The writer is president and CEO of Vancouver-based Wavefront.
Canada is at a crossroads. Look one way and you'll see enormous opportunities presented by the Digital Revolution. The other way is business as usual. But in fact, that's not even an option. If we stand still, Canada's future prosperity is at risk. There is an urgent need for our country to move beyond extracting natural resources and capitalize on the opportunities presented by the knowledge-based economy.
Our country is well positioned to succeed in the digital era – if only we adopt the right attitude. And that is all about thinking like a startup. Large or small, Canadian businesses must adopt the mindset of a startup. Not tomorrow, not next week. We need to start now.
Our federal government recognizes the urgency of this situation. Its Innovation Agenda is aimed squarely at helping Canadian businesses compete globally. But where I see hope, is with our country's many small and medium enterprises (SME). SMEs with fewer than 500 people comprise 97.9 per cent of Canadian businesses and employ 91 per cent of Canada's private sector work force. In the past, the large number of small businesses has been seen as a disadvantage; SMEs often don't have deep pockets or the resources to make a mark globally. But in a time of digital disruption where a team of 55 people at What'sApp can capture a market of half a billion people, SMEs have the agility to pivot with their products and services, to seize opportunities. Think of an 18-foot ski boat and an aircraft carrier. Which would you rather be on when it's time to quickly change course?
There is increasing awareness of the need to build digital competitiveness. Digital transformation is the top strategic priority for 50 per cent of CEOs and investing in new technologies to enable digitization is the top investment priority over the next two years, according to a 2016 survey by Forbes Insights and Hitachi.
But we need to approach this with more urgency. And with a different mindset. In the past, innovation was closely linked with cost reduction. As much as 70 per cent of a corporate investment was aimed at optimizing existing processes. Approximately 20 per cent was directed at driving adjacent growth. Only 10 per cent was focused on new markets and opportunities.
That approach worked when we had five- and 10-year business cycles. But today, we need to turn that model upside down. Businesses must match the pace of change in the marketplace. In particular, rapidly changing customer expectations are putting pressure on businesses to transform their processes. It's time for business leaders to aggressively re-evaluate how they manage their innovation investments.
It's not just the role of government and large corporations to lead innovation. It's time for Canada's SMEs to step into the leadership position and use their nimbleness to advantage. Our attitude has to change in four ways:
1) Increase our appetite for risk. Traditional Canadian caution needs to become part of our history, not our future.
2) Adopt a startup mentality in organizations of all sizes – large and small businesses, private and public sector. The startup model is built on a sense of urgency, with intense customer discovery and rapid iterative experiments. If you don't have the urgency and intensity of a startup, you're going to have a difficult time transitioning in this new age of uncertainty and digital disruption.
3) Actively invest in true innovation. Innovation is not tweaking existing processes for cost reduction. True innovation comes from disruptive thinking and daring that creates entirely new business models that capitalize on new opportunities in the marketplace.
4) Think globally. Businesses that succeed are pursuing global opportunities. We need to think big and recognize our ability to compete in markets around the world.
Wavefront has been supporting the growth of wireless and mobile companies for 10 years. During this time, we have seen a fledgling industry grow into an unstoppable force. Every day our team across the country works with startup founders who are using connected devices to solve problems and meet customer needs. We provide services to SMEs who are transforming processes and seizing global opportunities. And we support the efforts of large enterprise clients who are stepping forward to double down on digital today.
Canada must develop the talent to compete globally in the Digital Revolution. We have several advantages: strong education institutions, a highly skilled work force and some support for workers displaced by change such as automation. SMEs must seize digital opportunities if they are to survive and prosper. We need to cultivate forward-thinking corporate leaders who are determined not to be left behind. Government must understand they have to develop regulatory and policy agendas that are in sync with and moving at the pace of the new digital economy.
It all comes back to developing a culture of urgency and intensity. Finding the right attitude is the beginning of the journey. Leadership and culture dictate success.