Can Canadian Businesses Lead the World?

Taking the Opportunity to Learn and Explore

4 years ago, back in April 2018, I was visiting family in Adelaide Australia. I was there for my cousin’s wedding. I remember it being enjoyably hot, especially at the tail end of a Winnipeg winter. Now, despite the fact that we were there for vacation, as my wife, Sam, will attest to, I’m never one to turn down an opportunity to learn and explore how other leading businesses are making a difference.  Sam has often said that when I visit Antarctica at some point in the future, I’ll find a reason to have a meeting with someone! During this trip, I took the opportunity to visit a wealth management company called Perks. I had heard over the years that the Wealth Management industry in Australia and the UK was often thought to be about 5 years ahead of the Canadian industry, but I wanted to see it for myself. Without going into all the details, I can safely say that the rumors were true and that we were trailing behind in Canada. Where I saw the greatest differences was in their approach to client experience and ensuring that people received the best advice through a marriage between tax planning and accounting and traditional wealth management. Ultimately, clients benefitted from experiencing a coordinated approach to their planning, having all of their professional advisors working together under the same umbrella.

After that trip, I began to wonder, what other areas were we potentially falling behind in Canadian industry? I began to spend more time visiting wealth management firms in the US and speaking with their leaders. Once again I realized that we were trailing significantly behind in areas of coordinated advice and technology platforms. It became clear to me that we might be trailing by more thank the 5 years I expected, in fact 10 years is more likely. My biggest issue with all of this is that all of this lack of innovation was that it was ultimately Canadian clients who were suffering. The advancements being made in other parts of the world were leading to clients receiving more coordinated advice platforms and a more interactive experience with their professional advisors. All of which lead to a better overall experience for clients and arguably better opportunities to achieve their goals and perhaps even enhance them.

So is this a problem that’s limited to just the wealth management industry?

According to Imed Chkir, Professor of Finance at the University of Ottawa, Canada can do a lot better to foster innovation overall, despite having many cultural characteristics which are beneficial to fostering innovative growth. [1] In 2021, was ranked as the 21st most innovative country in the world, despite having an economy in the G7. Many of the countries who are ahead of us, including 3 Scandinavian countries, have much smaller economies and populations. Where we seem to be falling behind is in our support for research in development and post-secondary education, where we ranked 37in the World, which according to Bloomberg are critical components in innovation inputs. Despite our average ranking for inputs, we placed top 5 in the world for outputs which include patent registration. So why the big difference between inputs and outputs? Why are we generating so many new patents while we fall behind in support? According to Chkir, this is thanks to our cultural benefits here in Canada which include:

• Power distance, which measures the degree to which individuals in an organization accept the unequal distribution of power, has a negative effect on innovation. In societies where this index is high, individuals have limited access to information, which hinders innovation. In contrast, in societies with a low power-distance index, such as Scandinavian countries, individuals have more freedom and more incentives to innovate.
• Indulgence indicates the degree to which societies give people the freedom to satisfy their desires. People in societies with high indulgence scores are generally optimistic, encourage discussion and dialogue in meetings and decision-making processes, and prioritize feedback, coaching and mentoring. These characteristics are assets for innovation.
• Firms operating in long-term oriented societies are more likely to innovate. In these societies, individuals tend to exhibit more perseverance and persistence. They accept that results take time to achieve and tend to build long-term relationships with their employers.
• Uncertainty avoidance captures a society’s tolerance for ambiguity. Societies where this index is high view anything different as dangerous and protect themselves by enacting strict laws and rules. These societies are less innovative because they are more resistant to change and new ideas.
• The level of individualism indicates the degree to which individuals are dissociated and disconnected from groups. In individualistic societies, as opposed to collectivist societies such as communist countries, the values of individual freedom and initiative are encouraged and rewarded. Innovation is encouraged in these societies, which provide a dynamic and stimulating environment for creativity.
• Hofstede’s “masculine” values, such as assertiveness and competitiveness, do not foster innovation. In societies that value modesty and altruism, the emphasis is on conflict resolution, trust and emotional support, and there is a higher probability that firms will innovate.

The Lack of Support and Resources Effect Reaching the Next Level

So all of this is to say that as Canadians, it seems that there is no lack of innovative people here, just a lack of support and resources to take Canadian businesses to the next level where we can be global leaders. Additionally, it’s important that we expand on programs including “The Global Talent Stream” program which was created to attract top talent from around the world in certain industries. Locally founded company, Skip the Dishes, was one of the benefactors of this program as it helped them to attract more than 80 Brazilian software developers and helped them to resettle in Winnipeg. This program was so successful that other countries, including Australia, the UK and US have all adopted a similar program. In order to remain competitive, we must expand this program to include other occupations. Additionally, once top talent is attracted we must show them all the benefits that Canada has to offer them in hopes of retaining this talent here.

All the Wonders that Lie Ahead

As I write this post, I’m currently spending a week at the lake with my family. I’ve had a lot of time to spend with my 1 year old daughter and think about the world she will grow up in, to think about the wonders and challenges which lie ahead. Despite the global challenges we all face today including high inflation, war in Ukraine, Recessions and let’s not forget Climate Change, I remain optimistic about the future and the world that my daughter will inherit from us. But the challenges are extremely real and the solutions required must be innovative enough to equal the task. I think it’s time that as Canadians we start embracing this opportunity, celebrate the cultural benefits which foster innovative growth and take our place as global leaders.

- Grant White, CIM®,CFP®

Grant White is a Portfolio Manager/Investment Advisor at Endeavour Wealth Management with iA Private Wealth Inc, an award-winning office as recognized by the Carson Group. Together with his partners he provides comprehensive wealth management planning for business owners, professionals and individual families. This information has been prepared by Grant White who is a Portfolio Manager for iA Private Wealth Inc. and does not necessarily reflect the opinion of iA Private Wealth.

The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained here in may not apply to all types of investors. The Portfolio Manager can open accounts only in the provinces in which they are registered.