I recently read a fascinating book called “How to Make an Entrepreneurial State: Why Innovation  Needs Bureaucracy “ by Rainer Kattel, Wolfgang Drechsler and Erkki Karo, all of whom are influenced by Marianna Mazucatto, whose work I have discussed here and here.  It’s fascinating for two reasons: first, that the book says next to nothing about how making the state more entrepreneurial or why innovation needs bureaucracy, but it is a very inclusive history of the types innovation policy structures of nation-states around the world.  Possibly one of the greatest good book/terrible title combos of all times.

I will spare you a general critique of the book – Caleb Watney has already done that in Foreign Affairs, and it’s a must-read – and focus on how the book relates to the Canadian context.  And, reader, you will probably not be shocked to learn that the Canadian context for discussion of innovation agencies is deeply impoverished.  I count three areas where we can learn some tricks from abroad.

First, the book helpfully discusses the difference between making policy choices and implementing policy and why it is important not to assume success simply because a choice has been made and money spent.  In Canada, this is very poorly understood, and deliberately so.  Most of Canadian governance is about evading responsibility in the event of non-achievement of results.  This is why we are so bad at collecting data, and averse to doing things like actually announcing policy targets as opposed to simply announcing the initiatives themselves.  This is not specific to the Canadian discourse on innovation, but it is a specific way in which Canadian discourse on innovation is impoverished.

Second, the book helpfully distinguishes between the functions of innovation agencies/policies, of which there are broadly three.  There are agencies which fund innovation, there are agencies which shape markets (for instance, by focusing on procurement and competition policies), and there are agencies which try to work on big-picture system transformation.   In Canada we typically only talk about the first of these three.  The idea of market-shaping is largely anathema to us because a) we’re pretty conservative when it comes to this kind of intervention and b) even when it comes to using governmental power to shape markets through things like procurement, our governments are so deathly afraid of risk that they never prioritize innovation. And when it comes to system transformation, forget it.  So, what happens in Canada are big fights about the way that a single policy level is used to effect change without ever really questioning which other levers we could be pulling.

Third, we are not even particularly interested in the purpose of the agencies we create, whether it be diffusion-oriented (how do we get large numbers of firms to take up new technologies) or mission-oriented (how do we solve problem X).  In fact, most of our innovation agencies are really neither because they are framed in terms of how to distribute money to various stakeholders.  Probably the ones that come closest to having a mission, per se, are Brain Canada and Genome Canada.  The famous CARPA proposal could have had a mission, in the way that DARPA’s mission is about US military supremacy, ARPA-E is about energy, etc. But the backers of this idea pointedly declined to give it a mission, because their assumption was that throwing money around in a diffuse manner would somehow generate product innovation equally well no matter which area was chosen.  This comes from a general confusion in Canada between something being “mission-oriented” (solving a coherent set of problems) and it being a “moonshot” (i.e. something huge and out-of-this-world).  The Apollo project was mission-oriented, but challenges don’t have to be gargantuan in order to qualify as a mission.  

Of late, we do seem to care a little bit about the style of agencies we create, whether they are agile, like DARPA, or stable like NRC or the granting councils, or some combination of the too.  But historically, we’ve been pretty consistently Weberian on this: set up stable bureaucracies to hand out money to large, stable agents like universities.  The idea of small, agile organizations sheltered from political interference doing something other than hand out flipping great wodges of cash (what Dan Breznitz calls “peripheral agencies”) — while staying under the radar – is not really in our national DNA.

Put all this together and the following results: compared to many countries around the world, the Canadian policy discourse around innovation looks two- or even one-dimensional.  We don’t talk about outcomes at all, and very little about agency.  Missions?  Not really.  System transformations?  Fuhgeddaboudit, especially if we are talking about social or governmental transformation related to provision of education or social services or even something as obvious as road safety.  Links to other related areas, like competition policy or procurement, do occasionally show up in rhetoric. But in practice?  Not so much.

I could argue a lot of things in the national psyche are responsible for this (mainly: Canadians aren’t that interested in innovation because they prefer comfort to ambition)  but to drop the psycho-analyzing for a second: at a policy-structural level, Canadian governments have assumed that innovation policy = growth policy.  Not only that – they also have come to believe that industrial policy, competition policy and (under strong pressure from universities, who know a golden goose when they see one) science policy are also equivalent to innovation policy.  It’s all one giant mess, largely because Canadian government innovation initiatives, regardless of who is in power, never really have a logic structure more complicated than that of the Underpants Gnomes on South Park.

Step 1: Give government cheques to people doing gee-whizzy things.

Step 2: ?

Step 3: Growth!

Anyways, this book is really good if you want to understand how other governments make sense of Step 2, how they actually work to think through the how government initiatives affect real-world outcomes beyond the simple act of handing out cheques.  I hope a lot of people read it, because until Canadian policy makers can prove themselves more intellectually capable than the underpants gnomes, things aren’t going to get any better.

Fortunately, we can test the Underpants Gnomes v. Government of Canada policymaking by examining the recently-created Canada Innovation Corporation.  More on that tomorrow.