If there is one thing university Presidents desire, it is to be useful to society – and preferably to the government of the day, too. After all, post-Humboldt, universities exist to strengthen the state. The better a university does that, the more it will be appreciated and, hopefully, the better funded it will be. So it has always struck me as a bit odd how little universities (an business schools in particular) have really done in order to help work on the causes of Canada’s perennially sluggish economy.
Canada’s fundamental economic problem is that outside the resource sector, companies struggle to reach scale. Outside the oligopolistic telecoms and banking sectors, we are a nation of small and medium businesses. Judging by the party manifestos in last year’s elections, many people like things that way. Small businesses are good and deserving of lower tax rates, big businesses are bad and deserve to be taxed more heavily.
The problem with this little story is that it is simply wrong. Big businesses are crucial to innovation and hence to economic growth. Big businesses are the ones that have the money to invest in R & D. They are the ones that can make long-terms commitments to training employees (if you don’t think firm size plays a role in Germany’s ability to sustain its apprenticeship system, you aren’t paying attention). People may be rightly cautious about the power of capital and its influence on the political process; but that doesn’t mean we shouldn’t encourage the formation of large companies in the first place. Ask the Swedes: their social democracy would never have existed without very large companies like Volvo, Saab and Ikea.
And so the key question is: why don’t we have bigger domestic companies in Canada? Oh sure, we have the occasional behemoth (i.e., Nortel, RIM) but we don’t seem to do it in a non-ephemeral way, or do it across the board. And when our companies do start getting big, they often sell out to foreign companies.
We can point fingers in a whole bunch of directions – one favorite is a lack of appropriate venture capital. But to a considerable degree, it’s a question of management. Universities like to talk about how they are teaching entrepreneurship but getting people to start businesses and getting those businesses to grow are two very different propositions. We seem not to have a lot of managers who can take companies from their first million in sales to their first ten million in sales, or to take our businesses out of the Canadian context and into a global one (if you haven’t yet read Andrea Mandel-Campbell’s Why Mexicans Don’t Drink Molson, on this subject, do – it’s revealing). And for that matter, how is it that our venture capital industry still seems more comfortable with mining projects than life science or biotech?
Can it be – say it softly – a question of education?
We pretend that success in innovation is a function of prowess in tech. But to a large degree, it’s a function of management prowess: how can staff be better motivated, how can processes be changed to add value, how well can business or investment opportunities be spotted. Might it be that the education of our business elite doesn’t include the right training to do these things?
To be clear here, I don’t really have any evidence about this one way or the other. No one does. But if I were a university president, or a business dean, it’s a question I’d be asking myself. Because if there’s an economic conundrum that needs solving its this one, and if there’s any way in which universities can contribute, they should.