Canadian companies should focus more on marketing and sales tactics to improve growth and productivity rates, according to a new report by the C.D. Howe Institute. Canada has proportionately fewer large firms than other countries and ranks last in producing large manufacturing companies among countries where employment data is available from the OECD.
In The Missing Ingredient: Solving Canada’s Shortcomings in Growing Large Firms and Increasing Productivity, author Charles Plant measures Canada’s challenge at scaling companies – companies that acquire external equity capital, or capital that is converted into equity – against comparable, foreign-owned companies, with particular emphasis on the US.
“Our national ‘productivity gap’ has spurred analyses, reports and media articles for decades,” Plant says in reference to a 1979 Globe and Mail report, and the problem remains true even today.
The author finds that the Canadian government focuses too much on programs related to research and innovation, and not enough on the lack of resources, experience, and talent for commercialization. “This underweighting is keeping our firms smaller and growing slower,” he says. “Essentially, the issue is a lack of managerial know-how. Existing and new programs could shift their alignment towards the marketing and sales development needed to grow our young companies in Canada.”
In order to drive scale, the author assesses four factors that are necessary for the growth of small or medium-sized enterprises: access to markets, access to capital, access to personnel and finding the right balance between spending on research and development and marketing and sales.
To address the lack of improvement in productivity, the author recommends specific enhancements aimed at improving marketing and sales. For example, the Government of Canada would benefit from developing comprehensive objectives to measure outcomes, which can help create a clearer picture of productivity and large venture growth. Governments may also consider developing and funding programs that cater to students of the arts and humanities that promote marketing and sales as a potential career path.
“It’s clear that Canada’s record at scaling companies is lagging behind other countries,” the authors conclude. “We should acknowledge the role that marketing and sales plays in creating large firms, and then experiment with policies and programs that focus on this long-neglected area.
Charles Plant, PhD CPA CA is founder of the Narwhal Project. He is a serial entrepreneur, financial advisor, and innovation economist.