Competitiveness: Canada leads in AI, but lags in innovation, skills and capital

Date: Tuesday April 25, 2017

It’s not enough to be competitive nationally: The future is asking, ‘Can you build globally competitive companies?’

By Lee-Anne Goodman

Panelists Michael Sabia, Caisse de dépôt et placement du Québec, Janet Kennedy, Microsoft Canada (Microsoft Women), Michael Serbinis, LEAGUE Inc. and Dr. Raphael Hofstein, MaRS Innovation.

Canada is now at the epicentre of artificial intelligence (AI) after spending years as the developed world’s tech laggard, the head of Microsoft Canada told the Public Policy Forum’s economic Growth Summit on Thursday, April 20.

“The people that have the brains, and the thinking, are happening here … thought leadership for the world is happening here,” Janet Kennedy told a panel on competitiveness.

Canada has gone from a country that was “doing nothing” a few years ago to experiencing an explosion in cloud-based services in particular, she said, adding that Toronto and Montreal are also now world leaders in deep learning and machine learning.

“The talent is in Canada, the investment is coming into Canada,” Kennedy said.

Microsoft has built two data centres in Canada, one in Toronto and one in Montreal, and other companies have followed suit.

“The game has changed,” she said.

“It’s an incredible opportunity for Canadians to build an ecosystem and have the world look at us as a place for technology innovation … people want to come here and invest in this country instead of taking the talent out of the country.”

Video: Watch the whole session

But for all the good news, Kennedy points out that Canada’s persistent skills gap is posing a problem. In just two years, she said, there will be 182,000 open, unfilled tech jobs in Canada.

Filling those jobs will be critical to convince tech giants to stay in Canada.

Kennedy said Microsoft, along with the federal government, is taking measures to encourage girls to learn about tech.

“We’ve got to get young girls into this earlier … we’re losing them in middle school; it becomes not cool, and we’re losing them,” she said.

“You don’t have to be a geek programmer, but you need to know a little bit about tech to participate in the digital economy.”

“At the end of the day, if we don’t have enough people to do the jobs in Canada, they’re going to leave.”

Her co-panelist, Michael Serbinis, founder of Kobo and founder and CEO of League Inc., agreed, calling only half-jokingly for “kindergarten coders.”

The panelists told moderator Giles Gherson, deputy minister at the Ontario Ministry of Economic Development and Growth and the Ontario Ministry of Research, Innovation and Science, that the skills gap is just one of several problems posing risks to Canadian competitiveness.

Canadian businesses continue to drag their heels in terms of technological innovation, and there’s still not enough capital being freed up for Canada’s entrepreneurs.

Michael Sabia, president and CEO of Caisse de dépôt et placement du Québec, Sabia expressed dismay that a recent Statistics Canada survey found less than a third of big Canadian companies feel innovation is important, and only 15 per cent said they were prepared to take some financial risk in order to innovate.

“Now that’s an issue, that’s a problem, because companies are the medium through which (technological) diffusion occurs, and you get a lot of the benefit of technological change and innovation” across the economy that way, Sabia said.

Businesses need urgently to cultivate a culture of innovation within their organizations, he said.

“It requires a much broader approach … governments can’t and shouldn’t think of themselves as problem-solvers, but as people who convene the competencies of other people,” he said.

Serbinis said governments should focus on trying to get Canadian companies to scale up.

“Everybody here can start a company,” he said.

“But scaling up is hard; you need customers, talent, capital and judgment — access to people who have done it before,” he said, adding that Canada is making significant strides in getting startups to share knowledge and information.

Talented Canadian expats working south of the border want to come home following the election of Donald Trump, and have lots of expertise in scaling up companies.

But access to capital is critical in the scaling-up phase, Serbinis said, and Canada is lagging.

“As you scale up, you need more of it and bigger chunks of it, and we’re not very good at that yet,” he said, recalling how he was unable to raise $100 million in Canada to scale up Toronto-based Kobo, one of the world’s top e-readers.

It’s “no longer any good” to be a company that simply gets along in Canada , Sabia said — businesses need to aspire to compete in global markets, and capital needs to be made available to those firms.

Young companies and young entrepreneurs, he added, who have come of age in an era in which the whole world is open to them, are increasingly coming to the table with a global focus.

“Those are the people we ought to back,” he said.

Dr. Raphael Hofstein, president and CEO of MaRS Innovation, said Canadian companies have to do better at telling their corporate success stories.

“We have to improve on telling the story because this is how you build public-private sector relationships, and everybody will benefit from it,” he said.

He ended the panel discussion with a hint of promise — talented Canadian expats working south of the border want to come home following the election of Donald Trump, and have lots of expertise in scaling up companies.

“Now we have a wonderful opportunity — it’s four years minus 100 days, (and) there is a whole host of Canadian expats in the United States … some of whom have had very successful careers,” he said.

“They’re looking to come back …. We want to have these types come back and start a whole new generation.”

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