Unlocking Canada’s Potential: 8 Ways to Boost Productivity and Entrepreneurship

The reasons for low productivity in Canada have been well documented: labour market disruptions caused by the shift to remote work and changed work routines, low business investment, increased expenses due to inflation, slow adoption of technology, economic uncertainty, and subdued customer spending impacting sales and limiting productivity.

However, there’s another problem that impacts the efficient and effective making of products and services: getting caught up in businesses’ day-to-day operations, disorganized operations, siloed departments and information, and process redundancies. In other words, misspent time away from revenue-driving actions. Leaders sometimes work too much in their businesses instead of working on their business.

Imagine a hands-on entrepreneur at a small company who is handling inventory, customer complaints, human resources, etc., while simultaneously trying to streamline those operations through data-driven insights. They’re distracted by the day-to-day minutiae instead of focusing on how to strategically manage and grow the business. Rather than delegating tasks, analyzing market trends, creating growth strategies, and forging new business partnerships, they’re stuck in the weeds.

Why is Canadian Productivity Lagging?

Canada’s productivity performance lags behind many other advanced economies for several reasons, including less competitive markets, structural and economic challenges, and lower investment in technology that can help businesses grow.

In the United States, businesses have been quicker in adopting advanced technologies and digital tools, including robotics, artificial intelligence, the Internet of Things, and data analytics, which has led to higher productivity and growth. Meanwhile, European countries have also outpaced Canada in terms of technology adoption. Germany, for example, has been a leader in implementing Industry 4.0 technologies in its manufacturing sector, leading to significant productivity gains. 

Looking at the US again, the differences in competitive intensity may be contributing to weaker productivity performance in Canada. Fewer new businesses are launched here, which limits competition, innovation, and employee investment. 

Statistics Canada recently published a report showing low investment negatively impacts productivity. One highlight: investment per worker in 2022 was 22% lower than 2021 levels.

Canada has also struggled to achieve productivity gains in the service sector, which is a major part of its economy. In contrast, countries with advanced service sectors, like the US and the UK, have seen better productivity improvements through digitalization and efficiency gains.

The Business Sentiment in Canada

Economic uncertainties are forcing Canadian businesses to be cautious, according to the Zoho Canada Business Outlook Report released in April 2024. The report shows a decline in optimism, with 61% of respondents feeling positive about the remainder of 2024, compared to 74% in the previous Q4 2023 report. Additionally, 33% cite the economy as their biggest challenge, and 52% indicate a decline in customer spending.

However, staffing is holding steady, with more than half of businesses planning to maintain workforce levels. So, even as entrepreneurs work to manage challenges, they are maintaining capacity and expecting growth.

What Canada Must Do to Win in Business

The future of entrepreneurship globally, and in Canada specifically, will be shaped by several transformative trends and strategic imperatives. Here’s a look at what the future holds and what Canada must do to win:

Investment in Technology and Innovation

Canada needs to continue investing in technology infrastructure and innovation ecosystems, including support for research and development, startups, and the integration of cutting-edge technologies across various sectors.

Additionally, entrepreneurs will need to integrate advanced technologies, including artificial intelligence and business analytics, to gain insights into their operations, streamline processes, enhance productivity, and innovate in product and service offerings. 

Better processes and data for automating and tracking daily routines will help leaders to focus on strategic growth by understanding cash flow, customer needs, and market dynamics, among other things. 

These tech investments must include privacy solutions that comply with government regulations and with the public’s increasing demand for better data protection. State-of-the-art cybersecurity is also critical for safeguarding business assets and reputations.

Evolving Work Models

The shift to remote and hybrid work is here to stay and opens up opportunities for tapping into global talent pools and creating more flexible, resilient business models. This shift includes asynchronous work in which employees spread across geographies and time zones collaborate and communicate outside of a fixed Monday through Friday, nine-to-five schedule. 

Each option, compounded by the emergence of AI, presents unique opportunities and challenges, requiring a strategic approach to balance productivity, employee well-being, and business success.

Flexible work arrangements offer business advantages, including higher retention and productivity. However, business owners must evaluate their specific needs and consider factors such as industry requirements, employee preferences, and the nature of tasks for all teams to ensure fair policies. 

Spoke and Hub Offices

In a hybrid model, the organization has less control over the employees’ remote environment. To compromise, companies can choose to set up dedicated office spaces separate from their main office in different locations. This approach can encourage employees to go to an office that’s closer to where they live so they can work in a more productive environment. 

Zoho’s use of spoke and hub offices started in 2019 and has led to the establishment of its Canadian head office in Cornwall, Ontario, instead of a major metropolitan area. In Cornwall, Zoho has discovered and nurtured talent where relevant opportunities hadn’t previously existed. The spoke offices also open up new customers and give the company boots on the ground to determine the diverse and distinct needs of businesses within a given location.

Global Market Access

With advancements in digital technology and logistics, even small and medium-sized enterprises can access global markets more easily. Entrepreneurs with international aspirations will need to think globally from the outset and leverage Canada’s trade agreements to expand their reach.

Support for SMEs

Small and medium-sized enterprises are the backbone of the Canadian economy, and providing them with access to capital, mentorship programs, and business development resources is crucial. Government and private sector initiatives should focus on reducing barriers to entry and scaling opportunities for these businesses. 

Education and Skill Development

Equipping the workforce with the necessary skills for the future is vital. This includes promoting science, technology, engineering, and mathematics education, digital literacy, and ongoing professional development programs. Encouraging entrepreneurial education at all levels can also foster a culture of innovation and risk-taking.

Regulatory and Policy Frameworks

Canada must ensure that its regulatory and policy frameworks are conducive to innovation and growth. This includes simplifying regulations, providing tax incentives for startups, and ensuring that policies are agile enough to adapt to rapidly changing technological landscapes.

Sustainability and Inclusion

As global attention shifts towards sustainable practices, Canada can lead by example. This involves setting stringent environmental standards, supporting green technology development, and encouraging businesses to adopt sustainable practices.

Sustainability is not just a trend but a business imperative as customers consider environmental and social governance factors as part of their purchasing decisions. Businesses that embed sustainability into their operations will not only attract more customers but also adhere to regulatory requirements and avoid potential penalties.

Additionally, the innovation delivered by diverse teams is proven to lead to more inclusive growth.

Boosting Canadian Productivity

To address productivity challenges and be a global leader, businesses must invest in the people and technology needed to empower entrepreneurs to focus on strategic priorities rather than day-to-day operations. Governments can also help by ensuring favourable regulatory and policy frameworks conducive to innovation and growth.

Working together, Canada can be positioned as a global leader in entrepreneurship, fostering a robust, dynamic, and sustainable business environment.