Thursday, February 14, 2008

Innovation in Canada

I am a member of a task group studying innovation within our company.  This seems to be a prevailing topic as the focus moves from monetizing physical assets (capital goods, real estate, hardware, software) to monetizing innovative ideas (think green, cost reductions and efficiencies, patents, best of breed designs) and ensuring that we keep up with the increasingly fast-moving R&D train of the world, and all of those building cranes.

Canada does have a way to go, though we do have RIMM and our Canadian Space Agency... and CATA.

Canada’s lack of innovation, a 14th place ranking or a D Grade in Innovation, among the 17 OECD nations, is leading to mediocre socio-economic performance compared to other developed countries (Conference Board of Canada)

Source: CATAAlliance Executive Dashboard, February, 2008

Is D a pass? 

Some of the focuses of CATA, the Canadian Advanced Technology Alliance, include:

  • Building a brand for Canada (isn't this Tim Hortons?)
  • Creating an Industrial Strategy for Canada (outsourcing and a higher CAD?)
  • Attracting, retaining and training best talent (George Romero is moving to Toronto)
  • Public Safety and National Security with an eye on protecting privacy(unlike the US, where the GOP walked out of the House today because they couldn't get their NSA bill passed)

The membership has a noticeable slant towards manufacturers, which is probably because Canada has a large amount of them. 

So what is OECD and how do they have the authority to rate our innovative spirit? It's the Organization for Economic Co-Operation and Development.  Since this was written, there are now 30 nations on the list, so maybe Canada's been bumped a bit higher (or lower..)

In the US, a government task group has been created from top executives in the largest corporations to figure out how to quantify and measure innovation.  This committee, aptly and verbosely titled Measuring Innovation in the 21st Century Economic Advisory Committee (MI21cEaC would make a good strong password) has Steve Ballmer of Microsoft as one of its members.  Other companies with representatives include Wal-Mart, 3M, and IBM.

Oddly enough, Steve Jobs or anyone else from Apple isn't represented.

So why is everyone caring so much about innovation today?

"Innovation is a key determinant of economic growth and improvements in living standards over the long run. "

Sounds important.  So how do we measure innovation in an IT consulting organization?  In the "real world" outside the business, patents and R&D expenditures are used as proxies to measure innovation.  One KPI used is R&D / GDP (%).  SInce we don't have GDP in our organization, perhaps R&D spend / Total Revenue is a good KPI?  For measuring expenses perhaps, but innovation has got to be much more than figuring out how much money is being thrown at a problem.

Inside the business, there should be many ways to measure innovation.  Of course, before you can measure you must define.  The problem with the term "innovation" is that it has many possible connotations.  Invention is the creation of an idea.  So is innovation?  No.  Innovation, from what I understand is an idea that significantly improves on a previous idea (invention) or combines multiple ideas in a unique way, and demonstrates it to others in a repeatable fashion.

For things like this I look to Wikipedia, possibly the most revolutionary innovation since the printed word.  Since we're trying to relate this to business & government, I will go with this example.

In economics, business and government policy,- something new - must be substantially different, not an insignificant change. In economics the change must increase value, customer value, or producer value. Innovations are intended to make someone better off, and the succession of many innovations grows the whole economy.

To simply even further, you need to define what "value" is from an economic sense.

Value is...

"the amount (of money or goods or services) that is considered to be a fair equivalent for something else; "he tried to estimate the value of the produce at normal prices" - Free Dictionary

Sounds like apples to oranges... each of them could be priced matched and both are fruits, but some people like apples and some people like oranges.  Maybe Total Economic Value provides a better defnition?

"TEV is composed by use values, option values and non-use components. There is not in the literature a single standard categorization nor terminology. Often Total Value is reported as the sum of use value and non-use values or passive values"

Ouch.  Maybe not.

How do you increase value through innovation? 

Change the world.


No comments: