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KEVIN CARMICHAEL: How Canada's internal trade barriers and standards bodies block the innovation economy

Differing rules and regulations between provinces cost time and money, Vaughn Hammond writes. —
Internal trade barriers impede innovation, Kevin Carmichael writes. — - 123RF Stock Photo

To wit, one company's battle with a swamp of regulation, bureaucratic caution and political indifference to improving economic competitiveness

Edmonton-based Levven Electronics Ltd. is in the lead group of companies that will make it possible to connect your entire house to the internet.

Led by chief executive James Keirstead, a serial entrepreneur who previously made a name for himself building outdoor spas, Levven owns patents on a wireless switch that allows you to control lights, fans and other things from a smartphone. In May, the company had its best month ever in terms of sales.

On the surface, the key to Levven’s success to date is its technological breakthrough. But not really, since the most life-altering product isn’t worth anything if you can’t sell it. Levven’s switch is popular with geeks, but that’s a limited market. The opportunity to scale is in selling to builders.

But to install anything in a new home, it has to satisfy all the building codes and there is nothing in the Canadian Electrical Code about wireless switches. The company’s initial attempts to get a stamp of approval starting in 2015 were rejected because the standard setters were unwilling to take a risk on undefined gadgetry.

“We never thought it would go to the electrical code, because we were taking wires out of the wall,” Keirstead said in an interview.

There are a couple of issues here.

One, Levven’s experience is an excellent example of how our leaders’ refusal to get serious about internal trade barriers impedes innovation.

Keirstead is still working on getting the electrical code changed to include wireless switches. In February 2018, after hiring a lobbyist, he managed to get the Alberta government to issue a notice that states Levven’s switches should be treated like any other.

A year later, only Saskatchewan has recognized Alberta’s interpretation of the electrical code, meaning Keirstead remains blocked from about 90 per cent of this country’s real-estate market, based on Canada Mortgage and Housing Corp.’s latest tally of housing starts.

Because of its ingenuity, Levven had a head start in the race to capitalize on the shift to wireless homes; because this is Canada, it ran headlong into a swamp of regulation, bureaucratic caution and political indifference to improving economic competitiveness.

“There is no accountability to adopt changes and improvements,” Keirstead said. “If you say ‘Yes’ and something goes wrong, your head is on a pike. So they are better to say, `No, no, no,’ than to give us movement.”

As frustrating as it must be, Keirstead is right to stick with it.

The second reason Levven’s story is important is that it demonstrates the outsize role that standard-setters play in the innovation economy.

We obsess over trade agreements, and worry endlessly about the future of the World Trade Organization. But standards bodies and the codes they develop matter every bit as much as tariff rates.

There is no accountability to adopt changes and improvements. If you say 'Yes’ and something goes wrong, your head is on a pike. So they are better to say, 'No, no, no.'

James Keirstead, CEO, Levven Electronics

If you are on the cutting edge of one product or another, and the standard by which everyone agrees to use that thing is written to match your technology, then you stand a good chance of collecting rents on your innovation. Tens of thousands of these things are set every year.

“That’s the war,” Jim Balsillie, the former co-chief executive of BlackBerry Ltd. back when it was called Research In Motion, said in an interview earlier this month.

Balsillie is no longer on the front lines of that war. He is now more of a field marshal, using his influence to get policymakers and entrepreneurs thinking strategically about what it takes to win territory in the digital economy.

“Power and money come from ones and zeroes,” he said. “What we’ve missed is the need to create a digital policy infrastructure.”

Part of that infrastructure is a systemic approach to international standardization.

A couple of decades ago, China began manoeuvring its people into key positions at the International Standards Organization. Chinese now lead some 60 ISO technical committees, compared with about 100 that are led by Americans and a similar number claimed by the United Kingdom, according to Michel Girard, a former vice-president at the Standards Council of Canada who now is a senior fellow at the Centre of International Governance Innovation. (Disclosure: I also am a senior fellow at CIGI.)

There are more than 200 bodies around the world that set standards and write specifications for the information and communication technology industry and only one of them is based in Canada, the CIO Strategy Council, an assembly of chief information officers of which Balsillie is co-chair.

In April, the Standards Council of Canada announced that the CIO Strategy Council, which focuses on the ethical use of data and artificial intelligence, had been accredited to develop national standards. That should give the group an opportunity to influence international discussions about how to govern AI, potentially to the benefit of Canadian companies.

“If we don’t shape data governance, it will be foisted on us,” Balsillie said. “You are passive at your peril.”

Blocked from selling his switches to builders in most of Canada, Keirstead turned to the United States. Its building codes weren’t ready for Levven’s tech either, but Keirstead said he found that regulators were more open to innovation. He thinks he’s close to getting his switch added to the U.S. electrical code. “That would be epic for us,” he said.

• Email: kcarmichael@postmedia.com | Twitter: CarmichaelKevin

Copyright Postmedia Network Inc., 2019

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