Companies ignore partnerships and R&D investing at their peril, Deloitte report warns

By Debbie Lawes

Tax policies that encourage industry-academic collaborations and universities that provide more "practical" learning are among the recommendations in a new report that found just 13% of Canadian companies are sufficiently prepared for the coming wave of disruptive technologies such as artificial intelligence, advanced robotics, networks, advanced manufacturing and collaborative connected platforms. Equally worrisome is that 43% of the firms surveyed think they are better prepared to handle the impact of rapid technological change than they actually are.

Entitled The Age of Disruption: Are Canadian Firms Prepared?, the 36-page report by Deloitte surveyed 700 business leaders across Canada to better understand whether companies are equipped to withstand significant technology-driven disruption.

Each firm's performance was measured in four key areas of importance to disruption preparedness: awareness, culture, organizational agility and resources. Deloitte found 13% of firms were highly prepared compared against all four benchmarks, 52% were somewhat prepared and 35% were "wholly unprepared and struggling".

Describing the results as "highly disconcerting", Deloitte Canada's chief innovation officer says "corporate Canada absolutely needs to wake up and do their part. And it's not just the large companies. It's a call to action for everyone," says Terry Stuart.

While there are important things that both government and academia can do better or differently, Stuart stresses that the main target of the report is business. And it seems that a company's size, age or industry sector have little bearing on its readiness to adapt.

The good news, according to the report, is that the most prepared companies provide a roadmap for other organizations on how to survive and thrive.

"Highly prepared firms not only excel in the four areas that impact a company's ability to withstand disruption, they also demonstrate the attitudes and behaviours of Canada's most productive companies. They are more committed to R&D investment (with more than half planning to boost R&D spending over the next five years), more likely to be internationally focused, and perhaps most compelling of all, report greater revenue growth," says Stuart.

The report says companies should assess their preparedness for disruption based on:

• Awareness of the forces that have the potential to disrupt the firm's business or industry;

• A culture that promotes, encourages and provides incentives for innovative behaviours and practices;

• Organizational agility to embrace new ways of working and making decisions that make it easier to rapidly redeploy systems, assets and people to address external opportunities or threats; and,

• Effective resources, like advanced technologies, human capital and financial assets, that can be used to enable change often through the crowd.

One way companies can prepare is to partner more with start-ups and academia, the report notes. It recommends expanding the Scientific Research and Experimental Development (SR&ED) tax credit to support partnerships between Canadian companies as a way to grow start-ups and ensure mature companies stay innovative. Government should also introduce a new angel tax credit to reduce the risk of investing in early stage companies, similar to the tax relief associated with capital losses, says Stuart.

Governments also need to invest in innovation ecosystems that bring together start-ups, mature companies, post-secondary institutions and investors. Examples include Waterloo's Communitech hub, Toronto's OneEleven and Vancouver's Launch Academy.

On the academic side, the report calls for major changes to how students are taught, from kindergarten to post-secondary. It recommends overhauling K-12 education to focus on critical thinking and the practical applications of learning. The report delivers a similar message to universities, saying more direct links are needed between academia and the outside world, including more research partnerships with business.

Stuart says some universities are already making the shift. He points to Ryerson University as being a "beacon of light" with learning zones that allow students to work across disciplines and with external partners to gain experience in fields such as digital media, urban energy, fashion and design fabrication.

"We're not trying to get rid of the educational process," stresses Stuart. "We think it needs to be upgraded and enhanced."

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