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When people talk about innovation firms they typically think of global technology companies – businesses like Microsoft and Google – or tech startups founded by young digital entrepreneurs that are looking for investment capital and trying to become the next tech giants.
But there are a growing number of companies in various industry sectors that are emerging as non-traditional innovation firms—these range from consulting firms to advertising agencies to market research firms and even manufacturers. They are using technology in innovative ways to adapt their businesses to the digital economy and some are even commercializing their innovation into new digital businesses. These companies present a significant opportunity to create jobs and wealth in Canada as part of the federal government’s innovation agenda.
These are companies that are building sustainable businesses, many of which have been around for 10, 20 or even 30 years. They are typically self-funded, have access to bank financing, don’t need startup funding, and through the success of commercializing their own technology-enabled innovations, many of these firms are now experiencing significant growth, not only in Canada but globally. These companies are not necessarily looking for an IPO, but they are looking to grow their Canadian-owned and technology-enabled businesses.
Delvinia is one of those firms. We don’t build technology. We leverage existing technologies to develop new digital products and services that can be commercialized into globally successful digital companies. Over the past 20 years our research and development activities have led to the launch of several successful business units, including AskingCanadians, AskingAmericans and Methodify.
Like Delvinia, there are many other Canadian companies that are operating as service firms while identifying ways to be innovative in their industry sectors. However, these firms are often left out of the innovation discussion. They don’t fit the traditional model of an innovation firm because they’re focused on technology-enabled, not technology-driven, innovation.
If you’re not a startup and aren’t building a new technology, then it can be very difficult to benefit from existing government innovation programs. Yet, these non-traditional innovation businesses are experiencing growth, creating technology-based jobs, and fueling the Canadian economy at the same pace—and in certain instances faster—than traditional technology startups.
To accelerate the federal government’s innovation agenda and benefit the largest number of Canadian businesses, the traditional definition of an innovation firm needs to be expanded.
Canadian businesses that are successfully commercializing their own technology-enabled innovations need to be included in the mix. And our newly elected federal government has an opportunity to significantly accelerate economic growth by broadening this definition to extend beyond the tech firms and startups that are driven by technology.
Crafting policies that create incentives for these companies to continue to commercialize and remain in Canada as they scale up globally is another opportunity facing the government. The term scaling up refers to adapting the structure, business processes, and staff of an organization to enable its growth from a startup or small to medium-sized enterprise to become a globally profitable company. Government policy, talent supply, and industry structure are just some of the factors that provide a competitive advantage and support the scaling of domestic businesses.
Increasing the threshold for programs, grants and tax credits aimed at supporting small companies or startups is one mechanism to promote access to capital and help businesses expand. Current incentives like SRED tax credits become reduced significantly as the financial success of a company grows. Increasing the pool of eligibility and economic thresholds for programs such as IRAP and SRED creates additional incentives for Canadian companies to invest in their own innovation and remain in Canada.
Talent supply is also key. Recent competition between companies like Google, Uber and Tesla to snatch up experts in the artificial intelligence field is one example of the rivalry to secure talent in the innovation sector. Hiring staff that possess the experience to help an organization scale up globally can be a challenge.
Many innovation firms do not have the resources to hire out of school and invest in the time it takes to make these new employees productive. There are programs that already exist, like IRAP’s Graduate Intern Program or OCE’s Talent Edge, but these are restrictive and typically underfunded.
Creating incentives to repatriate Canadians abroad could be one strategy to improve access to talent and streamlining immigration policies to enable firms to hire outside of Canada is another. Government support in this regard could involve expanding funding for training programs and amending immigration rules to make it easier to recruit staff from overseas. One recommendation in the UK is to make a scale-up Visa available to top firms that would allow them to access talent abroad within two-weeks of applying.
New organizations like the Canadian Council of Innovators are working to establish a voice for innovation firms on these issues, and companies like Delvinia are trying to expand the definition to include non-traditional firms.
While there are many federal government programs already in place that have been designed to stimulate innovation, adapting the policies around eligibility to include non-traditional innovation firms will accelerate their ability to commercialize and scale up in a global market, while supporting the federal government’s objective to realize their innovation agenda and help to create great Canadian innovation companies.
Adam Froman is CEO of Delvinia
