Is Your Small Business Falling Behind on Productivity
Jean-René Halde, head of the Business Development Bank of Canada makes it clear, "Canadian entrepreneurs need to spend more money on high-tech equipment and come up with innovative ideas if this country is going to close the productivity gap with the U.S."
Halde and BDC vice-president Ian MacFadden also noted the reluctance of many small Canadian companies to invest in so-called ICT spending — information and communications technology.
ICT spending can help boost productivity by making companies more efficiently run, MacFadden noted. That message doesn’t always get through.
“To understand the value of investing in ICT, you really need a strategic approach, and a lot of small companies don’t have that approach,” he said.
"Canada's lackluster productivity risks hampering the country's economic recovery; higher productivity helps make our products more competitive in export markets," outlines Tiff Macklem, Bank of Canada deputy governor.
"If needed another more immediate reason to invest in productivity gains and improve our competitiveness, this is it," he said in Calgary. Macklem also noted that Canada ranks 17th in the Organization for Economic Cooperation and Development standings when it comes to business spending on research and development. He also pointed to a World Economic Forum study which puts this country in 19th place for innovation.
In an interview with the Star’s editorial board, Halde said too many small business owners think that innovation is something best left to technology firms like Research in Motion or other big companies that can afford it.
“We’re trying to get entrepreneurs out of their comfort zone,” said Halde. “We need to get them into the mindset of thinking of innovation … as part of their business strategy.”
Too often, there’s a perception that innovation means radically new ideas like RIM’s creation of the now-ubiquitous BlackBerry, he says. “We are on a bit of a kick to try to get them to stop thinking of innovation as PhDs in white lab coats.”
Innovation can sometimes mean something as simple as taking an existing idea or product and tweaking it slightly, or using it in a new way, Halde said, citing the example of a company that decided to add a second level to each of its cargo containers. “That doubles the productivity right there.”
Statistics Canada data released Monday showed that Canada's productivity grew by 0.5 percent in the fourth quarter of 2010. In the U.S., productivity grewby 0.6 percent in the same quarter. Over the entire year, productivity grew in Canada by 1.4 percent; in the U.S., that figure was 3.8 percent. That gap has been growing for the better part of three decades.
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