I had the great pleasure a few weeks ago of participating in my first TEDxYouth event, in Kingston, Ontario. Although the video link isn’t available yet, I thought I’d share a transcript version of my talk that was given on May 23, 2017.
“Thank you, thank you. You know, it’s great to be here today, sharing the stage with so many incredible young people. And it’s a great inspiration for me, because what I’d like to talk to you about today is how I believe young people, especially here in Canada, can become better innovators. But before I do that, I’d like to tell you a bit about my own experiences with this topic.
I’m a fourth generation small business owner. My parents started a small natural foods store in the late 1970s, my mother’s parents ran a general store in England, and my father’s grandparents – my great grandparents – were Eastern European Jews who left Europe after the First World War and came to Canada to run a general store in Winnipeg, Manitoba for over fifty years.
So when I think of the broad sweep of economic change that has occurred over the last century, I sometimes feel like my own family has been on the front lines of this change – that we’ve seen the forces, both good and bad – of economic innovation and growth. Because I believe that innovation always occurs in tandem with any kind of economic growth. Most people who have ever run a business know this intrinsically. My parents certainly did. My grandparents and great grandparents did. My wife and I – we’re both business owners – we live this reality every day.
But when it comes to the concept of innovation, something has changed over the last decade or so. We have gone from accepting innovation as the natural state of economic and social change to really celebrating the very concept of it. We’ve almost turned it into a kind of religion where we worship at the altar of buzzwords like disruption and start-up and intrapreneurship, and of course, the crowning glory, innovation.
I’ll give you some examples of what I’m talking about. Forbes Magazine has its annual most innovative companies list, and Bloomberg has its “innovation index”. Companies all around the world are trying to restructure their internal cultures to become better “innovators”, and universities and colleges, especially here in North America, are pumping millions of dollars into opening innovation labs and innovation centres. Even government has jumped on board, whether it’s cities, provinces and states, even national or federal governments. Here in Canada, we now have our own “Innovation Agenda,” which has become the centerpiece of the government’s plans to grow the economy, and which is meant to somehow foster “Canada’s innovation economy”.
This emphasis on innovation has really become an “innovation obsession.” This is the idea that we have become so wound up in the concept of innovation that we have forgotten what the concept meant in the first place, and we have lost sight of what exactly innovation is meant to achieve. In so many cases, innovation is usually considered synonymous with technology. We look at companies like Tesla and Apple and Uber, and we predict that these companies will become the dominant companies of the future. But if there’s one thing that I’ve learned from my own career as a business owner, it’s that technology does not necessarily dictate innovation, and similarly innovation is not necessarily dependent on technological change.
So what does this mean for young entrepreneurs?
I’ll start by showing you something else, and before I show you this I want you to think about what an “innovation economy” really means and how this might relate to young people. This is a list of the ten largest companies in Canada right now (see Figure 1 below). You can see in this list that we have financial institutions, oil and gas companies, transportation, insurance, telecommunications. And here’s the crazy thing – for a country that so desperately wants to innovate, that has its own innovation agenda, why are the most successful companies in Canada all relatively low on the innovation index? If you’re thinking just in terms of tech, if that’s your definition of innovation, you need to go all the way down to number 54 on this list before you come to a company which is focused primarily on information technology – in this case Open Text Corporation. And you’d have to go all the way down to number 81 before you found another one like this – Shopify. So out of the 81 largest companies in Canada, two are information technology companies. And in the top ten, they’re all from old, established industries being run by old, established companies.
Figure 1 – Ten Largest Companies in Canada, May 2017
|1||Royal Bank of Canada||Financial Services|
|2||Toronto-Dominion Bank||Financial Services|
|3||Bank of Nova Scotia||Financial Services|
|4||Canadian National Railway||Transportation|
|5||Suncor Energy||Oil and Gas|
|6||Bank of Montreal||Financial Services|
|7||TransCanada Corporation||Oil and Gas|
|8||Enbridge||Oil and Gas|
|10||Manulife Financial||Insurance and Financial Services|
|54||Open Text Corporation||Software|
Now look at a comparative list of US companies (see Figure 2 below). What’s one of the first things you notice about this? Unlike the Canadian list, you’ve got five out of ten companies that are clearly tech leaders. Apple, Amazon, Facebook, Microsoft, and Alphabet (which is Google). And what’s even more interesting, for me at least, is that ten years ago, the only one of these five companies that would have been on this list is Microsoft.
Figure 2 – Ten Largest Companies in the U.S., May 2017
|1||Apple Inc||Diversified Technology|
|2||Alphabet (Google)||Diversified Technology|
|4||Amazon.com||E-Commerce & Cloud Computing|
|5||Berkshire Hathaway||Diversified Investments|
|6||Exxon Mobil||Oil and Gas|
|7||Johnson & Johnson||Diversified Pharmaceutical|
|8||Online Advertising / Technology|
|9||JP Morgan Chase||Banking and Financial Services|
|10||Wells Fargo||Banking and Financial Services|
Now I’m showing you this to make a point about the Canadian vs the US economies – not just that America is more dynamic in terms of its tech sector, but that the economy itself is more dynamic, more open to change. And for me, this is the important thing about innovation – it’s less about what the change is than the willingness to make the change itself. The American economy hasn’t just embraced and led technological change – it’s actually shifted to accommodate for this change. And even those companies on this list that operate in “traditional industries”, in many cases they are still “innovators”. Take, for instance, Berkshire Hathaway, the investment vehicle of Warren Buffett and Charlie Munger. Berkshire got to where it is today by employing an investment philosophy which for decades and decades generally went against the grain of popular opinion. In other words, Berkshire innovated (in this case by being different), and look where it’s taken them.
So going back to the Canadian list, this list would have looked almost the exact same ten years ago. None of these companies are new – in fact they’re all really, really old. Now consider this: are any of our biggest companies – is our economy – really “innovating” in the way that our government wants them to, in a way that is best for the future of our country? Are we really driving an innovation economy?
So what does this mean? Well, right now in Canada, I think we’re facing a crisis of creativity. The messages are all there if we want to see them – our economy is basically asleep at the wheel. But what worries me more than just this crisis of creativity is that the response from almost every corner is to focus on what I consider short term solutions – to stick a bit more money in a budget for an innovation centre, or to provide more government loans for startups, or to stick the word “innovation” in as many places as possible. But these short term solutions all basically ignore the one key ingredient that is going to make or break the creation of a truly innovative, dynamic economy – which is our young people. If everyone is thinking the same way about innovation, then innovation – the idea of doing something differently – doesn’t have any real meaning.
So what I’d like to do is to offer an alternative concept of innovation, one that is aimed directly at engaging young people. Because as important as certain short term initiatives are, what we really need to do is focus on building innovation capacity in the long term. To get to the point that our economy becomes an innovation economy, we need to focus on making young people better innovators. It’s a long term project, but I want to suggest four ways that we can better achieve this. And remember, it’s about building innovation capacity.
The first thing we need to accept is that innovation is social. An innovation economy can’t on the one hand be dynamic in the products and services it creates while at the same time being stagnant in other areas like business culture, openness to competition, and a general satisfaction with the status quo. To really adapt to a changing economy, we need to understand that the forces that drive innovation are mainly social functions – it’s not government spending, or sleek innovation labs, it’s creativity and imagination and curiosity. Real innovation comes from a social need to explore, to push boundaries. And what better generation to do this than the current generation of young people, perhaps the most innovative, dynamic and versatile generation that has ever existed?
The second point, and this is linked to the last one, is that we need to understand that innovation is a process, not just an end result. We need to take the social functions I’ve just mentioned – curiosity, imagination – and integrate them into every area of public life, from business to education to public service. We need to understand that an economy is not necessarily innovative just because it hosts some high tech clusters. An economy is innovative because of how it deals with all types of challenges. There is no end goal of innovation – it’s just continuous improvement. For young people, this means worrying less about what the end result is and more about how you’re getting there, and your ability to solve problems. If there is an end result of an “innovation economy”, it’s to produce a workforce that’s highly skilled not just in technical tools, but in process tools. How to learn. How to think critically. How to solve problems.
The third point I want to make is that innovation is not industry specific. I’ll say that again: innovation is not industry specific. There is no industry that has a monopoly on innovation. Because innovation occurs on a scale of relativity. What’s old and tired in one sector or in one business might be game changing for another. We shouldn’t be convincing young people that the only way to be innovative is to be tech geniuses. You want to increase productivity? Then look at the actual industries that are producing things, and make them more productive. Look at some of the most successful Canadian companies in the last few years? Indochino: they’re an online men’s custom suit retailer. They just make clothes. What about Freshii? They’re a fast food chain. They’re not much different than Subway or McDonalds. But in both cases, these companies took a relatively uncreative, tired industry and they just tweaked it a little bit to make it more relevant for today’s consumer. That’s innovation.
My last point on this list, and probably the most important one, is that the most successful entrepreneurs are serial self-learners, and this, more than anything, is what makes an innovation economy. Innovators are people of curiosity who never stop learning. Take someone like Elon Musk or Richard Branson or Oprah Winfrey – these are people with vision and curiosity about the world. For young people, this means finding opportunities to learn outside of the traditional model of learning. If you’re not sure what you want to study at university or college, don’t just do it for the sake of it. Take a year off. Take two. Take ten! Just make sure that you’re having challenging experiences, and that you’re learning from these experiences. The best entrepreneurship comes from what is known as the “compounding of knowledge” – the idea that each bit of knowledge you achieve will lead to a bit more, which will in turn lead to a bit more, until it starts growing exponentially, in the same way that money in the bank gathers interest, and interest gathers on that interest, and so on and so on. Knowledge and skills, they work the same way. We need innovative plumbers and farmers and small business owners as much as we need innovative engineers and medical professionals.
So where does this leave us? Building an innovation economy isn’t something that’s going to happen overnight. And before we can really enjoy the rewards of an innovation economy, we need to build the human capacity to get us there. And that begins with young people. It begins with helping young people to understand that innovation is social, that it is both process and outcome oriented, that it is not industry specific, and that it requires an absolute commitment to every different kind of learning. If we can help the next generation to internalize some of these lessons, then maybe, just maybe, in the next several decades we’ll see the kind of actual innovation our economy really needs. If we can do this, then we can re-channel this crisis of creativity into one of the greatest economic opportunities our country has ever had, and it all begins with young people.