Alex Lazarow thinks the difference will help define the decade ahead for innovation.
And it will be driven by creators, the entrepreneurs and business leaders who look to build industries, not just gobble up old companies with software.
Lazarow is a Winnipeg-born former banker and McKinsey consultant who lives in Silicon Valley and works with Cathay Innovation, investing in technology companies globally. He’s written a new book, Out Innovate, which draws on more than 200 interviews with founders, investors and ecosystem builders to explain how the landscape of innovation is shifting.
The era of Valley-driven disruption will be replaced by a more constructive era, Lazarow writes. Hopefully, this means more innovators will focus on critical human problems like food supply, health care and environmental sustainability. Tech powers like Canada should thrive. But while Toronto, Montreal and Vancouver are among the 30 top tech ecosystems globally, the competition is growing. There are more than 480 tech startup hubs, and they’re home to 1.3 million startups.
He sees a centre like Minneapolis excelling as a healthcare hub, London growing as a fintech centre and Detroit regaining its place as the Motown of innovation. In each case, the clusters need big companies—“older siblings,” he calls them—to foster growth, through local procurement and research talent based in local universities.
The most successful centres have a “born global” mentality, Lazarow says. Singapore and Dubai may be the best examples of such places where entrepreneurs look in only one direction: outward.
“My advice to founders is if you’re going to spend the next decade of your life tackling one problem, you might as well make it something that’s going to have a lot of impact.” Lazarow says. “You might as well look for and find and reframe these big challenges into opportunities. And I think that’s what is going to give us an opportunity to support and promote this next generation of creators.”
Lazarow makes five critical points about innovation in the 2020s:
1. It’s more distributed than ever.
What used to be concentrated in a select few locations is now possible in most places. With 480 startup hubs globally, the next billion dollar startup could come from anywhere.
2. Ideas are global.
Gone are the days when only rich developed countries could capitalize on good ideas. This means more competition, but also more opportunity. For Canada, which lacks density of either consumers or companies, the opportunity lies in addressing big global challenges and being unafraid to think of the whole world as our potential market.
3. Hiring ‘A’ talent isn’t the same as building ‘A’ teams.
Startups should think creatively about how to help existing employees stay and grow, rather than accepting employee churn as a part of their business model. And when the depth of local human capital is not enough, they need to think more expansively about hiring talent and building distributed teams.
4. Silicon Valley’s “move fast and break things” motto doesn’t necessarily work in other, non-software sectors.
Startups must be more conscious towards managing risk when it comes to areas like healthcare and financial services. Any risk that threatens the customer should be mitigated rigorously.
5. Venture capital is due for a refresh.
The original VC model was inspired by the 19th-century backers of America’s whaling industry. It worked well for a long time. But global capital flows have changed over the past quarter-century, and Canadian entrepreneurs and investors need to shift too. This means finding new ways to bring risk capital to Canada and new ways to invest Canadian risk capital abroad.
John Stackhouse is a nationally bestselling author and one of Canada’s leading voices on innovation and economic disruption. He is senior vice-president in the office of the CEO at Royal Bank of Canada, leading the organization’s research and thought leadership on economic, technological and social change. Previously, he was editor-in-chief of the Globe and Mail and editor of Report on Business. He is a senior fellow at the C.D. Howe Institute and the Munk School of Global Affairs and Public Policy. His latest book is Planet Canada: How Our Expats Are Shaping the Future, which explores the untapped resource of the millions of Canadians who don’t live here but exert their influence from afar.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.