Small business is big in Canada – really big. So big that over 98% of all Canadian companies have fewer than 100 employees! When you add in medium-sized businesses (100 to 499 employees), that percentage grows to 99.8%. Needless to say, small businesses are the main pistons in our economic engine, and their success is vital to Canada’s prosperity. Bearing that in mind, recent research found that only 51% of new small and medium-sized enterprises (SMEs) in Canada are surviving beyond their fifth year of operation (BDC). Combine this with the fact that by 2021, there will be a need for approximately 216,000 digitally-skilled workers to fill in-demand roles (ICTC) and it becomes clear that supporting not only the development but the successful scale-up of our SMEs is crucial.
So, where are we falling short? One key component is digital adoption. In an age where technology is increasingly driving our economy, the adoption of technology by small businesses cannot be overlooked. However, despite this growing need, many of our SMEs are finding themselves struggling to keep up; with funding, time, and gaps in awareness and understanding being the top factors holding them back from adopting technology at a pace fast enough to facilitate growth (NRC).
Digital adoption helps small businesses remain competitive firstly by allowing for better customer experience. Often, the experience is why people will choose one business over another, or it’s what keeps them coming back to the same company time and time again, regardless of the price of the product. Digital adoption supports a far better online experience, as approaches link analytics to practical application; and a comprehensive understanding of customer datasets is necessary to support personalized experiences. This is just one example of why effective digital adoption is essential.
Aside from enhancing customer experience, digital adoption also promotes greater productivity levels. Described as “a measure of the efficiency of a person, machine, factory, a system […]in converting inputs into useful outputs.” (NRCC), productivity is at the foundation of determining both cost efficiency and competitiveness. Phrases like “work smarter not harder” and “more for less” embody this concept of increased productivity. In other words, increasing productivity does not necessarily mean expanding operations, but rather, reducing costs while increasing output in existing operations.
Similar to the story of digital adoption, although vital to success, productivity levels among Canadian SMEs are not quite where they need to be. A recent report published by the Conference Board of Canada found that larger firms had considerably higher labour productivity (defined as GDP per hour worked) than smaller firms (NRCC). One of the reasons for this – you guessed it – was that larger firms tended to invest more in technology adoption and digitization. ICTC asserts that as little as a 1% increase in labour productivity generated by the adoption of mobile technology would yield $2.5 billion to the Canadian economy – $8 billion if multiple emerging technologies were well-adopted. (ICTC).
With a need for awareness, time, and oftentimes significant budgets to support it, digital adoption is not always easily attainable. Large organizations in Canada often have the capacity to fully embrace technology as a competitive advantage, where for smaller companies with limited resources, it can be more difficult to do. However, Canada’s industry is one of small- and medium-sized enterprises (SMEs), and these are the ones we must support in this transition. In order for SMEs to feasibly remain competitive, Canada should be looking at ways to help foster this competitive edge by incentivizing SMEs in their digital adoption journey. One way in particular to foster digital adoption would be to implement a Digital Transformation Acceleration Program, coupled with a targeted short duration upskilling program. In response to the 2019 Federal Pre-Budget consultations, ICTC highlighted in Recommendation 2 just how that could be attained. SMEs are vital to Canada’s prosperity; and since nearly all future jobs will require some level of digital competency, digital adoption is increasingly becoming a “must” rather than a “nice to have”. Investing in digital adoption would go a long way in ensuring Canada’s small businesses remain competitive, sustainable and productive – something that will ultimately play a substantial role in growing the Canadian economy as a whole.