Wisdom Exchange 2006 Report

12th Annual Conference Report >>
WISDOM
THE FORUM FOR CEOS AND PRESIDENTS OF ONTARIO’S LEADING GROWTH FIRMS EXCHANGE
2006

Profiles in Innovation
May 2006 Kingbridge Centre, King City, Ontario

The Ministry extends its
appreciation to CEOs of
Ontario’s fastest growing firms
who 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:
“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

“Our clinics generated lively discussion from participants who obviously
care 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 Aide
Partner, Toronto Intellectual Property Group
Baker & McKenzie LLP

“Excellent event…keeps
getting better.”
Fabio Saposnik
President, Orvitek Inc.

“I always come away invigorated as well as a little appalled at
what I am doing or not doing, when having a chance to look at
things from a different angle. My colleagues feel the same way.
It’s a great learning experience. This venue is such a positive
reinforcement…I salute the Ministry for having the foresight of
making it available.”
Jill Anderson
President, Aecometric Corporation

“Congratulations on a first-rate event. The quality of the participants
was exceptional. I found my many conversations consistently interesting
and productive. The speakers were outstanding -- each had insights that
were valuable takeaways for me and, I’m sure, the other attendees. Now
it’s on to next year’s event!”
Mark Romoff
President & Chief Executive Officer, Ontario Centres of Excellence

For CEOs who missed the event, we hope that this report provides a profile of the insights shared by leading business
strategists 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 Internet
Leonard Brody, CEO, Author, Technology Entrepreneur

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

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

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

12 Renovating old 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

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
Introduction engaging speakers challenged their beliefs on the
innovation process and stretched their mental
muscles with new facts and perspectives.

• Technology entrepreneur Leonard Brody provided
In May 2006, CEOs from more than 100
surprising insights into the rising importance of
of Ontario’s fastest growing companies virtual communities.
gathered to share their experiences with
• Linda Duxbury revealed what lay behind the
innovation, what worked and what didn’t,
coming labour shortage and offered pragmatic
and what trends were emerging that would strategies for turning the changing workplace to
shape tomorrow’s business landscape. your company’s advantage.

The 12th annual Wisdom Exchange, held at • Keith Pelley, at the opening night dinner, hosted by
the Minister of Economic Development and Trade
the Kingbridge Centre just north of Toronto,
Joseph Cordiano, gave an insider’s report on the
was a thought-provoking forum for new remarkable turnaround of the Toronto Argos
ideas and stimulating conversations about football club.
hot business issues.
• 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.

2 WISDOM EXCHANGE 2006

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 who
missed the event, it can offer a taste of what took place and a tantalizing
hint of what could be waiting for you at next year’s Wisdom Exchange.

WISDOM
EXCHANGE
2006

When it comes to pushing the boundaries of
innovation, Leonard Brody is one of the veterans
who’s “been there, done that.” The lessons he
Canadian myth-busting learned on the front lines of technology not only
captivated the CEOs gathered for the opening session

and the real impact of of the 2006 Wisdom Exchange, his lively presentation
set the bar high for every subsequent speaker.

the Internet Brody is one of Canada’s most respected technology
entrepreneurs. He participated in one of the largest
Internet IPOs in history and has raised millions of
dollars for start-up companies. Currently, he is a
Leonard Brody venture partner at Growthworks Capital, one of
CEO, Author, Technology Entrepreneur Canada’s largest technology funds, and a Director
of Canada’s largest technology association, CATA.
He is also co-author of the best selling books
Innovation Nation: Canadian Leadership from
Jurassic Park to Java and Everything I Needed to
Know About Business...I Learned from a Canadian.

In a far-ranging presentation that both informed and
stirred the audience, Brody offered insights into the
impact of the Internet and upcoming tech trends.
But he began his remarks by destroying a number of
myths 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 when
the world sees us in a totally different light.”


“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.”

• He ticked off a rapid-fire list of telling points: Looking ahead, while the big picture is not clear,
some key tech-related trends seem to be emerging
• In the past 15 years, Canada has had the best from the mist, creating significant cultural shifts.
economic turnaround of any nation in the This is especially true for young people born since the
industrialized world. 1980s who have grown up with computers. For them,
• The Economist forecasts Canada will be the most their sense of community is not restricted by
competitive economy in the world through to 2009, geography but is highly mobile and built more on
with the best overall business infrastructure. shared values and interests.

• In 2005, the Anholt-GMI National Brand Index This shift away from geographic ties is also seen in
ranked Canada as the second most respected brand the dramatic growth of mobility in the working world.
in the world. The workplace is no longer fixed. People are
working at home, at clients’ offices, in their cars
• Alberta’s oil sands are a phenomenal source of and on vacation.
wealth on a scale comparable to Saudi Arabia,
ensuring long-term economic growth. “The mobile workforce can be a challenge to manage,
but it’s well worth it to learn how,” Brody said.
“Canada is the top producer of technological “While it may seem counter-intuitive, the business
innovation in the world – bar none – and we are benefits are huge.”
fierce competitors,” said Brody. “It’s time we got
behind our own brand.” But for employers the benefits can be great, such
as cost savings, better morale and performance,
Brody then turned his spotlight on the Internet and enterprise scalability, access to the best talent, with
illuminated emerging facts, trends and issues that no restrictions on geography, labour arbitrage, and
will shape the business landscape. disaster risk management.
Within the last 15 years, the Internet’s presence in Given the huge impact of technology, Brody surprised
the mainstream of business and society has grown his audience with his closing advice for business
from invisible to omnipresent. Its impact cannot be leaders looking to grow through innovation.
overestimated.
“Don’t focus on the technology,” said Brody. “If
“The Internet is now as accepted as water,” said there is one key message I want to leave with you
Brody. “In the U.S., 87 percent of teens use the it’s ‘community.’ Technology constantly changes.
Internet every week. People now spend more time People and community are the only things that
on the Internet than they do watching television.” matter. Focus on meeting their needs in new ways.”
“What we need to understand is that we are still in
the era of black-and-white TV in terms of Internet
development,” he said. “It’s like we’re in
kindergarten: we don’t know where we are, let
alone where we are going.”


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

“If you want your organization to thrive during the
during the coming coming labour shortage, it means shifting your
focus from managing money to managing people,”
labour shortage said Linda Duxbury as she launched into a lively,
fact-filled and often witty overview of the coming
labour crunch. Throughout her presentation Duxbury
provided tips on what CEOs can do to help their
Linda Duxbury companies prosper.
Professor, Sprott School of Business,
Carleton University Linda Duxbury, a professor at the Sprott School of
Business, Carleton University, has examined
Canadian and international demographics and
completed major studies on workplace issues.

For many people, just the mention of human
resources can make their eyes glaze over. But in a
world where products and processes can become
obsolete overnight, companies live or die based on
the skill, talents and knowledge of their employees.

And employees – not just good employees, but
virtually 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 moving
from a buyer’s labour market, where there were
more good employees than jobs, to a seller’s
market. We are facing a huge labour shortage for
the 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 have The challenge is to make your company a more
enough kids to grow the labour pool to meet the attractive place to work than your competition.
needs of a growing economy. In fact, they didn’t Marketing 101 tells you to study your target group –
have enough children to replace themselves. in this case, current and potential employees – and
meet their needs. But a close examination shows
The numbers are clear. For the past 25 years, the that this may be more complex than you first thought.
Canadian labour force has grown by approximately
226,000 per year. This decade, it will grow by Your workplace might include three or four different
123,000 per year. By 2010, that will drop to “generations” of employees, each with different
42,000 per year. needs and expectations, said Duxbury. Generations,
in this context, are defined not strictly by their age
The projected labour shortage is not purely a but by their formative influences and shared values.
Canadian phenomenon. In many European countries,
the situation is worse. Even China will be struggling Veterans were born before or during World War II and
to cope with the after-effects of its long-standing their formative influences were the atomic bomb
population policy of one child per family. and post-war reconstruction. In the workplace, they
value loyalty and they tend to defer to authority.
The labour shortage will be worldwide. In response,
HR management will emerge as a critical success Baby Boomers were born 1947 to 1964. Their
factor. As top employees become more difficult to formative influences were economic prosperity, civil
find, how well a company can attract and retain rights, birth control and rock ‘n’ roll. In the workplace,
employees becomes a competitive advantage. they tend to accept high levels of stress as the norm
but demand good “perks” and status symbols.
“In a buyer’s market, you can tell employees to
work this weekend or else you’ll find someone who The Baby Bust (Generation X), born 1961 to 1974,
will take their job,” said Duxbury. “In a seller’s grew up influenced by economic recessions,
market, that won’t work. You need them more than environmental degradation and AIDS. They are
they need you. They will tell you what they want. comfortable with technology in the workplace and
If your company won’t give it to them, a company tend to be both ambitious and focused on job security.
in Alberta will. And if Alberta won’t give it to them,
a company in Australia will.” The Echo Boom (Nexus or Gen Y), born 1975 to
1990, were raised in a child-focused society amidst
So, what can a business do? “I recommend that growing violence, terrorism and gangsta rap. More
companies focus on employee retention,” said than any other generation, they tend to be independent
Duxbury. “Losing a good employee carries huge and entrepreneurial with a focus on creating a good
costs in terms of loss of corporate knowledge, work-life balance.
customer relationships and recruitment. Besides,
as anyone who has been through it will tell you, Different generations, different needs but with one
hiring can suck the lifeblood out of you.” shared attribute: growing clout in the labour market.


For football fans, few plays are more exciting to watch
than an interception that turns the tide of a big game.
For Toronto Argo fans, that’s exactly what Argonauts
Old brands, new president and CEO Keith Pelley has pulled off.

Canadian Football League franchises have been
beginnings and struggling financially in the past few years, and the
Argos were no exception. When Pelley joined the
the importance of Argo football club in November 2003, the business
was in receivership. “We had no GM, no office
space and fewer than 10 employees, some of
park benches whom had to share computers,” Pelley revealed
during his dinner speech at the Wisdom Exchange.
“We were a 131-year-old start-up.”
Keith Pelley
What a turnaround in one year!
President and CEO, Toronto Argonauts
In addition to the Grey Cup victory, 2004 saw the
Argo season ticket base more than doubled and
average attendance at Argonauts home games went
from 12,000 in 2003 to over 25,000 a game in
2004. Sponsorship revenue tripled and 22 new
sponsors signed on.

Pelley joined the Argonauts after a broadcasting career
that spanned more than two decades. He was the
first Canadian to produce NFL football when he joined
the Fox Sports Network in 1995. He has produced
NHL hockey, Major League Baseball and the World
League of American Football. He has worked for ESPN
and Disney. He was president of TSN when the Argo
owners enticed him into picking up the challenge.

Although he had been involved in pro sports for
most of his career, when it came to actually running
a 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 the
one that needed to be tackled head-on, was branding.
The problem in terms of brand was and is that the
professional sports market in Toronto is incredibly
saturated. Maple Leaf Sports and Entertainment
owns the Toronto Maple Leafs, the Raptors, Leafs TV,
Raptors NBA TV and the Air Canada Centre. The Blue
Jays are owned by Rogers Communications, which
also owns the Rogers Centre (formerly Skydome) and
a vast stable of magazines, radio stations, cable

“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.”

systems and other media properties. That’s big league first-hand the devastating effects of violence. With
competition for a struggling brand like the Argos. their encouragement, the team started the campaign
which has been a big hit with the community. It educates
The most pressing problem was time. Pelley signed young people about guns, gangs and violence, raises
on just before Christmas 2003 and the new season money for underfunded community organizations
would start in the spring, whether the Argos were and creates opportunities for the players to become
ready or not. one-on-one mentors for youth-at-risk.”
Then Pelley found an edge. “We determined that “I get emotional when I talk about it because the
the CFL brand difference was that we were campaign is making a difference to kids’ lives in
accessible,” he recalled. “We decided that we our community,” said Pelley. “At the same time, if
would be out in the community more than any other you ask me is the campaign good for our brand?
brand. We would create opportunities for the fans Yes. Absolutely. No question about it.”
to meet the players and the coaches. We would
create awareness of the team in new areas. Our The Argo turnaround taught Pelley a few lessons.
goal was ‘more touches’ than any other team.”
First, the tremendous importance of branding.
He and his small staff kicked into high gear. “When I was at TSN, I was known as a big brand
“It was four months I’ll never forget,” he told the guy. Today, I’m even more so. Today, its brand,
Wisdom Exchange audience. “I made sure I was out brand, brand. You have your vision statement or
every night speaking about the Argo brand. I’d get your mission statement and you never, ever, ever
home by 10 pm, sleep ’til 3:30, read ’til 5:30, deviate from it.”
sleep ’til 6:30 then start again. I was determined Second, he has learned to hire people based on
to learn everything I could to do the job properly.” four criteria: work ethic, attitude, intelligence and
“I can’t tell you the number of times I had the door knowledge. “Knowledge is a distant fourth,” he
shut in my face,” he continued. “It was a brand no said. “Knowledge can be acquired. Work ethic
one wanted to be associated with. In 2003, the and attitude are right at the top of the list.”
brand lost $9 million. We had one cash sponsor. The third lesson has to do with Pelley’s philosophy
We were at zero.” of leadership. “I once worked for someone who
Today, it’s a whole different picture. Now, there are said that being a boss is not a popularity contest
over 600 events per year in the community involving and I have come to disagree with that. I think
Argo players, coaches and team employees. The Argos it’s really, really crucial that your employees
have more than 45 cash sponsors and another 20 in like you. If they like you, they’ll take a bullet for
contra. Attendance has grown to 30,000 per game. you. If they just respect you, you’ll die.”

“We are a brand people want to be associated Finally, and perhaps most importantly, “spend
with,” said Pelley. some time on the park bench,” Pelley advised
his fellow business leaders. Like most CEOs,
But the Argos have become more than a business. Pelley’s schedule is jammed with travel,
One of the initiatives that Pelley is most proud of is meetings, long days and answering e-mails at
the team’s Stop the Violence Foundation. night at home. But, near his office, there is a
park bench where he retreats to get away from
“The last few years have seen a rise in street violence, the pressure.
especially in Toronto, and especially involving guns and
young people. Some of the Argo players come from
major U.S. cities like L.A. and Detroit. They experienced WISDOM EXCHANGE 2006 9

If innovation is the path to greater profitability,
Larry Keeley wonders why most businesses are so
bad at it.
Innovation “Innovation fails 96 percent of the time. No other
area of management science puts up with this
without the level of randomness,” he told the CEOs gathered for
the opening session on the second day of the 2006
smoke and mirrors Wisdom Exchange. “Innovation is surrounded by
myths and clichés. You have to separate lore from
logic to get innovation to happen reliably.”

Larry Keeley Keeley, president and co-founder of Doblin Inc.
Co-founder and President, Doblin Inc. and graduate-level teacher in innovation strategy at
the Institute of Design in Chicago, has helped
Fortune 500 companies from American Express to
McDonald’s, Pfizer and Xerox significantly increase
their innovation success rate. BusinessWeek recently
named him one of America’s top innovation gurus.

His refreshingly contrarian views on innovation cut
through much of the smoke and mirrors that often
surround the topic. He began with a very pragmatic
definition.
“The term innovation should be reserved for an
initiative that can produce a viable new concept
that throws off enough free cash flow to justify
itself,” he said. “This keeps us from the sloppy
habit of calling anything ‘new’ an innovation. It
also begins to force some expectations. This is
when innovation builds real value.”

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

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

Dell did not become rich by building a better
personal computer. Dell revolutionized the industry
through innovations in financing, marketing,
distribution and customer service.


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.”

Starbucks reinvented a commodity as a consumer By multiplying the types of innovation, organizations
experience. multiply their impact. Keeley came to this understanding
through 26 years of studying innovation and
The list goes on. What’s important, Keeley told the interviews with literally thousands of leading CEOs
audience, is to broaden the drive for innovation around the world.
beyond products.
What he advocates is a much more disciplined
Research by Doblin has identified ten different types approach to the process of innovation, from diagnosis
of innovation within four distinct areas: finance, through invention, launch and extension. A highly
process, offering and delivery. The goal is to stitch simplified process summary includes four steps:
together different types of innovation into a coherent
and effective approach that creates value. 1. Study the fundamental components of your
Keeley offered an Ontario example of innovative industry, looking beyond products and at the
thinking that has paid big dividends for the organization. full spectrum of innovation types.

“The University of Waterloo has the reputation 2. Set an innovation goal that identifies changing
of a Canadian innovation incubator because of themes and customer discoveries.
two major decisions that the founders of the school 3. Build fewer but bolder concepts that focus on
made early on,” he explained. “The first was to allow platforms, not products.
the faculty to claim ownership of their research
rather than handing it over to the university. The 4. Implement clearly and swiftly with prototypes,
second was to have the students work as a part of not spreadsheets.
their academic studies.”
By using this process, Keeley said, companies have
“This gave UW an ‘entrepreneurial’ edge and led to been able to improve their success rate by up to
a proliferation of high-tech start-ups created by 70 percent.
students and faculty; the most famous of which is
Research In Motion. It has also given UW a huge “Clearly defined protocols help people do what is
economic impact, $1.6 billion province-wide in 2001, most useful in the heat of battle,” he explained.
and extended its influence beyond its region to the “How can you improve what you don’t define
whole of Canada, Silicon Valley and globally, with and measure?”
formal academic exchanges in over 40 countries.”
Keeley also holds a contrarian view on the challenges
Those early decisions by the University of Waterloo of intellectual property (IP) rights in an era in which
inadvertently stitched together five different types innovation is the Holy Grail.
of innovation. Financially, it changed the university’s
business model and created new financial networks “The best way to protect IP today is to keep it
with faculty and spin-off businesses. It changed moving forward at a pace that others can’t keep up
one of the university’s core processes – the creation with,” he said. “Secondly, the real payback comes
of intellectual property offered students a new kind when your IP becomes the platform that everyone
of academic experience and forever changed the else builds on. In that sense, IP management is less
university’s “brand.” about keeping your competitors out and more about
encouraging partners to adapt your platform.”


1 3

2 4

If there was one imaginary, all-in-one, combined
customer for the four experts gathered for this year’s
Town Hall at the Wisdom Exchange, it would be an
Renovating impeccably dressed male backpacker in the hills of
Costa Rica who takes a break to order Canadian

old business models groceries online and read a business bestseller.

The annual Town Hall at the Wisdom Exchange is a
popular forum that provides a practical counterpoint
to the discussion about trends to watch for and new
A Town Hall panel discussion
technologies around the corner. Once again, this
1 Bruce Poon Tip, CEO, G.A.P Adventures
year’s session brought together business leaders
2 François Bouchard, CEO, The Country Grocer
who have been on the front lines of innovation and
3 Larry Rosen, Chairman and CEO, Harry Rosen Men’s Wear
who have returned with hard-won lessons that they
4 John Hughes, Deloitte, Co-author of Building the Best –
shared with conference delegates.
Lessons from Inside Canada’s Best Managed Companies
They were Bruce Poon Tip, founder and CEO of
G.A.P Adventures; François Bouchard, CEO of The
Country Grocer; Larry Rosen, chairman and CEO
of Harry Rosen Inc. and John Hughes, a chartered
accountant and partner in the Private Company
Services of Deloitte.
G.A.P Adventures began with a new idea for the
travel industry: cultural tourism. Why not take small
groups of travellers on guided tours off the beaten
track so they could experience local culture up
close? Fifteen years ago, this was a revolutionary
concept. Today, the company that pioneered it has
grown to be a market leader, providing more than
1,000 adventures to over 100 countries.
That explosive growth was propelled by a second
innovation: understanding tourism as an exportable
service. Why not, for example, convince a group of
Belgians to buy a trip to Mongolia from a Canadian
company?
“We began with new ideas; our challenge has been
to remain innovative,” said Bruce Poon Tip. “Over
the years, our focus has shifted back and forth
between product and market focus. We started as
very product-focused, with trips for backpackers.
Then, as we offered more and different types of
adventures, we became more market-focused.”


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.

Today, the pendulum is moving back towards a more accolades for the way it has adapted customer
product-driven offering for G.A.P Adventures, and relationship management tools and staff training to
that seems to make him happy. “I’ve always wanted provide the personal customer care that exemplified
to take people to Antarctica and now we can do the original store, but in a modern, database-
it,” he revealed with a big smile. “We’ve bought our supported retail chain environment.
own icebreaker!”
“We don’t sell clothes,” revealed Larry Rosen,
For The Country Grocer, success came not so much chairman and CEO. “We’re in the relationship
from a new product but from putting a cyber-twist on business. It started with my father, who kept cards
a traditional service. The Country Grocer successfully on every customer. Today, we spend more than
operates a 10,000 square-foot store in the south $1 million every year on training to teach our staff
end of Ottawa, but business growth and fame has how to build relationships.”
sprung from its Internet operation.
Each successfully innovative company seems to
While ordering groceries online may have seemed find its own path, observed Deloitte’s John Hughes,
like a radical notion when the website was launched, co-author of Building the Best: Lessons from Inside
company owner and CEO François Bouchard Canada’s Best Managed Companies. The Canadian
explained, “We’re just doing what grocers were bestseller gives a behind-the-scenes tour of 10
doing 50 years ago. You’d call them on the phone, highly innovative companies that have met tough
they’d put it on your tab then deliver on a bike. challenges and gone on to break away from the pack
We’ve just adapted that model to new technology.” and become market leaders.
The Country Grocer is doing a booming business “Magnotta Winery, for example, started with a
with Canadian ex-pats around the world. It has so business plan that called for distribution through
many customers in the High Arctic that it offers daily the LCBO in Ontario but that didn’t happen.
deliveries to the region. Another major market is the What did they do? They opened their own stores,”
“Gen X” age group. Buying groceries online suits said Hughes. “Cirque du Soleil burst on the scene,
their lifestyle and, for many of them, it helps them to then faced the challenge of keeping that creative
look after an aging parent. In fact, one-third of their spirit alive, year after year, as the company grew.
customers are shopping for someone else. SpinMaster, which needs new toy ideas constantly,
created a whole network of inventors to feed them
And while some social commentators worry about innovative products.”
the loss of personal contact through Internet sales,
Bouchard said that online relationships can be very “There is no cookie-cutter approach to successful
strong. “We get e-mails from our regular customers innovation,” said Hughes. “If you study 50 companies,
telling us, ‘Don’t worry. I’m going on vacation next you will find 50 different approaches.”
week. I’ll be back.’”
Like The Country Grocer, Harry Rosen Inc. has found
success by using the latest technology to provide
exceptional levels of old-fashioned service. It has
grown from a single, 500-square-foot store in Toronto
to become a powerhouse in Canadian retailing. Its
16 stores nationwide account for 40 percent of the
market in high-end men’s wear. The chain has drawn


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

Creating As a developer and manufacturer of protective
equipment for police and military markets, they had
90 percent of the world market for bomb disposal
an innovation suits. Launched in 1981, they grew rapidly and were
named one of Canada’s best-managed companies
environment for several years in a row. They won more than half
a dozen export awards from the federal and
provincial governments. They grew so fast, they
grew right into trouble.
Richard L’Abbé
Vice-Chairman, Med-Eng Systems Inc. “In 2004, revenues dropped by 37 percent and
we were in deep trouble,” Med-Eng co-founder and
Vice-Chairman Richard L’Abbé recalled during his
lunchtime speech at the Wisdom Exchange. “But
now, we’ve turned it around. This year, we’re in
hypergrowth. Not only that, about 85 percent of
this year’s revenue is coming from products that
didn’t exist 12 months ago.”
“A company goes through a lot a phases during
25 years,” L’Abbé told the gathering. “Mistakes are
made and lessons learned.”
One of the big lessons was that, when you dominate
a niche market, you can get cocky. “We got used to
owning the market,” he revealed. “But it didn’t take
long before we were being copied by nine companies
on four continents. Our proprietary product
became a commodity. We weren’t prepared for it
and we found we couldn’t respond quickly.”


“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.”

The company had grown larger, but it had become Their goal was to hire the best people for each
cumbersome. specific job, pay them well and create an environment
that would foster innovation. To achieve that, they
“Managing growth requires good processes,” said created product management teams with a
L’Abbé. “But developing processes is boring, so I marketing person, an engineer, a designer and
would hand it off to staff, usually to someone who an outsourcing expert.
was not really doing much anyway. The results
weren’t very effective.” “We wanted a highly focused and motivated
team,” said L’Abbé. “We needed them to be like
As the company grew through diversification and a wolfpack.”
acquisition, all the attributes of a good start-up
company – strong market knowledge, flexibility, Today, when a client has a problem, the whole team
client focus and decisiveness – were handcuffed, goes out to the meeting. They all hear directly from
L’Abbé said. Internal silos developed between R&D, the client about the problem, and they all hear the
marketing, sales and operations. Innovation died. details filtered through their own expertise. They can
They instituted a phase-gate approach to new start designing the solution on the plane ride back
product development. They ended up with a process home. They go back and check their solution with
that required 85 signatures and 135 checkpoints the client, fix it, go back again and fix it again.
where projects could be killed.
“Typically, after the third visit, the client says ‘Wow!
“However,” L’Abbé observed dryly, “adversity This is fabulous’,” said L’Abbé. “This approach is
presents a great opportunity to change.” now generating 40 percent of our revenues.”

Their first step was to cut staff by 15 percent. The For Med-Eng, one of the biggest lessons they
company needed to change and it was clear that learned during 25 years of rapid growth is the critical
there were people on staff who didn’t want to work importance of focusing on human resources.
in an environment of change. “As soon as we did it,
productivity went up,” he said. “Focused teams really work,” said L’Abbé. “The
right teams will come up with new products so fast
But changing an organizational culture takes time. your competition will be left shaking their heads.”

They started by teaching managers how to hire
better. They profiled their best people to see what
qualities they wanted in new hires. Then they
scrapped the gate process and replaced all their
product managers.


There are more than They make up and account for more than

340,000
small and medium-sized businesses
>> 99%
of the province’s businesses
>> 50%
of all jobs
(SMEs) across Ontario

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

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

The annual Wisdom Exchange and Leading Growth Firm Series are two successful programs that
support and showcase Ontario’s growth firms. The government will continue to share critical
business information, insights and best practices with CEOs to promote effective management
practices 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: Contact:

• 2.7% of Ontario businesses are leading Ministry of Small Business and Entrepreneurship
growth firms that created 60% of the new Partnership and Business Development
jobs between 1997 and 2000 56 Wellesley Street West, 4th Floor
Toronto, Ontario M7A 2E7
• 99% of Ontario firms are small and Phone: 416-325-8772
medium enterprises (SMEs) with less than
500 employees Visit the website: www.sbe.gov.on.ca

• 97% of Ontario firms have less than
100 employees

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


Leading Growth Firm Series
CEO Perspectives
The Leading Growth Firm Series researches and promotes the effective
management 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
Leading Growth Firm Reports.

Proud Sponsors of Wisdom Exchange 2006

Wisdom Exchange 2006 Report

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