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Paul Tsaparis is executive-in-residence at York University’s Schulich School of Business and former president and CEO of Hewlett-Packard Canada. (Kevin Van Paassen/The Globe and Mail)
Paul Tsaparis is executive-in-residence at York University’s Schulich School of Business and former president and CEO of Hewlett-Packard Canada. (Kevin Van Paassen/The Globe and Mail)

LEADERSHIP LAB

Canada must develop our knowledge economy Add to ...

Business thinkers gathered at the World Economic Forum earlier this year talked at length about the rapid proliferation of “disruptive technologies” that are challenging the sustainability of many traditional business models and making the future course of global commerce impossible to predict.

When you consider that Apple and Google – attracting a market cap of $509-billion (U.S.) and $356-billion respectively – now tower over traditional corporate giants such as Exxon ($434-billion) and General Electric ($267-billion) in value, a little worried chatter and hand-wringing is understandable.

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As a long-time executive in the technology sector, however, I see nothing “disruptive” about innovation. I prefer the term “transformative technologies” to describe the revolution that is quickly moving the knowledge-based sector to the forefront of the world’s most vital industries.

Here’s why this sector is transformative: In an interconnected knowledge-based global economy, future growth will not take place where the lowest-cost labour is found; it will reside where the highest innovation and technological advances are happening and where the workers have the greatest skills. Technological advances are slowly allowing the return of manufacturing from low-cost countries to North America.

Such is the transformative power of the knowledge economy on all businesses, big and small, across all industries and within the private, public and not-for-profit sectors, which together reap the benefits of technological advances, productivity gains, economic growth and access to a more highly skilled work force. As Canadians, we stand among those who will benefit the most from the transformative nature of the IT and knowledge economy sectors – but only if we take the steps now to more fully develop our emerging knowledge economy. (According to a recent survey conducted by Strategy One, a research and consulting company owned by Edelman Berland, 87 per cent of Canadian executives agree that innovation is a strategic priority.)

During the 12 years in which I was chair of the Information Technology Association of Canada (ITAC), I saw firsthand the enormous importance, size and scope of the knowledge economy in this country, not to mention its tremendous potential. Canada’s information and communications technologies (ICT) sector alone is worth $155-billion in annual revenues and is the most research-intensive among all industries, accounting for 35 per cent of research and development spending, according to the most recent figures released by Industry Canada in March, 2013. Further, the ICT sector outgrew the overall economy in 2011, the latest year that figures are available, increasing by 3.2 per cent compared to a 2.6-per-cent increase for the total Canadian economy, according to Industry Canada.

And yet, while the Canadian industry has produced some aggressive innovators and drivers of ICT technology – Blackberry, CGI and OpenText are just a few examples of companies that, whatever their eventual corporate outcomes, have produced substantial wealth and, most importantly, a lasting and highly trained technological work force – it has traditionally underinvested in the knowledge economy. This limits the global competitiveness of our businesses. Today, the S&P/TSX Information Technology subgroup accounts for just 1.79 per cent of the capitalization on the Toronto Stock Exchange, down from 8 per cent in 2004.

We need to create market conditions that are ripe for the growth of the knowledge economy and for innovations to flourish. That means we need private and public investment, as well as a supportive educational framework, immigration policies and a proactive government economic agenda. Incremental injections of government funding to promote the knowledge economy won’t work – this is an industry developing on the global stage too rapidly for Canadians to participate in except in a “Go Big or Go Home” way.

We need to make sure we produce graduates with the right skills and expertise to feed the knowledge and ICT sectors, which will have the greatest growth potential.

Schulich School of Business, where I am an executive-in-residence, is on the right path with its recent appointment of entrepreneur-in-residence Chris Carder, co-founder ThinData Inc., an e-mail service provider, and its partnership with a leading technology company, Kinetic Café, which will give students looking toward the knowledge and ICT sectors an opportunity to be mentored and compete in startup competitions. In fact, the technology sector is now the fourth biggest recruiter of Schulich MBA graduates.

There are no guarantees, but at least Canadian graduates with the right skills, say in engineering or business, have a fighting chance at a career in their chosen field. In the knowledge economy, qualified workers are more highly educated, earn wages almost 50 per cent higher than average and face almost no unemployment, at 2 to 3 per cent, compared to an unemployment rate of 6.9 per cent in the overall economy, according to ITAC research.

To sustain our standard of living, Canada needs to fully develop the knowledge sector, not just for the sake of our current work force and generations to come, but also to remain a player on the global scene. I agree with former Bank of Canada governor Mark Carney that Canadian businesses need to stop hoarding cash – some $600-billion, or 32 per cent of the country’s GDP, by the count of RBC Global Asset Management chief economist Eric Lascelles earlier this year – and reinvest this stockpile to drive innovation. For Canadian companies in every sector it’s time to power up our economic potential.

Paul Tsaparis is executive-in-residence at York University’s Schulich School of Business (@SchulichSchool), former president and CEO of Hewlett-Packard Canada and a director of numerous private and not-for-profit boards, including Indspire, which helps indigenous people.

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