A well-functioning financial services sector is vital because it serves critical functions in our society. The sector is also economically important in its own right, directly employing 780,000 Canadians and accounting for 6.8 per cent of Canadian GDP in 2014, according to data from the Conference Board of Canada. By far the largest cluster of financial services firms is in the Toronto area, and they account for 32.3 per cent of Canada’s financial services employment. Nearly one worker in twelve in the metro Toronto area is directly employed by the financial services industry, which accounts for 13.2 per cent of the area’s GDP. Typically, Toronto is included in Top 10 rankings of global financial centres, with the Global Financial Centres Index ranking the city eighth in the world.1 Toronto’s financial sector also has substantial links to Waterloo’s tech sector, and the two are often considered part of the same GTA-KW nance ecosystem.2 Financial Technology (known as fintech) investments are growing rapidly in Canada, with OMERS Ventures reporting that 100 fintech start-ups in Canada have collectively raised more than $1 billion in funding since 2010.3


The term “innovation” has mixed connotations in the financial services industry. While innovation can boost productivity and living standards, financial innovations, such as loan securitization, tranched securities and credit default swaps, are seen as having played a role in the U.S. financial crisis of 2007-2008.4 Beck et. al. found that while increased financial innovation is correlated with higher GDP growth, it is also correlated with economic volatility and bank fragility.5 As such, there is a stronger link between innovation and regulation than in most industries. Regulators need to ensure an environment is created in which beneficial innovations are not being stifled while at the same time consumers are protected and systemic macroeconomic risk is guarded against.


We are not the first researchers to examine the state of innovation in Canada’s financial services industry. Past Canadian examinations include:
Conference Board of Canada (2015): The Conference Board found that despite strong financial performance relative to its international peers, the Canadian financial sector was a productivity laggard. While Canadian financial companies scored quite well on input-based measures of innovation, these inputs were not manifesting themselves in labour productivity growth.

McDonald-Laurier (2014): The report discusses the number of different regulators in Canada that financial rms must answer to and raises worries about a lack of policy coherence between regulators. The authors recommend that the federal government create a “world-class Financial Innovation Institute whose mandate would be to identify, back and promote the adoption of the ‘new’ and put Canada at the forefront of 21st-century financial institutional leadership.”

Munk (2011): There are some issues around the linkages between the financial sector and the Information and Communications Technology (ICT) sector highlighted by this study. Concerns are raised that Canadian financial institutions are not protecting their intellectual property to the same degree as their American counterparts and that the U.S. Patriot Act is causing issues for Canada’s financial sector. Not all is gloomy, however, as the report discusses some comparative advantages the Toronto cluster has over international competitors, including “strong physical infrastructure in terms of the transportation network and a first-rate airport … as well as a competitive research infrastructure in terms of the presence of world-class universities and community colleges.”

Munk (2015): A three-sentence paragraph of the report does an excellent job of summarizing the ndings of the paper: “While the GTA has all the necessary components for a dynamic and thriving ntech ecosystem, they are weakly linked. The consequence is that the parts do not currently add up to an e ective ecosystem. In short: we have many of the essential parts, but are missing the system.” The reasons cited for the lack of an e ective ecosystem include the need to go to the U.S. for an adequate level of funding for ntech rms to scale up, the lack of a national securities regulator, di culty getting regulatory approval in every province and the lack of inexpensive incubator centres. One interviewee cited coordination as being a problem: “There are few forums to connect. There are lots of products, campuses, financial institutions, and start-ups in the GTA, but it is hard to see a forum for all these people to come together.”6


Canada 2020 made its way to Bay Street in Toronto and assembled a group of financial industry experts, from government, non-governmental organizations, big banks and ntech startups. Some themes emerged in our two-hour conversation.
Market structure and incentives: When asked, “What is the biggest barrier to innovation in Cana- da’s financial sector?” a common answer was the structure of the industry and the incentives that it creates. Canada’s financial sector is dominated by six big banks. Due to the oligopolistic nature of the industry (caused, in part, by high barriers to entry), Canada’s Big Six are more pro table than similarly sized banks in other countries. Combined, Canada’s six largest banks earned $35 billion in pro t last year.7 In the view of some start-ups, this creates an incentive for the banks to ght disruptive innova- tions, as those disruptions put oligopolistic pro ts at risk. However, the counter-argument was given that the banks recognize that these innovations are inevitable, so the banks have an incentive to be active participants, rather than facing challenges from outside, such as from global players like Google and Apple.

Stability versus innovation: Innovation is a tricky concept in the financial services industry since innovations are seen as playing a role in the financial crisis of 2008. The roundtable unanimously recognized that regulators have an important role in protecting consumers as well as in protecting the integrity of the financial system from systemic risks. It was recognized that regulators have the near-impossible task of nding a way to protect the system while not sti ing useful innovations and keeping abreast of rapidly changing technologies.

A concern was raised that regulators are judged solely on their ability to prevent “bad things from happening,” which comes at a cost of innovation. One participant gave an analogy of judging road-safety regulatory bodies solely on the number of crashes, saying their response would be to “[make] all roads ve miles per hour.” A suggestion was made that financial industry regulators be given a dual mandate of consumer protection and innovation development.


The bulk of industry regulation applies equally to big banks and financial start-ups. Some members of the roundtable questioned whether this is always appropriate, given that the failure of small players does not create the systemic risk that the failure of a big bank would. The idea of a “regulatory sand- box,” a tool used from Singapore to the United Kingdom, was discussed. The sandbox would allow ntech companies that remained under a speci ed size to face a reduced set of regulations. Given that one of our ntech participants spent three times the amount of money on regulatory research as on writing html code, and another spent their first $25,000 entirely on researching regulations, such an idea has a natural appeal. One participant was concerned that the sandbox could create a wall that would prevent rms from growing past a certain size, and might deter venture capital investment if the venture capitalists thought there was a chance the rm would not be able to one day “play outside the sandbox.”

Cultural barriers to innovation: A concern was raised that Canadian investors and managers may be too risk averse to be full participants in a highly innovative industry. As one participant put it, “[In Canadian MBA programs] there’s not a lot on how to take risk … . In [New York], the mentality of grads out of the U.S. is to take risks. There’s an acceptance that if you do that and fail that’s OK. In Cana- da, there’s stigma around failure.” A suggestion was made that foreign investors from countries with higher appetites for risk, such as China, may be able to ll some of the financial (but not necessarily managerial) gaps.

Immigration issues: If there are talent (or cultural) gaps in the system, immigration might o er an answer. However, one roundtable participant noted that it takes so long to bring executive-level talent into Canada under the Temporary Foreign Worker Program that a candidate will have typically moved on to other opportunities by the time their application is approved.

Access-to-capital gaps: Members of the roundtable stressed the importance of looking at the entire life-cycle of a ntech company when discussing possible gaps in access to capital. The consensus was that seed funding for good ideas was available through angel investors and family members; as one participant put it, “There’s no shortage of people willing to write $50,000 cheques.” The bigger chal- lenge appears to be nding enough money to reach scale, with our ntech roundtable reporting that
it is more di cult to nd second-round funding than it is first. Canadian venture capitalists were seen as requiring higher rates of return or lower risk than their U.S. and Chinese counterparts, and there was a perceived talent gap between the quality of Canadian and American venture capitalists. Fintech companies partnering with banks was seen as an option, though there were concerns that accessing capital this way would come with too many restrictions. As one ntech start-up put it, “The challenge is allowing ntech to ourish while you’re in the hug of a big bank. The problem is I’d be dead in a year because I couldn’t go as fast as I need to go.”

Collaboration: Members of our roundtable saw increased collaboration as a way to increase innova- tion in the sector. One participant felt that there were tighter ties between the investment and ntech start-up communities in the United States, which allowed for information sharing and the building of trust and stated, “Interaction, sharing ideas among startups, isn’t something you get a sense of in Canada. We need a safe spot for founder-to-founder, investor-to-investor interactions.” Increasing interactions was seen as a way to identify gaps in the industry’s ecosystem and help match startups with investors. Some members of the roundtable felt that interactions between regulators and ntech start-ups were vital, while others believed that there was “no upside for [us] to talk to regulators.”

One participant called their interactions with regulators “unsatisfactory,” and described a typical interaction: They receive a letter from a regulator asking for information to determine whether or not they are compliance with a certain rule or regulation. A lawyer drafts a reply, at a cost of $5,000. The regulator determines the startup is in compliance, but doesn’t bother to let them know. Conversely, if the regulator determines the startup is not in compliance, they receive another letter, hire the lawyer to write a reply, and wait to nd out whether the regulator’s response will be silence or another letter.” One recommendation for an improved industry-to-regulator relationship is increased collaboration be- tween companies, which would allow them to speak in a single voice through the publishing of industry letters, white papers and other means. As one regulator described the current situation, “Government hears so many voices and has to prioritize.”


Final thoughts: Overall, the roundtable saw fantastic innovation potential in Toronto’s financial services industry thanks to banks that compete on the international stage and a critical mass of skilled graduates between Waterloo and Toronto. Increased innovation would bene t consumers, by giving them additional choices, more convenience, greater access to capital and lower costs when choosing financial products. A failure to innovate would see the pro table parts of the industry swallowed up by large U.S. players, with Canadian banks largely becoming commodity producers.

1 All data from the Conference Board report: Financial Services – an Engine for Growth 2015
2 One such example is the Munk School report Current State of Financial Technology Innovation.
3 Remarks by Carolyn Wilkins, Deputy Governor of the Bank of Canada
4 Financial Innovation and the Financial Crisis of 2007-2008 http://jerrydwyer.com/pdf/innovation.pdf
5 Financial Innovation: The Bright and the Dark Sides http://www.efa2012.org/papers/t1d2.pdf
6 Munk School – Current State of Financial Technology Innovation, page 16
7 http://www.cbc.ca/news/business/bank-pro ts-rise-1.3348661



Creative industries, such as the arts and video-game manufacturing, have become an important sector of the economy in Canada and globally.

Action Canada, a national fellowship program with a focus on Canadian public policy, notes that the cultural sector in Canada was worth more than $84 billion in 2007, which was more than the insurance industry, the hotel and restaurant industry, or the agriculture, forestry, hunting and shing industries combined1. There are more than in 1.1 million jobs in this sector2.

Industries and organizations that make up Canada’s creative sector include: advertising, architecture, craft, design, fashion, television, information technology, software, publishing, museums, galleries, libraries, plus the performing and visual arts. Canadian brands in many of these industries are very strong and globally known3.


Action Canada notes that Canadian innovation policy generally focuses on innovation in the hard sci- ences. Given the importance of the creative industries, it calls for an innovation policy that focuses on innovation within the creative industries.

Edgar Cowan noted in the Globe and Mail that Canada’s creative industries could be “an ideal gateway to a long-term strategy for improving our competitiveness and our capacity for innovation, leading to a more certain, sustainable future economy.4” The Ontario Innovation Agenda unveiled in 2008 included a focus on innovation in the creative industries in an attempt to “foster innovation, create good jobs and address the persistent challenge of lagging productivity.5

The publishing industry has struggled with innovation in some areas, but has been successful in others. For example, it has “embraced digital technology for internal work ow processes, for supply chain systems and processes, and for marketing and sales.6


There are a few examinations of innovation in the Canadian creative industries:

Action Canada (2014): This report asked the question, “How can we better leverage the competitive strengths of our creative industries to create a more prosperous nation?” The authors noted that the creative industries are important components of the Canadian economy and that Canada needs to develop policies on innovation within the creative industries to keep pace. The authors recommended the creation of a Canadian Council for Creativity that would promote creativity in business, public poli- cy and education in order to encourage all sectors to embrace creative skills. They also recommended the creation of a Year of Creativity in Canada to encourage people to see the role of creativity in innovation.

Hilchie (2006): Jayson Hilchie noted in an article for the Hu ngton Post that video-game development in Canada contributes $3 billion to the GDP. Canadians in video-game development have pushed the boundaries of interactive digital entertainment through innovations in “computational and techno- logical power, the complexity of level design, the rendering of 3D graphics and the immersion of the gameplay experience.” He calls for Canada to focus on talent development and retention, including leveraging both education and immigration to allow the seamless and e cient movement of highly skilled workers in the technology elds.

Castledale (2008): This report on the book publishing industry in Ontario noted the inability of the province’s (Canada’s?) Industry to take advantage of economies of scale as occurs in the U.S. At the time, Canada published about 16,000 new English language titles a year while the U.S. published some 300,000. The report, commissioned by the Ontario Media Development Corporation Book Industry Advisory Committee, noted the dramatic changes that digital technology was triggering in book publishing. The report also noted that the industry needed help both in terms of capital and technical expertise to participate and innovate while becoming more competitive.

Newman (2008): The Ontario Ministry of Tourism and Culture commissioned a report examining what Ontario public libraries will look like and the service they will o er in 2020. They reported that public libraries are very innovative in terms of how they “respond to a new social, technological and economic environment.” Libraries and librarians use innovative practices and services, such as o ering digital access to books, partnering with provincial and federal governments to o er programs, and hosting maker-spaces within their buildings, to meet the changing needs of their patrons and communities. This report highlighted the role libraries have in helping communities access and create innovations.


The Canada 2020 team headed east to Halifax and assembled a roundtable of some of the best arts and creative minds in the Maritimes. Our meeting at the Nova Scotia College of Art and Design’s Port Campus at Pier 21 brought together stakeholders in the lm, music, publishing and gaming industries, along with representatives from NGOs and government. Here is what they told us:

Importance of cross-sector collaboration: Many members of our roundtable talked about the importance of having writers, musicians, animators, programmers and lmmakers all within the same ecosystem, as it takes dozens of di erent skills to develop a product. One participant indicated that if one of those areas becomes weak, the whole ecosystem “falls apart.” But our stakeholders felt there was the need for further collaboration. One member suggested the importance of business graduates and artists speaking the same language, and felt there was bene t from business students taking arts courses and arts students taking business courses. Another added that Canadian postsecondary institutions we need to “bring arts, science and digital media together. You can’t be in silos all the time. We talk about STEM – it should really be STEAM (including Arts).”

Talent retention: Getting talented young people to stay in Halifax was seen as an issue, with one participant stating that “we don’t have a problem attracting people to our universities, the problem
is getting them to stay.” Roundtable participants believed that students left Halifax not because they were looking for more money, but they were rather looking for more excitement. As one stakeholder described it, “We have to remember that a 22-year-old wants excitement, not job security and a health-care system … What they think about is, ‘Where can I go that’s sexy, cool and exciting?’” Improving Halifax’s image and quality of life was seen as the way to retain additional young workers. Another participant said young people had a misleading picture of the Halifax economy because when the economic data they were presented with related to the province as a whole. In fact, economic growth in the city substantially exceeds that of the rest of the province. However, one participant indicated that job prospects were uneven in the arts sector, with some portions of the ecosystem featuring limited job prospects and high unemployment.

Quality of life: Good infrastructure and good government policy decisions were seen as important to generating the quality of life needed to retain talent. As one roundtable participant described it, “Young people say, ‘I won’t live here without bike lanes,’ or a train. It is easy for government to talk about industrial innovation, harder to keep in mind the creative end. I feel like the freeze in arts funding is hurting us. We cannot lose sight of things like co-op art galleries and the like, because they create marketability. This is the stu that people miss when they move to a smaller city.” Others indicated that there were bene ts to being in a smaller centre, adding, “It is important to think about the scrappiness and DIY factor in Halifax. When we grow, we will lose part of that.” Finally, one participant felt Halifax should ensure it not enact policies that would make the cluster too homogenized, adding, “We’ve worked to support our aboriginal community, our African-Canadian community and our Gaelic community. How do you create a policy discussion without losing sight of that quilt-work?”

Immigration and talent attraction: Some components of the ecosystem, particularly gaming, need to rely on immigration to ll roles. But as one participant put it, immigration can add jobs to the local ecosystem instead of taking jobs from it: “Our struggle is in nding talent. We’ve been lucky nding people locally, but each time we recruit for speci c positions, it’s a struggle. We have to rely on immigration, but understanding and applying Canada’s immigration programs require resources. Innovation brings value to individuals or business, but it also gives brings value back to the community.”

Some roundtable members said they were hesitant to hire foreign graduates of local schools, con- cerned the federal government would not allow them to remain in the country when their Post-Grad- uation Work Permit expired. The organizations did not want to hire and train workers if they did not believe they had a reasonable chance of retaining them.

As one participant described it, “International talent wants to stay. The immigration paperwork is di cult for international recent graduates, and a lot of employers are nervous about work visas. There is a lot of misunderstanding about immigration and work visas, and a lot of paperwork. People want to stay, but there is a lot of red tape.”

Navigating the immigration system was seen as an issue for small- and medium-sized businesses in Halifax, which does not have the network of experienced immigration lawyers that a larger centre like Toronto has. Finally, one participant indicated that the issue was not just young workers, and the barriers are as much cultural as they are regulatory: “There is a lot of focus on youth, but we are looking also for mid-level and senior staff. Jobseekers are looking for more opportunities. Attitude and quality of place is de nitely part of it.”

Final thoughts: Given the size of the Halifax market, it was not surprising to see roundtable participants emphasize “brain drain” more than those in some of our other roundtables. In general, roundtable participants placed a great deal of emphasis on the di culty of navigating funding and regulatory systems and the lack of resources to assist them in the local ecosystem. In particular, the lack of stable program funding was cited as a particular irritant, as it made it di cult for organizations to make long-term plans. Despite all of this, the mood of the roundtable was upbeat, and there was a great deal of energy in the room and substantial optimism about the future of the local cluster.


1 (Action Canada, 2014) Creativity Unleashed: Taking innovation out of the laboratory and into the labour force
2 (Cowan, Edgar, 2015) The Global and Mail, Canada’s creative industries can lead the economic challenge, http://www.theglobeandmail.com/report-on-business/rob-commentary/canadas-creative-industries-can-lead-the-economic-charge/article25236146/
3 (Cowan, Edgar, 2015) The Global and Mail, Canada’s creative industries can lead the economic challenge
4 (Cowan, Edgar, 2015) The Global and Mail, Canada’s creative industries can lead the economic challenge
5 (Castledale, 2008) Ontario Media Development Corporation Book Industry Advisory Committee, A Strategic Study for the Book Publishing Industry in Ontario
6 (Castledale, 2008) Ontario Media Development Corporation Book Industry Advisory Committee, A Strategic Study for the Book Publishing Industry in Ontario



The Canadian agriculture and agri-food sector plays an important role in the Canadian economy and cannot be ignored when we investigate innovation opportunities. The combination of continued population growth, climate change and changing demands from the marketplace make this economic sector rich with possibilities.21 The agriculture and agri-food sector generated $103.5 billion in 2012, which accounted for 6.7 per cent of GDP. Overall, an estimated half of all primary production in the Canadian agriculture and agri-food sector is sold for export, making Canada the world’s fifth-largest exporter.22 Canada is a world leader when it comes to agriculture, as it has nearly 70 million hectares of farmland and seven per cent of the world’s renewable fresh water resources. Even as the consolidation of farms continues, Canada’s average farm size is now larger than the U.S.’s and Brazil’s. Farming has become steadily more capital intensive.23

The Cluster Atlas identifies nineteen separate geographic agricultural clusters across Canada; only the construction industry, at 22, has more clusters across the country.24 Nearly half of the country’s agricultural clusters are found in Ontario, with Brantford, Centre Wellington, Chatham-Kent, Guelph, Kawartha Lakes, Kitchener-Waterloo, Leamington, Norfolk and St. Catharines-Niagara all cited as having active agriculture clusters, with Kitchener-Waterloo’s being the largest with 9,449 people employed in 2011. The remaining clusters are equally split between Quebec (Drummondville, Granby, Saint-Hyacinthe, Saint-Jean-sur-Richelieu and Victoriaville) and Western Canada (Abbotsford-Mission, Brandon, Chilliwack, Lethbridge and Saskatoon).

The food and beverage processing portion of the agri-food sector is the country’s largest manufacturing sector by employment, with more than 245,000 people employed in it in 2013. In 2013, capital investments in this sector rose seven per cent to $1.8 billion.25 The Cluster Atlas identifies fifteen distinct food and beverage clusters across Canada, with two in Eastern Canada (Moncton and St. John’s), four in Quebec (Granby, Montreal, Saint-Hyacinthe and Saint-Jean-sur-Richelieu), six in Ontario (Belleville, Brantford, Hamilton, Kitchener-Waterloo, London and Toronto) and three in Western Canada (Abbotsford-Mission, Lethbridge and Vancouver). The Atlas breaks down the food and beverage processing industry into twelve sub-industries, as shown below.


2Innovation in the Agri-food Industry

The June 2014 Senate report on agriculture noted the importance of innovation in the agriculture and agri-food sector in Canada: “Despite Canada’s wealth of arable land and water, Canadian farmers today can produce more food with fewer resources. This productivity is made possible by the discovery and adoption of research-driven new technologies and processes.”26

At the same time, chronic unprofitability within the agriculture sector in Canada,27 combined with increased international competition and a lack of innovation, has many calling for rethinking how the Canadian agriculture and agri-food sector is approached. This project started with an analysis of several high-profile reports into the Canadian agriculture and agri-food sector.

3Past Studies of Agri-food Innovation

We are not the first researchers to examine the state of innovation in Canada’s Agriculture and Agri-food sector. Past Canadian examinations include:

Standing Senate Committee on Agriculture and Forestry (2014): This committee investigated the state of research and innovation in the Canadian agriculture and agri-food sector. They called for an emphasis on both quality agri-food products and product differentiation. While they note the successful role of the government in creating an environment that encourages innovation in Canada, they highlight several areas of concern. First, they note that the government needs to strengthen and improve the regulatory framework within Canada to strengthen the approval process for new products, modernize animal health and disease control regulations, bolster IP protection and harmonize regulations at an international level. Second, they call for the government to adopt a long-term vision with government support for research and innovation work. Third, they call for an increase in partnerships and collaboration within the industry and an elimination of barriers at both the national and international levels in relation to innovation partnerships. Fourth, they call for the professional development of workers in agriculture and agri-food sectors to allow these workers and the public to take full advantage of innovation opportunities.

Agriculture and Agri-food Canada (2015): The report discusses the current trends and emerging opportunities for innovation available to the food processing industry. The piece highlights changes in consumer preferences due to shifting demographics, environmental concerns, a desire for more information and a need for convenience foods. It then discusses the resulting opportunities for innovation, including the use of innovative ingredients, and emerging technologies, including food processing and preservation technologies and technologies related to food quality and safety. The piece ends by calling for further research and analysis of the opportunities.

Ashton, Richards and Woods (2015): Innovation in food processing companies is examined in this report. It uses three cases to investigate the type of innovations occurring in these firms, the involvement in the innovation throughout the supply chain, the length of time for the innovation to be realized and the nature of growth that resulted from the innovation. They found that all three companies investigated had seven or more innovations in various states of completion. These innovations were primarily product innovations and process innovations. All three companies used supply chain partners outside of their companies to aid in the development of their innovations. The innovations were divided, almost equally, between being short and intense and long and continuous. Six types of growth were identified in these three cases, including growth as an increasing share of the existing market or expanding the size of the market, growth as remaining competitive or increasing efficiency and growth as creating new companies or increasing employment.

Canadian Agri-Food Policy Institute (2011): This report starts with the premise that “Canada is not realizing the full potential of a major strategic asset – the country’s agri-food sector.” It calls for a united approach throughout the country with short-term goals strategically created to meet the long-term goal of becoming “the world’s leading producer of nutritious and safe foods produced in a sustainable, profitable manner.” They call for a systems-based approach in which all agri-food stakeholders work together. They propose a five-part solution including a centre for good food citizenship, food system smart innovation, food system risk management, leadership in sustainability, and enabling regulatory change.

4What Our Roundtable Told Us

The day after our Kitchener technology industry roundtable, we headed northeast on Highway 7 to Guelph, Ont., where we met some of Canada’s leading experts in the agriculture and agri-food industry. Here is what they told us:

Efficacy requirements: The need, in some cases, to prove not just the safety of a product but its efficacy was seen by some at the roundtable as a barrier to innovation. One roundtable participant described the barriers created by efficacy requirements: “In some cases, Ontario agri-technology start-ups are launching their products in the United States instead of Canada since it is faster and the markets are bigger. These companies are enjoying millions in sales and Canadian farmers do not have access to the technology, even though Canadian taxpayers helped fund the innovations through various grants and loans over several years. We could solve this problem by harmonizing regulations with the U.S.A. and realizing we are too small to demand sovereignty in everything. There is no evidence to suggest the U.S. regulatory system is vastly inferior to ours. As was mentioned by others today, our onerous efficacy requirement is parental in nature and means that commercializing these innovations can take about three years longer in Canada. We have already harmonized important areas like human and environmental safety. Getting rid of the efficacy requirement does not seem to be too much to ask.”

Regulatory coherence: Roundtable participants discussed the incredible complexity of the agriculture and agri-food regulatory environment and said how difficult it can be for small- and medium-sized companies to navigate. They felt that agri-food manufacturers have a particularly difficult time navigating the system, because they have feet in both the agricultural and industrial worlds. One roundtable participant gave an anecdote of an agri-food manufacturer looking for government assistance to commercialize a potentially breakthrough innovation. “We don’t deal with manufacturing, you need to talk to industry,” they were told by agriculture regulators. Industry regulators offered a similar response, saying, “We don’t deal with agriculture.”

Regulatory mindset: A few members of our roundtable felt that to be the biggest regulatory barrier was the goal of regulators. As one participant put it, “The government needs to shift out of its parental mindset. The mindset is protectionist, slow and safe. It is problem-oriented, rather than potentialoriented. If we want to be the most trusted system in the world, then the way we create policy needs to change.”

Provincial barriers to innovation: One roundtable participant described the challenges as follows: “In one program, we are required to use a provincial body to be our agent to access funds from the federal government, so innovation becomes parochial. We must always try to force-fit innovation into an Ontario scenario. True innovation knows no borders. The vast majority of possible innovations in agriculture will serve the interests of all provinces and ideally multiple countries. If they can’t, then it is unlikely any will be of a size that matters. And yet, one of the filters we use to assess if we can take on an innovation is whether it will mainly benefit Ontario agriculture. This occurs while at the same time the federal government is encouraging us to expand nationally outside of Ontario. In other words, we are funded by federal money administered by a province and the province wants innovation to be provincially-focused while the feds wants us to expand nationally.”

Funding gaps: Funding issues, beyond provincialism, were also identified. One participant suggested that Canada should take lessons from Israel, where government programs ensure funding for companies at every single lifecycle stage and there are active supports to help innovators navigate commercialization. Another suggested that the way that funds are allocated for multi-year projects needs to be more flexible; the money is allocated equally each year in some programs, but companies typically have much greater needs in a project’s middle years than in the early and later years. On average, roundtable members supported funding models that put decision-making at the local level. Infrastructure gaps: The lack of rural access to broadband internet was seen as a hindrance to innovation for farmers and small agri-food companies: It impedes the adoption of the “internet of things” technologies, the acquisition of new techniques and methods, and access to foreign markets. One roundtable member suggested that Canada does not do enough to learn from best practices around the world.

Final thoughts: Overall, the roundtable’s consensus was that agri-food needs to be recognized as a strategic sector for the country. The global challenges of a rising world population and climate change create a world of opportunities for Canadian agriculture and agri-food companies. But Canada will only fully capitalize on its potential if we have innovative, entrepreneurial companies, embrace the changes brought on by a big data revolution and get the regulatory regime right.

21 Agriculture and Agri-food Canada, 2015
22 Global Investment Attraction Group, 2014
23 Global Investment Attraction Group, 2014
24 Spencer, 2014. Automotive is tied with agriculture with 19.
25 Global Investment Attraction Group, 2014
26 Standing Senate Committee on Agriculture and Forestry, 2014
27 Canadian Agri-Food Policy Institute, 2011


1What is the idea?

Canada needs innovative thinking to solve some of the more difficult social and economic problems the country faces, such as:

  • A lack of safe drinking water and substandard house on First Nations reserves.
  • A persistently large gender wage gap.
  • Growing rates of fentanyl and other opioid addiction.

To tackle these problems, we recommend the use of goals and prizes, which we have adapted from both the XPrize Foundation and the United Nations Millennium Development Goals.

Recommendation: The federal government should identify a set of measurable national goals,the Canada 150 Goals.51

Canada has already set some of these goals. Canada’s commitment to reduce greenhouse gas emissions by 30 per cent below 2005 levels by 2030 certainly counts as a measurable national goal,52 as does the prime minister’s commitment to “end boil-water advisories on First Nations reserves within five years.”53 Canada’s goals should follow the SMART criteria54:

  • Specific
  • Measurable
  • Achievable
  • Relevant
  • Time-based

Some of the UN Millennium Development Goals have been criticized for being unachievable or lacking measurability; the Canada 150 Goals must avoid such goals.
Recommendation: The federal government should create a set of Canada 150 Prizes, with large cash prizes for projects that will help meet these goals.

The prizes are different from the goals, but they should be related to them. One such example is Canada’s emissions goal, and the NRG COSIA Carbon XPRIZE55:

Goal: Reduce greenhouse gas emissions by 30 per cent below 2005 levels by 2030.

Prize: “The $20M NRG COSIA Carbon XPRIZE will challenge the world to reimagine what we can do with CO2 emissions by incentivizing and accelerating the development of technologies that convert CO2 into valuable products. These technologies have the potential to transform how the world approaches CO2 mitigation, and reduce the cost of managing CO2.”

In this way, the prizes assist Canada in achieving the final goals. Canada’s boil-water advisory goal could be matched with a prize for new water-treatment technologies, and the goal of reducing opioid addiction could be matched with a prize for treatment programs that prove to reduce addictions by a measurable amount.

These prizes would encourage investment of time and capital in finding innovative solutions to our goals and would incentivize Canadians to use their skills and imagination to solve some of the more difficult social and economic problems the country faces.

Recommendation: The federal government should ensure that Canada 150 Prize competitions are open to all Canadians.


The Minister of Innovation, Science and Economic Development will be responsible for administering the Canada 150 prizes and identifying the formidable problems to be solved.

Recommendation: The federal government should hold open consultations with Canadians to determine the list of Canada 150 Goals and Canada 150 Prizes.


One of the benefits of using a prize-based approach is that projects are only funded if they are successful, creating an automatic layer of accountability. The federal government must ensure that both the goals and the prizes have measurable criteria.


Regulatory Failure: A common theme that came up repeatedly in our roundtable was that governments were trying to do too much and were spreading innovation dollars around too thinly, rather than focusing on a few areas where it can realistically expect to succeed. There was a consensus that Canadian governments are too afraid to try to “pick winners,” and this aversion leads to a suboptimal use of resources. The Canada 150 Goals and Prizes are designed to “focus the mind” on a few key areas where Canada has the potential to be a world leader. By choosing specific problems to solve, we allow the government, firms and individuals to focus on developing and showcasing specific core competencies.

Risk Aversion: The Canadian government’s approach to risk aversion in the innovation sphere is to try to “de-risk” the space, by transferring risk from firms to governments. While appropriate in some circumstances, this approach does not teach Canadians how to take risks. Attaching large financial prizes to problems rewards risk-takers and creates an environment in which taking chances is more socially acceptable.

Evangelism: Canada currently has the world’s attention thanks, in part, to the international popularity of Prime Minister Justin Trudeau. By choosing specific problems to solve and by having large prizes attached to solving them, the prime minister can use his star power to highlight our innovative clusters to the world and make Canada “the place to be” for innovation.

Inequality of Opportunity: A large segment of Canada’s population is left out of government programs on innovation because they do not know how to navigate a complex regulatory environment. Using prizes that anyone can access opens up government-driven innovation to all Canadians.


Benefits: The approach of goals and prizes forces the government to focus on a few key priority areas. Furthermore, since prizes are only awarded for success, there is little financial risk for the government. If no innovation occurs, no prizes are awarded.

Costs and Risks: As with most, if not all, innovation programs, the government could end up paying for innovations that would have happened without the program. Furthermore, the government may choose the wrong areas as “winning” ones and fail to incent innovation in areas with a greater chance for success.


Economic Inclusion: Since many of the goals will be around assisting vulnerable populations, successful completion of these goals will lead to an improved quality of life, a lower cost of living and higher incomes for those in need.

Autonomy: We would recommend that when choosing the Canada 150 Goals, the government try to have at least one or two that would be autonomy-increasing if successful.

51 Canada 150 is in reference to 2017 being the 150th anniversary of Confederation.
52 Margo McDiarmid, “Canada sets carbon emissions reduction target of 30% by 2030,” CBC News, May 15, 2015.
53 “Justin Trudeau vows to end First Nations reserve boil-water advisories within 5 years,” Canadian Press, December 18, 2015.
54 Robert L. Bogue, “Use S.M.A.R.T. goals to launch management by objectives plan,” TechRepublic, April 25, 2005.
55 NRG COSIA Carbon XPRIZE, NRG COSIA Carbon XPRIZE Overview (NRG COSIA Carbon XPRIZE, 2016).

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