What Id like to do today is a bit of an experiment.
Rather than talking about just one idea of innovation in an innovative institution, Id like to share with you some observations on how certain corporations in the private sector have managed to become innovative organizations; that is, organizations that dont just come up with one good idea or two good ideas, but seem to come up with series of innovations in their products and services, as well as how they govern themselves, not just for years but for decades.
Id like to try to identify two or three themes that arise from a study of those different organizations and then try to apply some of those themes to the national level, being aware of the fact it is difficult and sometimes dangerous to try and apply private sector concepts to the public sector.
Nevertheless, Id like to take some of these themes and see whether they help us understand a little bit more about ways of becoming more innovative in governing ourselves, as well as seeing if there are ways we can become more innovative as a country.
To talk about the themes, [lets] look at corporations globally that have been innovators for the same period of time.
There are [the] product companies, such as General Electric, Hewlett-Packard, 3M. In service institutions there is investment banks, such as Goldman Sachs that have continued to innovate and play a leadership role in their industry decade after decade.
In consulting organizations there would be the Boston Consulting firm, MacKenzie and Company. In you look at Canadian organizations, there would be Bombardier, Nortel and many other organizations.
Theyre very different in terms of where theyre located, in terms of the style of their management and in terms of the products they produce. But there are two or three themes that seem to run across them.
The first is an absolute commitment to going out and attracting the very best people, working hard to develop those people to the best of their potential and, once those people are developed, to actually retain them.
In these organizations this isnt just something delegated to human resources, this is one of the key responsibilities for top management. So, theyll go out, not only to business schools, technical schools, industries, but actually search out the very best people who will comprise the leadership base and the innovators of tomorrow in that organization.
Once theyve actually found those people, theyll work to develop them, not just through formal training programs, [but] theyll institute ways of coaching and providing feedback in a clear fashion often tough feedback. Even more importantly, theyll work at providing these people with opportunities early on so they can develop as quickly as their capabilities will allow them to.
Youll find in many of these organizations people reaching high levels of responsibility very early in their career.
At General Electric, Jack Welch became Chairman of a close to $100-billion corporation in his early 40s and many of his division Presidents are in their early 30s.
Because in these organizations if they find creativity, if they find an innovative instinct, they are not afraid to give those people responsibilities to show those creative capabilities early on.
Once they have these people they will work hard to make sure that the people who are most valuable to the organization understand that; to make sure they are receiving the kind of rewards that are appropriate, both monetary rewards, but also rewards in terms of feeling part of the organization and being involved in the decision-making and being made to feel that they do represent the future of that organization.
And thats where many of these top organizations will distinguish themselves from others, because many companies can attract good people. Sometimes they can even develop them, but to attract and develop and retain them is whats necessary to make sure that an organization has the cadre of people they need to continue to innovate and grow and prosper year after year.
Thats the first theme and that would cut across all those companies I mentioned.
But having a capable bunch of individuals who are bright, are ambitious, [and] are creative is necessary, but its far from being sufficient.
The second theme, is that these organizations succeed in moulding these people into a team to ensure that whatever their background, wherever they come from, theyre infused with a shared sense of values; that they have some sense of identity that runs across the entire organization and that they have a set aspirations and goals and a vision that actually align them towards the same goals and the same aspirations.
And thats important, because the more talented and creative an individual it is the more difficult it may be at times to get them to feel part of a larger team.
How do they do that? First and foremost, as soon as some of this top talent is recruited an organization or corporation, such as a General Electric, or a MacKenzie or a Goldman Sachs will encourage these people to be brought together into one area.
GE, for example, has a training centre where it brings its top management from around the world to spend time together learning about how GE values have been set up, to share experiences about how GE was formed, to share war stories and to have a chance to meet peers from around the world.
It would probably much less expensive for each country to have its own training centre, but for GE its important that these people can come together when they come into the organization, when theyre at their impressionable period and get to meet people who will be friends and peers in the following years and to develop this sense of an identity with an organization thats larger than their particular business unit or larger than their particular function.
And that sense of belonging to something larger is reinforced by managers having the opportunity through their careers to go to different geographies, go to different functions and go to different businesses, so they can they can have the experience of the larger organization and they can build a sense of loyalty that goes beyond one particular business unit.
At the same time, these organizations count heavily upon certain individuals who represent in a sense the values, or the soul, of that organization to provide not only the sense of the vision but the sense of excitement that comes from being part of that vision.
Here Id like provide a slight variation from what [one] would see in many texts, where many authors would claim that role is played fundamentally by the CEO; you know, you need to have a dynamic, inspirational leader. And thats probably true, but I would argue that the sense of belonging to a large organization and the sense of living that vision doesnt come from the CEO, it comes from the hundreds of people two or three levels down who believe in that vision and who live that vision and communicate that vision.
It comes from the middle level and upper middle level managers who actually feel that, yes, this organization is doing something valuable, important and its actually an exciting place to be.
And these people who are the bridge builders within an organization, or the ambassadors within an organization, are extremely important because theyre the ones who will explain to someone coming into the company that it isnt just this function, or it isnt just this business, but its something larger than that.
And thats the key component of the second theme, which is to take the very best and brightest individuals you can find and build them into an innovative, creative team with a shared sense of vision.
The third theme is a little bit of an antidote to the second theme.
The third theme is, that at the same time one builds a sense of pride and a sense of belonging in a large organization, its incredibly important to instill a sense of dissatisfaction with the status quo.
A sense that although were very proud of what were doing now were not satisfied and we want to do better in the future and a sense of the importance of diversity of points of view, commitment to experimentation, a belief in the necessity to challenge conventional wisdom, so that these organizations arent just good now but that continue to be even better in the future.
And thats absolutely critical, because the ironic fact is very successful organizations who have been innovative in the past if theyre not careful become less innovative in the future, because the very things that made them successful and makes them proud may make them inflexible, unless open to new ideas coming from outside.
So, this third theme is extremely important; [because it] says, were doing well now, but were not doing well enough. What is it we can being doing better in the future and what are the ideas that can be coming from new young managers that can change the way were doing things today?
Those are three themes are that simply to the point of being almost simplistic, but I would argue that those are conditions that are necessary in an organization if they wish to be innovators not for years but for decades.
Now comes the experiment. Thats true in the private sector, [but] is there any relevance to a larger, more complex organization such as a national government, or even a nation itself?
Ill let you decide that after I finish, but let me try to apply those three themes to Canada to see how well were doing against those measures of innovation and to see what issues they raise for certain elements of public policy.
If we take the first theme, that of going out and attracting and developing and retaining the very bets people, I would say that historically Canada has done itself proud.
We have managed to over the years attract bright, diverse, committed people from around the globe. We have had tremendous success with our immigration policies and, in fact, its just one measure, but in the most recent census recent immigrants coming into Canada had a higher percentage of university degrees than the Canadian-born population.
So, I think in terms of us being able to go out and attract a diverse and very capable group weve done extremely well.
I would also say on the part of developing, historically, weve also done very well. If we look at our publicly-funded school system and university system its allowed us to have one of the most educated populations in Canada, where education is based on merit and based on academic potential, rather than based on access to financing.
However, while historically weve done well, there are a number of issues.
One has to wonder whether the major increases in tuition fees over the last several years may not result in education at the university level becoming less accessible based on academic merit and more an issue of financial means.
One has to also wonder whether the move to full-cost tuition for foreign students, while it seemed to make sense within the reality of our fiscal challenges, doesnt mean that were closing off access to some of the very best and brightest students from overseas who would have in the past come here to share their ideas with us and quite often stay in Canada afterwards.
However, I guess my look at attracting and developing and retaining the best people, the issue that would concern me the most right now is our ability to retain.
If we look at the last several years we have had a net outflow of what wed call knowledge industry employees to the United States in order of several thousand a year.
Between 1990 and 1994, we had a net loss of over 20,000 knowledge workers to the United States. On average, every year we suffered a net loss to the United States of over 600 scientists and engineers, 300 teachers and professors, 1,100 health care professionals and almost 2,000 managers.
We know that Microsoft is now one of the major recruiters at the University of Waterloo. Corporations are also actively recruiting Canadian companies, particularly in information technology. Investment banks, consulting firms and New York-based law firms have increasingly started to target graduates from our best universities. They dont necessarily want that many students. They simply want our best students. And in many cases with the salaries they are willing to pay they can get them.
Just one piece of evidence: at the Richard Ivey School of Business students graduating from the MBA program with positions in Canadian companies earned a base salary of about $60,000 a year, which is higher than the average income for a family in Canada; so [thats] not bad for a first-year MBA grad.
However, those Western graduates who went to positions in the United States earned on average salaries of over $100,000 Canadian per year. That is somewhere between 60 and 80 per cent more than their peers in Canadian positions.
So, theres a challenge. It doesnt mean we should be offering the same salaries. It doesnt mean we should be moving to the same tax system and all the implications that has for our social programs.
It means we have to offer a package to people here that makes it at least as attractive to stay in Canada, or come to Canada, as it is to go to [the] United States. And that means having superior social programs; that means having a universal medicare system [and] it means reinforcing the things that we value.
But, it also means at the same time doing that within a fiscal system that allows us to be competitive with the wage scale and the tax system in the United States. I would guess, based on anecdotal evidence, that people would be willing to accept a 20 or even a 30 per cent difference in salaries or after-tax income to preserve what we have here in Canada.
The challenge we have is: when it becomes 80 or 100 per cent, weve passed the break point.
The point I would leave is that we do have a challenge on the issue of the brain drain to the United States which we cant ignore. We need to think about how we collectively address [it] over the next several years.
How do we do on the second theme, which is the ability to take a group of individuals and to build into a team or an organization with a shared sense of values and a shared vision for the future?
Historically, Canadas done extremely well. We have a shared set of values in terms of tolerance of different races and cultures, a belief in meritocracy, a belief in an active support system in our social programs, which is highly consistent from coast to coast, including Quebec.
While in absolute terms were doing well, the trend is perhaps not that positive. We have to ask ourselves whether were doing enough to bring young people from Canada together at an impressionable age to share experiences and to actually get to understand this great country?
One of the down sides of having an excellent system of regional universities is that people like myself would go to university in a province where they were born and, if it wasnt for an exchange program to do with international development which brought me to Montreal, I would have not have been east of Saskatchewan before the age of 23.
And if people dont know the country they cant understand and they cant love the country. And they need to have that experience when theyre young.
So that would be one area, where compared to first-rate innovate organizations, perhaps we have an opportunity to do better.
Also, where are our shared institutions to communicate the ideas, values and shared interests?
Can we be doing more to share ideas and circulation of people between the private and public sector? And even more importantly between provincial and federal governments, so theres a greater understanding and a greater sense of a shared commitment to helping citizens between the federal and the provincial bureaucracies based on actually knowing one another even better than they do today.
Do we have national moral, intellectual and political leaders who transcend regional or particularist interests and communicate a clear sense of who we are, what we can and what we should be?
And lastly and most importantly do we have in the 30-and-40-year-olds a generation of bridge builders and ambassadors; people who really have experienced Canada, who care about Canada and can communicate that passion clearly and effectively to their fellow Canadians?
I would suggest that to be truly passionate you have to know the country and its many regions and its two national languages.
We know theres a challenge in Quebec, where in the school system the Canadian reality is not very effectively communicated. We have underlined many times the importance of Quebeckers [to] get to know the rest of this great country.
Its also important that Canadians outside of Quebec actually get to know Quebec and not to just to come in before every referendum and say, we love you, but maybe to come in at other times and spend more time getting to know that very distinct part of Canada.
I think on this second issue of developing a shared sense of purpose and an exciting shared vision for the future we have historically done very well, but I would suggest we have much more to do in the future.
On the third theme, Ill be quicker, because there the perspective would be fairly positive.
This third theme is the ability to encourage diversity and experimentation, while expressing a dissatisfaction with the status quo. And in terms of expressing a dissatisfaction with the status quo, we are world leaders. I would say there, weve done extremely well.
In fact, the multicultural diversity we have, as well as having a federal system of government that through its vary nature encourages diversity; where you have a national political structure with 10 provincial pilots to experiment with new social programs, is excellent.
While on the third point Id suggest there may be opportunities for us to do even better.
One of the possible down sides of us having engaged in a reinforcing of the Constitution with its repatriation and creation of the Charter of Rights and Freedoms is that while at the same time it helped define clearly the role of citizens, it tended to provide more power to the courts over the power of the Legislature. [This], in fact, be limiting our ability to come up with innovative social programs to reply to new social and economic conditions.
One question I would leave you.
Could we be doing more to actually have standard measures of performance across social programs, rather than standard principles for programs in education or health care or elsewhere, so that we could actually have citizens in every part of the country know in an objective way how well different provincial governments are performing to allow us to actually compare and contrast performance in different programs and, by so doing, having the national government help to share in the dissemination of best practices against objective measures of performance.