Resources Articles of Interests
Canadian tech firms need better entrepreneurial skills: study
Posted in Growth
Written by Derek Abma of the Financial Post on October 14, 2009 Too many Canadian technology firms are seeing an early demise because they lack the business skills to turn innovative ideas into marketplace success stories, according to a study released Wednesday. The Impact Group, a Toronto-based business advisory firm, said in its paper that "While Canada is second to none in technology, there is a significant lack of commerce skills among our technology entrepreneurs," Douglas Barber, former CEO of Gennum Corp. and one of the study's authors, said in a statement. "Companies often find themselves dependent on The Impact Group report was based on interviews with former CEOs and investors with 18 Canadian technology firms that no longer exist. Of these organizations, 10 became insolvent while the remainder disappeared through mergers or acquisitions -- five managed to do so profitably. Much of the problem, the study's authors assert, stems from a general lack of entrepreneurial culture in That can include a certain level of mandatory training in business by all post-secondary students, no matter what their major is, he said. Mr. Crelinsten added that as early as kindergarten, children can learn about concepts such as "value exchange." "There's a supplier and a customer," he explained. "It's not just a product or a service in exchange for money. . . . You have to understand your customer. You have to understand their needs. . . . Basically, you have to build trust. People won't deal with you if they don't trust you and think that you're trying to screw them." One of the keys to a technology company's commercial success, the Impact Group's study said, is understanding that customers are the ultimate source of revenue. Financing from friends, family, venture capitalists and banks is not sustainable for the long term, it said. "You would think that would be obvious," said Mr. Crelinsten. "But in fact -- especially in the technology sector -- we're so inebriated with technology, we think that if you have a good idea and enough financing, it's going to succeed." Mr. Crelinsten said of the 18 companies that were part of the study, the average lifespan was seven years, and more than one-third never made a sale. "And when we asked them, they had no idea who the customer might be," he said. Besides changes to the education system, governments could help the situation by better focusing their assistance, Mr.Crelinsten said. He said While the Impact Group's study focused on small, early-stage firms, Mr. Crelinsten said the failure of Canadian icon Nortel Networks Corp. provides a good example of what's wrong with much of "Nortel was a research culture," Mr. Crelinsten said. "People weren't trained to be business-oriented or customer-oriented. . . . A lot of the people who came out of Nortel were like that, obviously, and when they started to do a startup, they failed because they didn't have the customer-facing skills."