Blackberry blues and the future of tech in Canada

blackberryAs one of the few Canadians attending a recent international IT meeting, I found myself on the receiving end of several expressions of condolences about the fate of Blackberry – some more sincere than others. I have to admit, both as a happy ‘berry’ user for many years and as a proud Canadian, to experiencing at least a twinge of sadness at the negativity that seems to surround this one-time flagship of our industry in Canada. Notwithstanding their current challenges, there is no doubt that the company has been a very significant contributor to the Canadian scene in many ways and over many years – certainly in terms of job creation and economic development. I truly wish them well.

But, as we ponder Blackberry’s future, it is certainly also worth asking why there are so relatively few Canadian tech businesses of the scale and impact of Blackberry?

It seems to me that this is a particularly timely question to ask. We are currently seeing a surge in activity related entrepreneurship, including in many post-secondary institutions in Canada. A good part of this effort is focused around trying to generate new tech start-ups. Is it likely that these efforts will give birth to another Blackberry?

In their thrust towards entrepreneurship, Universities and Colleges are trying to respond to a number of forces. Current labour market conditions are presenting challenges in terms of providing a supply of more traditional jobs for their graduates. Both in Canada and beyond, youth unemployment is a growing concern. It is also fair to surmise that underfunded and cash-strapped post-secondary institutions see these new ventures as a potential source of income – a way to monetize the knowledge and discoveries that they create and foster. Universities, in particular are also trying to adapt to the push from government towards a more “vocational” and “relevant” focus.

Yet efforts at spawning new tech businesses are not new. Various programs and incentives have existed for some time to encourage new tech start-ups and very many new businesses have indeed been launched. Many have taken flight. But what has become of all of these start-ups? What might we learn that could help focus the current efforts and lead to the emergence of more companies of the scale of a Blackberry?

Some very useful insights into this can be found in a report form ITAC (Information Technology Association of Canada) entitled The Issue: Building Stronger Tech Companies in Canada. The report highlights a number of structural challenges to be considered and overcome, including access to market, capital and talent in order for a new business to be successful. These are all significant.

But the report also flags an important problem – and one that it should be possible to overcome.

The current structure of provincial securities regulations in Canada seems to make it more likely that promising new companies will be sold off before they ever have the opportunity to reach their full potential. The report notes that this is because the mechanisms which exist in other jurisdictions, most notably the United States, to empower Boards of Directors to act in the long-term interests of the business are not available to Canadian boards. Many of these companies are simply sold to the highest bidder just at the point when they are truly set to take flight – notwithstanding the views of those empowered to oversee these businesses. According to the ITAC report, the potential economic and job benefits to Canadians are typically not realized under these circumstances, with key leadership roles and expertise being consolidated offshore, often leaving little of significance remaining in Canada. The Appendix of the report makes sobering reading as it itemizes the many Canadian tech firms who have ended up in foreign hands through this process. Certainly foreign ownership is not in itself a bad thing and some entities continue to develop under these owners. But looking at this list, it is difficult to believe that overall outcomes are optimized in the national interest.

Surely the relevant provincial bodies need to take a hard look at this.

 



2 thoughts on “Blackberry blues and the future of tech in Canada

  1. How true for so many small companies not only IT ones. I know first hand how difficult it is to run a small business and I have several small companie sthat have started up back in the seventies who are still struggling. Two of the three are considering moving across the border. Government intrusion into companies that have been Kosher paying their taxes and enduring non stop inspections are destroying the initiative for the next generation that is to take over. They then cannot put up with our Canadian intrusion into their business where they are peddling hard to get business in other countries, This intrusion makes our products more expensive and especially in SE Asia we lose business for we cannot match the prices that want for our products. competition is enough to place heavy pressure on our products but the government continual inspections kills the most for staff is hired just to appease their needs. Canada is not friendly to the small entrepreneurs. Something has to change Help Justin!!!!!!

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