Innovative “local” firms can power local economies

January 4, 2013

TORONTO, ON, Jan. 4, 2013/ Troy Media/ – Canadians are constantly barraged with news stories about Canada’s apparently dismal productivity record. They are also repeatedly given news that one politician or another is handing out money for ‘innovation’. In fact, provinces have special advisory bodies attached to their Premier’s offices to help focus on which sectors to promote, and which regions to invest in.

Canada does not lack for ideas, or for brainpower. Many cities and towns across Canada have clusters of start-up companies bringing new products and services to market.

What we lack, however, are buyers.

Let’s say you’re a small Canadian start-up firm. You’ve designed technology that allows tests to be taken online that eliminates the need for supervision to avoid cheating.

That’s a product with potentially a global market. Sounds like a probable winner, right?

Maybe not.

The company – which has had to struggle to even get its product to market (Canada’s venture and risk capital communities remain tight-fisted and often expect results too quickly) – now starts trying to sell it.

As a potential buyer, what is it you want? First, references – at least three, preferably from close to where you live (from within your industry, certainly from in the country and preferably right there in your region). Second, stability – show me years of operation, millions of dollars in revenue.

Government bodies often add other requirements such as economic development (how many jobs will you create in my province?).

As a seller, all you want are customers. Make no mistake, when you take your product or service to Oman, or Angola, or Bolivia they aren’t interested in how big you are, how long you’ve been around, or what promises you’ll make about opening up branch operations. (They might even be willing to waive translation from English to Arabic, Portuguese or Spanish.)

They will, however, want to have Canadian references. After all, if you couldn’t sell your product/service at home then it’s probably no good.

Canada’s corporate and governmental procurement practices, on the other hand, preclude buying much of anything from a firm such as yours (which could be started in any small community that has decent internet connections). So you’re stuck.

The same goes for any business in any town, any village or any neighbourhood-shopping street in Canada.

While local stores often can and do buy from other local suppliers; chain stores, needing quantity to supply the chain nationwide, will buy centrally. This means you can’t get local products in chain stores.

Local organizations are part of their communities. Those communities, in turn, will prosper only if we actually act like we live there. That means working with local suppliers. If we can go out to the local farmers’ market or walk our shopping street buying locally as individuals, we can make changes that work to support the local economy, too.

These don’t have to be universally applied. One policy change; say encouraging purchasers to buy locally 10 percent of purchases (putting supplier locality ahead of the other usual procurement issues) could work wonders to stimulate the local economy.

In Oregon, a city economic development officer acted as the stimulus for this principle, bringing companies together. One largish firm had printing requirements: labels, stationery, and the like. They were buying from a major national printer in Wisconsin. Meanwhile, the local print shop – which could have handled everything required – didn’t even get a look in. By bringing them together, the bigger firm got a ‘just in time’ print service cutting the amount of money they tied up in supplies (they used to order a year’s worth at a time), and the small print shop got a major customer that fuelled its growth and created jobs.

All it took was for the procurement process in the big company to be changed to remove some of the ‘requirements’ that locked out the little print shop down the street – requirements that only made sense if you took the attitude that one big shipment a year made sense. (Being local often meant reorders could be filled by tomorrow, often the same day.)

It’s called cooperation, and it works wonders to grow local economies.

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