Tom Sweeney

It's a coming of age tale….

White paper looks at why Canuck tech firms are “disappearing”

Posted by sweens on November 6, 2009


By Ottawa Business Journal Staff
Wed, Oct 14, 2009 11:00 AM EST

Canada is wasting the productive lives of “many brilliant and courageous knowledge workers, and losing large sums of money doing it.”

At least, that’s the hypothesis of a white paper released Wednesday morning by Toronto-based Impact Group, which aims to answer the question of why Canadian technology firms are “disappearing.”

Using interviews with former CEOs and investors from 18 R&D performing companies no longer part of Canada’s business landscape, Impact says it discovered that 10 of the 18 firms became insolvent with the other eight disappearing through merger or sale. In five cases, those mergers or sales were profitable, it added.

The extinct firms, however, shared a number of characteristics, Impact said:

– A lack of commerce competence through poor customer engagement;

– Preoccupation with technology and idea-driven R&D “often resulted in a large R&D team with… an unsustainable burn rate”;

– Dysfunctional governance, including lack of shared goals between management and the company’s board of directors, and a lack of enterprise experience among investors.

“While Canada is second to none in technology, there is a significant lack of commerce skills among our technology entrepreneurs”, says Douglas Barber, founder and former CEO of Gennum Corp. and now a distinguished professor-in-residence at McMaster University, in a statement supplied by Impact Group.

“Companies often find themselves dependent on U.S. and other foreign nationals for executive talent especially for customer-facing experience and skills. If we are to succeed, the notion that technology coupled with sufficient venture capital will lead to success in the knowledge economy must be complemented by a deeper understanding of the human dimensions of enterprise and of the value exchange that is commerce.”

 

 Available at – http://www.ottawabusinessjournal.com/295648957466126.php

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