Companies that export are more innovative, productive, profitable, and protected from risk. This, the first in a four-part series, talks about how businesses that innovate and invest in R&D compete on the global stage. (See also: 2nd part – Productivity, 3rd part – Profitability, 4th part – Managing risk)
John Simmons is in a competitive business and he’s not just competing with other Canadians in his line of work — he’s competing with companies across the globe.
Simmons is CEO of Carmanah, a solar technology company that provides LED lighting solutions — street lights, parking lot lights and pathway lights — to infrastructure, including marine aids for navigation and airfield for ground lighting.
“We try to innovate so our solutions provide the best value for customers,” Simmons says.
In other words, his technology gurus work hard to make sure their products are the safest, most robust and at the lowest possible price.
“When we’re competing on the world stage, we’re up against competitors from a variety of countries,” Simmons said. “Through the vagaries of different currencies and costs, the one sure way to compete is to have innovatively better product solutions. The other variables you can’t control.”
It’s a well established fact that companies that export are better innovators. Compared to their non-exporting peers, exporting companies innovate more effectively, according to studies conducted by Statistics Canada, Deloitte and the Conference Board of Canada.
Innovation is often driven by new knowledge of overseas markets. As Simmons knows all too well, companies that operate abroad are forced by the competition to be more aware of how world markets are evolving and what they will need to do to remain competitive in their own industry’s ever-innovating landscape.
Simmons said that if his company were in the commodity business — say coal, for example — it may find itself favourably disposed to a change in currency rate and customers may buy in because of that. Of course, the reverse could be true as well.
“We can’t do much [on the productivity side] to change that,” he said. “We can apply innovation to improve our products, and make them technologically better and those attributes will often if not trump, certainly diminish, the impact of the things we can’t control, such as import duties, taxes, currency differences and all those things that can complicate export sales.”
The innovation that comes as a result of exporting isn’t just in terms of research and development, according to Canadian Manufacturers & Exporters CEO Jayson Myers.
“There is also a broader role for innovation that includes such things as better production processes, upgraded services, enhanced worker skills and more sophisticated distribution systems — all with the goal of providing more valuable solutions for the customer.”
The Canadian Chamber of Commerce has made similar observations: “We’re looking at how companies can take advantage of a knowledge economy by looking at their intellectual property a little differently than they traditionally have,” said Scott Smith, Director of Intellectual Property & Innovation Policy. “You monetize your intellectual property differently than you would, simply by creating something and manufacturing it.”
An Industry Canada survey also found that exporting is associated with a higher rates of innovation, stating that it’s characterized by greater investments in R&D, information and communications technologies, new equipment and employee training. For example, three times as many exporters as non-exporters invest in R&D.