Zarlink CEO says market focus essential for future success of Canadian high-tech

Sixth Annual RE$EARCH MONEY Conference

The prevailing R&D-centric model for stimulating productivity and innovation is "not only wrong but backwards", says one of Ottawa's most respected veteran high-tech entrepreneurs. Kirk Mandy, president and CEO of Zarlink Semiconductor, told a capacity crowd at the annual RE$EARCH MONEY on March 8 in Ottawa Conference that sustainable wealth creation cannot be achieved through a dominant focus on university-based research.

Mandy says that if governments really want to encourage company growth, they should instead focus on encouraging firms to develop market insight which he asserts should precede any decisions a company may make on technology development.

"Have we created wealth for anybody other than the researchers and the institutions that support them? Where are the growing companies, the growing industrial sectors of our economy?" said Mandy. "Market insight is about identifying areas where costs can be reduced or profits improved for a target customer segment while earning a reasonable profit for your company … I always find it odd that one can draw from a wealth of government support for R&D initiatives but support for market insight generation is not available."

Mandy's opening comments set the stage for a day-long discussion on what kinds of mechanisms and incentives governments can employ to stimulate private sector R&D. His views reflect a perspective on innovation that complements those of Dr Douglas Barber and Dr Jeffrey Crelinsten, who have long argued that a focus on markets and the needs of the customer must be taken into account when establishing effective policies.

When Mandy was at Mitel, executives realized that a reduction in the number of leased phone lines a company employed could substantially reduce operating costs. The company— led by Dr Terry Matthews and Dr Michael Copeland — then proceeded to develop new technology that met the needs of the customer, resulting in the creation of a global powerhouse with annual sales of $350 million at its peak.

"The insight into the market, or ‘how can I save this customer money and have him share the savings with me', preceded the technology development, not the other way around," said Mandy. "We encourage the development of technology, we get technology and technocrats. I wonder what would happen if we were to encourage the development of business with the same vigour that we support R&D?"

Mandy's roots run deep in Ottawa's high-tech sector and his skill set spans the gamut from the design of manufacturing and product development processes to executive positions at the pioneering telecommunications firm Mitel and his current role heading Zarlink, a leading Canadian semiconductor manufacturer. Through it all, he says keeping the customer at the forefront of decision making is an essential ingredient for success.

commerce first

Rather than focusing solely on building R&D capacity, policy makers should also concern themselves with encouraging the development of entrepreneurial skill sets and positive attitudes towards commerce. Mandy says those skills will become even more important in the future as globalization causes more and more functions of the high-tech enterprise to move offshore.

"People that can see the money and develop algorithms and plans to cause a bank transaction to occur are few and far between in Canada … (At Zarlink) we have market insight generation or business development performed by a small number of highly skilled people, and we are well down the curve in outsourcing everything else," he says. "In a world where all of the execution capabilities can effectively be outsourced, I would argue (that) the only thing left that is close to a company is its ability to identify opportunities in the marketplace, and to successfully execute whatever programs are necessary to cause a financial transaction to occur between the company and its customers."

Mandy says the current policy focus on universities must be altered before the forces of globalization leave Canada an economic backwater. "The world as we know it is forever changed as a result of the deployment of low-cost computing, communications and collaboration technology on a global scale."

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