SUMMARY REPORT

ECONOMIC DEVELOPMENT PROGRAMSchool of Environment, Enterprise and DevelopmentUniversity of WaterlooAuthor: Meg Ronson

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INTRODUCTION & EXECUTIVE SUMMARYIntroducing the final day of the Waterloo Innovation Summit, co-chair and acclaimed Canadian business journalist Amanda Lang offhandedly mentioned a “kind of euphoria you get from being around smart people.” Like so many insights shared throughout the Summit, this one hit a chord.

The Waterloo Innovation Summit — a two-day event discussing and celebrating the latest advances in tech, finance, automation and more — was a quintessential gathering of minds. The event, held September 13-15, 2017, brought together academic, business and government leaders from around the world for a single purpose: To share ideas on where human ingenuity will take us next.

This was an event that had carefully engineered, meaningful collisions that somehow felt effortless. Waterloo’s quantum titan Mike Lazaridis’s survey of the region’s innovation landscape flowed into an invigorating half-biography, half-rock show by ‘80s British electronica sensation Thomas Dolby. American cybersecurity expert Melissa Hathaway’s tough talk on global security and privacy action was followed by an audacious discussion about the future of finance and cryptocurrency with Kik founder Ted Livingston.

HACK VERB [HAK]“to clear (a road, path, etc.) by cutting away vines, trees, brush, or the like to modify (a computer program or electronic device) or write (a program) in a skillful or clever way to circumvent security and break into”

INNOVATION NOW: CANADA AND THE WORLDThe Waterloo Innovation Summit, in bringing together leaders in science, technology and research, creates a snapshot of what lies ahead for Canada and its evolving role in the global innovation ecosystem.

THEME 1: HACKING THE BALANCE

Every player has a different stake in the innovation space, and tensions rise as their goals and motivations blend and clash. The next phase of innovation requires us to think through and manage an appropriate balance so that everyone thrives.

CO-OPERATION AND COMPETITIONREGULATING AND ENABLINGRISK AND REWARD

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THEME 2: HACKING HUMAN SYSTEMS

Innovation comes from human ingenuity, and stems from a drive to solve human problems. Whether we’re looking at deep-learning artificial intelligence with start-up Maluuba or the future of sportswear with lululemon, it all comes together on the human side of innovation.

TALENTDIVERSITY

PEOPLE AND SOCIETY

CONCLUSIONS AND TAKEAWAYS: HACKING THE MOMENTDrawing from the themes and lessons learned from the summit, the final section provides high-level takeaways to inform investment, policy and action in Canada and around the world.

INVESTMENT

INVEST MORE

INVEST TOGETHER

INVEST WELL

POLICY

FIND PROBLEMS AND FIX THEM

FIND BARRIERS AND BREAK THEM

FIND TALENT AND KEEP IT

ACTION

ZERO IN ON GROWTH

PLAN FOR CHANGE

EMBRACE FAILURE

UNDERSTAND THE HUMAN

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INNOVATION NOW: CANADA AND THE WORLDThings are looking up for the Canadian economy. We are seeing renewed economic growth, helped along by increased household spending and a surge in exports, particularly in the energy sector. Canada tends to benefit from a relatively low dollar, encouraging exports and tourism from our neighbours to the south. But this is an old story. Canada has long relied on its proximity to the United States, its richness in natural resources, and its relatively well-funded public sector1 to keep it comfortable.

1 Alini, E. (2017, August 31). ‘Canadian economy smashes expectations with 4.5 per cent growth.’ Global News. https://globalnews.ca/news/3709379/canada-gdp-q2-2017/

Meanwhile, too much evidence still demonstrates that Canada’s action in innovation is lagging behind other world powers. Canada was ranked 13 of 16 peer countries and given a ‘D’ grade by the Conference Board for its low concentration of innovation activity. The culprits keeping Canada from the top of the list range from taxation to public policy to corporate culture. Lack of talent or access to risk capital are also named as challenges.2

2 Conference Board of Canada. (2013). International Ranking – Innovation. http://www.conferenceboard.ca/hcp/details/innovation.aspx

INTELLECTUAL PROPERTY3

3 Innovation, Science and Economic Development Canada. (2016). IP Canada Report 2016. https://www.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/h_wr04112.html

Between 2005 and 2014, global intellectual property rights applications by Canadians grew by

35%Canadians file roughly

5,000 PATENTSwithin Canada a year, but are increasingly filing patents abroad.

CANADIAN SPENDING ON RESEARCH AND DEVELOPMENT

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4 Statistics Canada. (2015). Spending on research and development, 2015 (intentions). http://www.statcan.gc.ca/daily-quotidien/150923/dq150923b-eng.htm

The most recent information on Canadian research and development spending have it at just over

30BILLION,down 0.7 per cent from the previous year.

Canada’s gross domestic expenditures on R&D as a percentage of gross domestic product was 1.69 in 2013, and it ranks OUT OF THE 67

COUNTRIES IN 5th

THIS METRIC.

The GERD (average gross domestic expenditure on research and development) to GDP (gross domestic product) ratio among OECD (Organisation for Economic Co-operative and Development) countries is 2.36, while the leaders are Israel, South Korea, and Japan with 4.21, 4.15, and 3.47, respectively.

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The truth is that Canada has so much potential lying in wait. We have all the right conditions for generating innovation, as outlined in the Canada 2020 Innovation Project report published in February of this year. (Click here to download the PDF.) We have strong intellectual property regulation and enforcement, excellent national infrastructure, a host of leading-edge academic and nonprofit institutions, and a well-educated population. In other words, we have all the inputs, but where are those outputs? Why are we not creating new technologies, new and lucrative creative goods and services? Why are we still predominantly exporting raw goods instead of pursuing innovation that adds value to and exports finished goods?

INNOVATION IN THE FEDERAL BUDGET 2017

The 2017 Federal budget was lauded for its bold commitments to advancing innovation in Canada5.

It included proposals such as:

5 Ireton, J. (2017, March 22). ‘Government offers incentives for innovation.’ CBC News. http://www.cbc.ca/news/canada/ottawa/federal-budget-2017-ottawa-1.4035656

The $50 million launch of a new procurement program called Innovation Solutions Canada

$7.8 million over two years for a new Global Talent Stream to help solve Canada’s talent shortage

More than $1.5 billion in new investments in the clean technology sector

More than $1.3 billion in new investments in support of technology entrepreneurs and innovation clusters

Canadian innovators and tech leaders are hopeful that this renewed injection of resources will help Canadian firms and entrepreneurs to grow, scale and reach international markets, powering Canada up the global innovation rankings.

The Waterloo Innovation Summit — in gathering together leaders in their craft, revolutionary start up founders, out-of-the-box thinkers, and industry disruptors — creates a compelling and exciting snapshot of the future.

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WATERLOO INNOVATION SUMMIT 2017 MAJOR THEMES

HACKING THE BALANCE

Let’s be honest — we’re not always ready for the disruptions our world throws at us. The idea that a system we rely on could become obsolete in six months can make us a little...tense. Participants of the Summit demonstrated steady hands and steely resolve as they discussed striking the right balance in forging ahead while staying grounded.

CO-OPERATION AND COMPETITION

The business side of innovation was a natural focal point of this year’s discussions. Policy developers, CEOs and budding entrepreneurs alike all want to know how to ensure Canadian businesses remain competitive. Too often, we find our most promising businesses moving to other countries in pursuit of lower taxes, higher wages and fewer regulatory restrictions.

In a strange paradox, it turns out that co-operation is at the heart of competitiveness. Mary-Ellen Anderson of Microsoft described its acquisition of Canadian start up Maluuba as a “package deal.” Maluuba is conducting ongoing research and development in the field of machine-learning, and boasts having built an algorithm that assisted a machine in achieving the highest possible score in the Atari game Ms. Pac-Man. (Read the paper here.) In buying Maluuba, Microsoft also committed to building a specialized hub in Montreal, recognizing that Maluuba’s position within Canada’s burgeoning artificial intelligence industry made it an asset above and beyond its product. Microsoft considered Maluuba’s established community and connections key components to its success. They also notably avoided a command-and-control acquisition strategy, so common in the past. The relationship was chiefly one of co-operation, complementary capacities and mutual benefit.

“Co-op hacked the university model: we broke down barriers between the campus and the economy.”

FERIDUN HAMDULLAHPUR PRESIDENT AND VICE-CHANCELLOR OF THE UNIVERSITY OF WATERLOO

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> REGULATING AND ENABLING

After the crash of 2008, the world and the Canadian economy took a heavy hit. However, many praised Canada’s more conservative and regulated banking sector as having granted us a gentler shock and a shorter rebound than in the United States. However, when it comes to innovation, to what extent is our regulatory environment preventing Canadian companies and innovators from hacking the future?

Canadian entrepreneur and Kik founder Ted Livingston is at the head of the next disruption in finance with the recent launch of their cryptocurrency “kin.” What we are seeing is the new stage of the global financial system, in which currencies are not tied to a national market but are instead dependent on direct business-to-business activity. This kind of a shift would make even the boldest regulators nervous. However, while timidity might buy us time, it won’t buy us a place among the leaders in global finance. If we hesitate to adapt to the shift, “we are going to miss the boat,” warns Livingston. “Again.”

Of course, the balance between regulating and enabling business activity is a delicate one to strike. While Canada’s governments have long been accused of failing to deliver on innovation promises, Iain Stewart of the National Research Council assures us of a new, deliberate and cross-departmental commitment to “walking the walk” of innovation.

“This isn’t a technology change, this is a culture change.”

ALEX BENAYCHIEF INNOVATION OFFICER OF THE GOVERNMENT OF CANADA

Acknowledging the natural tension between the speed of the private sector and the generally slower, process-dependent public sector, Amy Swenson of the Government of Ontario spoke of intentionally streamlining their hiring and procurement processes. She and fellow panelist Alex Benay of the Government of Canada also discussed leveraging private sector developments to digitally connect citizens with government. The opportunities for greater transparency, streamlined service delivery and more abound in the rich world of government technology.

The complexity of government operations can and will at times impede innovation, but Summit speakers identified an important shift in thinking involving breaking down barriers and facilitating co-operation within and beyond government departments. This new way of thinking could be the first of many steps that sees a new, innovative way to govern.

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> RISK AND REWARD

Innovation is a world of risk and uncertainty. Watching economic reports can sometimes feel like watching weather reports during hurricane season. Canadian businesses are notoriously conservative in their spending on research and development, while governments are slow to change, bogged down as they often are by decades of process. “Act like a startup” is the new war cry of our innovative age, but it is much easier said than done when companies and governments have much to lose.

As the Summit’s speakers identified, however, governments and companies don’t have much choice. The pace of technological change is affecting not only how we do business, but how we live, work and play. Failure to take risks not only means missing out on the rewards, but going the way of the dinosaur.

The key to effective innovation is identifying which risks are the right ones to take. Speakers were adamant that successful innovation needs to be useful, and that innovating for the sake of innovation is misguided at best. As long as innovation is done in pursuit of solving a real and well-understood problem, it is sure to be on the right track.

At the same time, there are some areas in which taking too many risks is not the answer. Cybersecurity expert Melissa Hathaway’s tone was ominous as she described the sometimes reckless race of innovation. We have become tremendously efficient at sharing, exchanging and storing information, but Hathaway is dismayed to find how little we focus on securing that information.

In a future in which everything from our thermostat to our car is integrated, the rewards in terms of efficiency, organization and time are evident. But the risks, if unacknowledged and unmanaged, could be catastrophic to consumers, businesses and nations alike. The more connected our consumer devices are, the more attack vectors we invite into our personal data, risking our privacy and opening us up to identity theft. Businesses risk losing valuable trade secrets and revenue in the event of security breaches, not to mention the reputation fallout from unintentionally leaking customer information. Nations that fail to guard against enemy cyberattacks are putting the safety of their citizens on the line.

Jigsaw’s Jared Cohen introduced the idea of “digital healthcare” early in the Summit, and the concept of keeping up with healthy attitudes and behaviours when working and acting in digital space. It is the responsibility of businesses to teach their employees and governments to teach their citizens how to stay digitally healthy. Speakers acknowledged a need to make digital healthcare an integral part of innovation in tech because the “bad guys,” according to Hathaway, will always be there to exploit security weaknesses.

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HACKING HUMAN SYSTEMS

In today’s technology, it is sometimes hard to discern where and when the technology ends and the human begins. The Summit’s speakers each addressed this delicate balance in their own voices — some uneasy, some excited — but all passionately attached to the humanity that lies behind every disruptive step.

“We’re moving from a chapter of asking our machines to perform tasks for us to having a dynamic relationship with our machines where they are our partner.”

JARED COHENCEO OF JIGSAW

TALENT

Canada boasts the most highly educated population in the world6 and routinely produces leaders in innovation. And yet, our businesses are hard-pressed to fill positions. It will only get harder as our most experienced workers, — the baby boomers — begin retiring en masse. There are clearly some missing links when it comes to attracting and retaining the next big leaders and thinkers who will drive our nation into the future.

6 Sherlock, T. (2015, November 24). ‘Canadians among world’s most educated: OECD’. Vancouver Sun. http://vancouversun.com/news/local-news/canadians-among-worlds-most-educated-oecd

Successful Canadian scale-ups Axonify and Stackadapt spoke of growth and talent in the same breath, and credited building a supportive culture for their talent as central to their success. When a company has grown past its startup phase, it begins to rely heavily on the decisions within the team rather than a single leader, affirmed Axonify CEO Carol Leaman. Stackadapt COO Vitaly Pecherskiy, meanwhile, sheepishly joked that getting the requisite startup ping pong table didn’t solve any of their early problems, but it did indicate to him that the company’s culture should be its own, rather than try to mimic the culture of others.

When considering the longer term, attracting and retaining talent in Canada requires dedication and focus. Mike Lazaridis, formerly of BlackBerry and now among the world’s most respected quantum experts, described establishing a technology ecosystem almost from the ground up in the Waterloo Region. It involved a deep, long-term commitment from business, academic and government stakeholders to create the necessary conditions for Canada’s own ‘Quantum Valley.’ It is this density of specialized finance, technology and knowledge that attracts and retains the best, brightest and most ambitious people in the field.

“This event truly is a world class-affair, and it’s no “coincidence” that it’s taking place right here in Waterloo. Thanks to the University of Waterloo, Communitech and so many others that work together, this region is internationally recognized as a hotbed of innovation.”

BARDISH CHAGGER MINISTER OF SMALL BUSINESS AND TOURISM

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DIVERSITY

Canada is not shy when it comes to celebrating its diversity. While some countries are reeling with pushbacks on immigration, gender equity and cultural inclusion, Canada has been forging ahead with its plans to ensure equal opportunity for people of all races, religions, genders and abilities.

Naturally, the Summit confirmed diversity as a cornerstone of innovation. Topics ranging from quantum technology to electronic synthesizers to cyborg anthropology seemed to align perfectly in their messaging. The breadth of the Summit’s subject matter thereby proved that innovation relies on unlikely collisions. Rocking out to a special performance of She Blinded Me with Science by Thomas Dolby right after considering the mind-bending disruptive potential of quantum computing was not only fitting, but meaningful.

But it begs the question: If Canada has for so long prided itself on its inclusivity and welcome embrace of other cultures, why are we not leading the charge when it comes to innovation? Are our boardrooms, councils and parliaments still woefully homogenous? Are our women and racialized peoples still earning less than white men? Are First Nations voices still struggling to be heard? These are tough questions Canada is still asking itself, but taking charge of the answers is absolutely imperative to harnessing that diversity into the future.

Innovation also requires an interdisciplinary approach to problem-solving and decision-making, and embracing the diversity of available talent. This is the secret to innovation that startup incubators have already discovered. Inviting all kinds of new businesses with unique expertise into the same space creates a collision-friendly environment and fosters out-of-the-box reasoning. The same also goes for established firms: both Cindy Fagen of SAP Labs and Philip Poulidis of BlackBerry agreed that diversity of all kinds helped their corporate cultures respond and adapt to disruption. Rather than only seeking talent among the alumni of business schools, they stressed the need to keep hiring policies and processes dynamic and open-minded.

PEOPLE AND SOCIETY

By now, we are all familiar with the way innovation can disrupt entire industries and subsequently set the course of history. Summit speakers waxed historical on the industrial revolution and the harnessing of fossil fuels, but they also had their eyes on the future, suggesting our next big leaps.

“We were kind of unconstrained by all...we didn’t know.”

JB STRAUBELCHIEF TECHNICAL OFFICER OF TESLA

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For Lazaridis, quantum computing is the way of the future. JB Straubel of Tesla has his sights on the mass production of lithium batteries and solar energy. And in the words of Jared Cohen, “Data is the new oil.”

No matter where they set their sights, however, our leaders of innovation are propelled forward not just by the prospect of disrupting the world, but doing it for the better. Cohen spoke of endangered and marginalized groups finding safety and empowerment through their smartphones. Amber Case dreamt of a world where technology didn’t interrupt our daily lives, but instead enriched them. Straubel anticipated an inevitable transition to sustainable energy, and he’s working on making it happen faster. The world’s innovators may be working with technology and ideas that are not yet mainstream, but they’re cognizant that disruption happens no matter what. They are prepared to lead it in the right direction: not to undermine the human element, but improve it.

The fear of machines replacing humans recedes as we now recognize the extent to which artificial intelligence can expand our own intelligence and automation can propel human development to inconceivable new heights.

“We have to ask, what are we optimizing for? Is it going to free up people’s time, or will we just have to sit there and monitor new systems?”

AMBER CASECYBORG ANTHROPOLOGIST OF HARVARD UNIVERSITY

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CONCLUSIONS: HACKING THE MOMENTThe Waterloo Innovation Summit is an opportunity to capture insights into what’s coming next, and what we can do about it — or better still, what we can do to help.

“We’ve all been in rooms where creativity is the norm, where ideas are the currency, and we know how those rooms make us feel. They make us smarter, better, they make us inspired. The real point though, is to engage that energy outside of that room.”

AMANDA LANGCANADIAN BUSINESS JOURNALIST

INVESTMENT

It will take time, effort and courage, but Canada must make a stronger commitment to fostering innovation within its borders rather than waiting to import it from abroad.

Invest more. Canadian businesses must dedicate more internal capital to research and development. This includes investing not only in improving outward-facing offerings, but inward-facing processes and practices.

Invest together. Identifying and leveraging partnerships with firms with adjacent needs allows businesses to pool investment dollars toward solving mutual problems. Corporate sponsorships of incubators, accelerators, and innovation-based events and think tanks facilitate mutually beneficial relationships with long-lasting rewards.

Invest well. Both public and private investment in innovation requires patience, but also focus. Rather than offering birdshot funding to entrepreneurs and innovators, funding should be focused and targeted at recognized regions and sectors that already demonstrate promising growth.

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POLICY

Every sector has its part to play in hacking the future. Innovation must become an integral part of our agendas to get us from “talking the talk” to “walking the walk.”

Find problems and fix them. Every single speaker identified the drive to problem-solve as the heart of advancing innovation. Policy must encourage vigilance and dedication when it comes to identifying and solving problems at all levels of operation.

Find barriers and break them. A frequent mistake in policy and practice is the tendency to silo innovation to a certain department or team. To truly advance innovation within an institution or culture, policy must emphasize embedding innovative thought and behaviour everywhere in the organization.

Find talent, and keep it. Canadians are some of the most educated people in the world, but we seem reluctant to harness that knowledge. In order to attract and retain world-class talent, Canada and its businesses must continue to push for more diversity, tolerance and inclusion, and commit to recognizing, nurturing and rewarding innovative talent.

ACTION

The Waterloo Innovation Summit’s theme — hacking the future — clearly points to the need to stay ahead of the next wave of disruption and change.

Zero in on growth. We cannot afford to sit back in the face of the opportunities and risks that innovation creates. The Waterloo Innovation Summit identified broad sectors that are positioned for growth but require more attention: consumer technology, big data, open source, privacy and security, sustainable energy and battery technology, robotics and automation, artificial intelligence, and quantum computing.

Plan for change. Remaining agile in the disruptive age means planning for disruption and uncertainty. Some of the more sobering words from Cohen, Case and Hathaway highlighted the dangerous side of the breakneck speed of innovation. Planning for the unknown may seem like an oxymoron, but remaining poised for change and uncertainty combined with a willingness to evolve is the essence of survival.

Embrace failure. Speakers repeatedly cited the importance of embracing and accepting failure in their day- to-day work. Tolerance of failure encourages taking the risks so necessary in innovation.

Understand the human. The age of big data and widespread access to technology means we can harness amounts of information we could only have dreamed of in the past. We now have the potential to understand human behaviour more deeply than ever, which will allow us to innovate more efficiently and intelligently.