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Adam Sax runs a drone company that serves the oil and gas industries, but he is encountering resistance to new technologies. He is seen here with his puppy, Muchkin, at his company’s headquarters in Oakville, Ont. (J.P. MOCZULSKI/The Globe and Mail)
Adam Sax runs a drone company that serves the oil and gas industries, but he is encountering resistance to new technologies. He is seen here with his puppy, Muchkin, at his company’s headquarters in Oakville, Ont. (J.P. MOCZULSKI/The Globe and Mail)

THE CHALLENGE

Drone company hits turbulence in the oil patch Add to ...

Each week, we seek expert advice to help a small or medium-sized business overcome a key issue.

From aerial surveys of real estate listings to bird’s-eye views of sports stadiums, unmanned aerial vehicles (UAVs) offer vantage points that are useful to a broad range of industries.

Capitalizing on the growth of this technology is the goal of Adam Sax, who founded Sky Guys Ltd. in March of 2015. With 14 full-time employees at its offices in Oakville, Ont., and Vancouver – and with two more locations in the works for Alberta and Newfoundland – Sky Guys started out targeting businesses in real estate, urban planning, film and television.

“We have continued to grow in those areas but have refocused on niche industrial industries,” Mr. Sax says, such as oil and gas pipeline monitoring, power and utility inspection and mapping services and large-scale manufacturing inspection.

Sky Guys also started creating its own proprietary technology and it is planning to launch a UAV school for companies that want to train employees in the art of flying drones.

“We’ve been working with the University of Toronto,” Mr. Sax says. “We’ve built a small team of aerospace engineers in-house and we’ve been working on some pretty neat long-range technology specifically for industries like oil and gas and power and utilities.”

He estimates that Sky Guys will post revenue of about $700,000 for 2016, and he is projecting $3.5-million for next year.

While most of the company’s clients are Canadian, Mr. Sax recently travelled to Saudi Arabia to pitch oil and gas firms.

These companies have traditionally used small aircraft with a pilot and a photographer to monitor pipelines. The photographer takes photos of any faults and then reports them later. This can get expensive; Mr. Sax says one of Sky Guys’ clients spends $50-million a year in pipeline monitoring in Canada alone.

The long-range technology that Sky Guys is developing will cover all of this client’s pipeline across Canada but also process the procured data and manage it in real time while in the air. “We’re reducing the cost of collecting the data, we’re actually managing it and we’re removing any human safety provisions,” Mr. Sax adds.

One of the problems that Sky Guys has encountered, however, is that, particularly in the oil and gas sector, there is a mistrust of disruptive technology and a tendency to maintain the status quo.

“We face challenges to convince those industries to try something new and different,” he says. “[Our technology] puts existing jobs at risk and creates new jobs, so there’s always a comfort issue for industries to take on something so new.”

THE CHALLENGE: How can Sky Guys persuade industries to embrace its product?

THE EXPERTS WEIGH IN

Joshua Gans, professor of strategic management, Rotman School of Management, and author of The Disruption Dilemma, University of Toronto

What this small business is doing is all over the shop – it’s targeting oil and gas, as well as other things. That’s pretty taxing; it’s hard to establish a brand name, compared to focusing on one or two of these segments and trying to do a good job there. So they seem to be spread too thin.

The Sky Guys should have the courage to focus and make an actual choice. I see a company that hasn’t been willing to say no to something. It’s a mode of desperation, and it also means that it hasn’t evaluated whether that was worth its time. What sectors does it really want to target? It might face very high customer acquisition costs for oil and gas, so maybe that’s not the way to go even though it looks like that might be a good idea.

Robert Scott, leader, national advisory services, Grant Thornton LLP, Toronto

When Canadian banks introduced ATMs, they offered a number of advantages but use stalled at 40 per cent of total adoption, until the banks started to realize that people were afraid that by using ATMs the tellers’ jobs were going to be at risk. So the banks engaged the tellers to give customers social permission to use the ATMs, explaining that they would be able to provide better service by handling the more complex needs that were now coming to the counter.

When a disruptive technology comes along, you need to really focus on what new services and benefits it can create. From my perspective, Sky Guys would benefit from telling rich case studies about the benefits that its users have seen and tie those benefits to bigger issues like the environment and innovation and productivity.

Krista Jones, head of work and learning at the research commercialization hub MaRS Discovery District, Toronto

You have to find a company that has a particular problem. Maybe hiring a plane over using a drone is faster and cheaper, but it doesn’t mean that its ability to get the information out is faster and cheaper. I think it’s about finding someone that has a problem and establishing a use case.

I would also make the company’s website less about its product and more about its customers. The site is very tech-heavy and not necessarily heavy about the people and the companies it is serving.

THREE THINGS THE COMPANY COULD DO NOW

Selectively target industries

Focus on one or two sectors, such as oil and gas and film, and really emphasize how its technology could help.

Tell rich case studies

Tell interesting client stories as a way of extolling the benefits of its technology.

Tone down the website

Concentrate less on the technology and more about the human element of its services.

Interviews have been edited and condensed.

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