What will it take for Canadian enterprises to win the innovation fight?

Age of disruption: Are Canadian firms prepared? is the latest installment in Deloitte Canada’s Future of Canada series. This particular report looks at how advanced technologies are driving disruptive innovations that will bring “significant and permanent change to Canada’s business landscape.”

The authors narrow the study down to five technologies that will have considerable disruptive potential: artificial intelligence (AI), advanced robotics, networks, advanced manufacturing and collaborative connected platforms.

As part of the study, Deloitte surveyed 700 Canadian business leaders to evaluate their business performance in four areas – awareness, organizational culture, organizational agility and resource effectiveness.

The Deloitte research delivered some disappointing truths when it came to Canada’s “disruption preparedness.” Only 13 percent of firms excelled in all four areas and were classified as highly prepared. Almost one quarter (23 percent) took action in only one area, and 29 percent were classified as tentative (i.e. not totally unprepared but struggling).

The most disturbing number out of all this is that more than one in three (35 percent of firms) were wholly unprepared and struggling across all four areas of preparedness.

This does not bode well from a competitive standpoint as Canada has struggled for some time to improve its productivity ratings. The World Economic Forum (WEF) ranked Canada 15th out of 144 countries in its annual world competitive index in 2014 – the country’s lowest ranking since 2006. In 2009, it ranked ninth. Despite Canada’s strong performance in areas that provide a foundation for competitiveness, such as institutions and rule of law, health care and childhood education systems, a stable economy and reliable financial markets, a key reason cited by the WEF chief economist Jennifer Blanke for Canada’s decline in productivity ranking is underinvestment in innovation and technology.

WEF also reported that Canada’s private-sector spending on R&D ranks 27th in the world, while university/industry collaboration on R&D ranked 19th.

Given Canada’s solid reputation for innovative thinking, the question is begged: what is missing in the equation? And while academia and government play a role in these outcomes, what do Canadian enterprises have to do to address the issue?

Terry Stuart, chief innovation officer, Deloitte Canada
Terry Stuart, chief innovation officer, Deloitte Canada

One thing is to find or groom new-generation talent. Terry Stuart, chief innovation office for Deloitte Canada and a co-author of the report, considers the recent numbers on talent to be a call to action for Canadian businesses. “If you look at the five technologies, there are many new skills that are required. But we don’t see them pervasively within organizations.”

Enterprises need to recruit more strategically in order to evolve the skills base needed. This starts with building awareness, he said. “If you’re not aware of the technologies and how they will impact your competitiveness, you are unable to create new solutions. A CIO should have a person on staff whose job is to explore what new technology is coming and its potential impact on their industry or company.”

The next step is building an innovative culture in which people are motivated to develop, pilot and bring new technologies to market. Agility plays a large part in ensuring processes are nimble and dynamic, Stuart noted. “If you don’t have strong Big Data or analytics capabilities, for example, that’s a huge topic under artificial intelligence. A lot of enterprises have data sprinkled throughout that’s not centralized or does not have the scale needed to adopt a technology like AI. So what do you have to do to build that in? How do we track and make sure we’re monitoring the use of our technology resources, or investing enough in R&D or training? These are very important questions to address.”

Collaborations and collusions are an important means to forge links with the brightest and best minds, regardless of whether they are in your employ or not. A growing number of companies, for example, are presenting problems to learning zones like Ryerson University’s Digital Media Zone, and dynamically engaging with students to engage in real-world problem solving.

Canadian Tire, TD Bank, Manulife, Canon, Google and Deloitte are among a number of Canadian organizations establishing outposts at Communitech’s startup community. “Now those corporations are co-habiting with over 100 startups. That’s the type of approach that will change the DNA for startups and large corporations,” Stuart said.

Sheridan College’s ABB Robotics Centre in Brampton is a production environment specifically built to accelerate innovative approaches to productivity and competitiveness in the manufacturing sector. Not only is it a hands-on educational playground for advanced manufacturing studies, the same resources are being used to provide consulting and prototyping services for industry partners – this closeness to the talent source gives companies direct access to a pool of emerging talent.

One incredibly rich source of innovation can be found in the notion of collaborative connective platforms. These may be in their infancy, but the sheer exponential power to be gained from collective creative thinking – whether in the form of in house or industry competitions – could be one of the most significant drivers of enterprise innovation.

Crowdsourcing is becoming an increasingly popular means of gathering input from the global community of IT professionals. Vendors such as Kaggle, a platform for predictive modelling and analytics competitions, allow organizations to take a data problem or situation into the cloud where an entire community of scientists and programmers compete to solve particular problems. “One organization put data in a cloud and within nine weeks had a solution better than the one internal experts built which delivered a 271 percent productivity improvement,” Stuart said. “They were able to access 120,000 data scientist that sit on Kaggle at a fraction of the costs.”

Like any new business model, crowdsourcing ideas does have challenges to overcome, he added. “Using crowdsourcing to expand and extend your capabilities means you have to work carefully around legal, risk and privacy issues, but that can be overcome by working with credible vendors like topcoder, 10EQS and Kaggle. What’s most interesting about the process is that the people who win most often don’t have a university degree, and they didn’t come from the industry. When you tap into intellect beyond your own industry’s capabilities, that’s when you get breakthrough thinking.”

This form of crowdsourcing is in its infancy at the moment, but it is becoming more pervasive in the US, and being used by organizations such as GE and the US government. “Early adopters are grabbing hold and getting going. We’re not seeing this at the same pace here,” Stuart said.

Whether they pull ideas from within the ranks of one’s own enterprise or from a global community of non-industry innovators, Canadian companies need to be playing catch up – and quickly. “CIOs are not spending as much time and effort and money [on preparedness] as they need to,” Stuart said. “The trajectory needs to change, and companies need to be prepared to adapt when they are going through this journey.”

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