Improving Canada’s lacklustre innovation performance has been a persistent challenge. Experts continue to blame our inability to turn ideas into tangible products and services on a complex set of factors such as low business expenditures on research and development (BERD) and shortage of venture capital (VC) funds. Yet, even with significant investments and a growing portfolio of policy instruments to spur business innovation and growth, the performance of our national innovation system remains weak.
Given this troubling trend, it is time to go back to basics. We must challenge our core assumptions about what innovation means and how it happens. In fact, one way to boost the commercialization of Canadian products and services is already right under our noses, effectively embedded in the definition of innovation.
Most definitions of innovation echo a common theme which suggests that innovation does not stop, as many would believe, at invention or product development. For an invention to create value or be implemented in the real world, you need to get that invention accepted in the marketplace and in use by consumers. And the only way to do that is to market and sell the invention so it becomes an innovation. The formula for success in innovation then is as follows:
Innovation = Invention + Marketing
Our success as an “Innovation Nation” will depend not only on our ability to come up with novel ideas or inventions but also on our ability to market and sell those ideas. So, how does Canada do in terms of spending on marketing and sales (M&S), particularly when compared to our neighbour to the south?
There is a striking difference in the spending behaviour of Canadian and American firms and their treatment of M&S. While mid-sized US software companies spend, on average, 34% of their revenue on M&S, comparable Canadian firms only allocate 20% of their budgets to those expenditures.
Although marketing and sales are clearly important in getting a technology accepted in the market, the discussion on science and innovation in Canada has paid little to no attention to this part of the innovation formula. Canada also does not have a BERD-like indicator that captures business expenditures on M&S in the technology space.
This neglect of M&S may be one root cause of Canada’s lacklustre innovation performance. We are soft selling innovation and not backing our inventions with appropriate budgets on marketing and sales that are critical to the wider adoption of products and services.
In order for us to become more competitive, Canadian companies must pay more attention to how they market and sell their ideas while policy makers must devise more effective supports that reflect the entire innovation formula—including marketing.