Improving Canada's Digital Advantage: Comments on Entrepreneurial Activity In The Technology Sector

Summary

Objective

It is the objective of Canada's Federal Government to facilitate further building of the technology–based industry. The technology industry is a universal support for advanced economies. Canada's success in building this sector is essential to our economic wellbeing.

Allan Wilson and Associates

Allan Wilson has, since 1981, been a management consultant to technology companies, from the largest to the smallest. He has worked with hundreds of such companies. He has also been involved with numerous initiatives designed to support the industry. More information about Allan, and his consulting practice, can be found at Allan Wilson and Associates Website

Submission

Entrepreneurs

Creation is at the heart of entrepreneurship. As a by–product, companies are built, and money is made. Entrepreneurs are attracted to environments where the resources and services they need are available.

Entrepreneurs need support in making their visions a reality. Most entrepreneurs gather a set of key advisors as they grow their company. This, usually, eclectic group of people are those who understand the vision, and are seen to contribute to its realization. This method of building companies is inefficient. Not all entrepreneurs are lucky in selecting key advisors, and not all recognize the need to re–select advisors as they grow.

The following diagram shows the range of support services needed to grow a technology company. There are a number of organizations, some government sponsored, who offer some of the services indicated here, but it is all to common that the content is driven from the top down, rather than from the entrepreneur up — limiting the value of such services.

Graphic Description

Conclusions and Recommendations

1. As government, only support those organizations that can prove they have a base of opted–in technology entrepreneurs. Validate these claims.

2. Actively encourage development and availability of a support structure for entrepreneurial activity in the technology sector. A wide range of participants, private and public, should be involved.

The Role of Clusters

An industry cluster is essential for success in maintaining and building a technology sector. The elements needed for such a cluster include: availability of technical talent, world leading service providers, a deep and extensive educational system, good and evolving infrastructure, financing and a local market. Canada's weakness in cluster building is in finance and local markets.

There are locations in Canada that qualify as technology industry clusters. Outside of these centres, efforts to establish an innovative technology industry are largely wasted.

Conclusions and Recommendations

3. Focus on building clusters supporting technology innovation and company development. Concentrate on technology clusters that have already proven viable, of which there are several in Canada.

4. Consider programs to attract entrepreneurs and technologists to Canada's ICT clusters.

Government Programs and Financing

Building a technology company requires cash. Some cash is available from government programs and agencies. The most accessible are SR&ED, IRAP, and the BDC. Beyond these sources, government programs are a morass of paperwork and, often, incomprehensible objectives.

A real value of government programs lies with individual government employees who provide personal help and advice, often outside of their job guidelines.

Other sources of cash, including personal investments and venture capital, are difficult to get, and expensive. The attitude of most of the Canadian financial industry is fundamentally at odds with the intent and capabilities of entrepreneurs.

Conclusions and Recommendations

5. Revise government programs to provide cash in essential areas of technology company development: marketing and sales, financial management, human resources, operations, and R&D.

6. Conduct a zero–based review of government programs using strict, industry based, criteria. Clear, industry–based, metrics for success, validated by the industry, are essential to success.

Building Large ICT Companies

Many technology entrepreneurs sell their companies in early stages of development. Typically, this is because they no longer know how to manage the growing enterprise, and do not know where, or how, to find appropriate management talent to supplement their skills.

Building large technology companies requires a number of elements: financing, access to a strong body of professional services, and support from local markets, both private and public.

Financing growing technology companies is a major problem in Canada. The small size of the Canadian market, difficulty in selling here, the size of other markets, and financing available in the United States, all align to move growing Canadian technology companies out of Canada.

Conclusions and Recommendations

7. Building strong technology sector clusters in selected Canadian centres, will provide growing technology companies with access to the resources they need for further growth.

8. Access to local markets, both public and private, would be of great benefit in building technology companies.

9. Improving access to investment capital would, given the support elements mentioned above, promote development of larger technology companies in Canada.