Addressing Canada's Innovation Paradox

 

Blake Melnick 







Addressing Canada’s Innovation Paradox

 by Blake Melnick


On Tuesday, November 4th, Mark Carney and the Liberal Party released their much-anticipated “Building Canada Strong” budget.

Regardless of how one feels about its specifics, there’s little question that Carney is focused on addressing what the Conference Board of Canada calls,  "Canada’s Innovation Paradox" — our chronic struggle to convert world-class education, research, and talent into sustained innovation and productivity growth.

The budget takes a long-term view on how Canada can improve its capacity for innovation and translate it into measurable impacts on GDP.
And while I would’ve liked to see more attention to tax reform — particularly incentives that encourage private-sector investment — and stronger commitments to eliminating interprovincial trade barriers, I still see this budget as an encouraging step in the right direction.

What’s often overlooked is that interprovincial barriers don’t just restrict goods, they restrict the movement of people. Provincial licensing rules for lawyers, doctors, engineers, and teachers etc. make it difficult for professionals to move to where the opportunities are and where the work is. This lack of mobility stifles innovation by limiting the very exchange of knowledge and experience that drives productivity across regions.

Despite this, I’m pleased with the direction of the budget, and it’s a perfect segue into this week’s episode of For What It’s Worth, titled:

🎙️ “Addressing Canada’s Innovation Paradox.”

🎧 Why This Episode Matters

In November 2024, I was invited to deliver the keynote address at the Growing Your Workforce Conference in Windsor, Ontario.


When I walked on stage, I had two goals:

  1. To shift how we think about innovation — to challenge the myths, clichés, and old assumptions that keep Canada from becoming a global innovation leader.

  2. To show that innovation can be made systemic — that we can design for it, measure it, and sustain it through the right mindset and systems of work and learning.

For all our intelligence, creativity, and research excellence, Canada remains one of the most persistent under-performers in innovation.

We’re brilliant at coming up with new ideas — but too often, those ideas either die on the vine or grow up and leave home, commercialized somewhere else, creating value and wealth for another economy.

🇨🇦 Understanding the Paradox

We live in an era of exponential change — automation, AI, and a gig-based economy are redefining work and learning. We’re in the Knowledge Age, where the most valuable resource isn’t oil, gas, or manufacturing output, it’s what we know, how fast we can learn, and how effectively we can share and apply that knowledge with purpose.

And yet, despite being more connected than ever, we’re also more fragmented.
We’re flooded with data, but starved for knowledge. We communicate constantly, but learn less deeply.

According to the Conference Board of Canada’s 2024 Innovation Report Card, Canada ranks 15th out of 20 comparable nations, behind countries like Korea, Switzerland, Singapore, and Germany. We have an A-level education system, but C-level innovation results.

The Conference Board warns that our inability to accelerate innovation-based growth is more than a business issue; it’s a threat to our competitiveness, our standard of living, and our social programs.

💡 Invention Without Innovation

This pattern repeats itself every few years.We fund research, launch tax credits and grants, invest in education and talent, but we continue to struggle to bring those ideas to market and drive measurable impact to our GDP.


As Jim Balsillie,


former co-CEO of Research In Motion and founder of the Council of Canadian Innovators, points out:

“Canada is a world leader in producing intellectual property, but a chronic exporter of it.”

Up to 75 percent of Canadian-generated IP ends up owned by foreign entities.
That means we do the hard part - the creative, high-risk work of innovation, only to hand off the rewards elsewhere.

The problem isn’t just about ownership, it’s about mindset.

Canada still operates with an Industrial Mindset — one shaped by manufacturing and natural resources. We measure success in production, output, and efficiency, not in knowledge creation and application.

“Canada is still focused on building the car, when the real value lies in the software that drives it.”

🧠 From Industrial to Knowledge Mindset

The Industrial Mindset made sense when value came from physical goods and scale. But in today’s Knowledge Economy, value comes from ideas and from our ability to turn information into insight and insight into action.

A Knowledge Mindset is about learning velocity how fast we can transform learning and experience into understanding. It’s about recognizing that our most valuable resource walks out the door every night - our people and their collective capacity to create.

Unfortunately, our funding, policy, and education systems still reward industrial behaviours in a knowledge-based economy. We measure output per hour instead of ideas per hour. We teach compliance instead of curiosity. We fund research instead of risk-taking.

And that’s what keeps the paradox alive.

💰 The Commercialization Gap

If you talk to Canadian innovators, you’ll hear the same frustration:

“We can get seed money. We can get research grants. But when it’s time to build a product, hire talent, or find a first customer — we’re on our own.”

That’s the missing middle - the gap between invention and market adoption.

Canada has relied for decades on indirect funding,  SR&ED tax credits, grants, and public R&D.These support discovery but not deployment.

We need direct funding where innovation investments flow straight to innovators and, most importantly, we need Canada to become the innovator’s first customer.

When government buys Canadian innovation, three things happen:

  1. It validates the product.

  2. It keeps intellectual property and economic value in Canada.

  3. It de-risks the market for others to follow.

This is how the United States built its innovation ecosystem. Agencies like NASA, DARPA, and the U.S. Department of Defense acted as early customers for emerging technologies, from semiconductors to the internet.

If Canada follows suit, we won’t just buy products, we’ll invest in a future economy that we actually own.

As the Council of Canadian Innovators warns,

“If we continue to fund innovation indirectly, we’ll keep training the world’s smartest people to build wealth somewhere else.”

🧩 Knowledge Management — The Bridge

Part of the solution lies in Knowledge Management (KM) the bridge between invention and innovation. KM isn’t about databases or document control, it’s about managing the cultural conditions that make innovation possible - creating systems that move knowledge from those who know to those who need to know, when they need it.

The Conference Board of Canada found that organizations with better KM processes are more innovative and productive because knowledge is the raw material of innovation.

It starts as data, becomes information, and through reflection and purposeful  collaboration, and application, turns into knowledge. Innovation is what happens when we apply that knowledge in new ways.

🌍 The Way Forward

If Canada truly wants to address its innovation paradox, we need to:

  • Shift from an industrial to a knowledge mindset.

  • Reform how we fund innovation — direct, early, and local.

  • Make knowledge our most valuable export.

Because as Jim Balsillie reminds us:

“Innovation without IP ownership is philanthropy.”

If we start measuring what we learn rather than what we make, we can transform our paradox into an economic advantage.

🔑 Key Takeaways

  1. Canada excels at invention but struggles with commercialization.

  2. We must replace indirect funding with direct, innovator-based support.

  3. Governments should act as first customers to retain IP and grow domestic markets.

  4. Innovation thrives on a knowledge mindset, not an industrial one.

  5. Knowledge Management is the system that turns ideas into measurable knowledge that creates value.

🎧 Listen to the Full Episode

🎙️ For What It’s Worth with Blake Melnick
Episode: Addressing Canada’s Innovation Paradox 
Available on Apple Podcasts, Spotify, or wherever you listen.

🔗 References

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