Canada’s innovation gap: Design the missing link ⛓
Canada’s economic future depends on recognizing design as a core driver of innovation, competitiveness and successful commercialization.
All around us there's constant talk about the urgent need for Canada to diversify its economy beyond natural resources and improve commercialization outcomes. Leaders from business and government emphasize the importance of innovation, driving more research and development, and creating valuable new products and services. I've been inspired by Canadians urgently launching new initiatives from
to the Canadian Shield Institute by the Council of Canadian Innovators and many more. All aiming to strengthen our economic sovereignty and innovation landscape in their own ways.Yet, there's one critical piece often missing from these conversations: design.
Canada's Economic Challenge
Canada clearly faces big economic challenges - even without the current geopolitical risk of tariffs threatening a heavily resource-dependent economy that’s become over reliant on a single and now unreliable customer. Our productivity growth lags behind other developed nations, innovation investments aren't paying like they should (compounded by low levels of investment to begin with), and overall economic growth feels stalled. The WIPO Global Innovation Index, which looks at innovation inputs and outputs of countries around the world ranks Canada 8th globally for inputs, but 20th for outputs (and 25th for creative outputs), putting Canada behind most G7 nations, and highlighting our ongoing struggle to turn ideas into market successes.
This gap between potential and performance isn’t new either. One of the most influential strategists of the last century, Harvard’s Michael Porter, called it back in 1991 in his “Canada at the Crossroads” report. The diagnosis then was clear: Canada relies too heavily on macroeconomic stability and resource exports and lacks in capabilities like innovation, productivity, and business sophistication that drive long-term prosperity.
Over 30 years later, many of these conditions remain unaddressed. And while we’ve gotten better at invention, we still struggle to translate ideas into global success and diversify our economy.
Recently, the chorus of voices talking about these challenges is growing and Benjamin Bergen from the Council of Canadian Innovators (CCI) captured Canada’s ongoing difficulties in turning ideas into commercialization.
“We’re really good at invention—the creation of ideas—but where we fall down is at commercialization... In a 21st-century economy, the way you capture wealth and prosperity is through the selling of ideas.”
CBC’s The Current
This week, Ontario CEOs released an open letter through the CCI calling for an urgent shift in economic strategy with a hit list of 7 priorities they want the provincial government to urgently prioritize focused on building domestic capacity and skills, prioritizing domestic providers and increasing capital and funding (and more) to drive Ontario competitiveness and sovereignty.
In the news, we regularly hear a now familiar and seemingly obvious call to evolve our economy beyond natural resources.
“For too long, Canada has been dependent on exporting raw materials while relying on foreign multinationals for high-value industries... If Ontario wants to be truly competitive, it must shift from being a supplier of low-margin commodities to a producer of high-value goods and services like intellectual property and digital services.”
We’ve known about these challenges for decades, and now the stakes are higher than ever. Canada has a highly educated and talented population that when paired with enormous resources should rightly create a vibrant and competitive economy, so why aren’t we capturing the full economic benefits?
Design is an efficiency multiplier
The Conference Board of Canada calls our persistent commercialization challenges “Canada’s Innovation Paradox.”
We often point towards limited access to capital or our aversion to risk as some of the biggest contributing factors responsible for commercialization struggles. These explanations are partly valid but also miss an essential point: even with adequate investment and risk-taking we could have more ammo, but bad aim.
Design helps us aim better 🎯.
In our national understanding, design is often reduced to aesthetics, however, design is a tool that directly supports the shift Porter called for. It enables businesses to be more sophisticated, helps translate research into marketable solutions, and raises the value of what we make, not just how we extract it. It’s the critical bridge connecting inventions to real-world impact.
By ensuring innovations resonate with people and meaningfully solve problems, design makes investments and risks smarter, better informed, and ultimately more successful.
Yet Canada's innovation investments and ecosystem routinely overlook or misunderstand design. While capital investment is essential, pouring resources into “innovation” or “commercialization” efforts without thoughtfully integrating design means risking these hard to come by investments on solutions that may not effectively solve real problems or be truly desirable. The Danish Design Center has been able to effectively articulate design maturity of organizations, and in my experience most of innovation activity and dialogue in Canada considers design at the first (non-design) or second (design as styling) step.
While most of our G7 peers have fully embraced design, if all we do is turn on the investment faucets and don’t consider how we as an economy climb the ladder, we risk continuing to turn groundbreaking ideas into missed opportunities, exporting raw innovation along with our raw materials instead of capturing their full value ourselves. Without a better mainstream understanding of design, we risk continuing to watch other countries succeed commercially from our resources, ideas, and efforts and spend more decades wondering what to do about it.
Design is an economic engine
Around the world, businesses prioritizing design consistently outperform competitors. McKinsey’s 2018 data shows among 300 cross-sector (physical goods, digital products, services) and cross-border companies those integrating design see 32% higher revenue growth and 56% higher shareholder returns compared to those that don't 😮.
In Canada 🇨🇦
A 2010 State of Design report found that 84% of Canadian manufacturers using advanced design processes reported improved customer satisfaction, and 66% reported reduced time to market.
A 2016 Measuring the Impact of Design in Manufacturing in Canada study found that manufacturers integrating design early in the product lifecycle consistently saw higher productivity, faster commercialization, and in many cases, entirely new product lines or market entries.
In the UK 🇬🇧
In 2019, the UK's design economy alone contributed £97.4 billion annually—about 5% of its GDP—and grew twice as fast as the rest of the economy.
In Denmark 🇩🇰
A 2018 Design Delivers report has shown that design leads to stronger businesses, where 92% of companies using design strategically saw a positive impact on their bottom line with major gains in customer satisfaction (67%), and competitiveness (77%).
In South Korea 🇰🇷
Since the early 2000s, the South Korean government has made design policy a pillar of national economic strategy, investing in national design centers, R&D incentives, and education. This focused investment in design transformed Samsung and Hyundai into global design leaders shifting the country from a manufacturing hub to an innovation hub.
Despite these results and knowledge, design remains underutilized in Canada’s innovation strategy - an oversight we can no longer afford.
Good design transforms research and innovation into market-ready, user-centred solutions. It accelerates commercialization, multiplies impact, and ensures every dollar and bet goes further.
Canada’s economic future depends on recognizing and finally acting on this truth.
👉 In the next note, we explore the role of design in improving quality of life and social outcomes for Canadians, a topic that very recently (pre-tariff and election cycle) was top of mind for most Canadians. Subscribe not to miss out.