Canadian innovation: a crisis of confidence?

Where are Canadian information and communication technology (ICT) companies headed? The same place as Nortel, Mitel, JDS, Alias, Corel, Softimage, Platform and ATI? All these companies were at one time world leaders in their segments – and Canadian. They have all disappeared or been swallowed by larger US players.

Or is Canada still a hotbed of successful innovation?

At a meeting of the York Technology Association (YTA) Wayne Gudbranson, President and CEO of the Branham Group presented a list of the top 25 “up and comers” for 2012. The list is based on “creativity and innovation” which is a subjective criteria, but even so, the list is not reflective of what we are seeing. Some well known and innovative companies such as FreshBooks, HootSuite and Shopify are omitted from the list – along with less well known ones like Side Effects, Intelex and KMI. And others, like CommunityLend, are no longer in business – we know because they were our office neighbors on Adelaide Street.

In aggregate the top 250 Canadian ICT companies had sales of $83 billion in 2012, 17% more than in 2009. This growth rate on the surface sounds satisfactory especially when you take Blackberry into account that makes up 22% of the total, whose sales slid by -7%. However, once you take out the large telcos; BCE, Telus, Rogers, Shaw, MTS, Videotron, Cogeco and SaskTel you are left with only 41 companies with sales of more than $100 million. In a sector of fast-growing global players Canadian companies are getting left behind.

There is a sentiment common among YTA members that it is impossible to maximize a company’s value in Canada. Access to markets, venture funding and technical and business skills needed to grow businesses are not available here.

This attitude is self fulfilling. If business leaders take their ventures out of the country the ecosystem required to enable businesses to succeed will never develop. Our colleges and universities will not understand what innovative companies need and interns will be unable to find rewarding assignments; the investment community will not develop the expertise they need to tell the difference between promising ideas and duds; sales and marketing personnel will not develop the skills needed to grow businesses; and managers who are technologically savvy will depart for jobs elsewhere leaving us without these key builders of new ventures.

Leadership will not be provided by government. They are more in tune with the needs of large established businesses who lobby to protect their existing franchises. Leadership has to come from within the industry. We need to become more aggressive and remind the naysayers that Nortel, JDS, Celestica, Blackberry and others grew to become huge forces using local resources and talent. We all need to do all we can to support the “up and comers” so they become successful global players.

Full interactive chart of companies available on the Branham300 site.

TB