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International Business Digital disruption needs nurturing if Canadian companies are to survive: tech leaders

An illustration of a road going through a tunnel made of digital zeroes and ones.

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Executive Pulse seeks input from Canadian leaders on vital issues that affect our business and economy.

Companies can no longer afford to sit on the fence when it comes to change and embracing the digital era, according to Cisco chairman John Chambers.

Speaking at the BoxWorks 2015 event in San Francisco last week, he went so far as to say that 40 per cent of Fortune 500 companies will no longer exist in 10 years because of a failure to adapt to the digital era.

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Whether or not that comes to pass, Cisco Canada's president Bernadette Wightman is equally bullish on the need to accept disruption and innovation as a means to drive business forward.

"I think constant change is absolutely imperative and it's going to happen in spite of us," she says. "I hate feeling I'm trying to keep up and that's why I always want to move faster because I want to be ahead of that curve and I want to be looking around those corners."

Approaching her one-year anniversary of coming to Canada from Russia, where she was the general manager in that country and the Ukraine, Kazakhstan and other Commonwealth of Independent State countries, Ms. Wightman is convinced the environment here is ripe for success.

"It's an interesting country, Canada," says Ms. Wightman, who originally hails from Manchester in Britain. "We estimate there are only 1,200 companies that have more than 500 employees. So, in effect, we are a mid-market or commercial-type country."

One of the factors that helps propel companies that are competitive in an era of digital change is nurturing the businesses that have potential to reach scale, she adds.

She cites the need to "see the unicorns," which are small startups that eventually reach a valuation of more than $1-billion. While she acknowledges that Canada doesn't have as many of those as it perhaps should, she says that is because of a lack of investment further down the scale.

To that end, in the past year Cisco has made significant investments into companies such as Bit Stew Systems, a Burnaby, B.C.-based industrial analytics software developer, and Cambridge, Ont.-based cyber security service provider eSentire Inc.

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"If we want disruptional things happening at the top, we actually have to look further down and look at how we're investing in those businesses," Ms. Wightman says.

Going against established conventions are what propelled Ariel Garten, the co-founder and chief executive officer of InteraXon Inc., to create the Muse headband, the company's flagship product, a few years ago. As a practising psychotherapist with a keen interest in fashion and science, Ms. Garten was fascinated by the thought of using brainwaves in computing technology.

Muse helps people to increase focus and reduce stress with the aim of learning to meditate effectively.

For Ms. Garten, it is developments like this that show the possibility for innovation in many different areas of everyday life, and points to how companies such as Uber or Airbnb have revolutionized the transportation and hospitality industries. She adds that the old idea that suggested Canadian businesses were not as forward looking as their U.S. counterparts is dead, pointing to the technology industry – and the Toronto-Waterloo corridor, in particular – as something in which Canada is viewed as a world leader.

But businesses need to keep up.

"A new generation of consumers have new ways of interacting with technology and the world around them, and this requires that businesses cater to them by continuously innovating," she says. "Look at banking: The majority of consumers under the age of 30 may not even have stepped foot into a bank in the past month."

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With this in mind, this year Cisco did a survey of 7,200 financial services customers in 12 countries, with 75 per cent of them saying they would be willing to move their money to institutions offering more digital services. In Canada, 60 per cent of participants said they would switch providers specifically to access Internet of Everything-enabled services, such as video-based mortgage consultations and automated financial advice systems.

While acknowledging that capitalizing on this kind of willingness is crucial for Canadian businesses to thrive, Ms. Garten also cautions that some consumers have serious concerns about the spread of technology, such as privacy issues, personal and family security and the pressure they feel to always be switched on and plugged in.

She warns, as well, that many Canadian businesses are not set up to recognize and counteract potential disruptors to their industries.

"Entrepreneurship and innovative thinking are concepts that should be fostered within organizations, but you sometimes see that companies are so focused on their current business models, these concepts are never fully explored or at least prioritized," she says.

"Canadian businesses need to do a better job of fostering awareness of factors that have the potential to disrupt their industry, positioning their organization to take action today."

That change in direction has to happen at the very top, Ms. Wightman says.

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"At the company level, our CEOs have to be willing to reinvent themselves and their teams and that's a big one," she says. "I really don't believe it when people say to me, 'I can't find a diverse team,' or 'I can't find this, that or the other.' If the CEO takes it on, you can make that difference, it's within your control."

The current disparity between the U.S. dollar and the loonie is something that Canada needs to capitalize on, as well. As an example, Ms. Garten compares the cost of operating a startup in San Francisco versus in Toronto, where the cost of employees, office space and employee health benefits is far lower.

She says Canada needs to take advantage of this and create policies to keep Canadian startups here if we are to cope with and prepare for the possibility of disruption in various industries.

"Now, more than ever, people and businesses are at least aware of the possibility of being disrupted in their industry," she says.

"You don't need to be anxious about disruption, but you at least need to be aware of the possibility that your business may be affected by a sudden change in the industry."

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