up stocks of flu vaccine against a possible pandemic. Earthquake damage is understood because of TV news coverage of incidents in even the most remote corners of the world. Here again, investments routinely do flow as a result of appropriate updates to the building code and mandates for their application in new construction projects, as well as in some retrofitting and reinforcing of old structures in vulnerable zones. But, even though the death toll among drivers on our existing highways is staggering in comparison with incidents of bridge collapse, outbreaks of disease, or earthquakes, we do not invest enough in making the roads safer. The required knowledge and technology exist and are well proven, but the public and governments are inured to the risks inherent in the very familiar and widespread activity of driving on our roads.

30And things get even more difficult when we enter the area of social programs designed to promote the development of children into competent adults. Such programs are another prevention measure; they decrease the future economic and social burden on society of caring for its adult members who cannot make it on their own. However, this area is always the subject of difficult debate involving cultural norms, political ideology, religious values, and organized interests, in addition to potentially high costs.

31These issues affecting long-term investment are so complex that I shall make only two modest proposals here.

32First, in the case of new ventures, I would urge changes in tax rules designed to provide an incentive for the investor to stay in new venture for a long time. For example, the federal government might consider a time-dependent tax rate for capital gains deriving from equity in a new Canadian venture. The rate could be very high, perhaps even 100%, for investments held less than one year, and could decrease with time, dropping to zero for capital gains on investments held for 10 years or more. Undoubtedly, tax experts in government could come up with other possible incentives of this sort. The main point is that incentives need to be devised to encourage investors to stay with small successful Canadian companies and help them grow into large ones.

33The second proposal deals with investing in preventive measures. I think the academic community, the insurance industry, and the government could make an important contribution if they worked together to develop a widely understood and generally accepted approach to making the business case for investing in preventive measures of all kinds. This work should certainly involve economists, demographers, accountants, actuaries, and finance experts in government. Having a business case produced by generally acceptable methods will not dictate the decision on a particular investment, but at least it will provide estimated costs and benefits that are reliable and comparable with other investments.

Developing entrepreneurial managers

34As I have used the term, entrepreneurial managers are those who are always seeking new ways to add value in their business. What sort of people might they be, and how could we develop more of them?

35First of all, these are managers. They have already attained a position of some authority in an existing organization and are able to direct the work of others. They are proven performers. They are secure enough to “think out of the box,” to promote innovations of all kinds. Some of those innovations might be their own ideas; others might come from any source inside or outside their organization. In all cases, however, the managers I call entrepreneurial have the capacity to visualize how these new ideas might be translated into new or improved products for the market, as well as to devise the business models for doing that. It is tempting to identify entrepreneurial managers with disruptive innovations, but that might be too simple. I can imagine entrepreneurial managers seizing opportunities for sustaining innovations that increase the value added in their company’s existing product lines.

  • 5 Something like this happened at 3M, traditionally one of the world’s great innovation powerhouses. (...)

36But they can’t do it alone. The corporate culture in which they work must be supportive of innovation. If they are surrounded by signals that what matters most is improving the details of current activity, innovation is likely to suffer.5

  • 6 The Shad Valley program is operated by Shad Valley International. Details at http://www.shad.ca.
  • 7 Master’s in Business, Entrepreneurship, and Technology now offered under the aegis of the Faculty (...)

37Some people are naturally entrepreneurial. They become entrepreneurs on their own and will always be entrepreneurs, no matter what. But others may have latent entrepreneurial talent that needs the right opportunity to develop. I believe that education has a role to play in this. At best, this begins with imparting information, then moves to providing examples through case studies and by putting students in contact with active entrepreneurs, and ends by providing students with opportunities to be entrepreneurs themselves. This process can be started early. For example, for 25 years Canada’s Shad Valley6 program has been offering selected gifted high-school students four-week summer courses in science, technology, and entrepreneurship on 11 university campuses, followed by five weeks of co-op job experience in industry. Many of their 10,000 “alumni” have gone on to become technology entrepreneurs after their university studies. At a higher level, the MBET7 program of the University of Waterloo provides students with a structured and assisted experience in taking to market the ideas that they have already been developing. In this area, as in so many others, we know what to do, and we do it very well; we just don’t do enough of it.

  • 8 Executive Master’s in Business Administration.

38And there are more things to try. For example, a special form of EMBA8 might be developed that would have an important component of hands-on entrepreneurial experience for managers who feel that they have the potential to become entrepreneurial managers, and who work in companies that want to develop such capacities.

39Developing entrepreneurial managers is an area where the education sector, working in close partnership with business, can make a big contribution for the long term. Since new educational programs take years to start up, and then years for students to complete, this work should begin now.

Developing our untapped human resources

40Here I will focus on untapped human resources in just two groups of people: First Nations youth and immigrant professionals.

  • 9 Data from the 2001 Census quoted in the “Fact Sheet-Education”, on the website of Indian and North (...)

41It has long been acknowledged that First Nations children and youth lead a hard life and face limited prospects for economic success as adults. Their high-school completion rates are only about 40%. But the data9 also show that First Nations men and women who finish high school have the same chances of finding employment as other Canadians with the same level of education. This finding suggests a concrete strategy to foster their development and improve their opportunities in life. The goal should be to raise that 40% much closer to 100. There isn’t a ready recipe for doing that, of course. People have been working to increase First Nations high-school completion rates for a long time, but success has been limited and slow. However, I believe that there is a new urgency today, since success now will not only improve the economic prospects of First Nations people, but also improve the demographics of the entire labour force. I believe that a partnership of the First Nations, the Government of Canada, and the appropriate provincial governments and educational systems that was focused on this target, and given appropriate resources, could be capable of coming up with plans and actions that would greatly accelerate the increase in high-school completion rates of First Nations youth.

42Success would improve the lives of future generations of First Nations people, but it would also have an economic impact on Canada as a whole. It could relieve some of the demographic pressure on Canada’s workforce. In several parts of the country—Northern Ontario, Manitoba, Saskatchewan, and parts of Alberta—First Nations youth constitute the majority of young people. When they complete high school and whatever postsecondary education they choose, and then enter the workforce, they will provide it with some much-needed rejuvenation.

43The other people that I consider an underdeveloped human resource are immigrant professionals. Canada is fortunate enough to attract many newcomers who have had a professional education in their home country. Unfortunately, however, far too many of them are prevented from practicing their professions in Canada. It is understandable that there should be caution about the quality of their credentials and the education behind them, particularly in professions that deal with aspects of public safety; but current practices often result in profound discouragement for the immigrants and a senseless loss of opportunity for the country. We simply must do better.

44First of all, our assessment of professional education in the homelands of Canadian immigrants must be as thorough and up to date as possible. Many of these countries have recently been undergoing deep and rapid change, and the quality of the professional education they offer may be very different from what it was just a couple of decades ago.

45Then, in the matter of ensuring adequate experience, we must learn to combine the two essential elements—Canadian testing for competence and supervised Canadian experience—in ways that are appropriate for educated professionals. This means that those who are qualified should be able to establish their credentials with minimum delay and begin to practice, and those whose qualifications need to be raised should be steered to the appropriate remedial training. And we shouldn’t assume that the appropriate form of such remedial training must consist of sending people back through the corresponding Canadian professional curriculum. For many, this could be a major unnecessary expense and waste of time. We must develop the capacity to design remedial training programs that are more appropriate to the circumstances of the individuals.

46In addition, the federal government must get its act together and develop policies and practices that are consistent among those officials who admit immigrants and those who assist in the job placement of residents. Somebody at a very senior level of the federal government must become accountable for doing this right.

Working to become a world marketing powerhouse

47A visit to any university or college classroom in science, engineering, technology, or commerce quickly reveals that there are many students in the room who have “old country” connections with just about every country that Canada trades with, either by being immigrants themselves or through their families. Some of these students can speak the language of the old country, even if they were born in Canada. It seems to me that their presence could provide a strong foundation for developing Canada into a “world trade superpower.”

48This is very important, because value added depends on sale of the products. It is not enough to be strong in R&D and develop great technologies and new and exciting products. Those products must be sold. And given the limited size of Canada’s domestic market, the success of Canadian value-added products in export markets is essential.

49We have a million or so undergraduates in our colleges and universities. If just 0.1% of them, namely 1,000 students at any one time, spent one year of serious study in the old country, then Canada would gain 1,000 possible candidates per year for international marketing and trade careers. These people would have acquired some first-hand knowledge of the culture, economy, politics, environment, history, geography, business practices, and laws of at least one country. If this was done on a continuing basis, Canada’s potential for great competence in world trade would grow significantly.

50While there is nothing to prevent individual students from taking this path on their own, activity on the scale of thousands of students would have to be set up as a program. Two elements would be important. The first is financial. There would be a need to help students with travel costs, health care coverage, tuition fees, and the possible loss of income in foregone summer employment in Canada. The second is academic. Arrangements would have to be made for the year of study to count toward the participating students’ degrees at their home universities. In the first instance, this would require bilateral institution-to-institution agreements, but if the scale were large enough that would become unwieldy and some simpler umbrella arrangement would have to be devised.

51The number of 1,000 students per year seems large at first glance, but in reality it is quite modest. Canada has about 80 universities and some 150 community colleges, which means that on average only four students from each institution would be participating each year. At the level of particular institutions, one might easily find demand for much greater participation, perhaps many times greater.

52It is not beyond imagining that there might be 10,000 young Canadians studying abroad in their families’ old countries at any one time. It is hard to think of anything that could enhance Canada’s reputation around the world more than a flood of energetic and motivated bright students, eager to learn and to establish connections with people in the lands where their own roots lie.

53Nothing so far has been said about student exchanges, the most common format of programs for study abroad. I have treated this as a one-way, non-degree Canadian program designed for Canadian purposes that can be served without exchange. It requires a quick start, and its one-way flow prevents possible delays in arranging for symmetrical arrangements with other countries. But if exchanges of one-year, non-degree students could be arranged at a useful pace, the program would be even better. It would be good for Canada to welcome thousands of students into Canadian classrooms each year, help them learn about this country and its people, and build the foundations for various long-term, grassroots linkages between our countries.

Growing “3-legged people”!

54I have given this section a quirky name to make the key idea more memorable. It is also a way of meeting the challenge of what to call—briefly—the people whose attributes I describe below. Perhaps readers will come up with a better name for them. If you do, please let me know.

55It is generally recognized today that collaboration and partnership are the keys to the success of many organizations in this increasingly complex and interconnected world. In economic matters, collaborations among business, academia, and government have grown particularly important. But experience has shown that such partnerships are difficult to negotiate and not easy to maintain.

56Partnerships are built on trust, and trust is easier to develop when people understand deeply the activities and goals of their potential partners. For that reason, I have come to believe that it is very important for nations to cultivate a number of individuals who have experience in leadership positions (CEO-level, or one level below) in all three sectors: business, academia, and government. Having played a major role in each, these people would know intimately the realities, values, pressures, and practices of all of three.

57These “three-legged people,” as I call them (because they have a foot in each of three sectors), could act as leaders in the creation of strategic, high-level partnerships among institutions and organizations in the three sectors. They would also be on hand to offer understanding and encouragement from the top of the organization when the inevitable difficulties showed up at the working level.

58Vannevar Bush, quoted extensively in Chapter 3, was such a person. He was a professor of electrical engineering, dean, and vice-president at MIT. In government, he was a very senior public servant in Washington during World War II. The Manhattan Project reported to him. And in business, he was one of the founders of Raytheon Corp. He is perhaps the best known example of a “three-legged person” from the recent past, but there seem to be many other such people in the US today. Regrettably, very few such individuals come to mind in Canada, with the possible exception of one or two from Québec. Numerous other Canadians have had very senior experience in two of the three sectors, but not in all three.

59Given the importance of such leaders, and the fact that they haven’t been emerging spontaneously in Canada, I think we should set out consciously to develop them. One approach might be to identify those who already have the right experience in two sectors and work informally to develop attractive senior opportunities for them in the third. A small committee of very senior people from all three sectors would perhaps be the best group to take charge of getting that done.

Developing a new business model for Canada

60We conclude with the most difficult and potentially the most important initiative. If approached in the right way, the process of developing a new business model for Canada could become a nation-building effort in participatory democracy; it could produce both sound ideas for making our prosperity sustainable and, at the same time, widespread public support for them.

61Why a new business model for Canada?

62In the economic sphere, a huge qualitative change affecting the whole world is the movement of the centre of industrial innovation. It has been moving westward since the middle of the eighteenth century and has now reached mainland Asia, where a third of the world’s population resides. There it has the potential to expand enormously, with great implications for trade patterns around the world. Canada’s economy is very dependent on trade, so we are bound to be affected.

63The movement of the centre of industrial innovation is not a new process in the world, but I think that it has recently been accelerating. What I consider its current phase started with the publication between 1751 and 1776 in France of L’Encyclopédie of Diderot and d’Alembert. Among other things, that massive publishing project codified a vast compendium of the technologies of the day and made a lot of technological knowledge available beyond the guilds. I think of that process as analogous to a switch from a “trade secrets” model to the use of patents for protection of intellectual property.

64From that point, the centre of industrial innovation moved across the English Channel to Britain, taking shape as what we now call the Industrial Revolution. Its best-known product was the steam engine, which led to the railway but also to steam-powered manufacturing machinery capable of producing high volumes of products.

65The next hub of industrial innovation was the east coast of the US. In the late nineteenth century, this region produced a twofold legacy of mass manufacturing with interchangeable parts and, later, the electrical industry.

66The next phase of innovation, the auto industry, took place mainly in the US mid-west. From there, the centre continued moving across the US to the west coast, producing jet travel and the digital revolution. Then it crossed the Pacific to Japan, where it produced an explosion of consumer electronics. Most recently it has moved to mainland Asia, which is beginning to look more and more like today’s New World.

  • 10 Martin Kenney and Rafiq Dossani, “Offshoring and the future of US engineering: An overview,” The B (...)

67As the centre of industrial innovation moved west, the business models of the countries along the way evolved. Perhaps the biggest recent change has been the decline of manufacturing and the growth of services in the UK and North America, and the outsourcing of brand-name manufacturing and routine back-office services to contractors mainly in Asia. Even more recently, it is starting to affect the model of engineering education in the US.10 There are now discussions about what new form US engineering education should take, given that not only manufacturing but also R&D and design are increasingly being outsourced to Asia by US industry. In what areas might future US engineers be able to maintain their advantage over their counterparts elsewhere? What will they have to do to keep earning their much higher standard of living? What changes in engineering education might be required to prepare them for that future? I am just starting to hear such questions being raised in Canada.

68These considerations lead me to conclude that Canada must recognize this qualitative change and that an important expression of this recognition would be a new business model. Strictly speaking, we don’t have an explicit business model. There seems to be an implicit one that I would describe as “the US with a time lag.” The expressed short-term aspirations of leaders from government, universities, and some sectors of industry add up to a vision of a high-technology Canadian economy a lot like the US in the late 1990s but with little mention of services. Juxtaposed against that aspiration we have the unavoidable reality of a two-pronged exporting economy. One prong is in manufacturing, particularly transportation; the other is based largely in resources and in the supply of raw materials and commodity products to a world in which the competition is getting stronger and the customers more demanding. And services about which we talk little are already a big part of what we do.

69This brings me to the process of developing a new business model for Canada. I believe that doing this could be very valuable, in terms of the results it could produce as well as the process of achieving them. I see it as an opportunity to launch a nation-building exercise in participatory democracy that would provide a strong basis of public support for whatever model emerged. Here are some of the most important features of the process:

70The discussions should be very broad, involving governments, institutions, organizations, communities, and individuals.

71The JSC would act as the Steering Committee, and there would be a small national secretariat backing up the process but no planeloads of civil servants arriving from Ottawa to organize it. All discussions would be organized locally, independently, in their own way and at their own expense, by communities, by local organizations, by governments, by neighbourhood associations, by volunteer groups, by institutions, by professional bodies—in brief, by anybody who wanted to put the effort into it.

72All those interested in participating would receive the same document: a two-page summary of facts about Canada, and four questions. Their only responsibility to the Steering Committee would be to return the answers by a specified date and indicate whose answers they were and how they were arrived at. Institutional responses from the education, health, and municipal sectors should come back to JSC through the provinces; the rest may come back on-line or in some other direct way. However, I would rule out any cross-country tour of the JSC to receive presentations face to face. The number of such sessions would have to be limited to very few by time pressures on the JSC members, and that could be taken as suggesting that all the other submissions were less important. And even if the logistics could be managed in some miraculous fashion, the slim new insights obtained in this way would not justify the additional cost and delay involved. However, there would be nothing to prevent local groups or governments from organizing their own open sessions where many respondents could meet and discuss what they had submitted. The records of those discussions would contribute new value in the process.

73The questions should be tailored in detail for the various groups participating, but they would all deal with the same four issues. For example, here is how they might be posed for discussions in a small town:

  • What are your strengths, and the sources of wealth and prosperity in your community today?
  • What do you expect your strengths and the sources of wealth to be in 10 years? In 20 years?
  • What opportunities exist today for creating more wealth and making your community more prosperous, and what would it take for you to seize these opportunities?
  • What new opportunities for producing more wealth and increasing prosperity does your community hope to create in the future, and what would you have to do today to make it possible to create them?

74The accompanying fact sheet should deal realistically with the whole country and must not be just a box of bon-bons. It should be a tight but comprehensive list of strengths and weaknesses, as well as of challenges and achievements. Needless to say, some of the facts may be challenged or corrected in various places, but that would be a constructive feature. The nation-building aspect of this process is that all participants are made aware of problems and possibilities across the whole country, not just of their own. They then develop their own plans in the context of Canada as a whole.

75Here is an example of what I have in mind:

  • We are almost 33 million people responsible for a land mass of 10 million square km, but we occupy only a small fraction of that area—a strip along the southern border with the US.
  • 80% of us live in cities.
  • Manufacturing is a dwindling percentage of our economy but an anchor for many other activities. Services are growing, and most services originate in cities.
  • 80% of our trade is with the US, and much of that has to squeeze through a small number of border crossings.
  • We pride ourselves on our environmental consciousness but in fact pollute the air and water more than many other industrialized countries.
  • Our production of commodities from natural resources consumes a lot of energy, produces a lot of pollution, and emits greenhouse gases, and all of these effects increase in proportion to the volume of commodities produced.
  • Many Canadians are involved in a broad range of knowledge-based economic activities in which value is added with minimal consumption of energy and very little pollution or greenhouse gas emission.
  • We can no longer count on the cheap Canadian dollar to give our business a competitive advantage.
  • The small percentage of us who live on farms have the potential, with today’s technology, to be self-sufficient in energy; but we aren’t because measures are not in place that would make the installation of the required systems affordable.
  • Some of us still live in small company towns located close to concentrations of resources in remote areas, at a time when the producers in those towns are facing increasing pressure from global competitors whose products arrive at industrial centres by sea.
  • We have a good education system, with strong participation at the post-secondary level.
  • We have the world’s longest coastline by far, but we have a small and obsolete navy, and our fisheries are severely depleted.
  • Some of our largest and oldest corporations are no longer controlled by Canadians.
  • We are very good at research and engineering, and at starting up new ventures, but we are less successful at growing these ventures into large, successful companies.
  • We have some of the world’s most beautiful natural areas protected as national parks.
  • The mountain glaciers, permafrost, and Arctic ice are melting fast. This will have serious implications for water supplies to cities and for the northern habitat.
  • We are good at managing very large engineering projects.
  • Our claims to sovereignty over the Arctic are being challenged.
  • We are very good in the domains of high technology and advanced manufacturing, and we can create leadingedge products of the highest quality in areas such as microsystems and robotics.
  • We take pride in the performance of our health care system and its universal coverage, but complain about the delays in getting access to it.
  • The railways, our main east-west link for the transportation of bulk goods, were built more than a century ago.
  • Our cities have been shaped more by sprawl than by renewal.
  • Most of us have become very dependent on the use of the car in our life and work.
  • Many very talented Canadians choose to live and work in the US.
  • We have enormous stores of natural resources, but we seem content to export them largely as raw materials and import some of them back as the value-added products of another nation’s ingenuity.
  • Our manufacturing workforce is capable of work of very high quality, and our publicly-funded health care system relieves our manufacturers of the long-term burden of funding health care plans for employees and retirees.
  • We have an extraordinary multicultural society, which represents all the world’s trading nations among us.
  • We are very good at creating university-industry partnerships for research to solve practical problems in advanced industries and in other sectors.

76If the process of developing a new business plan for Canada works really well, the result could be a much clearer view of the way ahead for Canada, with strong public support behind it.

Notes

1 The latest version of such a committee was announced in the spring of 2007.

2 The National Advisory Board on Science and Technology (NABST) was initially chaired by Prime Minister Mulroney.

3 Canadian Academy of Engineering, Energy Pathways Task Force, Phase 1-Final Report, 63 pp., 2007, ISBN 978-0-9730830-3-3, also available electronically at www.acad-eng-gen.ca

4 For example, this was one of the issues examined in 1987 by the Premier’s Council of Ontario in its study of what it would take to succeed in the new global economy.

5 Something like this happened at 3M, traditionally one of the world’s great innovation powerhouses. See “3M’s Innovation Crisis—How Six Sigma Almost Smothered Its Idea Culture,” cover story in Business Week, June 11, 2007.

6 The Shad Valley program is operated by Shad Valley International. Details at http://www.shad.ca.

7 Master’s in Business, Entrepreneurship, and Technology now offered under the aegis of the Faculty of Engineering.

8 Executive Master’s in Business Administration.

9 Data from the 2001 Census quoted in the “Fact Sheet-Education”, on the website of Indian and Northern Affairs Canada, http://www.ainc-inac.gc.ca downloaded October 18, 2007

10 Martin Kenney and Rafiq Dossani, “Offshoring and the future of US engineering: An overview,” The BRIDGE, pub. by the US National Academy of Engineering, Fall 2005, pages 5-12.

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