Challenging Canada’s innovation narrative through research
For over 50 years, Canada has lagged much of the rest of the developed world at R&D, patenting and productivity. We’ve also been challenged at creating world-class companies. And yet we continue to have the same discussions and introduce new government programs to promote technology commercialization without significant improvement in results. We may be making progress but so is the rest of the world.
I’ve spent the last 15 years doing research to find the root causes of our challenges in creating a world class innovation economy. I’ve found that our opportunity is to expand our reach by entering more lucrative markets, to behave more globally and to prioritize innovation. We must also improve the amount of capital available for startups in the technology sector, and spend more on marketing and sales. This will improve the growth rates of our companies, making them more attractive to late stage capital, fuelling their ambitions to become world-class. And in established industries we can improve our focus on innovation helping these companies become more competitive.
In addition to doing research, I work with innovators technology entrepreneurs to help them understand what it takes to transition from startup to scaleup and how to fuel rapid growth through innovation.
Canadian tech companies get an A for effort in social media, but a D for results. Overall, we rank first in effort (as gauged by activity) but unfortunately, only fourth in results, or ability to generate engagement with followers and other observers
We still lag many of the US states including Pennsylvania, Illinois, and Georgia and particularly Massachusetts, New York, and California at both starting and scaling companies. We hold our own, however, when compared to Europe.
Canada is not known for its ability to create and grow companies that serve consumers. If we want to create world-class companies we need to create them in world-class markets and these are predominantly consumer markets.
The Formula for Scaling to World Class
There is a financial formula for scaling to become a world class company and these are the rough parameters of that formula. A company must plan to grow at least 60% a year for 10 to 15 tears to become world class. In order to do that, the company will need to raise about $1.5 of capital for every $1 of revenue and allocate almost twice as much spending on marketing and sales as they do on research and development.
Minimum Annual Growth Rate
Ratio of Capital to Revenue
- Marketing and sales 45%
- Research and development 30%
- General and admin 25%
Allocation of Expenditures
Triggers and Barriers to Innovation
Making sure there is a market for your product or service is the first step in developing a world class company. One of the things that creates a challenge for entrepreneurs is thinking that there is a market for something that they have developed when there really isn’t. This frequently leaves them with a product in search of a market. In 2018 we will be releasing a book that sets out to explore this subject. In the meantime, take a look at the content we have on this site. In it we are looking at the forces that act on buyers; the triggers to innovation, as well as the barriers and forces of competitive differentiation.