Is innovation really the key to Canada’s manufacturing success?

I have heard it said many times that innovation is the key to our success – or even just they key to our survival. Another common belief is that Canada is a very innovative country or, to put it another way, that Canada is a country which strongly encourages innovation and innovative pursuits.

I strongly agree that innovation is critical to our future, but would argue that we are not really the innovation nation that we like to think we are. It all depends on your definition of innovation.

Jim’s favorite way to describe innovation is by saying it’s “where inspiration meets passion.” I like that definition. In fact, I am sure that is the exact kind of innovation our manufacturing industry needs to succeed. Many of the other definitions and examples people use to say their company is an innovative company have very little to do with real innovation at all.

Take, for instance, the idea of continuous improvement. Sorry, that’s not innovation. Lean manufacturing? Nope, not that either. R&D, product improvements and product engineering? Nope, that’s not it either. Perhaps R&D is, but only if you continue the pursuit until you realize a tangible benefit from it. At the very most, you might be able to argue that all of these things are a form of passive innovation – and it might be enough to help you survive. But it is nowhere near the type of active innovation that our industries really need to succeed.

Jim did talk about topics like Lean, Six Sigma and continuous improvement. But he mentioned these as part of his company’s defensive playbook – which using a football analogy, describes its strategy for protecting the profitability and viability of its core businesses. The offensive playbook – the strategy to grow the company – is dependent on true innovative pursuits. These are what Jim referred to as market makers or game breakers.

For passive innovation pursuits (the defensive playbook), the basic goal is not to lose. Survival. For active innovation pursuits (the offensive playbook), the goal is to win. Success.

Why shouldn’t activities such as Lean manufacturing, continuous improvement and R&D be considered innovative in and of themselves? Because most of your competitors, in every major manufacturing region in the world, are doing those things too! These are the defensive things we need to do just to survive. We need to be more innovative, truly innovative, if we hope to succeed.

Think for a moment about the terms “market makers” and “game breakers.” If you think of Canada as a truly innovative manufacturing nation, try to identify even a handful of market-making innovations – inventions that changed the world. Alexander Graham Bell invented the telephone and then, many years later, RIM invented the BlackBerry. Please feel free to fill in the gaps for me and tell me what market makers or game breakers I may have missed (Okay, there’s the snowmobile, the Robertson screw driver…).

I’m not saying that we have no innovative spirit in our country, but I do believe that most of us are under the illusion that we are more innovative than we truly are. While most of Canada’s manufacturing sector is automotive-related, that industry sector is nowhere near the top of the list as far as research and development investment is concerned. According to Canada’s Top 100 Corporate R&D Spenders List, in 2005, the communications and telecom sector accounted for 26 per cent of R&D investments, telecommunications services for a further 16 per cent, pharmaceuticals and biotechnology accounted for 16 per cent and aerospace for eight per cent. Automotive accounted for only seven per cent of R&D investment, the same amount as software and computer services, and just barely ahead of energy and gas at six per cent. Computer equipment came in at four per cent, and mining and metals at three per cent. It is interesting to note that the country’s two aforementioned major market-making inventions are telecommunications-related, and alarming to note that Canada’s most important sector (as far as the economy is concerned), is near the bottom. Are there market-making or game-breaking opportunities in the automotive sector worth pursuing with passion? You bet there are – just think of our society’s growing environmental consciousness and the ever-increasing cost of oil. The automotive industry hasn’t had a need for invention and innovation this significant since Henry Ford invented the assembly line and, by doing so, created a way to make the car affordable for the masses.

I have also heard it said that our manufacturing industry became comfortable and complacent because of decades of enjoying a significant currency advantage with our biggest trading partner. I would agree with that statement. Along the way, we likely also lost some of our entrepreneurial zeal and inventive spirit.

Now is the time for our industry and companies to be particularly sensitive to new inspirations, and to be willing to passionately pursue them. We need more than passive innovation; we need game breakers and market makers. Now is the time for true innovations. It really is the key to our survival, and to our future success.

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