wisdom exchange 2006 report

Profiles in InnovationMay 2006 Kingbridge Centre, King City, Ontario

THE FORUM FOR CEOS AND PRESIDENTS OF ONTARIO’S LEADING GROWTH FIRMS

12th Annual Conference Report >>

WISDOMEXCHANGE

2006

The Ministry extends its appreciation to CEOs ofOntario’s fastest growing firmswho took the time to “gather on the park bench,” gain perspective and exchange ideas at

Wisdom Exchange 2006. Wisdom Exchange provided a stimulating networking forum, which

was once again rated as a success by CEOs and presidents of Ontario’s leading growth

firms who attended.

Here’s what CEOs had to say:

“Our clinics generated lively discussion from participants who obviouslycare deeply about their businesses and the intellectual property they’ve created. Thanks for the opportunity for us to lead these clinics –it’s much appreciated.”

Christopher AidePartner, Toronto Intellectual Property Group

Baker & McKenzie LLP

“I came away inspired by some of the speakers, and I am making plans to get more of our companies in touch with them.”

David Hogg President, HPM Consortium

“I always come away invigorated as well as a little appalled atwhat I am doing or not doing, when having a chance to look atthings from a different angle. My colleagues feel the same way.It’s a great learning experience. This venue is such a positivereinforcement…I salute the Ministry for having the foresight ofmaking it available.”

Jill AndersonPresident, Aecometric Corporation

“Congratulations on a first-rate event. The quality of the participants was exceptional. I found my many conversations consistently interestingand productive. The speakers were outstanding -- each had insights thatwere valuable takeaways for me and, I’m sure, the other attendees. Nowit’s on to next year’s event!”

Mark RomoffPresident & Chief Executive Officer, Ontario Centres of Excellence

“Excellent event…keeps getting better.”

Fabio SaposnikPresident, Orvitek Inc.

For CEOs who missed the event, we hope that this report provides a profile of the insights shared by leading businessstrategists and demonstrates that there is no cookie cutter approach to successful innovation.

Table of Contents

2 Introduction

4 Canadian myth-busting and the real impact of the InternetLeonard Brody, CEO, Author, Technology Entrepreneur

6 Survive and thrive during the coming labour shortageLinda Duxbury, Professor, Sprott School of Business, Carleton University

8 Old brands, new beginnings and the importance of park benchesKeith Pelley, President & CEO, Toronto Argonauts

10 Innovation without the smoke and mirrorsLarry Keeley, Co-founder and President, Doblin Inc.

12 Renovating old business modelsA Town Hall panel discussion • Bruce Poon Tip, CEO, G.A.P Adventures• François Bouchard, CEO, The Country Grocer• Larry Rosen, Chairman and CEO, Harry Rosen Men’s Wear• John Hughes, Deloitte, Co-author of Building the Best –

Lessons from Inside Canada’s Best Managed Companies

14 Creating an innovation environment Richard L’Abbé, Vice-Chairman, Med-Eng Systems Inc.

WISDOM EXCHANGE 2006 1

It was a remarkable and rewarding conference,

a chance for CEOs to compare notes with their

peers. At the same time, a strong line-up of

engaging speakers challenged their beliefs on the

innovation process and stretched their mental

muscles with new facts and perspectives.

Introduction

In May 2006, CEOs from more than 100

of Ontario’s fastest growing companies

gathered to share their experiences with

innovation, what worked and what didn’t,

and what trends were emerging that would

shape tomorrow’s business landscape.

The 12th annual Wisdom Exchange, held at

the Kingbridge Centre just north of Toronto,

was a thought-provoking forum for new

ideas and stimulating conversations about

hot business issues.

2 WISDOM EXCHANGE 2006

• Technology entrepreneur Leonard Brody provided

surprising insights into the rising importance of

virtual communities.

• Linda Duxbury revealed what lay behind the

coming labour shortage and offered pragmatic

strategies for turning the changing workplace to

your company’s advantage.

• Keith Pelley, at the opening night dinner, hosted by

the Minister of Economic Development and Trade

Joseph Cordiano, gave an insider’s report on the

remarkable turnaround of the Toronto Argos

football club.

• Larry Keeley offered a systematic, disciplined

approach to innovation that, to the delight of

many Fortune 500 companies, has proven to be

highly effective.

• Richard L’Abbé described how his company grew

so fast that it grew into trouble, then found its way

back onto the road to global success.


For those who attended and couldn’t keep up with the flood of new insights

and ideas, the following report will help jog your memory. For those whomissed the event, it can offer a taste of what took place and a tantalizinghint of what could be waiting for you at next year’s Wisdom Exchange.

WISDOMEXCHANGE

2006


When it comes to pushing the boundaries ofinnovation, Leonard Brody is one of the veteranswho’s “been there, done that.” The lessons helearned on the front lines of technology not onlycaptivated the CEOs gathered for the opening sessionof the 2006 Wisdom Exchange, his lively presentationset the bar high for every subsequent speaker.

Brody is one of Canada’s most respected technologyentrepreneurs. He participated in one of the largestInternet IPOs in history and has raised millions ofdollars for start-up companies. Currently, he is aventure partner at Growthworks Capital, one ofCanada’s largest technology funds, and a Director of Canada’s largest technology association, CATA.He is also co-author of the best selling booksInnovation Nation: Canadian Leadership fromJurassic Park to Java and Everything I Needed toKnow About Business...I Learned from a Canadian.

In a far-ranging presentation that both informed andstirred the audience, Brody offered insights into theimpact of the Internet and upcoming tech trends. But he began his remarks by destroying a number ofmyths about Canadian business in the 21st century.

“We’re our own worst enemy,” he began. “We are a nation that sees the glass as half empty whenthe world sees us in a totally different light.”

Canadian myth-bustingand the real impact ofthe Internet

Leonard BrodyCEO, Author, Technology Entrepreneur



• He ticked off a rapid-fire list of telling points:

• In the past 15 years, Canada has had the besteconomic turnaround of any nation in theindustrialized world.

• The Economist forecasts Canada will be the mostcompetitive economy in the world through to 2009,with the best overall business infrastructure.

• In 2005, the Anholt-GMI National Brand Indexranked Canada as the second most respected brandin the world.

• Alberta’s oil sands are a phenomenal source ofwealth on a scale comparable to Saudi Arabia,ensuring long-term economic growth.

“The Internet is changing us as people and as a

society,” Brody said. “In fact, for some young people,

virtual communities can be more important than

physical ones.”

Looking ahead, while the big picture is not clear,some key tech-related trends seem to be emergingfrom the mist, creating significant cultural shifts.This is especially true for young people born since the1980s who have grown up with computers. For them,their sense of community is not restricted bygeography but is highly mobile and built more onshared values and interests.

This shift away from geographic ties is also seen inthe dramatic growth of mobility in the working world.The workplace is no longer fixed. People are working at home, at clients’ offices, in their cars and on vacation.

“The mobile workforce can be a challenge to manage,but it’s well worth it to learn how,” Brody said.“While it may seem counter-intuitive, the businessbenefits are huge.”

But for employers the benefits can be great, such as cost savings, better morale and performance,enterprise scalability, access to the best talent, withno restrictions on geography, labour arbitrage, anddisaster risk management.

Given the huge impact of technology, Brody surprisedhis audience with his closing advice for businessleaders looking to grow through innovation.

“Don’t focus on the technology,” said Brody. “Ifthere is one key message I want to leave with youit’s ‘community.’ Technology constantly changes.People and community are the only things thatmatter. Focus on meeting their needs in new ways.”

“Canada is the top producer of technologicalinnovation in the world – bar none – and we arefierce competitors,” said Brody. “It’s time we gotbehind our own brand.”

Brody then turned his spotlight on the Internet andilluminated emerging facts, trends and issues thatwill shape the business landscape.

Within the last 15 years, the Internet’s presence inthe mainstream of business and society has grownfrom invisible to omnipresent. Its impact cannot beoverestimated.

“The Internet is now as accepted as water,” saidBrody. “In the U.S., 87 percent of teens use theInternet every week. People now spend more timeon the Internet than they do watching television.”

“What we need to understand is that we are still inthe era of black-and-white TV in terms of Internetdevelopment,” he said. “It’s like we’re inkindergarten: we don’t know where we are, letalone where we are going.”

Survive and thrive during the cominglabour shortage

Linda DuxburyProfessor, Sprott School of Business, Carleton University

Organizations don’t innovate, people do. While that statement seems self-evident, it has profoundimplications for knowledge-based companies,particularly when coupled with a shrinking talent pool.

“If you want your organization to thrive during thecoming labour shortage, it means shifting yourfocus from managing money to managing people,”said Linda Duxbury as she launched into a lively,fact-filled and often witty overview of the cominglabour crunch. Throughout her presentation Duxburyprovided tips on what CEOs can do to help theircompanies prosper.

Linda Duxbury, a professor at the Sprott School ofBusiness, Carleton University, has examinedCanadian and international demographics andcompleted major studies on workplace issues.

For many people, just the mention of humanresources can make their eyes glaze over. But in aworld where products and processes can becomeobsolete overnight, companies live or die based onthe skill, talents and knowledge of their employees.

And employees – not just good employees, butvirtually any warm-blooded potential employee – will soon be in short supply. “That’s not an opinion, it’s a statistical certainty,” said Duxbury.

For Duxbury, the picture is clear: “We are movingfrom a buyer’s labour market, where there weremore good employees than jobs, to a seller’smarket. We are facing a huge labour shortage forthe next two decades.”



“When it comes right down to it, you can’t coerce, command, control

or buy commitment and enthusiasm, nor can you order someone to

be innovative and creative,” said Duxbury in closing. “You need to

create an environment that promotes these attributes. You do this by

how you behave, not what you talk about. You have to start viewing

employees as assets rather than costs.”

The reason is simple, Baby Boomers didn’t haveenough kids to grow the labour pool to meet theneeds of a growing economy. In fact, they didn’thave enough children to replace themselves.

The numbers are clear. For the past 25 years, theCanadian labour force has grown by approximately226,000 per year. This decade, it will grow by123,000 per year. By 2010, that will drop to42,000 per year.

The projected labour shortage is not purely aCanadian phenomenon. In many European countries,the situation is worse. Even China will be strugglingto cope with the after-effects of its long-standingpopulation policy of one child per family.

The labour shortage will be worldwide. In response,HR management will emerge as a critical successfactor. As top employees become more difficult tofind, how well a company can attract and retainemployees becomes a competitive advantage.

“In a buyer’s market, you can tell employees towork this weekend or else you’ll find someone whowill take their job,” said Duxbury. “In a seller’smarket, that won’t work. You need them more thanthey need you. They will tell you what they want. If your company won’t give it to them, a companyin Alberta will. And if Alberta won’t give it to them,a company in Australia will.”

So, what can a business do? “I recommend thatcompanies focus on employee retention,” saidDuxbury. “Losing a good employee carries hugecosts in terms of loss of corporate knowledge,customer relationships and recruitment. Besides,as anyone who has been through it will tell you,hiring can suck the lifeblood out of you.”

The challenge is to make your company a moreattractive place to work than your competition.Marketing 101 tells you to study your target group –in this case, current and potential employees – andmeet their needs. But a close examination showsthat this may be more complex than you first thought.

Your workplace might include three or four different“generations” of employees, each with differentneeds and expectations, said Duxbury. Generations,in this context, are defined not strictly by their agebut by their formative influences and shared values.

Veterans were born before or during World War II andtheir formative influences were the atomic bomb and post-war reconstruction. In the workplace, theyvalue loyalty and they tend to defer to authority.

Baby Boomers were born 1947 to 1964. Theirformative influences were economic prosperity, civilrights, birth control and rock ‘n’ roll. In the workplace,they tend to accept high levels of stress as the normbut demand good “perks” and status symbols.

The Baby Bust (Generation X), born 1961 to 1974,grew up influenced by economic recessions,environmental degradation and AIDS. They arecomfortable with technology in the workplace andtend to be both ambitious and focused on job security.

The Echo Boom (Nexus or Gen Y), born 1975 to1990, were raised in a child-focused society amidstgrowing violence, terrorism and gangsta rap. Morethan any other generation, they tend to be independentand entrepreneurial with a focus on creating a goodwork-life balance.

Different generations, different needs but with oneshared attribute: growing clout in the labour market.

Old brands, new beginnings and the importance of park benches

Keith PelleyPresident and CEO, Toronto Argonauts


For football fans, few plays are more exciting to watchthan an interception that turns the tide of a big game.For Toronto Argo fans, that’s exactly what Argonautspresident and CEO Keith Pelley has pulled off.

Canadian Football League franchises have beenstruggling financially in the past few years, and theArgos were no exception. When Pelley joined theArgo football club in November 2003, the businesswas in receivership. “We had no GM, no officespace and fewer than 10 employees, some ofwhom had to share computers,” Pelley revealedduring his dinner speech at the Wisdom Exchange.“We were a 131-year-old start-up.”

What a turnaround in one year!

In addition to the Grey Cup victory, 2004 saw theArgo season ticket base more than doubled andaverage attendance at Argonauts home games wentfrom 12,000 in 2003 to over 25,000 a game in2004. Sponsorship revenue tripled and 22 newsponsors signed on.

Pelley joined the Argonauts after a broadcasting careerthat spanned more than two decades. He was thefirst Canadian to produce NFL football when he joinedthe Fox Sports Network in 1995. He has producedNHL hockey, Major League Baseball and the WorldLeague of American Football. He has worked for ESPNand Disney. He was president of TSN when the Argoowners enticed him into picking up the challenge.

Although he had been involved in pro sports formost of his career, when it came to actually runninga football club, “I had no idea what I was doing,”Pelley admitted. “I had so much to learn.”

The biggest issue the Argos faced, Pelley felt, and theone that needed to be tackled head-on, was branding.The problem in terms of brand was and is that theprofessional sports market in Toronto is incrediblysaturated. Maple Leaf Sports and Entertainmentowns the Toronto Maple Leafs, the Raptors, Leafs TV,Raptors NBA TV and the Air Canada Centre. The BlueJays are owned by Rogers Communications, whichalso owns the Rogers Centre (formerly Skydome) anda vast stable of magazines, radio stations, cable


systems and other media properties. That’s big leaguecompetition for a struggling brand like the Argos.

The most pressing problem was time. Pelley signedon just before Christmas 2003 and the new seasonwould start in the spring, whether the Argos wereready or not.

Then Pelley found an edge. “We determined thatthe CFL brand difference was that we wereaccessible,” he recalled. “We decided that wewould be out in the community more than any otherbrand. We would create opportunities for the fansto meet the players and the coaches. We wouldcreate awareness of the team in new areas. Ourgoal was ‘more touches’ than any other team.”

He and his small staff kicked into high gear.

“It was four months I’ll never forget,” he told theWisdom Exchange audience. “I made sure I was outevery night speaking about the Argo brand. I’d gethome by 10 pm, sleep ’til 3:30, read ’til 5:30,sleep ’til 6:30 then start again. I was determinedto learn everything I could to do the job properly.”

“I can’t tell you the number of times I had the doorshut in my face,” he continued. “It was a brand noone wanted to be associated with. In 2003, thebrand lost $9 million. We had one cash sponsor. We were at zero.”

Today, it’s a whole different picture. Now, there areover 600 events per year in the community involvingArgo players, coaches and team employees. The Argoshave more than 45 cash sponsors and another 20 incontra. Attendance has grown to 30,000 per game.

“We are a brand people want to be associatedwith,” said Pelley.

But the Argos have become more than a business.One of the initiatives that Pelley is most proud of isthe team’s Stop the Violence Foundation.

“The last few years have seen a rise in street violence,especially in Toronto, and especially involving guns andyoung people. Some of the Argo players come frommajor U.S. cities like L.A. and Detroit. They experienced

first-hand the devastating effects of violence. Withtheir encouragement, the team started the campaignwhich has been a big hit with the community. It educatesyoung people about guns, gangs and violence, raisesmoney for underfunded community organizations and creates opportunities for the players to becomeone-on-one mentors for youth-at-risk.”

“I get emotional when I talk about it because thecampaign is making a difference to kids’ lives inour community,” said Pelley. “At the same time, ifyou ask me is the campaign good for our brand?Yes. Absolutely. No question about it.”

The Argo turnaround taught Pelley a few lessons.

First, the tremendous importance of branding.“When I was at TSN, I was known as a big brandguy. Today, I’m even more so. Today, its brand,brand, brand. You have your vision statement oryour mission statement and you never, ever, everdeviate from it.”

Second, he has learned to hire people based on four criteria: work ethic, attitude, intelligence andknowledge. “Knowledge is a distant fourth,” hesaid. “Knowledge can be acquired. Work ethicand attitude are right at the top of the list.”

The third lesson has to do with Pelley’s philosophyof leadership. “I once worked for someone whosaid that being a boss is not a popularity contestand I have come to disagree with that. I thinkit’s really, really crucial that your employeeslike you. If they like you, they’ll take a bullet foryou. If they just respect you, you’ll die.”

Finally, and perhaps most importantly, “spendsome time on the park bench,” Pelley advisedhis fellow business leaders. Like most CEOs,Pelley’s schedule is jammed with travel,meetings, long days and answering e-mails atnight at home. But, near his office, there is apark bench where he retreats to get away fromthe pressure.

“I guarantee that if you spend one hour each

week sitting on a park bench, you’ll be amazed at

the results. The time I spend there is invaluable.

It gives me a chance to get back my perspective

and it gives me great ideas.”

Innovation without the smoke and mirrors

Larry KeeleyCo-founder and President, Doblin Inc.

If innovation is the path to greater profitability, Larry Keeley wonders why most businesses are sobad at it.

“Innovation fails 96 percent of the time. No otherarea of management science puts up with thislevel of randomness,” he told the CEOs gathered forthe opening session on the second day of the 2006Wisdom Exchange. “Innovation is surrounded bymyths and clichés. You have to separate lore fromlogic to get innovation to happen reliably.”

Keeley, president and co-founder of Doblin Inc. and graduate-level teacher in innovation strategy atthe Institute of Design in Chicago, has helpedFortune 500 companies from American Express toMcDonald’s, Pfizer and Xerox significantly increasetheir innovation success rate. BusinessWeek recentlynamed him one of America’s top innovation gurus.

His refreshingly contrarian views on innovation cutthrough much of the smoke and mirrors that oftensurround the topic. He began with a very pragmaticdefinition.

“The term innovation should be reserved for aninitiative that can produce a viable new conceptthat throws off enough free cash flow to justifyitself,” he said. “This keeps us from the sloppyhabit of calling anything ‘new’ an innovation. Italso begins to force some expectations. This iswhen innovation builds real value.”

Secondly, he said, to focus only on product innovationis nearly always wrong.

Henry Ford’s big innovation was not the productionline. His breakthrough was that he changed thebusiness model for the auto manufacturing industry.After nearly going bankrupt three or four times, Fordstarted selling the cars to his dealer network whichgave him immediate cash flow to finance growth.

Dell did not become rich by building a betterpersonal computer. Dell revolutionized the industrythrough innovations in financing, marketing,distribution and customer service.



Starbucks reinvented a commodity as a consumerexperience.

The list goes on. What’s important, Keeley told theaudience, is to broaden the drive for innovation beyond products.

Research by Doblin has identified ten different typesof innovation within four distinct areas: finance,process, offering and delivery. The goal is to stitchtogether different types of innovation into a coherentand effective approach that creates value.

Keeley offered an Ontario example of innovativethinking that has paid big dividends for the organization.

“The University of Waterloo has the reputation of a Canadian innovation incubator because of two major decisions that the founders of the schoolmade early on,” he explained. “The first was to allowthe faculty to claim ownership of their researchrather than handing it over to the university. Thesecond was to have the students work as a part oftheir academic studies.”

“This gave UW an ‘entrepreneurial’ edge and led toa proliferation of high-tech start-ups created bystudents and faculty; the most famous of which isResearch In Motion. It has also given UW a hugeeconomic impact, $1.6 billion province-wide in 2001,and extended its influence beyond its region to thewhole of Canada, Silicon Valley and globally, withformal academic exchanges in over 40 countries.”

Those early decisions by the University of Waterlooinadvertently stitched together five different typesof innovation. Financially, it changed the university’sbusiness model and created new financial networkswith faculty and spin-off businesses. It changed one of the university’s core processes – the creationof intellectual property offered students a new kindof academic experience and forever changed theuniversity’s “brand.”

By multiplying the types of innovation, organizationsmultiply their impact. Keeley came to this understandingthrough 26 years of studying innovation andinterviews with literally thousands of leading CEOsaround the world.

What he advocates is a much more disciplinedapproach to the process of innovation, from diagnosisthrough invention, launch and extension. A highlysimplified process summary includes four steps:

1. Study the fundamental components of yourindustry, looking beyond products and at thefull spectrum of innovation types.

2. Set an innovation goal that identifies changingthemes and customer discoveries.

3. Build fewer but bolder concepts that focus onplatforms, not products.

4. Implement clearly and swiftly with prototypes,not spreadsheets.

By using this process, Keeley said, companies havebeen able to improve their success rate by up to 70 percent.

“Clearly defined protocols help people do what ismost useful in the heat of battle,” he explained.“How can you improve what you don’t define and measure?”

Keeley also holds a contrarian view on the challengesof intellectual property (IP) rights in an era in whichinnovation is the Holy Grail.

“The best way to protect IP today is to keep itmoving forward at a pace that others can’t keep upwith,” he said. “Secondly, the real payback comeswhen your IP becomes the platform that everyoneelse builds on. In that sense, IP management is lessabout keeping your competitors out and more aboutencouraging partners to adapt your platform.”

What is the real driving force behind innovation? Keeley has no doubt.

“Innovation is about leadership, about senior executives sensing

when and where is the time and place for change,” he told the CEOs.

“Your job as leaders is to get a finger on the pulse of the market,

then get ahead of what your customers want.”

If there was one imaginary, all-in-one, combinedcustomer for the four experts gathered for this year’sTown Hall at the Wisdom Exchange, it would be animpeccably dressed male backpacker in the hills ofCosta Rica who takes a break to order Canadiangroceries online and read a business bestseller.

The annual Town Hall at the Wisdom Exchange is apopular forum that provides a practical counterpointto the discussion about trends to watch for and newtechnologies around the corner. Once again, thisyear’s session brought together business leaderswho have been on the front lines of innovation andwho have returned with hard-won lessons that theyshared with conference delegates.

They were Bruce Poon Tip, founder and CEO of G.A.P Adventures; François Bouchard, CEO of TheCountry Grocer; Larry Rosen, chairman and CEO of Harry Rosen Inc. and John Hughes, a charteredaccountant and partner in the Private CompanyServices of Deloitte.

G.A.P Adventures began with a new idea for thetravel industry: cultural tourism. Why not take smallgroups of travellers on guided tours off the beatentrack so they could experience local culture upclose? Fifteen years ago, this was a revolutionaryconcept. Today, the company that pioneered it hasgrown to be a market leader, providing more than1,000 adventures to over 100 countries.

That explosive growth was propelled by a secondinnovation: understanding tourism as an exportableservice. Why not, for example, convince a group ofBelgians to buy a trip to Mongolia from a Canadiancompany?

“We began with new ideas; our challenge has beento remain innovative,” said Bruce Poon Tip. “Overthe years, our focus has shifted back and forthbetween product and market focus. We started asvery product-focused, with trips for backpackers.Then, as we offered more and different types ofadventures, we became more market-focused.”

Renovatingold business models

A Town Hall panel discussion

Bruce Poon Tip, CEO, G.A.P Adventures

François Bouchard, CEO, The Country Grocer

Larry Rosen, Chairman and CEO, Harry Rosen Men’s Wear

John Hughes, Deloitte, Co-author of Building the Best –

Lessons from Inside Canada’s Best Managed Companies

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Today, the pendulum is moving back towards a moreproduct-driven offering for G.A.P Adventures, andthat seems to make him happy. “I’ve always wantedto take people to Antarctica and now we can doit,” he revealed with a big smile. “We’ve bought ourown icebreaker!”

For The Country Grocer, success came not so muchfrom a new product but from putting a cyber-twist ona traditional service. The Country Grocer successfullyoperates a 10,000 square-foot store in the southend of Ottawa, but business growth and fame hassprung from its Internet operation.

While ordering groceries online may have seemedlike a radical notion when the website was launched,company owner and CEO François Bouchardexplained, “We’re just doing what grocers weredoing 50 years ago. You’d call them on the phone,they’d put it on your tab then deliver on a bike.We’ve just adapted that model to new technology.”

The Country Grocer is doing a booming businesswith Canadian ex-pats around the world. It has somany customers in the High Arctic that it offers dailydeliveries to the region. Another major market is the“Gen X” age group. Buying groceries online suitstheir lifestyle and, for many of them, it helps them tolook after an aging parent. In fact, one-third of theircustomers are shopping for someone else.

And while some social commentators worry aboutthe loss of personal contact through Internet sales,Bouchard said that online relationships can be verystrong. “We get e-mails from our regular customerstelling us, ‘Don’t worry. I’m going on vacation nextweek. I’ll be back.’”

Like The Country Grocer, Harry Rosen Inc. has foundsuccess by using the latest technology to provideexceptional levels of old-fashioned service. It hasgrown from a single, 500-square-foot store in Torontoto become a powerhouse in Canadian retailing. Its16 stores nationwide account for 40 percent of themarket in high-end men’s wear. The chain has drawn

accolades for the way it has adapted customerrelationship management tools and staff training toprovide the personal customer care that exemplifiedthe original store, but in a modern, database-supported retail chain environment.

“We don’t sell clothes,” revealed Larry Rosen,chairman and CEO. “We’re in the relationshipbusiness. It started with my father, who kept cardson every customer. Today, we spend more than $1 million every year on training to teach our staffhow to build relationships.”

Each successfully innovative company seems to find its own path, observed Deloitte’s John Hughes,co-author of Building the Best: Lessons from InsideCanada’s Best Managed Companies. The Canadianbestseller gives a behind-the-scenes tour of 10highly innovative companies that have met toughchallenges and gone on to break away from the packand become market leaders.

“Magnotta Winery, for example, started with abusiness plan that called for distribution throughthe LCBO in Ontario but that didn’t happen. What did they do? They opened their own stores,”said Hughes. “Cirque du Soleil burst on the scene,then faced the challenge of keeping that creativespirit alive, year after year, as the company grew.SpinMaster, which needs new toy ideas constantly,created a whole network of inventors to feed theminnovative products.”

“There is no cookie-cutter approach to successfulinnovation,” said Hughes. “If you study 50 companies,you will find 50 different approaches.”

For companies like G.A.P Adventures, The Country

Grocer and Harry Rosen Inc., it means using new

technologies to renovate an age-old business model.

The result? Financial success – and a happy

backpacker in the hills of Costa Rica.


Creating an innovation environment

Richard L’AbbéVice-Chairman, Med-Eng Systems Inc.

Med-Eng Systems of Ottawa was the poster child forbusiness growth and success until 2004.

As a developer and manufacturer of protectiveequipment for police and military markets, they had90 percent of the world market for bomb disposalsuits. Launched in 1981, they grew rapidly and werenamed one of Canada’s best-managed companiesfor several years in a row. They won more than halfa dozen export awards from the federal andprovincial governments. They grew so fast, theygrew right into trouble.

“In 2004, revenues dropped by 37 percent and we were in deep trouble,” Med-Eng co-founder andVice-Chairman Richard L’Abbé recalled during hislunchtime speech at the Wisdom Exchange. “Butnow, we’ve turned it around. This year, we’re inhypergrowth. Not only that, about 85 percent ofthis year’s revenue is coming from products thatdidn’t exist 12 months ago.”

“A company goes through a lot a phases during 25 years,” L’Abbé told the gathering. “Mistakes aremade and lessons learned.”

One of the big lessons was that, when you dominatea niche market, you can get cocky. “We got used toowning the market,” he revealed. “But it didn’t takelong before we were being copied by nine companieson four continents. Our proprietary productbecame a commodity. We weren’t prepared for itand we found we couldn’t respond quickly.”



The company had grown larger, but it had becomecumbersome.

“Managing growth requires good processes,” saidL’Abbé. “But developing processes is boring, so Iwould hand it off to staff, usually to someone whowas not really doing much anyway. The resultsweren’t very effective.”

As the company grew through diversification andacquisition, all the attributes of a good start-upcompany – strong market knowledge, flexibility,client focus and decisiveness – were handcuffed,L’Abbé said. Internal silos developed between R&D,marketing, sales and operations. Innovation died.They instituted a phase-gate approach to newproduct development. They ended up with a processthat required 85 signatures and 135 checkpointswhere projects could be killed.

“However,” L’Abbé observed dryly, “adversitypresents a great opportunity to change.”

Their first step was to cut staff by 15 percent. Thecompany needed to change and it was clear thatthere were people on staff who didn’t want to workin an environment of change. “As soon as we did it,productivity went up,” he said.

But changing an organizational culture takes time.

They started by teaching managers how to hirebetter. They profiled their best people to see whatqualities they wanted in new hires. Then theyscrapped the gate process and replaced all theirproduct managers.

Their goal was to hire the best people for eachspecific job, pay them well and create an environmentthat would foster innovation. To achieve that, theycreated product management teams with amarketing person, an engineer, a designer and an outsourcing expert.

“We wanted a highly focused and motivated team,” said L’Abbé. “We needed them to be like a wolfpack.”

Today, when a client has a problem, the whole teamgoes out to the meeting. They all hear directly fromthe client about the problem, and they all hear thedetails filtered through their own expertise. They canstart designing the solution on the plane ride backhome. They go back and check their solution withthe client, fix it, go back again and fix it again.

“Typically, after the third visit, the client says ‘Wow!This is fabulous’,” said L’Abbé. “This approach isnow generating 40 percent of our revenues.”

For Med-Eng, one of the biggest lessons theylearned during 25 years of rapid growth is the criticalimportance of focusing on human resources.

“Focused teams really work,” said L’Abbé. “Theright teams will come up with new products so fastyour competition will be left shaking their heads.”

“The goal is to become an organization with the

capability for continuous change,” said L’Abbé.

“Innovation happens when you create the environment

for it to flourish.”


There are more than

340,000small and medium-sized businesses

(SMEs) across Ontario

They make up

99%of the province’s businesses

and account for more than

50%of all jobs

Entrepreneurs have built the province’s small business community into a key driver of Ontario’seconomy. They are principal contributors to innovation, investment and job creation in every part ofthe province.

In May, Premier Dalton McGuinty underlined the importance of Ontario’s small business communityby creating the new Ministry of Small Business and Entrepreneurship. The ministry is focused onhelping SMEs to grow and prosper, and will be a source of programs, information and advice forbusiness owners across the province.

The annual Wisdom Exchange and Leading Growth Firm Series are two successful programs thatsupport and showcase Ontario’s growth firms. The government will continue to share criticalbusiness information, insights and best practices with CEOs to promote effective managementpractices that will help them to innovate and compete.

To access reports in the Leading Growth Firm Series and for updates on the Wisdom Exchange visit:www.wisdomexchange.ca

Make a note to attend the next Wisdom Exchange…We’ll keep you informed!

• Stats at a Glance:

• 2.7% of Ontario businesses are leadinggrowth firms that created 60% of the newjobs between 1997 and 2000

• 99% of Ontario firms are small and medium enterprises (SMEs) with less than500 employees

• 97% of Ontario firms have less than 100 employees

• SMEs accounted for over half of total privatesector employment in Ontario (1994–2003)

Contact:

Ministry of Small Business and EntrepreneurshipPartnership and Business Development56 Wellesley Street West, 4th FloorToronto, Ontario M7A 2E7Phone: 416-325-8772

Visit the website: www.sbe.gov.on.ca

>> >>

Leading Growth Firm Series CEO Perspectives

The Leading Growth Firm Series researches and promotes the effectivemanagement practices of CEOs of Ontario’s high performing firms.

14 Shifting Demographics: The Search for Talent

13 Outsourcing: Alliances for Growth

12 Why Leading Growth Firms Matter

11 Planning for Succession

10 Partnering for Growth

9 High Performing Advisory Boards

8 Winning Management Teams

7 Leveraging Customer Relationships to Drive Growth

6 Dynamics of Growth: Is High Growth Sustainable?

5 The Wisdom Exchange 2000 Report

4 The E-Business Readiness Assessment Report

3 The Six Stages of Growth

2 The Growth Builders Report

1 The Innovation Report

For copies of the reports, visit www.wisdomexchange.ca and click on Ô Leading Growth Firm Reports.

Proud Sponsors of Wisdom Exchange 2006

wisdom exchange 2006 report

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