Canadians needs to embrace the entrepreneur to make Canada a leader in the digital economy

Photo by Walter Tychnowicz/Wiresharp Photography.

Future generations will learn of the personal and economic impacts of the global COVID-19 pandemic and how it served to accelerate change. I’d like to cite the relevance of leadership in managing rapid change, including that associated with the emergence of the digital economy and what Canada needs to do to become a leader in this new economy.

Canadians want an economy that is resilient, able to weather shocks and recover quickly. We expect our institutions and our governments to care, to check excesses and buffer us against shock. But “active intervention” gets criticized as being socialist and socio-economic engineering. So democratic governments get caught between activism — generally resented as too late — and responding only to the aftershocks.

The option is leadership and mentorship throughout the community, a process now made easier by the wide adoption of unprecedented technologies which can bring individuals together.

Laurie Schultz, CEO of Galvanize, one of Canada’s three Unicorn companies (startups that have achieved a value of over $1 billion) says leaders are those who “create a future that otherwise would not have happened.”

Speaking from Vancouver, Laurie recently shared her experience, along with Dr. Amit Monga, Executive Professor of Finance at the ‎University of Alberta, via Zoom on our weekly KEI webinar.

Amit said he had to move to San Francisco to find funding for his initial startups. Laurie admitted her company didn’t even approach Canadian investors.

Canada has a great history of developing good ideas, but incubators for commercialization have fallen short. Amit described his experiences and frustration as a PhD student in machine learning at UAlberta in the 1990s where there was “no place on campus to brainstorm commercialization,” and the industry liaison office was primarily focused on licensing and patents.

So, what does this all mean? First, we need to embrace the entrepreneur. Innovation, the commercialization of new ideas, starts in the brains of people. But to pass through the “Valley of Death” — where 80 percent of startup enterprises fail — is not an easy task. Some would argue that failure is core to evolution and that 80 percent is okay.

I think we can and must do better. Survival of the fittest is too raw. Meeting and working with one or more mentors who have survived the pitfalls of commercialization can offer paths across that chasm of corporate doom.

Second, Canadians must support the innovation ecosystem to increase the survival, growth and retention of the entrepreneur. However, that system takes years of experience to develop and manage resources and processes. Those years are supported not only by performance indicators, but also trust.

Creators of technology often lack the skills for commercialization so must find partners with those talents. Laurie described how the founder of her company trusted her enough when she removed him from management decisions because people took advantage of his good qualities. Innovators must learn to meet and establish relationships with management teams who understand the dynamics of commercialization in order to find investment.

Private investment is crucial in post-COVID recovery

Geography has played a crucial role in commercialization. Americans have a longer history of technology hubs such as the Cambridge, Massachusetts hub or Silicon Valley. Canada is slowly changing, particularly in the agri-food business and with its Protein Industries Canada supercluster initiative. But the country’s investment community is developing as well. As the “nouveau riche” investment market is becoming more mature, it is more willing to invest for longer times before demanding return on investment.

Recently we have seen that the tech sector is becoming a significant contributor to Alberta’s economy and is attracting substantial investment, particularly in Calgary.

Historically, Canadians have largely relied on government to funnel investment into long-term, risky ventures. But the COVID deficit has rapidly shrunk that purse, so private investors will have to step up if Canada is to retain a seat at the leadership table.

Government should incentivize investors to take risks on Canadian startups by:

• developing policies and procurement that encourage and support entrepreneurship and early-stage enterprise through tax credits and other financial frameworks; and
• continuing and expanding initiatives at the community level such as superclusters which bring cross-disciplinary young entrepreneurs together with experienced mentors.

Investors can support the innovation ecosystem by:

• funding companies that are in “blue sky” territory by developing relationships with entrepreneurs. These relationships are easier to develop now than ever before because of the ubiquitous Zoom;
• going for longer-term investments as opposed to instant ROI; and
• attending brainstorming sessions that expand the profit-and-loss mentality.

History will point to the 21st century as a time when personalization displaced socialization and leadership embraced change — the age of the digital economy aided by the innovation ecosystem. For Canada, the innovation ecosystem is late coming, but maturing rapidly as the provinces and citizens recognize that the status quo is untenable.

Welcome to a more personal, creative future.

Perry Kinkaide, a life-long embracer of change, is a former public servant and corporate executive. He now manages the Kinkaide Enterprises Inc. (KEI) weekly newsletter and public webinar.

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