Month: July 2016

For many Canadians, 2016 was the winter of their discontent. It was characterized by stock market volatility, stagnation in the energy sector and corresponding anxiety around economic growth and job prospects.

All of that makes the change of season a welcome time to review, reassess and rethink what lies ahead.

While those who ascribe to conventional wisdom often cite the adage, the more things change, the more they remain the same, in the early 21st century we may have to concede that, at least in some areas, the more things change, the more they change.

The leaders of successful businesses understand the need for constant and vigilant reassessment of and adaptation to changing market forces, consumer tastes, and societal and economic shifts. They recognize that if they are unable to continually satisfy their clients and customers and implement new means of responding to customer needs or demands, a fickle market will move on to The Next Big Thing or to whatever comes along that strikes a chord.

A critical part of that process is a reconsideration of the tools available to deliver the products and services that meet client or customer needs. In Navigator’s business, one of those key tools is research. Both qualitative and quantitative research—in conjunction with our proprietary techniques—have, for many years, provided us with the means to discover the thinking behind attitudes and opinions, to explore strategies and to test and refine our hypotheses. In fact, our “research-guided” approach has been a fundamental underpinning of our response to crises, to the development of campaigns, and to the crafting and execution of high-stakes strategy.

But, things have changed.

More than ever before, digital services, technologies and capabilities provide a new means of understanding public thinking, motivations and behaviours. While it may be clichéd to point to the mastering or harnessing of digital technology (and its output in the form of social media) as critical to business success today, these technologies and their imaginative uses present practical applications and genuine opportunities.

At Navigator, we could not ignore the richness of digital data about everything from purchasing preferences to real-time assessments of breaking issues. In our on-going re-evaluation of our service offering, we recognized that a marriage between our rigorous research capability and the effective mining of social media in our digital practice would provide a rejuvenated and more powerful tool in understanding public opinion, consumer behaviour and stakeholder engagement. In this instance, change has wrought something entirely different.

Of course, the adage about change does hold in some circumstances: As we in Canada struggle with the repercussions of a world-wide oil glut and its sharply negative influence on our oil-producing provinces, we have to remind ourselves that we have been here before. The boom and bust cycle is not new. While each trough in the cycle stings in new ways—and its inevitable upturn offers only limited consolation to the many affected today—we should remind ourselves that prices will rise and the sector will recover.

The downturn affords an opportunity to reconsider, to determine strategies for recovery and to understand how circumstances that have brought us to today’s tough reality will be managed or addressed in the future.

Perhaps one of the most heartening and least likely affirmations of the adage about change is the recent news about the resurgence of the humble, hard-copy book. Many had accepted the demise of the printed text, displaced by the advance of technology that provided a wave of Kindles, Kobos and other e-readers as the definitive and improved alternative.

But, it appears that the ephemerality of words on a screen could not replace the satisfying crack of a spine or the tactile pleasure of paper. As hard-copy sales rise, maybe some things do remain the same, even in the digital age.

In this issue of Perspectives, we explore all of these changes and the importance of opportunities to rethink, regroup and re-examine. As we look ahead to summer, we hope this issue provides an opportunity to reflect on change in its many forms, the implications, and our ability to assess its permanence.

(Sorry, Big Data…)

When it comes to making sense of our surroundings, common sense and gut instinct are as important as ever.

If there is one thing that bridges human experience across the ages it is a deep fear of the unknown.

Over time, humans have tried to prepare for the unknown in many ways, including digging moats and fortifying walls against unexpected enemy attack. We may not deal with unforeseen threats in quite the same way today, but our obsession with trying to eliminate them is arguably more intense—and more costly—than ever before.

As technology and trade have abolished traditional borders, fear of the unknown has understandably escalated. Businesses face more direct exposure than ever to variables and pressures they cannot control. This is especially true where, as in Canada, there is significant leverage to global commodity cycles.

But just as technology has amplified the challenge, it has also provided a solution. Or at least, that is the claim.

One thing is certain: Technology has given great uplift to the current C-suite cult of “evidence-based decision-making.” The appeal of Big Data, which is expected to grow into a $50 billion-a-year market by 2019, is the promise that information technology can vanquish that primordial fear of the unknown. The bigger the budget for real-time data warehouses, analytics software and beta-busting PhDs, the tighter the grip on all those unforeseen dangers. Right?

Maybe. But then, maybe not.

There is no question that thorough research is an essential component of every successful strategy. The use of qualitative and quantitative research provides a clear road map for success; users of such research can zoom in on specific intersections where stakeholder agendas converge. In turn, that informs a refined understanding of the avenues for influence and the bridges for support of issues.

It does not necessarily follow, however, that the greater the mass of data, the more useful it is. Neither are the insights from data analytics magically transformed into a competitive advantage. That requires an aligned corporate culture and a number of other complex processes that manage data, analyze it in ways that enhance understanding and make changes that reflect those new insights.

Another limitation of the increased dependence on Big Data is the expectation it creates. The more an organization invests in a specific technology, the more reluctant it is to acknowledge its limitations. Inevitably, there is an institutionalized inclination to dismiss any information or warning signals that don’t conform to the expected outcome.

By extension, the heightened emphasis on “evidence-based decision-making” downplays an important factor: gut instinct. Instinct is discounted as primitive and unreliable because it defies the metrics and algorithms in which the corporate “decision tree” is so deeply rooted. It has been even further discredited in many circles by Donald Trump’s claim that he bases his political positions on instinct rather than fact.

However suspicious we may be of our own innate behaviour and reactions, instinct has its place. After all, it has, to a great extent, brought us all this far.

While “fight or flight” standoffs should perhaps not become the new norm in business meetings, instinct should still matter in a decision. It remains a legitimate—if unfashionable—counterbalance to the highly processed and quantifiable insights gleaned from Big Data and other such sources.

It doesn’t stop there.

The same is true of the lost art of listening—really listening. We are so technologically empowered to express our opinions and frame our own narrative, we often forget the basics. Few things have contributed to our long-term survival as much as paying close attention to our surroundings, differentiating and responding to the various sounds we hear.

Finally, for any business, a healthy fear of the unknown is not necessarily a bad thing. There are few greater threats than a false sense of security. And to date, there is no algorithm to defend against it.

For Canadians, riding the resource cycle through its chronic ups and downs has become engrained in our national identity.

As with individuals, it’s hard to pinpoint the elements that shape a collective identity. In the case of Canada, there’s little question that the chronic cycle of boom and bust has played a significant role in how we view ourselves and how we frame our national policies, approach, and even our national persona.
Every boom and every bust has unique characteristics. Still, our reactions to these ups and downs are surprisingly consistent. We are initially surprised and then we vow—again—to wean our domestic economy from the treachery of resource extraction and the global commodity cycle. This vow is followed, of course, by once again becoming comfortably dependent on a resurgent resource extraction sector flush with employment opportunities—not to mention the billions of tax dollars that are brought along with it.
Now, as we grumble our way through an extended period of US$30 oil and the re-redistribution of jobs and provincial fortunes, it’s worth pondering how all this has affected our expectations and reactions.
Depending on where we are in the cycle, government budgets certainly reflect varying degrees of Keynesian largesse. After all, in good or bad times, Canadian politicians—Liberal or Conservative—view increased spending as either the solution to a downturn or a reward for an upturn.
More broadly, Canada’s political landscape has been informed by boom and bust. In the wake of the Great Depression and significant economic strife, two fledgling parties were born on the Prairies. The CCF, the forerunner of today’s New Democratic Party, permanently shifted Canada’s political discourse towards the left.
By contrast, the Social Credit movement in many ways represents an early version of a successful populist conservative party whose model informed the development of later parties like the federal Reform Party and Alberta’s Wildrose Party. This populist strain has traditionally been the weakest part of the fragile Canadian conservative coalition, occasionally finding itself within the tent of federal or provincial conservative parties before once again splintering away in a dramatic fashion. As such a tenuous pillar of the conservative tent, it has had an outsized influence on governing Conservative parties throughout Canada’s history.
Much of the social framework of modern Canada also dates to that same Depression era, including unemployment insurance, universal health care, the Canada Pension Plan, Old Age Security and an expectation of government involvement in whole areas of Canadian lives. These programs represent measures that were demanded at the nadirs of Canada’s boom and bust cycles, yet remain untouchable even at the highest points of booms. Programs that existed as relief measures swiftly transform into a part of the third rail of Canadian politics.
There are other ways that the boom and bust cycles perpetuate our egalitarian self-image. After all, every cycle has the effect of bringing one group down and another back up.
As oil prices soared earlier this decade, the focus was on an ascendant Alberta and all the ways it had become the dominant, defining force in the Canadian economy. That led to an influx of people and prosperity that spilled over into Saskatchewan. Newfoundland’s leverage to offshore oil production, and its secondary role in populating Fort McMurray, ensured that it too was part of the new ‘petro-archy.’
Cue the predictions that the influence of Toronto and Ontario was over forever.
The collapse in oil prices has moderated that conviction and brought attention and growth back to central Canada, where lower energy prices benefit what remains of the manufacturing sector. This has, inevitably, set off the latest round of hand-wringing about our productivity levels and competitiveness—or lack thereof.
It’s very Canadian to gripe about how bad our productivity is and how it needs to improve. But recent international studies put us near the top of the world in that regard. As well, our international reputation for stability and multiculturalism is reflected in the fact that even in an economic downturn, Canada remains a preferred destination for personal wealth, driving real estate prices in Vancouver, especially, but also in Toronto.
Foreign investors who are sniffing about Canada for corporate bargains seem baffled by all the proclamations of despair—and only too happy to take our misery off our hands at a discount.
As the dollar flails about, we should remember that the gloom and doom of bust and boom is seldom quite as dire as we think. A rising or falling dollar always brings both winners and losers. Based on the age-old axiom that ‘good news is no news,’ media stories focus on the losers, who are always quick to bemoan their fate publicly. Those who gain from the rise or fall are usually smart enough to stay quiet while the cycle plays out ﾅ one more time.