I attend a Canada 2020 presentation last night at National Gallery featuring Martin Wolf. In terms of economic theory … the more I learn the more I learn how little I know. There were some really intelligent people in attendance last night and the preambles to questions were filled with economic theory gems. Most of the meaning contained in the preambles was well beyond my humble economic theory comprehension. However, I believe that I did glean some keen insights from Mr. Wolf. In passing he said something to the effect of those industrial jobs are not coming back … and that insight forms the basis of this post.

There were lots of intellectual theorizing on fixed exchange rates, fiscal and/or monetary policy levers and a raft of other economic tools to influence and calm potentially volatile markets. However, IMHO when you boil economic recovery down to its most simplistic solution it is without a doubt creating long term sustainable jobs. Economic policy levers influence but do not drive the economy. Job growth will spur economic recovery and growth is a driver of the economy not a follower. The gem I gleaned from Mr. Wolf is that industrial era jobs are gone and will not come back.

The economic downturn is a function of two key drivers; unethical behaviour in capital markets and a tectonic shift in the base of employment from industrial to knowledge based jobs. The lack of regulation on financial markets lead the economy into the recession, however, it will be job creation that leads us out. Government policy levers need to recognize that regulating financial markets will help to prevent future unethical behaviour but these measures are in no way a cure for the current economic malaise.

The key to economic recovery is in dealing with the tectonic shift in employment base and not preventing future recessions. Industrial era policy will not work in the era of knowledge based jobs. Financing physical infrastructure such as roads and buildings may have paved the way for economic recovery in the Great Depression, however, the same policy and paradigm will not spur recovery today. What will facilitate economic recovery is a knowledge based policy paradigm. IMHO one of the greatest challenges and opportunities in North America today is re-skilling the industrial work force to become more entrepreneurial. If industrial jobs are not coming back and traditional industries are crumbling before our eyes then we need to spur innovative thinking and creativity to forge new industries. We need to find, facilitate and encourage the knowledge era equivalents of Henry Ford and Thomas Edison.

That transformation is cause for much reflection … more coming soon.

Ian Graham

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This post summarizes a great article I found this summer in the Kauffman Foundation Thought Book for 2011. Andrew Hargadon article “Policy Levers for Fostering Innovation and Entrepreneurship in Clean Technology” gives some wonderful insights into fostering innovation. I have simplified the article and made it somewhat more policy generic rather than sector specific.

Photo Attribution: The Spaceship of Tokyo by Stuck in Customs

Key levers for policy levers to foster innovation;
“First, innovation includes both the development and widespread adoption of new technologies and practices. R&D investment does not guarantee success.”

“Second, innovation depends as much on new business models as on new technologies.
Third, new business models tend to come from start-ups and the entrepreneurs who lead them. Incumbent firms drive incremental innovations that fit within their existing business models.”

“Fourth, innovations’ biggest productivity growth and impact come after new technologies are put into practice. The market validation of new business models, technology platforms, and market needs spur investment in complementary innovations up and down the new supply chain.”

In Canada there are plenty of government programs to help with the R&D side of technology adoption but far fewer incentives to support the market adoption of new technologies. A more balanced approach to innovation incentives and policy is important. The number of people a company has working on R&D is quite possibly far less important than the type of innovation the people are working on.

The second and third points provide excellent validation of the importance of start-ups in the innovation process. Start-ups can potentially create the greatest innovation value by introducing new dimensions to a market. Innovative emerging technologies have a greater probability to produce true economic growth.

Therefore a national innovation strategy should seek to;
- Take a holistic view of innovation
- Recognize the importance of start-ups to innovation
- Target specific emerging technologies

Ian Graham

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All start-ups face a multitude of challenges and obstacles on the long and bumpy journey to success. The key to start-up DNA success is not really all that mysterious and could quite possibly be boiled to: Passion, People and Persistence. However, understanding the bonds and genetic code that holds the strands of start-up DNA together … is more art than science.

Each year since 2005 I have been picking 3 start-ups to watch … alumni report to follow later. It seems to me that for the past 3 years there have been a steady upward and positive trajectory to the Start-up scene in Ottawa. This year’s cohort of start-ups to watch is IMHO tangible evidence of Ottawa’s grassroots potential. According to tradition the start-ups are presented in alphabetical order;

Arkalumen is based on a great idea and matched with an excellent plan of execution and great people. This start-up certainly has all of the right ingredients for success.

Avacano is a start-up with the ability to adapt and a founding team that definitely seem to have great Start-up DNA. As the youngest start-up with the furthest distance to go I still really like their chances.

PowerScout Sports is another really great idea with amazing people. In fact Brad Stewart is the first person to be named to the “start-ups to watch” list twice. Great idea and great people should equal great execution.

May all the start-ups have success and good fortune on the long road ahead. Wising that the fire of passion keeps burning brightly; you have the good fortune to meet great people along the way and finally the strength of conviction to above all else persist.

Ian Graham

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