OECD Ministerial Meeting on the Digital Economy: Panel on Stimulating Digital Innovation Across the Economy

Speech

Speaking Points

The Honourable Navdeep Bains, PC, MP
Minister of Innovation, Science and Economic Development

Cancún, Mexico

June 22, 2016

Check Against Delivery


Panel discussion question 1: What policy approaches can stimulate ICT adoption and use more effectively? How can complementary investments in skills and organizational change be encouraged?

Good afternoon.

It's an honour to be here at the OECD Ministerial Meeting on the Digital Economy. I would first of all like to congratulate Mexico on hosting this valuable event in beautiful Cancún. Thank you also to the OECD [Organisation for Economic Co-operation and Development] for inviting me to participate in today's panel discussion.

Innovation

When we talk about stimulating digital innovation, we need to think about what innovation actually means. From my perspective, “innovation” is a way of seeing the world. It's about looking at how things are done today and imagining a better solution—how can something be done smarter, faster, better? In what ways can we improve our quality of life?

Innovation can be revolutionary; it can transform an entire industry or create new jobs and markets where none existed before. Innovation can also be evolutionary—small, constant changes that ensure our survival. As we enter a new industrial age, technology continues to change all aspects of our lives. It disrupts entire industries, but it also pushes us to make incremental, constant investments in our daily lives and in our ways of doing business.

It is in this context—innovation and change—that I am leading the development of an innovation agenda for Canada. And it is therefore so timely to be here and have this opportunity to exchange ideas and best practices with you on how we can better stimulate digital innovation.

Digital adoption

We know that technology supports innovation and makes us more productive. And we know this is true for every size of firm, in every sector. But we also know that not every firm is taking full advantage of the benefits of new technology.

SME adoption challenges

In Canada, we know that smaller firms in particular lag in technology adoption. This trend runs counter to the innovation- and productivity-enhancing benefits of technology adoption. So the question is—why?

Our small businesses consistently identify three main barriers to adoption: 

  • First, a lack of awareness. Smaller businesses often don't know what technologies are available and don't know where to get good information.
  • Second, cost. There is a sense that costs will be high. Also, it's not always easy for firms to assess the return on investment.
  • Third, a lack of time and skills. Business owners are busy with day-to-day operations, and smaller businesses in particular often don't have dedicated IT people that can implement technology solutions.

These barriers are not unique to Canada; we find similar data across OECD countries and across all sectors of the economy.

Policy support

To stimulate the adoption of digital technologies, we need policies that tackle these three issues.

Awareness

Raising awareness of the benefits of technology adoption is an area where government can help. In Canada we've developed learning resources related to the actual technology adoption experiences of small businesses. Advisory services in various government agencies can play a role in raising awareness of the benefits of technology solutions by providing information on real-use cases.

The Business Development Bank of Canada—or BDC for short—offers expert consulting services to guide small businesses through the process of identifying and purchasing technology solutions that meet their needs. From 2011 to 2013, the BDC undertook about 900 ICT [information and communications technologies] assessments and had over 300 technology consulting mandates.

Government can also encourage and support private sector–led efforts to raise awareness. One such example is the Digital Adoption Compass, a Canadian virtual community of practice that helps small businesses gain the knowledge they need to adopt technologies.  

Cost

In terms of cost, policies can be put in place to help firms address risks. This can include programs that provide access to capital to purchase technologies. In Canada, the BDC issued nearly 1,800 technology adoption loans from 2011 to 2013.

The good news is that the ICT sector is addressing risks in other ways, by lowering the upfront costs and investment required of firms. Pay-for-use models, such as software as a service and cloud services, and the proliferation of apps are making technology adoption easier and more affordable. In many cases, technology adoption doesn't require large capital investments anymore.

For government, that forces important questions. Have our policies and supports adapted to these trends? For example, do our financing programs support service-based technology purchases, or only capital investments in huge servers? As the cost of and need for capital investment in ICTs lowers, we need to look at whether we should re-examine ICT investment as a global measure of success.

Skills and time

For a firm to successfully implement a technology, it requires people with both technical and soft skills. Research shows that one of the biggest challenges for employers is finding people with the right blend of business, interpersonal and digital skills. It isn't enough to buy software or install a new app; a business must integrate the technology into its business strategies, and employees have to know how to use the new systems to their full potential.

In terms of policies, evidence shows that having someone work with a business for more than just a few weeks is key to fully integrating new technology into a business. There is no one-size-fits-all approach to integrating new technology, but consultants, ongoing advisory services, embedded interns, train the trainer sessions, etc., are all useful.   

In Canada, we have a unique program, the Youth Internship Program, which does two things. It provides funding for not-for-profit organizations to hire interns for digital jobs, and it gives interns an opportunity to apply digital skills in a real-world situation. Results include improved online marketing and social media campaigns and better use of online learning technologies—all fuelled by technology and effective technology adoption. About 18,500 youth have participated in the program since 2003, with nearly all participants (98%) reporting that their experience made them more employable.

Conclusion

As we look for ways in which our policies can encourage businesses to adopt technologies, we need to keep in mind why businesses aren't adopting them already and work together to find innovative solutions that address these challenges.


Panel discussion question 2: How can digital innovation policies better take into account the heterogeneity of sectors, organizations, governments and individuals?

Businesses—whether they're retailers, manufacturers or farmers—all face the same overarching challenges in adopting technologies. As previously mentioned, these common barriers are cost, a lack of awareness of the benefits and a lack of skills and organizational capacity.

The large uptake of BDC's Smart Tech solutions by businesses across sectors—including service, retail and manufacturing—is evidence that the adoption challenges and the supports needed are consistent across sectors, even though the sectors themselves are very different from each other.

If you look at how firms do business, this makes a lot of sense. All firms have similar internal operations—ways of doing business they can streamline and make more efficient through the adoption of technologies. All firms interact with customers. Technologies can help them interact better with their clients. Adopting technologies can help all firms do business smarter, faster and better—regardless of what those businesses are.

Our policies need to be flexible and broad enough to help a wide variety of businesses innovate by adopting whichever technologies best suit their needs.

Digital inclusion

Another challenge ahead of us will be to implement more holistic policy approaches to address gaps within the digital economy. In addition to increasing the rate of digital adoption by businesses, there is also room to improve the level of digital inclusion for individuals. While there is widespread access to and use of the Internet across the OECD, the intensity of Internet usage continues to vary across the OECD and among social groups.

In Canada, while inconsistent access to broadband is one factor, the key reasons for non-use of the Internet are affordability, interest, lack of skills, age, disability and health. These are challenges found across the OECD. In order to bridge digital divides, we need policies designed to further extend broadband coverage and address accessibility issues.

Canadian policy supports

As you may know, Canada's large land mass brings some logistical challenges to extending broadband to isolated and remote communities. This year, we committed $500 million toward a new broadband program to extend and enhance service to rural and remote communities, building on the work of the Connecting Canadians Program.

Accessibility is also an issue that we are confronting both in urban centres and in remote communities across the country. Our Computers for Schools program refurbishes computer equipment for use by not-for-profit organizations that support low-income Canadians, seniors, Indigenous communities and new Canadians. Through collaborative partnerships, these programs are ensuring that Canada is inclusive in engaging Canadians' participation in the digital economy.

Conclusion

The Government of Canada is committed to taking action that will strengthen the links between key partners in the innovation ecosystem. Greater cohesion among actors will further stimulate digital innovation and, ultimately, increase global productivity and prosperity.

If we work together, this kind of productivity and inclusive prosperity is within our reach.

Thank you all for your time.

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