Wrap your business in the flag

Canada is a ‘wonderful’ brand that can be leveraged by organizations competing on a global stage – a realm where too many homegrown firms are failing
By Liz Bernier
|Canadian HR Reporter|Last Updated: 09/15/2014

Editor's note: Once a month, the Strategic Capability Network (SCNetwork) hosts a special seminar on a topic of interest to HR professionals and business leaders. Canadian HR Reporter covers these events for a special feature titled "Executive Series." The feature includes news coverage from one of our editors, plus commentary from SCNetwork's panel of thought leaders on strategic capability, leadership in action and organization effectiveness.

This web post contains all of these elements:

Canadian HR Reporter's news coverage

What Canada can bring to the party, by Karen Gorsline
Playing the game to win, by Morgan Smyth
It's time for Canadian companies to start rethinking their game, by Trish Maguire

Wrap your business in the flag
Canada is a ‘wonderful’ brand that can be leveraged by organizations competing on a global stage
– a realm where too many homegrown firms are failing

By Liz Bernier

We already know Canada is a name that inspires pride and recognition around the world. But what we might not know is this: It’s also a potential brand — one that’s been consistently underutilized by Canadian organizations.

That was the central message author and consultant Doug Williamson delivered at a Strategic Capability Network event in Toronto.

“I want you to understand that this brand — this wonderful, well-regarded, credible brand called Canada — is under-leveraged around the world,” said Williamson, president and CEO of the Beacon Group. “We haven’t done a very good job of taking the brand called Canada and wrapping it around our companies and having them go out to explore the rest of the world.”

The country is falling further and further behind, he said. The opportunities are endless but the vast majority of small and medium-sized Canadian companies are not competing on a global stage — 77 per cent of our trade is with the United States of America.

“We suffer from a deficit of ambition. We’re not hungry enough. Now, I’m not talking about the big banks that have been very successful internationally or the big insurance companies that have been successful internationally or the large resource companies… there’s no question that we have a number of very successful multinational corporations. But they are in the minority when it comes to the Canadian business landscape,” he said.

“One of the reasons we are where we are is that we’ve had it way too easy in Canada... in fact, our good fortune of residing just north of the U.S. market, and our good fortune in fish, minerals and farming, has meant we’ve been able to be very successful up to this point — more by good luck than hard work.

“The fact is, we’re amateurs when it comes to the global environment.”

The competitive landscape has changed and we can’t afford to continue to underutilize our national brand, said Williamson.

And this isn’t just a challenge for large corporations.

“(It’s) Canadian businesses in Moncton, Saskatoon, Kamloops, Brockville… because they’re the real face of Canadian business — it’s not Bay Street. And out there, the pain in middle-market, middle-sized companies is significant,” he said.

“In every other country that’s successful today, the engine for growth is their mid-sized companies. But we don’t have enough of them, we’re not diversified enough.”

There’s a huge transformational challenge facing Canadian business in all sectors and companies of all sizes — and we have to come to grips with, or at least have a willingness to acknowledge, the fact that we need to have that type of major transformation, said Williamson.

“We can’t be successful in the future by doing what we’ve done. What got us here won’t keep us here,” he said.

“I’ll just ask you to think: Are we hungry enough? Are we ambitious enough? Why don’t we play business the way we play hockey? Why are we afraid to go into the corners with our elbow up when we have business internationally, yet we admire that when we play hockey?”

Hidden champions

If we really want to overcome this ambition deficit, we need look no further than “hidden champions,” said Williamson.

“These are companies you’ve never heard of, who have over a 50 per cent market share, who by definition are twice the size of their competitor, and who have dominated and continue to dominate a niche,” he said. “Over 80 per cent of them come from small countries.”

Leadership lessons

One of the first lessons we can learn from these hidden champions is around the importance of leadership, said Williamson.

“They’re all led by executives who have a very fierce resolve to change the world. They have a deep, deep desire — they’re patriots, and they are tenacious. So tenacity is key.”

These organizations also have incredibly high performance standards, he said.

“They are really tough on their people, they deal quickly with underperformance and they treat their star performers in a very special way. They understand a simple rule of economics: Fair does not mean equal.”

These companies operate in a highly decentralized manner, putting accountability firmly on the shoulders of executives. They’ve decided to dominate a niche and, as such, they have incredibly crisp focus — they know exactly what they’re good at, said Williamson.

Another common characteristic? These organizations are incredibly driven.

“They have lofty ambitions. If you go and visit some of these companies, you’ll discover that their expectations for growth are in the 20-to-25-per-cent-a-year range. When you look at Canadian companies, it’s almost as if we’re afraid to set the bar too high for fear we fail — so let’s set the ambition bar low and at least we can make it. That’s not a trait of a hidden champion,” he said.

Hidden champions also have a “glocal mindset” when moving internationally, said Williamson.

“When they go to a country, they don’t send bucketloads of expatriates… they try to be part of the local community and they represent themselves that way,” he said.

“The vast majority of hidden champions are from small towns, not big cities… and there’s an issue there that’s interesting, because they understand community. They understand family, they understand roots in the community, they understand common sense, they understand practicality.”

Innovation is another key trait behind these organizations’ success.

“They’re serial innovators… they’re the ones that kill their own products and reinvent before they allow a competitor to kill their products. And it’s the difference between a Sony and an Apple,” he said.

Related to innovation, there is also the necessity of “going with the flow” and being comfortable with uncertainty and ambiguity.

“In the world we live in today, there is no executive or company that is smart enough to predict the future. So if you’re not building a resilient organization, an adaptable organization, an organization that can go with the flow, you’re not going to be set up for success,” he said.

“It’s time to rethink the game.”

What Canada can bring to the party
By Karen Gorsline (Strategic Capability)

Doug Williamson outlined a grim economic future if Canada doesn’t expand beyond its reliance on its primary trade relationship with the United States. Michel Sylvestre and James Louttit outlined their business and personal experience operating outside Canada. What was missing was a broader focus on Canada’s unique position and opportunities for operating at the global level, as seen below.

Canada’s new natural resource: Traditionally, Canada has relied heavily on natural resources to drive the economy. But the country has another renewable natural resource to leverage — its broad base of immigrants who have retained their multicultural identity, rather than being subjected to a “melting pot” philosophy, as in the U.S.

There is a significant number of people who, even beyond the first or second generation, are able to relate to cultures other than just a Canadian one. In aggregate, they understand the needs and opportunities and how to do business in almost every country in the world.

They became Canadians seeking a better life, are willing to work hard and value education. Marginalized by a lack of Canadian experience or hiring practice inertia, they are underemployed or under-utilized and would welcome the opportunity to innovate and demonstrate what Canada could do to better access various global markets. Canada needs to mine this new resource.

Canada has sound business practices: Prior to 2008, Canada’s banks chafed under what they considered unduly restrictive financial policies and regulations with respect to U.S. and other global banks. Yet when the financial meltdown occurred, the world looked at Canada’s banks and economy with envy and a new-found respect.

The Canadian financial sector is relatively concentrated in a few large organizations that operate across the entire country and, to varying degrees, in other global economies. While looking to be more innovative, Canada needs to leverage the confidence in its base of prudent business practices to create opportunities and contribute to a more stable global economy.

Canadians are nice: While there are those who say Canadians are too nice, the fact remains that those who travel the globe would rather be known as Canadian as opposed to almost any other nationality. There are multiple contributing factors to this perception: Canadians tend not to be xenophobic or parochial, they travel the world and are curious about and open to other cultures which, in turn, makes them more respectful of other cultures.

While there may be a few “ugly Canadians,” a Maple Leaf flag on luggage or a backpack normally triggers a good response outside Canada. Being nice doesn’t preclude being ambitious, taking risks or being successful.

Canada has its own brand of innovation and creativity: In the arts, health care, animation, technology and many other sectors, Canada has demonstrated talent that other countries recognize. In many cases, the talent gains access to the world market through the U.S. In a few instances, such as the Toronto International Film Festival or the Sprinkles Global Health Initiative (to deliver micronutrients in the form of “sprinkles”), Canada makes its mark and brings the world to its doors: Canada is a driving global force.

The country needs to find other opportunities to create its own innovation and creativity industries to gain recognition beyond the individual contributors and develop demand for a made-in-Canada brand.

Canada has a long history but is also new: History saw Canada grow from English and French colonies, with the U.S. even having some claims. It evolved into a confederation within the British Commonwealth, which gave it access to and relationships with countries across the globe.

Yet Canada did not have its Maple Leaf flag until 1965, and the Proclamation of the Constitution replaced the British North America Act in 1982. Canada has not operated as a colonial master itself.

Within its Confederation, it has had to deal with the challenges of balancing the diverse interests of Quebec, Ontario and eastern and western provinces. It has had to find creative ways of accommodating the needs and interests of a province that is largely French and those that are primarily English — in language, legal foundations and culture.

In business, many large companies have adopted a colonization approach. They have a clear headquarters in one country and have expanded globally to exploit opportunities and increase their sphere of influence, practising what could almost be considered economic colonization.

In contrast, the experience of Confederation and understanding of cultural differences gives Canadian companies the opportunity to build a business model based on the Canadian experience of collaboration, respect for differences and co-operation.

With a shared border, Canada will continue to see the U.S. as a major trade partner. However, as Canada uses its unique resources, perspectives and positive image to expand into new global markets, its businesses will have many opportunities to “Do it our way, eh”.

Karen Gorsline is SCNetwork’s lead commentator on strategic capability and leads HR Initiatives, a consulting practice focused on facilitation and tailored HR initiatives. Toronto-based, she has taught HR planning, held senior roles in strategy and policy, managed a large decentralized HR function and directed a small business. She can be reached at gorslin@pathcom.com.

Playing the game to win
By Morgan Smyth (Leadership in Action)

Why are Canadian businesses so non-competitive on the world stage? In 2013, we were ranked 14th out of 61 countries on the competitive scale, according to the Conference Board of Canada. (Norway was number one, Luxemburg was number two). We didn’t even get into the top quartile — and our 2014 ranking threatens to be even worse.

Why do we perform so poorly? Is it because we lack skilled talent? Apparently not — according to the 2014 Pearson Education Attainment Index, Canada is in seventh place worldwide (the United States is in the 17th spot).

Maybe we just don’t have enough global experience? Not true: The World Trade Organization says of all the G7 countries, Canada ranks number two in world trading, where more than two-thirds of our GDP’s worth are goods and services sold to other countries albeit mostly oil, minerals and lumber (Germany is number one).

Perhaps it’s because our businesses are placed at an unfair tax advantage here at home? Actually, a 2014 study by KPMG ranked Canada as the world’s most tax-friendly country for business.

Well, what about a lack of access to foreign markets? Here, too, Canada has 10 free trade agreements in place and is currently negotiating 14 more.

Could it be a lack of other government assistance then? Hardly. The federal government helps companies through agencies such as Export Development Canada, FedDev, Global Markets Action Plan.

Plus, it provides monetary incentives via programs such as SR&ED, ecoENERGY, CRD Grants, Engage Grants, Knowledge Mobilization Initiative, Mitacs and IRAP. In addition, the federal government and each province offer incentives unique to their specific geographies and groups.

So if it’s not the availability of a skilled workforce, global trading experience, access to and assistance in penetrating rapidly expanding global markets or R&D collaborating services and monetary incentives, what could it be?

Why do we continue to languish, year after year, at a productivity level that’s only 80 per cent as good as the Americans?

Seeking management

In a word: Management. More precisely, a lack of competent management.

The responsibility to improve Canada’s productivity rests squarely on the shoulders of our business managers. While it is the leader’s job to paint the vision and map the strategy, it is management’s job to execute this strategy.

Management is responsible for establishing the most effective organizational structures, acquiring and training the right resources, implementing the best processes possible and overseeing their successful execution in order to achieve the company’s objectives.

Clearly this is not being done.

Why not? Some experts speculate it’s because these managers don’t see the need.

As in the “boiling a frog” anecdote, Canada’s business managers have become so complacent that soon it will be too late. They, and their companies, will be cooked.

One only has to contact the customer service department of a company in the U.S. and then do the same with one in Canada to grasp the gap.

So, what’s to be done? First off, management’s performance criteria and compensation must be firmly based on productivity gains. Their objectives have to be clearly defined and management must commit to them.

How they achieve them is their responsibility. And if they don’t succeed, they are clearly not managers (yet) and should be dealt with immediately and appropriately.

Next, as Harold Geneen, former Chairman of ITT, said: “Management must manage!” How many of our “managers” today spend their entire day truly managing?

Lastly, to all you managers: Fill every position with competent players. Clearly articulate the game plan and commit all to the rule book. Equip the team with the right gear. Train, train and train them some more. Then, get out there and play to win.

Morgan Smyth is an SCNetwork thought leader and a change management consultant who launched his own IT services company which soared to Profit Magazine’s 50 Fastest Growing Companies. He is based in Toronto and can be reached at msmyth@braegen.com.

It's time for Canadian companies to start rethinking their game
By Trish Maguire (Leadership in Action)

Doug Williamson has a compelling message for Canadian business leaders: Canada is falling behind in global markets and is at risk of becoming irrelevant. Conversely, other small countries, such as Germany, Denmark, Hungary and New Zealand, are achieving new and continued growth as well as increased job creation. Is it possible Canadian business has become complacent in relying on America for 77 per cent of our trade? Have our abundant natural resources lulled us into a false sense of wealth? Are Canadian leaders more conservative, traditional and risk-averse than we want to admit? How can business leaders turn this dismal scenario around and create a strong global presence for Canadian business?

The inspiration may be found in a global phenomenon that Hermann Simon started to research in the late 1980s where he established that unfamiliar, mid-size, world market leaders were highly successful in niche global markets — despite
economic instability. Simon found these highly innovative, global companies, which he called “hidden champions,” in just about every type of industry.

Statistics confirm there are about 2,800 hidden champions worldwide, with almost one-half from Germany. Even more remarkable is these companies account for about 25 per cent of German exports and created one million new jobs over 10 years.

Is there an underlying message that bigger is not necessarily better or more successful? How does this have an impact if Canadians believe small to mid-size companies are our future for economic growth, stability and job creation?

Question — how many mid-size Canadian companies can boast of a 60 per cent global market share or take pride in being the only
provider of a specific service around the world? If, as a Canadian business leader, you are still wondering how this is relevant to your business, are you aware of Simon’s findings on the power behind hidden champions?

These market leaders see the global market as an open opportunity to systematically grow their market. Could it be their leaders only anticipate boundless growth?

I wonder how their outlook may differ from ours. What’s different about their vision and strategies compared to those of our business leaders? What can Canada’s leaders learn from them?

There are a few key practices that hidden champions appear to have in common that Canadian business leaders may find worthy of exploring and adopting. One practice that deviates from North American practices is outsourcing.

Hidden champions consider their superior quality and uniqueness to be core competencies and, consequently, only outsource non-core competencies.

Second is their strength and profound commitment to innovation. How many times do we hear Canadian leaders asking for greater innovation? Would it surprise you to learn hidden champions reportedly spend twice as much on R&D compared to the average industrial company? Moreover, hidden champions report five times more patents per employee than patent-intensive large corporations.

An outstanding customer-centric focus can be considered a third key strength. Typically, large companies indicate that employees have between five and 10 per cent regular customer contacts. For hidden champions, however, their employees have regular customer contacts 25 to 50 per cent of the time and expressly with their top customers.

Also deserving serious attention is their track record for having a highly qualified workforce along with extremely low turnover and high retention rates. Compare the hidden champions’ statistics to North America, where Simon reports that over a 10-year period, these champions have more than doubled their university graduates intake and have more women in top positions than larger companies.

As for turnover, their rates are less than three per cent annually — meanwhile, North America averages around 30 per cent. Additionally, they accredit the intellectual power of their employees to their four-fold strategy for creating competitive advantages which are product quality, advice, systems integration and ease of use.

Last but not least is their viewpoint of leadership, which Williamson succinctly articulated. In his words, the three critical and universal leadership competencies that differentiate hidden champions from everyone else are: contextual intelligence, strategic intelligence and decision-making intelligence.

Hidden champions are proof of the importance of small and mid-sized companies to a country’s economic stability in a time when global growth continues to be the challenge. Canadian leaders have an opportunity to be highly innovative, profitable, global market leaders in every type of industry.

If we want to be a recognized global brand for superior product excellence, irrefutable customer- centric focus and continuous investment in innovation, then our leaders need to start doing things differently.

Trish Maguire is a commentator for SCNetwork on leadership in action and founding principal of Synergyx Solutions in Nobleton, Ont., focused on high-potential leadership development coaching. She has held senior leadership roles in HR and OD in education, manufacturing and entrepreneurial firms. She can be reached at synergyx@sympatico.ca.

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