Dr Douglas Barber

Competence in knowledge-based commerce

Dr H Douglas Barber

Innovation is what humans do to find new ways within their circumstances to maintain or improve their lives. To prosper sustainably, people need to be productive, healthy, committed and engaged for the good of their community and the world beyond. Canada, with 6.2% of the world's land mass and associated natural resources, is a big country. It is number two in the world. With 2% of the world's economy we rank 13th in the 267 nations. We act in the influential forums of the top economies of the world such as the G8. We think of ourselves as a significant player economically, politically and intellectually.

In the knowledge-based economy, where knowledgeable people are the key asset, Canada is a small player. We have only 0.5% of the world's people. We rank 35th in the nations of the world. It is a very different challenge to achieve prosperity in the world economy with only 0.5% of its resources. Here we must prepare our people to create and trade value based on their knowledge. For Canada, with its unique economic history, the irreversible move towards the knowledge-based economy presents challenges to our perception of reality and therefore to our ability to innovate and sustain prosperity.

Canada's prosperity in the wealth of nations has been declining in terms of the purchasing power parity (PPP) GDP per capita. Between 2002 and 2003, we slipped from 9th to 13th. The nations who moved ahead of us were Denmark, Austria and Iceland. Indeed, except for the US, all those ahead of us are small nations that, on average, export 33% of their GDP and import 32%. The challenge for Canada is not size. The challenge is exacerbated by Canada's natural resource abundance, which ensures a strong base economy but also masks progress into the knowledge-based economy.

All small developed countries face the challenge of exporting to be prosperous. An important aspect of that challenge in a developed economy is that typically 70% of the economy and more than 70% of the workforce participate only in the un-traded or internal activities of the nation. This, coupled with high natural resource exports, makes it difficult in Canada to value appropriately all the trading activities and to recognize that the productivity of every person affects the international competitive capability of the nation.

These factors have increasingly been a concern of Canadian governments and public investments in R&D have been substantially increased in the belief that this would result in increased commerce and prosperity.

When R&D is used as an innovation surrogate, it gives rise to a narrow concept of innovation which is based on science and technology. However, because increasing prosperity is directly dependent on the private sector commerce — where R&D investments are primarily made under the commercial disciplines of revenue and profit expectations — the living definition of innovation is broadened to whatever contributes to successful commerce.

In Canada, atypically, close to 50% of R&D investment is public in university and government research. In the developed world, this is more typically about 30%. In a study of all industries in Canada that report R&D investments, Dr Jeffrey Crelinsten and I found that Canada's knowledge-based enterprises are small global players exporting more than 90% of their products and services. They have a weak voice at home and they do not see their future in Canada.

In that study we interviewed 60 CEO's of the R&D intensive enterprises. We learned that in Canada the culture of science and technology is strong but the culture of commerce is weak and the public support for commerce is low. The US was identified as being strongest in commerce in the world. This is confirmed by the World Economic Forum. The US balances better the science and technology with commerce.

Commerce is a very human activity. It is a value exchange in which value is determined by people. One of our challenges is to strengthen the human learning and the skills required for successful commerce.

Since the mid 1800's the success of science-based knowledge in enabling us to understand and harness the physical world for our purposes has been nothing short of spectacular. As a result, objective, evidence-based learning (the scientific method) has become the dominant discovery discipline. The subjective, experiential-based learning of earlier centuries — 900 years for Oxford and 800 for Cambridge -— has lost credibility. Indeed, to be respectable, human learning has also had to embrace the scientific approach. That's why, for example, we have social sciences.

The net result is that the world of human learning, which requires the subjective, experience-based disciplines, has declined. Along with that, our human learning has lost place in our conscious lives while remaining essentially intuitive.

Why are we worse in this regard in Canada? There are a few significant contributors:

* Our resource-based economy is material- and locale-determined. It requires a much lower level of human interaction than required in knowledge-based commerce. It keeps us among the wealthy nations of the world with no driving imperative to change.

* Our constitutional constraints, that force a national focus on research and knowledge, weakens our ability to focus strategically on learning and on the development of human, commerce skills in our people.

* Coupled with these, our practice of autonomous independence for academics has been more accepting of scholarly isolation from societal needs for human learning.

* Amplifying these factors is the complexity and difficulty of addressing the human element in any situation. We opt quite naturally for factors that are more predictable and easier to control.

* An integrated outcome of the above four factors is a societal level of ignorance. Even in our knowledge-intensive enterprises where the need for human understanding and humane practice is very high, the levels of competence and consciousness are quite elementary. We may have PhDs in science or technology but we're in pre-kindergarten in our human knowledge and skills.

To function in the human interpersonal world, we need to know, practice and participate consciously in such things as understanding, listening, trusting, influencing, awareness, good will, confidence, ethics, balance, wisdom, maturing, pragmatism, timeliness, intuition, leadership, delegation, appreciation, respect, caring — the list goes on. Conscious learning around these human aspects of life is key to commerce.

Dr Douglas Barber is co-founder and former CEO of Gennum Corp.