CPAs, Start-Ups and Solving Canada’s Productivity Crisis

Canada has a productivity problem. And innovation is the solution.

At this point, the fact that Canada’s stagnant GDP-per-capita, unchanged from virtually ten years ago, is impacting our standard of living is no longer news. The need for Canada to become more productive has become the rallying cry for policy makers and economists across the country.

And the key to becoming more productive is embracing the innovation economy, including the economy of intangibles.

As noted in You Can’t Touch This: The Intangible Asset Debate released by CPA Ontario in 2021, the move towards an increasingly digital world shifted our collective focus away from the traditional understanding of the value of physical goods.

From data to governance to intellectual property, what are considered the most valuable assets have changed, and CPAs need to develop the skillset to thoughtfully and effectively harness these assets.

At a fireside chat during the closing session of CPA Ontario’s Innovation Leadership Accelerator, John Ruffolo, FCPA, FCA, Founder and Managing Partner of Maverix Private Equity, Carol A. Leaman, co-owner and CEO at Axonify and Narbe Alexandrian, Founder and CEO of Define Capital discussed the state of Canada’s innovation economy, and the role of CPAs in supporting Canadian start-ups and scale-ups.

‘The world really has changed…it is now an intangible based economy. Things that we took for granted in the post-World War Two economy simply don’t apply anymore,’ said John Ruffolo, one of the founders of the ILA program. ‘We need to understand that it’s not so much about physical supply chains and manufacturing and distribution of goods - it’s really the architecture of agreements.’

‘IP matters, data matters, standards matter, bilateral and multilateral agreements matter.’

Carol echoed John’s thoughts.

‘What was an asset 20 years ago is a completely different asset today. If thought about appropriately, the biggest asset of a billion-dollar company is the data it collects. Someone needs to be putting their mind to that, not the [physical assets].’

The way that we think about assets, value and productivity will require an entire shift in thinking for many CPAs.

‘I would encourage all of you to think of these [intangible things]. It’s no longer that one bottom line on a balance sheet. It’s such a multi-layered thing in today’s world, and [CPAs] have the opportunity to be at the forefront of thinking about how to value and negotiate those things,’ said Carol. ‘Embrace change and make the best of change. Think about it in a leadership mindset. It allows you to break free from the mindset of restraint and really go for it.’

The leadership that Carol speaks to could very well be exactly what Canadian entrepreneurs need. They already have the ideas but they just need the support.

When the common argument that Canadian entrepreneurs don’t have the right risk profile to compete with the rest of the world was brought up, it was swiftly shot down by Carol.

‘I have mentored many entrepreneurs and have over the last twenty years. And it is not for lack of energy, desire, good ideas. We have amazing entrepreneurs in this country. We put up our own roadblock in so many ways – but let’s pave the way for people to get going and give them the best shot. We all need to support Canadian companies and entrepreneurs.’

Diving into a new field, especially an intangible one, can be nerve-wracking, but many have demonstrated that it can be done. Narbe Alexandrian was once in this position, and he offered some sage advice to those wishing to do the same.

‘If you ever want to get into a new industry, don’t just fantasize and guess about it. Go talk to fifty people in that field that are ten years ahead of you. Understand their journey,’ said Narbe. ‘You have to take advantage of every moment you have and not waste it.’

There is a lot of work to do to boost Canada’s innovation output, but as John said, ‘We are not so far behind that we can’t catch up.’

CPAs can play this leadership role in the start-up and scale-up economy. Through programs like the Innovation Leadership Accelerator, CPA Ontario is preparing CPAs to take on this role and help build the economy of the future.

The Innovation Leadership Accelerator will launch its second cohort in June 2024.