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Executives at Magna Closures Inc. turned for help to a retired Toyota Motor Corp. vice-president to teach the company how to develop a first-rate manufacturing system. (Moe Doiron/The Globe and Mail)
Executives at Magna Closures Inc. turned for help to a retired Toyota Motor Corp. vice-president to teach the company how to develop a first-rate manufacturing system. (Moe Doiron/The Globe and Mail)

Globe editorial

Memo to Canadian companies: Study the competition Add to ...

A fresh, bracing perspective on Canada’s slow productivity growth – often a rather repetitive, though important theme – has been opened up by a study from Deloitte Canada. Its essential advice is that businesses in Canada would be more innovative if they studied their competitors with considerably more attention.

The central finding of The Future of Productivity: A Wake-up Call for Canadian Companies is that 36 per cent of Canadian firms erroneously believe that their investment – in research and development, manufacturing and equipment, and information and communication technology – is equal to or greater than their competitors’ investment, when in fact they are investing less than the median for their group of competitors.

The authors call this group “overconfident,” an adjective that might suggest brash, reckless, swashbuckling entrepreneurs. What they are really getting at is an unjustified complacency. Curiously, 46 per cent of the overconfident believe they are risk-takers, but only 42 per cent of what the authors call dynamic firms – the real embracers of uncertainty – think they are taking risks. (A third, middle category of “static” companies is quite small, only 14 per cent of the total sample.)

The recommended cure is “competitive intelligence.” By that, the study presumably doesn’t quite mean espionage or surveillance of competitors. Instead, it points out that Statistics Canada can supply information on several useful aspects of Canadian business practices, which is increasingly accessible.

This study does not dismiss the range of public policies designed to encourage productivity growth; rather, companies would be in a better position to take advantage of those measures, if only they understood their own situation better.

Interestingly, the study does not feed into any cliché of a Canadian sluggishness. On the contrary, Canada is particularly vigorous in start-ups, but not so good at sustaining their growth. If Deloitte is right, Canada will overcome most of its productivity gap if its companies learn to be more curious about their competitors.

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