Deeper Restructuring

Originally posted on SAT, FEBRUARY 6, 2010 AT 09:22

For some Canadian businesses, the recovery may prove as challenging as the downturn. … Canadian companies are emerging from the recession to an altered world – one that may require deeper restructuring and bolder strategic initiatives than currently contemplated.

- Mark Carney, Governor of the Bank of Canada

Although many pundits claim productivity is a four-letter word in Canadian (and European, even in American) polity, I think this signals a true shift in the conversation among Canadian business leaders. Although the gap between Canadian and US productivity growth has proved to be more illusory than real given hind-sight, Canada does have a real problem. Too long sheltered by a favourable exchange-rate gap with it's largest export market, Canadian businesses have under-invested in their businesses for much of the last 15 years.

I think this presents a great opportunity for two sectors, manufacturers of productivity-enhancing machinery and for IT. The first is an obvious gimme; with the Canadian dollar's appreciation against the US dollars, much of this machinery is now much more affordable, thereby enhancing the ROI calculations and shortening the pay-back for capital investments. The second has a harder row to hoe. IT investment has a disappointing track-record when it comes to realizing a return on investment. Too many promises, too many hidden costs of implementation.

Business Intelligence should be better position in this regards. In many projects I've participated in, we've managed to reduce large numbers of person-hours of unproductive, even soul-crushing labour at the cost of a less than 15-20% of the reduced out-lay. More often that not, this doesn't lead to redundancies and lay-offs. Rather, the people freed of doing pointless spread-sheet jockeying are thereby freed to do the actual job they are putatively hired to do.