Special to The Globe and Mail, Feb 13 2014
During a recent business trip to San Francisco, I wrapped-up my last meeting at 10 p.m. and walked out into a quiet street – not a cab in sight. Seeking the fastest way back to my hotel, I started searching for cab companies on my BlackBerry. I landed on Uber – an ‘on demand’ transportation company. Backed by investors such as Amazon’s Jeff Bezos, the firm leverages wireless technology to connect passengers with high-end vehicles for hire in 50 global markets – at standard taxi rates.
Within seconds, I requested and paid for the closest vehicle with a few taps on my smart phone – and was picked up in less than three minutes. As I stepped in, the driver welcomed me by name, handed me a bottle of water and inquired about to the route I wanted to take. Why? Because the moment I leave his vehicle, Uber sends me an electronic receipt and a request to rate the service received. The company only employs drivers with a rating of three or more stars. This revolutionary wireless service is creating a new approach to transportation – and a new customer experience. And it is taking the world by storm. In cities across the U.S., Uber is struggling to keep up with demand. Bookings and revenues have increased more than 20 per cent month over month during the last quarter alone.
It’s is just one example of how disruptive mobile technology can transform an industry. It can also transform an economy if we are open to doing business in completely different ways.
As I arrived at my hotel, I wondered: How many Canadians benefit from this wireless solution for transportation? Today, Uber only operates in Toronto and Montreal. It made me wonder why this is the case and how many other disruptive wireless innovations Canada could employ to transform our economy?
The evidence is all around us. When applied in novel ways, mobile technology has the potential to spawn new products, services and markets. It can increase the efficiency of almost any industry sector and improve our quality of life. Canada must lead such innovation if we are to tackle our long-standing productivity problem and stimulate sustainable economic growth.
It’s well known that Canada lags the U.S. when it comes to productivity – defined by OECD as the ‘amount of labour, capital and natural resources required to produce one unit of GDP’. With an annualized labour productivity growth (2001-2009) of 0.7 per cent, Canada plunges to the bottom quartile of OECD nations.
The most recent productivity report published by Deloitte elaborates on different root causes for this productivity gap. A key reason: few Canadian companies make the R&D investment required to drive innovation, growth and expansion. Productivity is a complex challenge that requires action on many fronts. One is most certainly a greater investment in innovation that puts transformative technologies to work in completely new ways. A second is the relentless drive to lead the world in such innovation – not just for a first few years but over the long haul. These challenges demand significant culture change in Canada.
Deloitte also notes that many of our dynamic emerging companies grow aggressively during the first five years and then stagnate. These firms begin to settle for incremental innovation, a series of small improvements to new features to an existing product or service. They stop taking the giant innovative leaps that once catalyzed their growth.
Transformational innovation is certainly a path less traveled – particularly in Canada. It’s often costly, time-consuming and challenging to launch a product or service that creates an entirely new market or experience. Firms that are bold enough to explore these unchartered territories and exploit transformative technologies such as wireless often reap great rewards. Just look at Uber.
These technologies create the potential to significantly enhance our productivity. For example, GE estimates that Machine-to-Machine (M2M) technology could empower the world’s oil and gas, power, health care, aviation and rail industries to achieve efficiencies that exceed $250-billion over 15 years Cisco estimates the total untapped global M2M opportunity exceeds $14-trillion from 2013 to 2022.
Within Canada, this opportunity will reach $400-billion by 2020. We are currently seizing a mere 16 per cent (or $25-billion) of these productivity gains. This is five times our total trade with India, and eight times our total trade with Brazil. Global competitiveness begins at home with fearless, innovative companies – and a domestic economy that capitalizes on the emerging innovations. The time to ratchet up our game is now.
Technology is no longer a barrier to innovation. Today, computing power, storage and bandwidth are within reach of almost every company. The new challenge: how to leverage these capabilities to gain market advantage. This competitive edge is often derived from novel business strategies and offerings that capitalize on transformative technologies. It is a shift that unleashes tremendous potential. But it requires courage to break away from what is known. Such risk-taking is not recognized as a Canadian strength. The bottom line: If we don’t drive disruption, we will be disrupted.
Fortunately, some Canadian firms are demonstrating such boldness. Take Semios. With locations in Vancouver and Ontario’s Vineland region, the company has developed a disruptive wireless M2M pest control system. Combining networked devices, data management and wireless technologies, it enables farmers to protect crops using pheromones as opposed to harmful pesticides. It is a technology that enhances the safety and efficiency of agriculture – and one that is garnering worldwide recognition. Semios is the only Canadian company to receive an international Powerful Answers Award from Verizon. Last week, the U.S. mobile giant awarded $10-million to 15 innovators proposing powerful solutions to some of our greatest societal challenges – including Semios.
So, how do we build on this leadership, stimulate more transformative innovation in Canada, and apply disruptive technologies across our economy? It will take concerted and strategic action by policy makers and industry.
An important foundational step: public policy that encourages greater investment in transformative innovation; and market regulations that enable the ready adoption of emerging products and services. If we opened our market to greater global competition, it would catalyze even greater innovation and performance in Canada.
These four actions must be coupled with companies that:
- Demonstrate leadership by creating a culture that values and invests in transformative technologies and innovation;
- Benchmark global business strategies and delivery models that capitalize on wireless and other transformative technologies, and explore new ways to gain commercial advantage from these capabilities;
- Leverage cloud computing and wireless technologies to streamline capital planning and deployment, reduce business cycles, and accelerate time to market;
- Capitalize on transformative technologies to enhance product and service design and customer experience to achieve greater differentiation from competitors and drive revenues.
Canada cannot afford to be complacent. We can seize the reins or lose control – the choice is ours. As we leave money on the table for global competitors, other nations are acting with urgency to capitalize on the power of transformative technologies. This is particularly true in developing countries where mobile technologies are revolutionizing education, health care, food production, energy and transportation. Transformation is not an option – it is required to be competitive on a global scale.
What could we achieve as a country if we combined innovation leadership with such urgent drive for change? One thing is certain: we would transform far more than our economy.