As Canada awakens from its COVID-19 lockdown, the race for economic growth is on. Both policy-makers and business leaders have their work cut out for them to make the most of a rare opportunity, emerging from a deep but short recession.
Businesses are adapting to the “new normal” of “hybrid work” and also realizing that a digital strategy is a must to cater to a growing population that’s become accustomed to getting more done online.
And the Canadian economy is back in an international competition to attract investment dollars and talent—it wants to be thought of as a business-friendly environment.
Meanwhile, government spending has ballooned, and the budget deficit—when expenses exceed revenues—is estimated to swell to $256 billion in 2020–21 from 23.8 billion in 2019–20, according to the Parliamentary Budget Officer.
Against that backdrop, business leaders from different industries assessed the roadmap ahead for Canada at the Collision from Home online technology conference on June 24 and 25.
Making Canada More Competitive
A rise in deficit spending leads to higher taxes in the future, but “I would encourage politicians not to tax that back right away,” said RBC president and CEO Dave McKay.
“There’s lots of countries that are thinking the same thing. There’s an opportunity to repatriate jobs, an opportunity to build up manufacturing bases, and digital capabilities, so taxation policy and regulation are really critical components for businesses to come together with government to take advantage of the opportunities before us,” McKay said.
After the Trump administration aggressively cut taxes in late 2017, Canada’s business environment, with its higher tax rates, became relatively less competitive.
McKay also pointed to the need for appropriate government support in terms of easing regulation, raising foreign investment, and encouraging immigration to fill the needs of the economy.
Rogers president and CEO Joe Natale is focused on the competition for international talent—calling it a “war.” By 2021, Canada is expected to have 216,000 unfilled tech positions, according to the Information and Communications Technology Council.
The systemic regulatory hurdles that diminish Canada’s attractiveness include carbon taxes, pipeline delays, interprovincial trade barriers, and red tape that slows approval processes for permits, for example.
As Canada restructures its supply chains, continues to build infrastructure, and pumps out talent from its schools, McKay emphasized that policy-makers need to do more to attract foreign investment.
Canada has already lost billions in potential investment from the oil and gas sector alone due to greener pastures south of the border, though the drop in oil prices due to COVID-19 has exacerbated the underlying trend.
‘The Digital Economy Is the Economy’
The corporate sector is digesting lessons learned during the past few months. The way business gets done appears to have changed for good.
Vulnerabilities in business models have been exposed, such as a lack of a strong online capability.
Armughan Ahmad, president & managing partner, Digital at KPMG says key trends in business are automation in the workplace, domestic supply chains increasingly using artificial intelligence, and online transactions.
“I think every business needs to really think about their end-to-end digital transformation and really have a transaction methodology that provides you that,” he said, noting that his 80-year-old parents are buying groceries online with Instacart, as a sign of the times.
McKay says that it’s a “mobile-first” world and that small and medium-sized companies weren’t prepared for the surge in online business with the pandemic.
“Small businesses from all sectors are starting to think, ‘I need to rethink my services. I need to rethink my businesses. I need to build for a mobile and online world,’” he said.
For RBC, retrofitting legacy systems for online processing is “really clunky and difficult,” McKay said, adding that the bank started building products for a digital-first world less than a decade ago.
“The digital economy is the economy—full stop,” McKay said.
The challenge for businesses in a post-COVID world is to create omni-channel experiences for their customers—seamless shopping across many in-store and online channels—while also producing and marketing goods and services in an omni-channel way, considering their employees’ stages of life and preferences.
Remote Work, Staying Connected
In addition, critical for moving forward is mastering the paradigm of hybrid work—managing employees working in the workplace or at home or anywhere—while maintaining the company’s culture.
For leaders, one of the biggest obstacles of managing a team virtually is staying connected with everyone, says Jean-Francois Gagne, co-founder & CEO at Element AI, a Montreal-based artificial intelligence startup.
There are advantages to working with people face-to-face, like more effective collaboration and relationship-building and potentially greater generation of ideas.
“Working from home does not mean the same thing to everybody,” Gagne said. Some people may have small apartments and disruptions from family, for example. On the other hand, people can avoid lengthy commutes and potentially structure a better work-life balance.
Managers also don’t want to overload their employees with meetings, so the onus is on them to find better ways to interact—there are opportunities to build best practices around the hybrid work environment and still reinforce the social tissue that makes companies strong, Gagne said.
On the bright side, Natale has been impressed with what Rogers has been able to accomplish through collaboration between teams working remotely. He said the company has seen a 50 percent increase in internet consumption and has rolled out several initiatives to help businesses and consumers.
“It’s that culture of collaboration that really feeds these changes. Some of them would have taken years but now they’ve taken weeks, and I think it’s something we can all be proud of,” he said.
Collaborating effectively in a remote work environment can foster an almost startup-like atmosphere, which can be used to solve specific problems.
KPMG’s Ahmad encourages well-established companies to adopt a startup-like approach to essentially create a separate business off to the side—the “disruptive exponential organization.”
“You need to drive efficiencies in a separate way while you’re giving birth to these new ideas, and these disruptive exponential organizations are getting super cool,” he said.
It’s about continuing to innovate in the changing environment brought about by COVID-19, Ahmad said, noting that bigger companies can learn from the ecosystem of startups, with their small, dynamic, and sometimes remote teams. This can be a fruitful strategy for achieving a specific goal that’s not the typical function of the core company.
McKay remains highly optimistic about the journey in building a culture, innovating, training, and becoming productive in the hybrid world’s work environment post COVID-19.