Key Points:

1. Canada’s innovation challenge is no longer about talent or ideas, but about translating world-class knowledge into sustained economic and social impact

   
   

2. Decades of declining research and development investment and slow technology adoption are eroding Canada’s competitiveness at the exact moment global innovation pressures are intensifying

   
   

3. Reversing this trajectory requires coordinated action across business, academia, and government to treat innovation as essential infrastructure rather than optional ambition

Canada is facing a moment of truth. In a world marked by rapid technological change, intensifying global competition, and ever-shifting economic power, a country’s capacity to innovate is no longer a niche advantage. It becomes essential.

Alas, the latest assessment from the Council of Canadian Academies (CCA) paints a sobering picture. Canada’s innovation performance is declining. This speaks directly to the future of Canadian competitiveness, jobs, social systems, and the livelihoods of people across such a massive country.

The fundamental tension that the report highlights is familiar to many Canadian leaders: despite exceptional research and globally recognizing talent, Canada struggles to turn ideas into economic action. As the expert panel put it, we are at a “critical juncture” in Canada’s history.

The Numbers Don’t Lie

The CCA’s report systematically benchmarks Canada’s performance in science, technology, and innovation against other nations. In many key metrics Canada lags significantly behind her neighbours. Both business and government research and development spending are well below the Organisation for Economic Co-operation and Development (OECD) average, an underinvestment which impedes productivity growth and dulls competitive edge.

What’s striking here isn’t just the relative performance. It is where Canada is heading. While research and development In Canada has been steadily declining over the last 30 years, the rest of the world has been trending in the opposite direction. 

For business leaders, this development matters because research and development, technology adoption, and innovation directly influence productivity, economic growth, export competitiveness, and the ability of Canadian firms to lead in global markets.

Knowledge is Power… if it Catalyzes Change

Canadian universities remain a genuine strength. They continue to produce world-class research and attract top talent with high levels of international collaboration and impact.

These institutions are a national asset because they illustrate a core challenge. And yet, excellence in knowledge creation does not automatically translate into innovative success.

Many post-secondary institutions still struggle to commercialize discoveries. While Canada certainly excels at ideation, the CCA reports that it truly struggles to translate knowledge into pragmatic, measurable action and outcomes. This is precisely where other economies are significantly outperforming Canada.

Therefore, it is not surprising that AI is a useful case study here. Canada indeed played an early and influential role in advancing AI research, with breakthroughs that shaped the field globally. But according to the CCA, Canada’s strength in AI research has not yet yielded proportional commercial or economic impact.

While Canada’s banks and retailers lead AI adoption nationally, wider industrial adoption and commercialization lag behind the rest of the world, meaning that Canada’s early lead is eroding.

The Consequences of Inaction

Why does this matter to business leaders? It is self-evident that lagging innovation stifles GDP growth, limits the proliferation of high-paying jobs, and diminishes competitiveness in global markets. But one of the more significant impacts are its societal implications.

Innovation isn’t just about making technology. It has a correlating social effect that connects directly to how efficiently public services are delivered. It also effects national resilience; modern healthcare delivery and housing solutions–which are exceptionally expensive yet constant societal hurdles in Canada–depend upon innovation that streamlines population support capabilities.

The report’s emphasis on “a serious and widening gap between our potential and performance” is thus a call to action. It signals that maintaining the status quo is not an option if Canada wants to preserve its standard of living and social solidarity in an era of rapid and uncertain change.

What Canadian Leaders Must Wrestle With

If there is a central insight from this report for Canadian business and public sector leaders, it is this: improving innovation performance requires systemic and coordinated action across the ecosystem.

There is no single silver bullet here. Strengthening Canada’s innovation performance means rethinking how it funds research and development, how it supports firms in adopting new technologies, and how it helps startups scale into globally competitive businesses.

For business leaders, this means investing more deliberately in technology adoption, building internal innovation capabilities, and collaborating across sectors. It also means engaging more actively with legislators and policymakers to signal where structural barriers are holding firms back.

A Path Forward for Canada

Despite its severity in tone, the report does not mean Canada is doomed. Far from it. The foundational elements of a high-performing innovation ecosystem are present. Canada has educated citizens, excellent universities, robust industries, and a cultural openness to new ideas. Canada just needs to figure out its struggles with knowledge translation.

Canadian leaders in business, academia, and government must align around innovation to make it a strategic imperative. The CCA report is not a verdict—it shows where Canada stands today and highlights the strategic choices that lie ahead. How Canada responds will shape not just economic statistics, but the everyday lives of Canadians in jobs, public services, and opportunities for future generations.