Is "risk management" killing our productivity?
By Adam
February 03, 2012
Small Business & Entrepreneurship
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By Elaine Mah
I found myself wondering this week if our conservative Canadian approach to managing risk will have a negative impact on future productivity—and, ultimately, innovation—when I read a recent report from Deloitte Canada http://www.theglobeandmail.com/report-on-business/economy/canadians-score-lower-on-risk-tolerance/article2060767/ .
The report by Deloitte found that Canadian business leaders are not planning to invest in the types of activities required to improve productivity. “Our study substantiates—for the first time—that it’s true, not a hypothesis, that Canadians are indeed more risk-averse than Americans, despite our current positive economic climate,” said Bill Currie, Deloitte Canada’s vice-chair and America’s managing director of consulting.
Deloitte’s report comes on the heels of Stats Canada’s announcement http://www.bnn.ca/News/2011/6/10/First-quarter-productivity-up-04-below-forecast.aspx that Canadian productivity numbers, while up a little, were half the increase we were expecting. That’s not good news, considering our economy has been doing well.
The report identifies five key issues driving Canada’s productivity woes:
· chronic under-investment in machinery and equipment
· sheltering of the Canadian economy
· increasing competition for human capital
· inefficient and insufficient support for innovation
· lack of risk capital for start-up companies.
Many of these issues not only hamper productivity, but also limit our ability to innovate. And, let’s face it, it’s often SMBs that lead innovation; if there’s no support—financial or otherwise—it’s hard for them to make strides.
Let’s look at a company like PackSmart http://www.intel.com/Assets/PDF/general/Pack-Smart_CaseStudy.pdf. They use technology to build more effective machines to make packaging for the products we use every day. While the cost of the machines can be high, return is significant for the business. But if those same businesses can’t get financing to purchase new equipment, they lose out on that opportunity not only to innovate, but also to boost productivity gains.
To be competitive, we need to collectively open ourselves up to new ideas, new opportunities and new markets, while finding new ways to increase productivity, whether through technology and better collaboration or sharing of data (more on this in a later post).
As Deloitte’s report says: We’re at a crossroads. Let’s choose the path to innovation.
What do you think? Do we need to give ourselves more credit? Are we more risk tolerant than we think and will that risk aversion hurt our innovation over the longer term?
ELAINE MAH joined Intel Canada in 2005 as Canadian Business Marketing Manager. She is responsible for Intel’s brand management, product positioning, product launch management and marketing research, as well as sales and integrated marketing communications, advertising and promotional campaigns designed to reach Canadian business customers. Prior to assuming this position, Elaine was Vice President at Sharpe Blackmore Euro RSCG, where she was responsible for planning and strategy on accounts including Direct Energy, Volvo, and Yahoo!, along with new business development. A marketing professional for over 20 years, Elaine received her Bachelor of Commerce degree from the University of Alberta.
I found myself wondering this week if our conservative Canadian approach to managing risk will have a negative impact on future productivity—and, ultimately, innovation—when I read a recent report from Deloitte Canada http://www.theglobeandmail.com/report-on-business/economy/canadians-score-lower-on-risk-tolerance/article2060767/ .
The report by Deloitte found that Canadian business leaders are not planning to invest in the types of activities required to improve productivity. “Our study substantiates—for the first time—that it’s true, not a hypothesis, that Canadians are indeed more risk-averse than Americans, despite our current positive economic climate,” said Bill Currie, Deloitte Canada’s vice-chair and America’s managing director of consulting.
Deloitte’s report comes on the heels of Stats Canada’s announcement http://www.bnn.ca/News/2011/6/10/First-quarter-productivity-up-04-below-forecast.aspx that Canadian productivity numbers, while up a little, were half the increase we were expecting. That’s not good news, considering our economy has been doing well.
The report identifies five key issues driving Canada’s productivity woes:
· chronic under-investment in machinery and equipment
· sheltering of the Canadian economy
· increasing competition for human capital
· inefficient and insufficient support for innovation
· lack of risk capital for start-up companies.
Many of these issues not only hamper productivity, but also limit our ability to innovate. And, let’s face it, it’s often SMBs that lead innovation; if there’s no support—financial or otherwise—it’s hard for them to make strides.
Let’s look at a company like PackSmart http://www.intel.com/Assets/PDF/general/Pack-Smart_CaseStudy.pdf. They use technology to build more effective machines to make packaging for the products we use every day. While the cost of the machines can be high, return is significant for the business. But if those same businesses can’t get financing to purchase new equipment, they lose out on that opportunity not only to innovate, but also to boost productivity gains.
To be competitive, we need to collectively open ourselves up to new ideas, new opportunities and new markets, while finding new ways to increase productivity, whether through technology and better collaboration or sharing of data (more on this in a later post).
As Deloitte’s report says: We’re at a crossroads. Let’s choose the path to innovation.
What do you think? Do we need to give ourselves more credit? Are we more risk tolerant than we think and will that risk aversion hurt our innovation over the longer term?
ELAINE MAH joined Intel Canada in 2005 as Canadian Business Marketing Manager. She is responsible for Intel’s brand management, product positioning, product launch management and marketing research, as well as sales and integrated marketing communications, advertising and promotional campaigns designed to reach Canadian business customers. Prior to assuming this position, Elaine was Vice President at Sharpe Blackmore Euro RSCG, where she was responsible for planning and strategy on accounts including Direct Energy, Volvo, and Yahoo!, along with new business development. A marketing professional for over 20 years, Elaine received her Bachelor of Commerce degree from the University of Alberta.