The Future of Productivity: Clear Choices for a Competitive Canada

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Deloitte's Chief Innovation Officer, Terry Stuart, presented The Future of Productivity: Clear choices for a competitive Canada, at the Halifax State of the Economy Conference on May 22, 2013.

What is driving Canada's poor productivity performance? Why is the productivity gap between Canada and other countries so big? How can Canada prevent its "gazelle" firms from turning into "water buffaloes"? How can we drive growth and competitiveness to ensure a prosperous future? Terry also highlighted key recommendations for companies, government, and academia on how to improve Canadian productivity by innovating.

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The Future of Productivity: Clear Choices for a Competitive Canada

  1. 1. The future of productivityThe innovator’s time is nowMay 22nd, 2013
  2. 2. © Deloitte LLP and affiliated entities.Future of Productivity
  3. 3. © Deloitte LLP and affiliated entities.Productivity is the most significant threat to Canada’sstandard of livingEmployment rate% of total populationthat is employedHoursWorkerOutputHourGDPPopulationX Work effort X Productivity = Standard of livingSources: Centre for the Study of Living Standards, OECD2010$59.28$46.212010$59.28$46.21$13/hr
  4. 4. © Deloitte LLP and affiliated entities.Canada’s economic composition by size and sector isnot a key driver of slow productivity growthSource: Statistics Canada, Industry Canada, U.S. Bureau of Labor Statistics, Deloitte AnalysisSize doesn’t matter Contribution to Canada–U.S. productivity gap 2009U.S.Canada$59.28$46.21Impact of productivity within eachfirm size (98% of productivity gap)$12.81Impact of firm size distribution(2% of productivity gap)$0.26
  5. 5. © Deloitte LLP and affiliated entities.Canada’s economic composition by size and sector isnot a key driver of slow productivity growthSource: Statistics Canada, Industry Canada, U.S. Bureau of Labor Statistics, Deloitte AnalysisCanada–U.S. productivity growth gap 1987-2008U.S.Canada1.88%1.04%Sector compositiondoesn’t matter eitherSize doesn’t matterIn-sector productivity 88.3%Sector composition 5.4%Residual 6.3%
  6. 6. © Deloitte LLP and affiliated entities.Growth is the deceptively simple solution to productivity– but Canadian firms find growth hard to sustainGrowth in services firms, 2005-2007Young firms (<5 years old)Percentage of high growth firms by country0.15%$0.41%0.54%0.54% 0.57%0.64%0.41%Note: High growth firms are defined as firms with 20%+ annualized employment growth over a 3 year period. Scope of firms is limited tothose with 10-250 employees with $30K-$50M revenues in the first year of the period. Similar trend is observed in manufacturing firms.U.S.Norway(2006)SwedenIsrael(2008)Canada Netherlands Spain
  7. 7. © Deloitte LLP and affiliated entities.4.5%4.9%5.4%2.6%3.7%4.0%2.7%Growth is the deceptively simple solution to productivity– but Canadian firms find growth hard to sustainGrowth in services firms, 2005-2007Mature firms (>5 years old)Percentage of high growth firms by countryU.S.Norway(2006)SwedenIsrael(2008)Canada Netherlands SpainNote: High growth firms are defined as firms with 20%+ annualized employment growth over a 3 year period. Scope of firms is limited tothose with 10-250 employees with $30K-$50M revenues in the first year of the period. Similar trend is observed in manufacturing firms.
  8. 8. © Deloitte LLP and affiliated entities.Canadian businesses lose momentum for multiple reasonsLow risktoleranceLowcompetitiveintensityPoor tradeactivityWeakinvestment
  9. 9. © Deloitte LLP and affiliated entities.Canadian businesses lose momentum for multiple reasonsA national strategy for globalcompetitiveness is imperative tosolve Canada’s productivity challenge
  10. 10. © Deloitte LLP and affiliated entities.“The future of productivity: clear choices for a competitive Canada”report presents specific, detailed recommendations to resetCanada’s productivity trajectoryBusinesses GovernmentAcademiaCurriculumCommercializeTradeImmigrationGrowthFDIDecision-makingReinventionClustersInvestmentTalentTrade
  11. 11. © Deloitte LLP and affiliated entities.lululemonInnovation with customers – Living design thinking
  12. 12. © Deloitte LLP and affiliated entities.Canada GooseExtreme Canadian manufacturingGo to "Insert" tab in Ribbon to insert Header & Footer
  13. 13. © Deloitte LLP and affiliated entities.VenmarBreathing easy through innovation
  14. 14. © Deloitte LLP and affiliated entities.ReconBringing information to people when they need it
  15. 15. © Deloitte LLP and affiliated entities.ReconContinuing to deliver innovation
  16. 16. © Deloitte LLP and affiliated entities.Ocean Nutrition CanadaHomegrown innovation – Healthier world
  17. 17. © Deloitte LLP and affiliated entities.BlueLight AnalyticsTaking university IP to the market
  18. 18. © Deloitte LLP and affiliated entities.The time to act on innovation is nowConnect withCanadianincubators andaccelerators
  19. 19. © Deloitte LLP and affiliated entities.The time to act on innovation is nowSupportentrepreneurshipand innovationin Canada’seducationalsystem
  20. 20. © Deloitte LLP and affiliated entities.The time to act on innovation is nowTake a freshapproach toproduct and servicedevelopmentexplore“DesignThinking”
  21. 21. © Deloitte LLP and affiliated entities.The time to act on innovation is nowBuild outyourinnovationecosystem
  22. 22. © Deloitte LLP and affiliated entities.The time to act on innovation is nowActivelymanage yourinnovationprogram
  23. 23. © Deloitte LLP and affiliated entities.Terry StuartChief Innovation OfficerDeloitte Canadatestuart@deloitte.ca
  24. 24. © Deloitte LLP and affiliated entities.Let’s discussWhat challenges/barriers doesyour organization face whendeveloping an innovation culture?What are actions you, as abusiness leader, can take topromote an innovation culture inyour organization and in ourcommunity?What are our future opportunitiesfor developing an innovationculture in our community –collaboration, working withuniversities, etc.?#1#2#3

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