HUDSON, July 2019                                

CONTACT: Doug Meredith                                         DETAILED PRESS RELEASE
514-605-4357
[email protected]

Canadians See Their Business Leaders as Less Accepting of Change

A recent study conducted by Forum Research and ResearchNow on behalf of Meredith Page & Associates (mp2strategic.com), shows striking new evidence that Canadians feel less able to contribute new and useful ideas in the workplace than are American workers. The study’s results - released today - show that 64% of American workers agree that leaders in their organizations value people and processes that create useful change. This stands in contrast to Canadian workers, of whom only 58% agree.

Worryingly, the gap between American and Canadian respondents grows even larger for younger workers (at 70% and 58% for Americans and Canadians under 45 respectively).

This new evidence is of concern for Canadian firms, governments and policy shapers who are interested in maintaining and improving Canada’s competitive position in the global economy. With Canada recently slipping to 25th most innovation-friendly nation according to the World Economic Forum, and with the Canada-U.S. innovation gap slowly growing, it is clear that Canadian firms will need to address issues related to the organizational culture of innovation in order to effectively compete. 

A Gender Gap in Canadian Attitudes toward Leaders’ Acceptance of Change

Gender differences were also seen in Canada. Among Canadian men 61% agreed that leaders value people and processes that create useful change compared to just 54% of women (and only 26% who strongly agreed).

 Few gender differences were seen among U.S. workers where 63% of men and 64% of women agreed that leaders where they worked valued people and processes that created useful change.

U.S. Organisations Lead in Encouraging Creativity among Younger Workers

When asked, a full 70% of American workers under the age of 45 agreed that innovation and creativity were encouraged in their workplace compared to just 61% of Canadian workers in the same age group. Clearly, Canadian employers need to do a better job of listening to creative and innovative ideas from their base of younger employees of both genders.

Effective teams from different backgrounds- A slight edge for Canadian workers

Workers in both countries agree that people from different disciplines and backgrounds work together in effective teams with 72% of Americans and 74% of Canadians agreeing with this statement.  The results were similar for those under the age of 45 where three quarters agreed with this statement.

Among those who strongly agreed, the difference was greater. Younger Canadian workers are more likely to strongly agree, with 44% indicating that they strongly agreed compared to just 34% of Americans who did. Canadian women were also more likely to strongly agree (44%) compared to 39% of Canadian men and compared to just 31% of both American men and women.

In both countries leaders’ acceptance of change confirms technology investment; high in manufacturing, low in the public sector

A key finding is that organizations seen as having the technology necessary to succeed also have leaders who are open to change. Combined results for both countries show that in manufacturing 67% of employees agreed that leaders valued useful change and 58% agree that their employers made the investments in technology necessary to succeed. In the public sector only 47% agreed that leaders accepted change and just 36% agreed that employers made the investments necessary to succeed.

Commenting on the results Doug Meredith of Meredith Page and Associates (mp2strategic.com) said “the results are consistent with 2014 economic research by the World Economic Forum (WEF) showing that Canada’s competitiveness lags that of other OECD countries. Innovation especially is an area of concern.  Organizations need to be agile to face increasing global competition which requires constant innovation and leadership.  These results show that a key obstacle is that Canadian organizations are not encouraging creativity and innovation as much as those in the U.S.  Our business leaders need to put the tools in place to track their performance in these areas. They also need to create cultures and provide the training and resources necessary to encourage innovation and sustainable competitiveness, especially among younger workers and both genders. This can mean both disruptive innovation as well as incremental progress. A strength to build on is the finding that people from different backgrounds and disciplines are viewed as more likely to work effectively in teams by Canadian workers.” 

Meredith Page & Associates (mp2strategic.com) is a consulting firm specializing in business consulting and research.

About the Agile & Innovative Organizational Cultures Initiative

This survey is part of the Agile Organizations initiative which is designed to help organizations to become more agile, innovative and competitive. The questions asked are a small sub-set of the Agile and Innovative Organizational Cultures Questionnaire which includes more detailed questions to identify strengths and weaknesses in areas such as the use of collaboration tools, internal entrepreneurship and employee engagement. The objective is to achieve a large sample using the full questionnaire so that benchmarking will enable organizations, industries, geographies and even individuals to identify ways to develop more agile, innovative and successful work environments. The study has been designed over the past year. Additional sponsorship opportunities are available for the implementation of the full research program. The questionnaire and benchmarking data will be made available to other consultants or researchers who wish to contribute to the project.

For more information please contact Doug Meredith at [email protected]. He can also be reached by phone at 514-605-4357

Methodology

A total of 1,683 people in Canada and the U.S. participated in the study. The Canadian survey was carried out by Forum Research of Toronto. ResearchNow of Toronto conducted the survey in the United States. Both were conducted on behalf of Meredith Page & Associates (mp2strategic.com). All three firms carried out the study as a joint venture and as a public service. The sample consisted of 763 working Canadians and was conducted using IVR.  A sample of this size is considered to be accurate to within +/- 3.5% 19 times out of 20.  In the U.S. the sample consisted of 920 working Americans and was conducted using an online panel. The margin of error for a sample of this size is +/- 3.2%, 19 times out of 20.  Where appropriate, the data have been weighted by age, gender, region and other variables to ensure that the sample reflects the actual population according to the latest census data. To assess methodological differences, one question was replicated using an internet survey in both countries which confirmed the findings.

According to the World Economic Forum’s Global Competitiveness Rankings, Canada’s global competitiveness ranking had dropped from 9th to 12th place among 142 nations in 2011.  In the 2012-2013 version, Canada has slipped further to 14th place in competitveness.

Quoted in the September 5, 2012 Globe & Mail, Thierry Geiger an economist with the forum said that “innovation is the one place that Canada could do better” and that Canada has long fallen short in comparisons of innovation and productivity. The report shows Canada in 22th place in terms of innovation.  It is rated 26th in terms of what is called business sophistication.  This is based on a survey of 198 Canadian executives regarding their perceptions of how sophisticated processes such as distribution and marketing generally are.

Coverage of the World Economic Forum’s findings in the Huffington Post says that Canada benefits from efficient markets but its performance is being dragged down by the perceived "quality of its research institutions and the government's role in promoting innovation."  The Conference Board which assisted the forum in collecting the data noted that the country is not "taking full advantage of our strong economic fundamentals."

While we should be concerned about the competitive ranking overall, what is especially surprising is the ranking in comparison with our biggest trading partner.  The US holds 7th place, compared to Canada’s 14th place.  Switzerland garnered the number one spot.

The report says that Canada’s results are being dragged down by lower enrollment rates in universities and a decline in the extent to which workers are being trained.  Previous reports have said that improving business sophistication and innovation in the private sector and producing goods and services higher on the value chain would improve the score.

Numerous other reports have suggested that Canada does not measure up when it comes to innovation and competitiveness.  A report by the global accounting and consulting firm Deloitte is reviewed in the October 1st Financial Post under the heading “Are ‘fat and happy’ Canadians too chicken to invest in growth and innovation?”. The article suggests that Canada’s inability to improve productivity is connected to the country’s history of and culture of modesty, compromise, and most importantly risk aversion. 

Accepting that all these studies are correct and pointing in the same direction, it seems fair to conclude that Canada is behind and falling further behind in innovation and competitiveness.  What might be of more use is to try and understand the reasons for this and what could be done.  Starting with the studies mentioned above there are a number of reasons proposed for Canada’s poor performance and they are quite dispersed.  In developing an agenda that focuses more on organizations and culture rather than macro economics, the following questions come to mind that warrant more investigation.

Are Canadians fat and happy?  Of course this quote, based on the Deloitte report discussed elsewhere is somewhat glib and and is a turn on the cliche of being "lean and mean". However, the concept does raise the question of whether or not there is a predisposition to accept mediocrity as opposed to a culture of winning and success. Like any cliche, these are generalizations and clearly Canada has many very successful, innovative and competitive companies.  A more interesting question is to look at the extent to which there is a competitive culture that is pervasive in successful organizations and how Canadian organizations measure up; compared to each other and to the best in their industries.  Also, this has to be thought of in terms of sustainability. Perhaps managers of Lehman Brothers viewed their organization as lean and mean before the company collapsed.

Are Canadian managers risk averse?  Again this question is too general, but it could be boiled down to an assessment of risk taking, risk management and risk aversion in
organizations.  A better question is perhaps "what is the role of risk taking in successful organizations"?  Is there a culture that rewards risk taking?  How is risk managed so that staff have reasonable levels of responsibility in taking risks without putting the organization in jeopardy.  

Do Canadian organizations encourage innovation?  Of course some do and some don't.  The key question is what the difference is in successful organizations and how Canadian organizations measure up to some of the leading organizations in the world. 
The focus of interest would not be so much on measures such as the number of patents granted etc but the extent to which innovation is encouraged and supported throughout the organization as part of its culture.  The alternative would also be of interest, which is to look at the barriers to innovation in Canadian organizations and the extent to which it is discouraged.

Leadership.  The challenge here would be to define leadership and measure it.  This can be done to some extent at a macro level by looking at e.g. growth in market share, share price etc.  Another would be the role in mergers and acquisitions.  For example, why is that so many Canadian companies seem to have been acquired recently?  Why could Canadian companies such as Alcan, Inco, Falconbridge, Nortel, RIM not maintain their position in sectors they once dominated? One question here is whether or not this is in fact true, perhaps smaller up and coming businesses will take over the leadership in other sectors. The other question would be to look at the perceptions of leadership from inside the organization. Is it viewed as being ethical, intelligent, experienced etc. and how do these perceptions vary between organizations?

Other issues to be explored in more detail;

Developing a definition of sustainable productivity that looks at the impact of productivity on the organization and the individual as well as the environment and societies.

The role of ethics in leadership and competitive success or failure,

Canadian educational institutions; are they producing true leaders and innovators?

Bureaucracy and the ability to break down silos and boundaries between disciplines.

The basic definition of productivity is the amount of output per unit of input (of labour, equipment and capital).  So with this in mind, a basic conclusion is that Canada is not producing at the same rate or as efficiently as other developed countries in terms of its inputs.   An interesting proviso to this though would be what the World Economic Forum calls sustainability.  This is the impact that economic development has on natural environments and cohesive societies.  So, at a very basic level using a measure of productivity as defined above, a third-world worker who is working for one dollar per hour may well be more productive than a Canadian worker.  At a societal level in a western democracy, Canadians probably feel that that is not anything we wish to aspire to. It also may not be sustainable to pay someone such a low wage, although that may be resolved by increasing wages over time.  From a global level we also may see a leveling out with increasing wages in developing countries and of course that is happening with growing middle classes in many Asian countries.  At the same time, if Canadian workers are to maintain their competitive position by depending on the use of technology, investment is required.  As an agenda item for future research, productivity is well defined and measured by economists at a macro level although sustainable competition is not. Another important question would be why does Canada not invest more to increase sustainable competitiveness?  Perhaps it’s due to what the Deloitte report suggests is risk aversion.

According to the article on the Deloitte report, Canadians are fat and happy and too few are willing to invest and to take risks. This is an interesting idea but one that is a bit hard to quantify.  

The report (The Future of Productivity, Clear Choices for a Competitive Canada) points out that large firms are more productive than smaller ones but that the higher concentration of larger firms in the US does not explain the difference.  Differences in the size of businesses are not an explanation for the differences between the two countries. Productivity is higher in the US across all firm sizes.

Interestingly, the report suggests that the US financial sector is more productive than its Canadian counterparts.  This is perhaps counterintuitive, especially since many of the large US financial institutions such as Lehman Bros and Bear Stearns no longer exist.  This raises the issue of "sustainable competition" in a different light. In addition to the impact of productivity on environments and societies, it would be worth considering whether competition is sustainable for the individual and the organization over the longer term.  For many US financial services companies it wasn't simply because they took excessive risks, it was that they engaged in practices which were often illegal and unsustainable such as accepting "no doc loans".|

The results for the oil and gas sector are also surprising and show Canadian firms perform poorly compared to their US counterparts. One might think Canada would excel in productivity gains here given the importance of the sector and of the investments made in the oil sands and off shore.  In fact the report does suggest that both the sectors in the US and Canada had declined in terms of productivity but that this is largely due to massive increases in investment in both countries which in the short term decreases productivity while it is necessary to increase productivity over the longer term.   Also, because this sector is a much larger proportion of the Canadian economy the overall effect of the decline is much greater on the Canadian economy than it is in the US.

In manufacturing Canadian productivity improvements were lower across all sectors the study looked at.  Generally this is explained by three factors, the rising Canadian dollar, rising labour costs which to some extent are associated with the higher exchange rate and less investment in new technologies.  The report says that Canadian businesses made only 52% of the investment that US firms per worker in labour saving machinery over the period from 2000 to 2007.  A question of interest here would be why is the case.  Is it because Canadian managers and owners are risk adverse?  The question of risk aversion among Canadian business leaders would be a question worth exploring further.

The conclusion that retail is the one sector which is an "illuminating bright spot and the most significant contributor to narrowing the productivity gap" is another surprising conclusion.  With the entrance of companies like Target, Walmart, Home Deport into the Canadian market which seem to have had great success taking market share away from Canadian competitors, it seems a stretch to imagine that Canadian retailers are more productive. The global bright spot in retail is, of course, the online businesses such as Apple and Amazon that are American and which are highly innovative and productive.  Rather than suggest that our retailers are doing well, it might be more interesting to try to understand why these online businesses have been so successful and what Canadian firms could learn about innovation in this sector.

An interesting conclusion is that Canada has its fair share of fast growing new entrepreneurial firms but that over time, a number of factors such as risk aversion, low export activity, and weak R&D activity stifle growth.

The results for risk aversion are interesting and are based on a survey of executives and perhaps help to explain lower levels of investment.   The report also references a 2006 CIBC survey of small business owners that suggests that the issue may also be related to a higher priority placed on balancing wealth creation with other lifestyle choices.  US entrepreneurs were more likely to say that wealth creation alone was their primary motive.  The report concludes that both factors are at play; attitudinal differences may affect the growth in demand for financing but there is also less risk capital readily available.  Early stage businesses in Canada can only access 35% of the funding available to US start-ups.

The report suggests that Canadian business is less innovative.  They discuss the business life-cycle and suggest that managers in Canada are not quick enough to address decline let alone to engage in "creative destruction” and to re-invent and re-invigorate their businesses.  

The issue of creative destruction and the suggestion that Canadian businesses are less innovative are areas that warrant further investigation.

The report goes on to make sound recommendations for business, government and academia.  It suggests that businesses should strive to become national and international and leverage new capital equipment.   Government should among other things encourage foreign investment, continue to improve the immigration system and provide incentives for growing rather than for being small. For academia the report suggest greater focus on commercialization and creating the curricula to support productivity.  While all the recommendations are sound, those dealing with academia seem to be the most pragmatic and perhaps the most straightforward to implement.

At the same time, we have to keep the role of randomness and market forces in mind.  A hedge fund that made a killing in the economic downturn may turn out to be a one trick pony, making one lucky bet perhaps betting against financial institutions.  Some potentially great entrepreneurs may not have been successful due to factors that were truly beyond their control. This seems to be an important factor to keep in mind when looking at a “case study” approach to understanding innovation an business success.  It’s amazing how often business books site examples of success which in retrospect are not. Lehman, Bear Stearns and MF Global are all examples. Blackberry will be a hero or a villain depending on how it fares over the next months and years.

Still it is clearly important to understand the role of leadership in competitive success and innovation. In “Judgment: How Winning Leaders Make Great Calls”, Noel M.Tichy and Warren G. Bennis, make the case that leaders make crucial judgments in three areas; People, Strategy, and Crises. Judgments are characterized by three phases; Preparation, the Call and Execution. At a high level it might be of interest to consider where some of these leadership failures have occurred according to these three types of judgments. For example, Amanda Lang author of The Power of Why in a recent interview on the CBC suggests that RIM’s shortcoming were that is was too content with the status quo.  Perhaps this was a failure of strategy, trying to focus on the business market and not being aware of the potential of competing devices that were popular with consumers to become dominant in business as well.  In terms of leadership challenges in the RCMP, judgments with respect to people seem to have been a key issue when two Commissioners have had to be replaced since 2007.  

Another model is proposed by Roger Martin in the Design of Business. He points out that the most successful businesses will balance what he terms reliability and validity. Reliability is the consistency and effectiveness of business processes.   McDonald’s will reliably provide the same dinning experience, following the same processes in all of its restaurants.  Validity is the creative development of new ideas, products and services which can not necessarily be done in a reliable way.  Breakthroughs, innovation and creativity require different thought processes involving “abductive” logic. This is reasoning based on wondering about observations that don’t fit existing patterns and coming up with new designs and creative solutions.  He argues that businesses focus on analytical thinking including deductive and inductive logic because the focus is typically on process improvement rather than on creativity.  Design thinkers can balance analytical thinking and creative thinking. There are some similarities between this approach and Lang’s concept of the Power of Why.  Abductive logic might also be seen as risk taking simply because to invest resources into a concept that does not have a track record in most businesses is seen as risky.  They prefer to focus on what has worked and improve it.  This would be similar to being stuck in the status quo.  The concept of risk in this context is essentially reluctance to innovate and is consistent with Deloitte’s suggestion that Canadian businesses are risk adverse.

The key research question here is the extent to which Canadian businesses do balance reliability and validity and is this a predictor of success.