There are five well-documented stages of business growth. In general, a “successful” business is born, grows, matures, and then must either renew itself or die. This scenario plays out all the time. Remember Blockbuster Video? Blockbuster was a hugely successful company, but due to the onslaught of new technology (enter Netflix), it eventually folded. It failed to renew itself to be a vital player in a new world.
The equivalent is happening in Canada, including in Canadian agriculture. According to the Business Development Bank of Canada (BDC), the productivity gap between Canada and the United States is widening. According to the study:
- Canadian businesses are less productive compared to their American counterparts, generating just 73 per cent as much output as their U.S. peers, down from over 90 per cent in the 1980s.
- Productivity among small and mid-size companies in Canada is especially poor, the study notes — less than half that of larger businesses. In the U.S., the gap is far less, with small or mid-size businesses 67 per cent as productive as large companies.
So what’s going on? Simple. If we look at Canada and its economy as one big corporation, we’ll see that we’re at a critical point in the business lifecycle. Canada is nearing the end of its maturity phase, and has to make a critical choice: reinvent itself or die.
This might seem like a surprising statement, especially when it comes to agriculture. Historically, Canadian ag has played a hugely important role in world affairs. But the world is changing, and we’re getting a lot of competitive pressures from other parts of the world closer to end users. Also, we’re a high-cost jurisdiction in terms of labour.
Traditionally, the way we’ve worked around these factors is by leaning on our weak dollar. Yes, the weaker Canadian dollar makes us more competitive globally, but it’s not a good strategy in the long term, because the value of the dollar is beyond anyone’s control.
When you’re in such a late stage of the business lifecycle, the only way you can keep growing long-term is by rethinking the way you’ve done things, which involves focusing on innovation. Now is the time to reinvest and reinvent your business to meet the future.
What does that look like in practice? Stay tuned.