By Mandy D’Autremont
Google. Apple. Shopify. 3M. These companies tend to come to mind when we talk about ‘innovation’. We picture it as something that takes place in a computer lab, usually in the science or tech field. But, for most of Canada’s independent businesses, innovation does not necessarily mean developing a new app or wearable technology.
Canada’s small business owners, like you, think creatively to come up with solutions to everyday business problems and these steps are also a form of innovating. Innovation can include coming up with a new way of marketing your services, tweaking a product for a new market, or adopting a better tracking system to improve productivity. These innovations may involve using existing technologies in a new way or adopting a strategy that you have not applied before.
Limiting the definition of ‘innovation’ to new inventions exclude the vast majority of independent businesses, and unintentionally reinforces the notion that Canadian businesses are not innovative enough. As a result Canadian businesses typically don’t see themselves as part of the conversation on innovation since the definition used by government is often limited to the IT sector and is increasingly focused on the next big idea.
The Canadian Federation of Independent Business’s (CFIB) report, Beyond the Big Idea: Redefining and rethinking the innovation agenda, based on survey results of more than 6,000 small business owners, shows that innovation takes many forms for independent businesses and is not the exclusive domain of high-tech start-ups or cluster hubs.
In fact, over 80 per cent of our members implemented an innovative change within the past five years. Ninety per cent of those in manufacturing took on at least one type of innovative activity, as did 77 per cent of businesses in agriculture. For example, one of CFIB’s agri-business members explained some of the activities they implemented to innovate: “We are dairy farmers and we installed activity monitors on all the livestock. This tracks their activity so we can get them pregnant sooner to increase production. Also on this system it tracks their eating and rumination and temperature in order to watch their health better and easier. [It] allows us to treat them sooner and make better decisions in their treatment and ration changes.”
These survey findings may sound surprising because even though Canadian businesses are innovating, Canada usually fares poorly in rankings of OECD-type countries’ progress or work on innovation.
Clearly, traditional conversations around innovation aren’t telling the whole story. We need to reframe these conversations to better reflect what Canadian businesses are doing, and what can be done to support them.
The federal government has signalled a renewed focus on innovation through their Innovation Agenda. This can be an opportunity for the government to ensure small business owners are included in the conversation. Given small businesses make up the vast majority of Canada’s economy, it only makes sense that they take a central role in the Canadian innovation agenda.
However, creating an environment that encourages innovation shouldn’t mean that the government has to create costly new financing grants and programs. Instead, it would be more effective to address the barriers to innovation, such as skilled labour shortages, red tape and taxes. Reinstating the small business corporate tax reduction plan and easing – not increasing – the burden of payroll taxes, are examples of policies that would encourage more innovation in small business.
CFIB also recommends approaching new regulations and legislation with an ‘innovation lens’ that will consider the impact of new policies on a small business’s ability to innovate.
The ideal policy model that drives innovation will help small businesses hire more people, pay higher wages and be even more productive contributors to Canada’s economic growth. Another way for government to do that would be to implement an innovation deduction that would allow businesses to claim up to $100,000 per year on new equipment and technology similar to what was recently introduced in the United States.
Innovation is not a goal in and of itself, but rather a way for businesses to increase productivity and create jobs. And we know innovation is happening every day in small business, like yours. What we really need is to build an economic environment that supports all kinds of innovation.