1

1 Monte Kwinter

1 Steven J. Spear,The necessity of innovation

2 Charles F. Knight, Six keys to global growth

Workshops4 • Financing strategies for the new decade6 • Leveraging core competencies to drive new business8 • Sustainability as a competitive advantage

10 • Driving growth: new markets, new revenues

12 Mike Miller, New technologies and your business: Ways to market and collaborate online

CONTENTS

WISDOMEXCHANGE

2010 REPORTERMay 4--5, 2010

www.ontario.ca/economy

LEVERAGING OPPORTUNITIES IN THE NEW DECADEShift!

THE FORUM FOR CEOS AND PRESIDENTS OF ONTARIO’S HIGH PERFORMING FIRMS

Monte Kwinter welcomes delegates

Delegates to the 2010 Wisdom Exchangewere welcomed at the opening night dinner byMonte Kwinter, Parliamentary Assistant tothe Honourable Sandra Pupatello, Minister ofEconomic Development and Trade.

Kwinter began by thanking the delegates for their hardwork and perseverance during the recent economicdownturn. The Conference Board of Canada, he noted,forecast that Ontario’s GDP would grow by 6 per centthis year. The Ontario government is helpingbusinesses to build on the momentum of thatturnaround and leverage the opportunities of the newdecade through a series of tax and program initiatives.

As a result of the business tax cuts and the move to aharmonized sales tax, he pointed out, the tax onbusiness investment in Ontario is being cut in half.

“Our goal is to make Ontario the most competitivejurisdiction in North America for business investmentand it’s working,” said Kwinter. “GE credited Ontario’stax cuts as one of the main reasons for their recent$100 million investment in Peterborough.”

Those tax cuts will help business make the investmentsit needs to close productivity gaps and accelerate thegrowth of their companies.

At the same time, Ontario’s “Open for Business”program is making it faster and easier for companiesto do business with the government. For moreinformation about the program, visit www.ontario.ca/openforbusiness

“I encourage all of you to take full advantage of the services offered by the Ministry of EconomicDevelopment and Trade,” said Kwinter in closing.“After all, we share the same goal – growing Ontario’seconomy and businesses.”

THE NECESSITY OF INNOVATION Steven J. Spear, Author

Innovation is widely hailed as the key to winning newcustomers and market share. But what if it’s more essential than that?

For Steven Spear -- a well-recognized expert on how select companies generate unmatchable performance byconverting improvement and innovation from inspiration to repeatable, broad-based, skilled-based disciplines --manufacturing and providing high-value services have become so complex that perfection is impossible.Problems will always arise and solutions will be found that generate new knowledge.

Capturing and leveraging that knowledge requires a disciplined approach to managing the innovation process. Infact, it becomes an essential strategic process as systems become more complex.

Steven J. Spear, a Senior Lecturer at MIT, five-time winner of the Shingo Prize and author of Chasing the Rabbit:How Market Leaders Outdistance the Competition and How Great Companies Can Catch Up and Win, providedinsights into how innovation can be successfully managed and leveraged during his keynote address on theopening night of the 2010 Wisdom Exchange.

Continued on page 2

At the Wisdom ExchangeThe networking reception buzzed with energy asbusiness leaders made new connections and re-connected with other CEOs, president and ownersof Ontario firms. The opportunity for one-on-onediscussions with peer CEOs about current issues andbest practices, as well as hearing presentations fromleading business strategists, draws innovativedelegates who are committed to the growth of theirfirms to the annual Wisdom Exchange conference.

2

Good news for customers, bad news for managers

Compare a 2010 Ford Mustang with the famous 1964Mustang that inspires reverence among classic carbuffs. On the outside, the two vehicles look almost thesame, from the aggressive front hood to the swept-backstyling along the side panels.

But pop the hood and it’s a very different story. The1964 version had a big engine block, carburetor, battery,radiator and a few other components. In the 2010version, the engine itself is pushed into one corner tomake room for air conditioning, power steering, ABSbrakes, GPS and a host of other elements all designedto keep the driver safer and more comfortable.

“There’s no question that the 2010 Mustang is a better,more powerful and more efficient vehicle,” said Spear.“Not only that, when the price is adjusted for inflation,it’s cheaper. In fact, measured in constant dollars, the2010 Mustang costs less than a Model T back in the day.”

Clearly, the consumer is a big winner from all thoseinnovations.

For Ford, however, the 2010 Mustang is infinitely morecomplex to design and manufacture. The 1964 versionwas a superb example of mechanical engineering, builtmainly from steel and a few other materials for upholsteryand interior trim. Today’s vehicle requires softwareengineers, experts in advanced materials and a long listof systems design specialists all working in concert.

The same good news/bad news paradox can be seen inhealthcare. A patient diagnosed with breast cancer in the1950s faced, at best, two choices: radical surgery orwhat we would call today minimal palliative care. Thediagnosis was virtually a death sentence.

Today, dramatic improvements in early detection and thedevelopment of a wide range of targeted treatments frompharmaceutical cocktails to radiation therapy andsurgery have increased the survival rate for localizedbreast cancer to 98 per cent, according to the AmericanCancer Society.

And that’s great news for patients.

For healthcare providers, cancer treatment today involvesa host of experts and technologies – MRIs, chemotherapy,nuclear medicine, nutrition, rehabilitation – and acontinuum of care that must be carefully orchestrated tomeet the unique needs of each patient.

From linear simplicity to spider web complexity

For all its complexity in terms of mechanical engineering,the 1964 Mustang was a relatively straight-forwardproduct of almost A + B = C linear simplicity. Its designwas governed by well-known principles of engineeringand physics that could be calculated with a slide ruleand a set of reference tables.

Today’s Mustang is built with advanced materials, someof which did not exist a decade ago, and incorporatessoftware that was designed last year to control, forexample, the integration of flexible fuel systems. Dozens

of different components are interwoven to interactsimultaneously in a relationship more like a spider webthan sequential links in a chain. And while theinterconnections and interactions among all thesecomponents go through rigorous testing before thevehicle is put on the market, the number of productrecalls – even among automakers such as Toyota –speaks to the complexity of today’s designs.

Similarly, healthcare has become more complex as itinvolves more knowledge and people. In the case of breastcancer, a treatment regime that 50 years ago requiredsurgical expertise and post-operative nursing care nowcalls for several teams of experts that are expected tostay current with what seems like a daily flood of newdrug discoveries and breakthroughs in medical technology.How the various drugs and therapies interact varies witheach individual and must be monitored carefully.

These incredibly complex systems have become the normacross virtually every sector. Our expectation is that theywill work perfectly. Our experience tells us they won’t. Thechallenge lies in how we react to that shortfall.

“You will never, ever develop a system that worksperfectly the first time,” said Spear. “The trick is to turnthose system failures into opportunities. You need tocapture the knowledge gained by solving the problemand leverage its impact as innovation.”

Problem solving as knowledge creation

The world’s best product launch, said Spear, was theU.S. Navy’s nuclear propulsion program. That success

THE NECESSITY OF INNOVATION Continued from page 1

Steven J. Spear, Author

Emerson, although not well known to consumers, has become a globe-spanning manufacturer through a remarkable management processcharacterized by simplicity, intense competitiveness and discipline.

SIX KEYS TOGLOBAL GROWTH

Charles F. KnightEmerson

Along the way, Emerson racked up unprecedentedfinancial results including 53 consecutive years ofincreased dividends per share.

“We had a great run,” admitted Emerson’s legendaryChairman Emeritus Charles Knight during his morningpresentation at the Wisdom Exchange. “And let me tellyou – it was a lot of fun!”

Knight, along with Emerson Chief Operating Officer Ed Monser, detailed the company’s unique managementsystem in a two-hour overview. They added personalinsights to the story outlined in Performance withoutCompromise: How Emerson Consistently Achieves WinningResults, published by Harvard Business School Press.

From Midwest to the global stage

Launched as an electric motor manufacturer in St. Louisduring the 1950s, Emerson is today a technology leaderwith 250 manufacturing locations – more than half ofwhich are outside the U.S. – along with 129,000employees and revenues that top $20 billion annually.

Emerson also stands out among U.S. corporations foranother reason. During its entire history, Emerson has onlyhad three CEOs. The average CEO tenure for a companylisted on the New York Stock Exchange today is five years.

Knight was CEO from 1973–2000, a period when Emersongrew from a dozen divisions generating revenues of

less than $1 billion to more than 60 global divisionsgenerating revenues of more than $15 billion.

Much of that growth came through acquisitions – 254 ofthem at a cost of $14 billion over the 27-year period.Billions more were invested in engineering and design totransform Emerson from an industry follower to aglobally recognized technology leader.

“This is all about winning,” said Knight as he began tooutline Emerson’s approach to managing what becameduring his tenure a complex, worldwide operation.

A set of core values are the foundation for the process,including integrity, profitability, industry leadership andadding value for customers. “They may sound likemotherhood values,” said Knight, “but that’s the way it is.”

Six management essentials

There are six key elements to Emerson’s managementprocess.

1 Keep it simpleManagement guru Peter Drucker was a champion ofsimplicity, and, said Knight, “my predecessor lived anddied by Drucker.”

When simplicity is an overarching element, it shapesevery aspect of the business: simple plans, simplecommunications, simple organization.

“This is more than a platitude,” Knight said. “Keeping itsimple is one of the hardest management principles tofollow because it requires intense focus, discipline andcommitment. It forces you to develop a clear set ofpriorities and communicate them to the entire organizationin ways that all employees can understand.”

2 Commitment to planningThey say at Emerson that planning is a contact sport, anaxiom that reflects both the sense of competitiveness andthe teamwork that pervade Emerson’s corporate culture.

Emerson’s planning process is rigorous and intense.Unlike many corporations, Emerson has no dedicatedplanning staff. Executive management is deeplyinvolved. The people who make the plans are the peoplewho execute them. They agree to the targets and areresponsible for achieving them. The company-widecoordination process is a mammoth operation. Quarterlyplanning conferences in St. Louis involve four thousandpeople.

The planning cycle was developed during Knight’s tenure.A number of lessons were learned along the way.

“We learned it was important to separate quarterly profitreviews from growth planning,” said Knight. “We foundthat we’d get so excited about the revenue side that wedidn’t pay enough attention to the growth side.”

3

was based on a highly disciplined approach to managinginnovation that can be applied in virtually any sector.

In 1948, scientists understood the explosive power ofnuclear energy. They theorized that it could be harnessedto fuel engines but no one had actually accomplished it.But within six years, under the command of AdmiralRickover, navy engineers designed, built and launchedthe submarine USS Nautilus – the world’s first nuclear-powered vessel.

Since then, despite the millions of miles that have beenlogged by the U.S. Navy’s nuclear-powered fleet, therehas not been a single injury due to reactor failure.

The navy engineers faced a daunting challenge in termsof innovation: develop a fool-proof system for controllingand managing nuclear power within the tight confines ofa ship. Once the vessel was launched, system failurecould bring disaster of terrible proportions.

To guide the nuclear R&D program, Rickover workedclosely with the engineers and demanded they follow astringent protocol.

Rather than pursue open-ended experiments, he decreedthat the engineers predict what would happen for everyprocess, observe closely and measure what actuallyhappened, then figure out why there was a difference.

By taking this disciplined, scientific approach to R&D andproduct innovation, Rickover’s engineers were able tosteadily learn what works in nuclear propulsion andimprove on their designs.

“Every problem is an opportunity to create knowledge,”said Spear. “Rickover’s mantra was ‘see a problem,solve a problem’ but then he took it one step further andadded ‘share every learning.’”

Solutions discovered in one area of design could beapplicable in another area, but only if that knowledgewas openly available. Rickover deliberately encouragedthe free flow of ideas and information among teams toleverage the impact of every innovation.

Leadership in discovery

“Leadership is about modelling this disciplined approachto innovation and ingraining it within the organization,”Spear told the CEOs. “The real job is to engage staff inthe process.”

It’s also important to recognize that applying thisdisciplined approach is a skill that needs to be practicedbefore it can be mastered.

“It takes time to learn how to walk,” he reminded theaudience. “It starts with an infant learning how to rollover, then lift up its head, then crawl, then cruise alongthe furniture, then stumble and fall and pick itself up andtake a few steps and fall again.”

The child learns to walk through trial and error,determination, learning from mistakes and applying thatnew knowledge. Companies can learn a disciplinedapproach to successful innovation in the same way: onestep at a time.

Spear suggests that companies begin with a few peopleon a focused project and let them develop innovationskills, then teach others on the next project.

“Think of it as an incubator project where employeeslearn skills that can spread throughout the organization,”said Spear. “Choose a project with a small footprint buta long leg.”

An early and easy “win” for the project team will givethem the confidence to apply the approach more broadlyand multiply the impact of the skills they have learned.

This disciplined approach to managing innovation fitsvery neatly with many continuous improvement practices.At the same time, the tenets of ‘see a problem, solve aproblem, share the solution, engage employees’ alsoprovide a valuable tool for the ongoing work of building a stronger, more competitive company.

Does the process work? It worked for the U.S. Navy. Itcan work for your company.

Ed Monser, Emerson’s COO and Knight’s co-presenter atthe conference, characterized the planning process asKnight’s “greatest legacy because it generates such awealth of benefits.”

A well-executed planning process, according to Knight:

• helps develop better strategies

• keeps everyone on track with discipline and intensity

• provides the link between strategy and action and astructure for setting priorities, evaluating results andsolving problems.

Large-scale, company-wide planning also creates ablameless organization. No time is wasted assigningblame because everyone was involved in the decision.

As an added benefit, all that cross-divisional contactoffers managers an excellent opportunity for talent-spotting. High-performing staff can be identified,developed and groomed for more senior positions.

3 Strong systems for follow-up and control

Knight noted that it’s not uncommon for a company tohave a great strategy but fall short on the implementation.

Emerson takes implementation as seriously as it doesplanning and is organized to follow up on plans rigorouslyand routinely.

One of the great benefits of this is that there are far fewersurprises. Managers are often able to detect externalchanges at an early stage and modify plans accordingly.

4 Action-oriented organization

As a performance-driven company, Emerson has anaversion to bureaucracy. In the words of Ed Monser, “too often, it just gets in the way.”

Emerson increases its organizational bias towards actionby pushing planning and decision-making down to levelsclosest to customers and markets.

To minimize turf battles and the growth in corporate staffpositions, Emerson doesn’t publish an organizationalchart. “Our focus is on planning, implementing programs,solving problems and developing opportunities,” he said.“The people working on these things need to be able towork directly with each other. Reporting alongorganizational lines can create barriers and delays.”

5 Operational excellenceEmerson’s definition of operational excellence is simpleand straightforward: offer customers the best products,services and solutions, and produce them at the best cost.

“This demands a deep understanding of your customerneeds and priorities,” said Monser. “It also requires arigorous and ongoing examination of your globalcompetitors.”

To achieve “best cost,” Emerson focuses on constantcost reductions at every level of the organization. Monserillustrated the corporate emphasis on this principle bydescribing how Knight (and now his successor David Farr)would arrive for meetings at an Emerson plant and gostraight to the plant floor and begin talking one-on-onewith workers. One of the first questions to every employeewas “What cost reduction are you working on?”

6 Creating an environmentin which people can anddo make a difference

The disciplined intensity of Emerson’s performance-focused corporate culture provides a self-sortingmechanism for hiring and promoting management staff.If a new hire doesn’t take to it, they soon leave.

But people who thrive in that setting are developedthrough a career process as carefully planned, monitoredand evaluated as any other element in the Emersonenvironment. One result is that most positions are filledfrom within the organization. The executive turnover rateis less than 4 per cent.

Monser, who has been with the company for more than30 years, revealed that he’d had 13 promotions duringhis career and he knew in advance what each one would

be and when it would likely occur. It was all laid out forhim. Even today, he said, he knew where he would be intwo years and even five years from now.

“When people know what lies ahead, they have hope andoptimism for the future,” he said. “The result of thatconfidence is a tremendous level of loyalty andcommitment to the company.”

The importance Emerson places on developing andretaining the right people is shown by the fact that,despite the size of the global operation, HumanResources reports directly to the CEO.

“Dave Farr spends more than 30 per cent of his time onHR,” said Monser. “If you treat people fairly, if youdevelop good two-way communications programs andhave effective compensation programs tied toperformance, you will make unions unnecessary.”

The big picture

Emerson’s six-point management process not onlyhelped generate impressive financial results, it helpedthe company globalize its manufacturing operations andrestructure in response to worldwide customer needs.

Most recently, it helped management respond to thefinancial crises and economic slowdown.

“What do you do in a downturn?” asked Monser. “Youget ready for the upturn.

“We increased our spending on engineering, technologyand new product development,” he continued. “Then,when customers are ready to buy and they say ‘what’snew?’ you’re already ahead of your competition.”

To wrap up the presentation, Knight offered a series ofCEO leadership tips.

Some of them were management focused, such as “setand demand high levels of excellence.”

Some were more personal, such as “set priorities forhealth, family and business that are balanced.”

But there was one piece of advice that was clearlyclosest to his heart. “Have fun,” said Knight with a biggrin. “This is the greatest game in the world.”

4

Financing acquisitions

Acquisitions were a hot topic. Both Dan Mishra and DanO’Toole grew their companies by acquiring others. Therewas considerable interest in the room about theprocess, the risks and the benefits of doing this.

Dan O’Toole founded Phoenix Systems, which specializesin technology-based productivity solutions, in 1980. After25 years of very modest growth, he embarked on anexpansion strategy that featured several acquisitionsand saw the company’s sales increase from $3 millionto $15 million. He financed these acquisitions bydeferring the debt against future performance, which ineffect resulted in the deal paying for itself. He concededthat it had been a risk, but said he had little choice.

“As we assimilate and grow, we realize that traditionalbanking finance isn’t doing it,” said O’Toole. “Our bankersdon’t see us for our growth.” Dan Mishra agreed withthat assessment, though he said it isn’t always the case.

“Banks do compete,” Mishra said. “They are notmonolithic – you just have to draw them into thecompetition.”

In 2004, Mishra took CSDC Systems Inc. out onto theacquisition trail. Four significant acquisitions later, CSDChas gone from being a $3 million company to a $15 millionorganization, and is expanding from North America andthe Caribbean into Latin America and India.

The acquisition challenge

Mishra was asked about the dangers of acquiring othercompanies – merging cultures that don’t go well together,resentment from within the company that is acquired,and service offerings that don’t really make sensetogether. As moderator Andrew Wilkes put it, “at leasthalf of all acquisitions should never have happened.”Mishra agreed that there are significant dangers, andcredited his success to the fact that he always tries tomake his deals worthwhile for both parties.

“We do not acquire blindly,” he said. “We identify holesin our offerings, and we acquire companies that makesense in that regard, for us and for them. We own them,but they continue being the boss. In the end, we haven’tchanged their lives, we’ve made them more comfortable.”

Debt vs. equity financing

The acquisition discussion was followed by presentationsfrom the two financiers. Leon Raubenheimer of ZEDFinancial Partners tackled what he termed the criticaldistinction between debt and equity financing. Both, hesaid, were valuable, but he cautioned that companieslooking for financing must understand the differentmotivations at work.

Debt providers, traditionally banks, are not in thebusiness of taking risks. Their rate of return is low – 6–15 per cent per year – compared to equity providers,so they are less inclined to stick with companies throughbad times. Debt providers will look at two things:collateral and can this company make it? “They do notwant to go through the whole lending process just tosend a receiver in six months later – they prefer cashflow to collateral.” As Raubenheimer joked during hispresentation, on a sunny day your bank will cheerfullyfinance your umbrella, but if it starts to rain they may wellcall your loan.

By contrast, equity partners will really be partners. Theytraditionally look for rates of return that are much higher –20–35 per cent per year – and assume that if they incur aprincipal loss they can make it up on the next deal. Theyare looking for companies that are going to grow, not flatline, and so risk is something they are prepared to accept.

Raubenheimer said that because equity partners are in itfor the long haul, they are often a more attractive optionfor companies looking to grow. But he cautioned thatthere is always a price to be paid. When you give upequity, he said, you give up control.

In exploring bridge debt, mezzanine debt, and seniordebt, he summarized:

• A bridge loan has to be a bridge to something concrete –it should not be a pier. It needs to get you somewhere.It is not a short-term survival tool!

• Mezzanine debt financing (a.k.a. Dequity) is the layerof financing between a company’s senior debt andequity. It is often used for acquisitions, leveragedbuyouts and recapitalizations.

• There are two types of senior secured debt: asset-based lending (generally used by asset-rich companies)and senior secured cash flow (often best for service-related, non-cyclical and high margin business.)

When preparing for financing, Raubenheimer advised:

• Get your financial house in order. Make sure yourfinancial statements and systems are up-to-date andorganized.

• Know what you are looking for – equity (control or non-control), short-term debt, bridge or long-termfinancing – and match your financing to your needs.

• Prepare a comprehensive business plan. Be realisticin your assumptions and have back-up for yourassumptions. Make sure your business plan, numbersand assumptions tie together.

Asset-based lending

Raubenheimer was followed by Colin Ross of the Isle ofLewis Group. Ross’ specialty is asset-based lending. Hesaid that asset-based lending, in which the loan issecured by assets such as machinery or buildings, is notvery common in Canada but is definitely something toconsider if your company is looking for a significantamount of money. Ross said smaller companies lookingfor amounts less than $5 million will generally not havemuch luck in this area, because they won’t likely haveenough assets to secure the investment.

His presentation underscored there is LOTS new in asset-based lending. However, he commented that, “businessin Canada is going through one of the toughest periods in

It’s been a tough year for businesses, for banks, for consumers – forpretty well everyone. Yet, companies are still in business, and to staythat way they need to keep finding ways to turn a profit.

“It all boils down to one thing: money,” was the assessment of oneaudience member as the workshop discussion focused on how tosecure the financing you need to grow your business and revenues.

FINANCING STRATEGIES FOR THE NEW DECADE

WORKSHOPS

MODERATOR

Dan MishraPresident and CEO,CSDC Systems Inc.

Colin RossPresident and CEO, Isle of Lewis Group Inc.

PANEL

Dan O’ToolePresident, Phoenix Systems

Leon RaubenheimerManaging Partner, ZED Financial Partners

Andrew WilkesChairman, National Angel CapitalOrganization

its history as market conditions have dictated that creditmanagers in most lending institutions proceed withcaution when considering a company’s creditworthiness.”

One ripple effect of the recession has been that,“equipment values have decreased sharply due tobusiness failures, making it a buyer’s market forequipment. The same goes for inventory.” As a result“new lenders are coming into situations where a viablebusiness has to be refinanced but the value of theequipment, real estate and inventory has dropped andcan only be financed at the true net recovery value ofthese assets in today’s lower markets.”

“Company’s have to be careful when orderingappraisals,” Ross further cautioned. “They are expensiveand if the new lender does not trust the appraiser, hewill order a new one from someone he trusts. Now thecost of the appraisal has doubled.” He offered ways toavoid this, such as getting a rough evaluation (i.e. “adesktop appraisal”), possibly from a consultant, beforeapproaching a lender.

Angel investors

The final presentation was given by moderator AndrewWilkes. He is an active angel investor, who generallylooks for high-growth opportunities among companiesthat have a technological edge in traditional industries.Wilkes said that angel investors invest in 30–40 timesmore companies than venture capitalists, and theyinvest with their own money. Angel investors tend to lookat making short-term deals, focused on takingcompanies to specific milestones, after which they pullout and look for the next company to help.

As banks continue to clamp down (reduced lending,tightened security, personal assets), Wilkes shared five “angel” perspectives:

• There is investment capital looking for great companiesthat have proven themselves to be globally effective.

• Private and public equity markets have improved forcertain sectors (resource, financials, importers) butremain very difficult for the export and tech sectors.

• Cash continues to be king. Collect receivables, reduceinventories, reduce and renegotiate costs, drive forshort-term cash sales, reduce marketing costs throughinnovative strategies and strategic partnering ratherthan “greenfielding.”

• It’s a great time to take market share. Those thathustle will win!

• Focusing on the customer should continue to be yoursingle purpose.

Wilkes talked with enthusiasm about how much heenjoys helping companies. He said his goal is always totake good companies and make them better. “When Ilook at investing in a business, if I can’t add value otherthan money, I shouldn’t be there,” he said.

What does it take?

Following the presentations, the workshop settled into ageneral discussion about what it takes to get ahead. Thetone was set by an audience member who said that “inlife, it’s not what you deserve, it’s what you negotiate.”

Leon Raubenheimer echoed that sentiment. He said theworst possible thing you can do when trying to attractfinancing is to present a false picture because, when thedue diligence is done, you will be found out and loseyour investor. The better approach, he said, is to havedone your homework.

“You have to be persistent and you have to be organized,because when you walk into that office, you have oneshot,” he said. “Make it a good one because, most ofthe time, you don’t get another.”

That was a sober point of view reflecting that these arehard times in business. But Andrew Wilkes struck amore optimistic tone, saying that he sees companiesevery day that are getting ahead.

“There is always money looking for great companies,”said Wilkes, “but you have to have vision, you have tohave guts, and you have to be able to sell yourself.”

Financing today:Learnings from the pros

• You can sometimes get better financial termsfrom traditional banks by drawing them into acompetition for your business.

• Following an acquisition, the merger of twocorporate cultures works best if both partiesfeel they benefit from the deal.

• Banks and other traditional lenders, whilerequiring a relatively low rate of return (6–15 per cent) on their capital, have a lowtolerance for risk. They might call the loan ifthey feel debt repayment is in jeopardy.

• Equity investors have a higher tolerance for risk but require a higher risk premium (20–35 per cent) on their investment.

• Angel investors often structure theirinvestment to cover a specifically definedphase in the company’s growth and to include their participation in managementdecision-making.

5

6

A solid core group of technical people

Northern Cables president Shelley Bacon kicked off thediscussion with a brief description of the genesis of hiscompany, offering a fine example of key people creatinga new enterprise by leveraging their skills and strengths.When Philips Cable closed its doors in Brockville in1996, Bacon and four other Philips employees lost theirjobs – and found an opportunity.

“There was great opportunity in the industrial powercable business,” said Bacon. “We had the technicalexpertise, and we had some skills and experience thatcould be put to good use. Our products are now used inalmost every industrial or commercial building in NorthAmerica, from the Olympic athletes’ village in Vancouverto the Confederation Bridge in P.E.I.”

Bacon and his partners started with some usedproduction equipment and, with crucial advice from anaccountant advisor, set up shop in a 25,000 sq.ft. plantin Brockville. Focussing on the U.S. market, where anothersupplier had shut down, Northern was shipping productwithin seven months. The company was profitable withintwo years, and has grown to employ 120 people today.

“In hindsight, I can see that there are four main reasonsfor our success,” said Bacon. “We had a solid coregroup of technical people. We decided early on to selldirectly out of our factory, with no sales people on theroad. We make service a priority. And finally, we are alean organization.”

“You can’t shrink to greatness”

Bruce Seeley is building his company in a completelydifferent manner. An operations executive with 30 yearsexperience in the automotive, medical and constructionproducts sectors, Seeley put his wisdom to work with the purchase of John G. Wilson Machine Limited inPrinceton, Ontario.

“To get the most out of my experience, I went looking fora metal fabricator and I wanted a company in ruralOntario because I think it’s a good place to manufacture,”said Seeley. “Wilson had a good location, solid workforceand management, but it had lost a key customer in 2007 and had been unable to reduce overhead.”

Seeley did a classic SWOT analysis that looked at thecompany’s human capital, its competitors, responsetimes, customers and the corporate culture. The result:Wilson Machine was due for some major changes.

“I had to drive a culture shift,” he said, “to create alaser-like focus on customer service. I distributedauthority to the shop-floor level and created a newatmosphere of transparency. We’re now focused onsales, marketing, and branding, and I’ve implementedISO (standards) and CRM programs.”

Seeley redirected the company’s efforts to concentrateon delivering a “tailored value proposition” instead ofsimply the lowest price. Where necessary, he hiredexternal help for crucial tasks such as marketing, marketresearch, and optimizing the company’s website andsearch engine rankings.

“I leveraged my core competencies to complete theSWOT, penetrate new markets, power up the salesgroup, and focus on new sales challenges,” he said.“One way we’re tracking new markets is by followingareas where government is spending on things like cleantech, green tech, and medical technologies. You can’tshrink to greatness.”

Building new business from a downturn

Like Northern Cables, Bamco Custom Woodworking Inc.was founded in 1996, but the similarity ends there.Company president Bill Van de Ven was a carpenterworking in a family company with limited room foradvancement. Van de Ven and his two partners founded

a company based on high-quality products. Producingtop-notch custom millwork for premium contractors hasbuilt a company with two plants in Guelph, 110 employeesand a 30 per cent annual growth rate.

Even with that great success, Bamco is still striving forgrowth in new markets and sectors. Van de Ven isleading the company’s program to capitalize onheightened interest in “green” products.

“I discovered a new water-based wood finishing systemat a trade show in Europe that offers great potentialhere,” said Van de Ven. “We got support from theOntario government in 2008 to buy new equipment, andthen the recession hit.”

Bamco met that capacity challenge by creating a newbrand for Euro-look cabinetry. When the company found ittough to get a foothold in the new market, it adaptedonce again.

“We bought a local competitor, and we now have theirdealer network across North America to sell our line ofgreen, non-VOC (volatile organic compound) woodsupplies,” he said. “Those same dealers are also sellingour custom millwork, and we are expanding into newmarkets in the Caribbean.”

Can you buy growth?

Workshop participants were very interested in thedifferent growth strategies outlined by the threepresenters. For acquisitions, Bruce Seeley advised onlybuying existing businesses that have assets lenders willrecognize as solid collateral.

“My business is mainly commercial and industrial,” said Shelley Bacon, “and it’s very, very competitive, soit’s easier for us to vertically integrate, to watch forcompetitors failing and move into new markets slowly.”

What does it take to build a new business in today’s brutallycompetitive markets?

CEOs shared their insights on the requisite skills for success in three very different scenarios and, although all three panellists workin the manufacturing sector, their diverse experiences in buildingsuccessful businesses provided valuable lessons.

LEVERAGING CORE COMPETENCIESTO DRIVE NEW BUSINESS

MODERATOR

Shelley BaconPresident, Northern Cables Inc.

Bruce SeeleyPresident and CEO,John G. Wilson Machine Limited

WORKSHOPS

PANEL

Bill Van de VenPresident, Bamco CustomWoodworking Inc.

Deirdre McMurdyVice President, Public Policy Forum

Bill Van de Ven’s growth through acquisition strategyoffered both challenge and opportunity in the form ofnew employees.

“We also acquired 35 employees with the purchase, and it was a challenge at first, because some of themthought that they had saved us,” he said. “But goodpeople are hard to find, and having experiencedemployees at the start does fast-track you to where youwant to be.”

Customer service was another core competency thatdrew a lot of interest from the audience. In Bamco’scase, the three owners all had wide experience that theytransferred to new employees as they joined the company.

“Planning is crucial in our business,” said Van de Ven,“so if we can get the new home buyer to pick themillwork in the home early in the process, it gives us abigger lead time. We showed our builder clients that byencouraging home buyers to decide early, the builderscould also sell more upgrades. It’s a win-win benefit ofgood customer service.”

At John G. Wilson Machine Limited, top level customerservice is part of the new culture.

“I lead by example,” said Seeley. “When I first boughtthe company, I interviewed all of our customers but Iwasn’t happy with the answers I got. So I hired a thirdparty to survey them, and I got much more valuablefeedback. We also have customer tours every week.We’re communicating all the results throughout theorganization.”

Personal service is the standard at Northern Cable,which has followed a “no voice mail” policy since itsinception. The company has two core groups assigned todeal with specific customer service issues. Any neworder is confirmed in writing the day it is placed.

Technical excellence was another crucial core competencyidentified by the panel.

Northern Cable maintains its technical advantage withformal training, in-house meetings each quarter, and anannual plant shutdown where all outstanding issues arediscussed in detail. At John G. Wilson Machine, Seeleyenhances the skills of current employees with co-optraining programs run with local colleges.

“We meet that technical challenge by treating oursuppliers like partners,” said Bamco’s Van de Ven. “Theycan help the most with our high-tech challenges, so wechoose suppliers who offer total solutions.”

Retaining employees who have the core competenciesnecessary for the company’s success was the finalissue addressed by the panel. Van de Ven noted that thewoodworking industry’s high-wage environment is achallenge.

“We want our people to be informed. We plan to publishwage rates for all our positions, so people can aspire to a better position or leave if they feel they can dobetter somewhere else,” he said. “We’re also offeringprofit sharing.”

When Seeley purchased John G. Wilson Machine, a wagerollback was a necessary part of the company’srestructuring.

“I also gave the employees full financial disclosure andset up a profit sharing plan. It’s working very well.”

A common thread running through all these examples isthe ability to negotiate win-win solutions with employees,customers and other stakeholders. And as markets growever more competitive, negotiating skills will becomeeven more essential and join the short list of corecompetencies needed for business growth.

Building on strengths: Learnings from the pros

• A plant closure or the loss of a key customercan sometimes free up valuable technicalexpertise to tackle a new opportunity.

• When necessary, hire external experts for helpwith crucial strategic tasks such as marketresearch and web design.

• Choose suppliers who can help you meetchallenges, then treat them as partners.

• Acquiring a competitor can provide access tonew markets and dealer networks for yourexisting product lines.

• Recognize customer service as an essentialcore competency and make sure newemployees receive training.

• Retaining good employees who have the core competencies you need can be bestaccomplished by building a win-winrelationship with them.

7

8

The first was that sustainability represents a profoundparadigm shift in business thinking that goes far beyondrecycling and energy conservation. Sustainability entailsexamining operations from cradle to grave to find andexploit new opportunities.

Panellists also had no doubt that the drive forsustainability had passed the proverbial “tipping point”and would exponentially grow more important to everycompany’s bottom line.

The sustainability imperative

“I didn’t set out to make my company more sustainable,but here we are,” revealed ABS Friction’s Rick Jamiesonwhose company now diverts nearly 100 per cent of itssolid waste stream.

A manufacturer of aftermarket brake pads, ABS Frictionwas taken by surprise a few years ago when Guelph’snew mayor, who was elected on a strong environmentalplatform, closed the city’s dump.

Jamieson quickly realized that tipping fees for industrialwaste would climb steeply – fees that would underminethe company’s competitive position. Fortunately, hefound a recycling company in Hamilton that took a largeportion of his solid waste for free. They in turn resold thewaste to a U.S. company that could used it as fuel. ForABS Friction, the result was not only that they avoidedrising dump fees, they actually cut operating costs.

That eye-opening experience helped put Jamieson andhis company on the path to sustainable businesspractices. He then found even more support forsustainability concepts as he travelled across theUnited States and internationally.

“The landscape has changed permanently, people’sperspective has fundamentally shifted,” he said. “Thesustainability concept has gone viral.”

Like ABS Friction, many companies find themselvespushed into sustainable business activities by rising costsor other pressures. Increased prices for raw materialshave forced some operations to use those materialsmore efficiently, reducing costs for both materials andwaste disposal.

Other companies are drawn to greener practices by theircustomers. Brett Wills from High Performance Solutionsgave two examples of large organizations – Walmart andthe Toronto Transit Commission (TTC) – that haveestablished procurement policies that focus on green orsustainable business practices.

Other major corporations – Dell, SC Johnson, 3M, Disney,PepsiCo – have formed a sustainability consortium todevelop sustainable guidelines for large-scale enterprises.

In some cases, there is a clearly stated preference fordoing business with suppliers that can provide, as in thecase of the TTC, “products and services that areproduced, distributed and disposed of with the leastenvironmental impact.” Other companies ask suppliershow they can help the company reduce its carbon footprint.

A growing list of spin-off benefits

The impact of sustainable business practices has grown,and with it certain competitive advantages have emergedconsistently across virtually all business sectors.

In addition to cost savings, one of the clearest advantagesinvolves recruiting and retaining good employees.

“Studies show that 79 per cent of employees want towork for an environmentally responsible company and 64 per cent said that a company’s environmental effortsmade them feel more loyal,” said Wills. “Your employeeswant to get involved, and they can be a tremendoussource of innovative ideas on how to make yourbusiness more sustainable.”

Other competitive advantages include the potential forincreased customer loyalty, the ability to develop newproducts and access to higher value markets.

“It’s an opportunity to move away from the price/deliverybusiness model,” said Philip Ling. His company,Powersmiths International, specializes in green buildingtechnologies such as high-efficiency power transformers.“It means working with customers whose businessvalues are more complex than pure cost.”

Part of the task sometimes involves helping customersdeal with internal challenges. The initial cost for greentechnology is often higher than traditional products, butthe cost-saving payback is spread over years or evendecades. This can be an issue when the initial purchasecomes out of a capital budget, while the savings arerealized in the downstream operations budget.

Moving money from one budget to another is rarely easy.Fortunately, organizations that are committed tosustainability are often more open to innovativeapproaches and corporate change on a broader scale.

“There is a real sense among people that we are on ajourney towards more sustainable practices,” said Ling.“People say ‘Here’s where we are and there’s where wewant to get to. What can you do to help?’ There is a lotof openness to new ideas and a sense of shared purpose.”

First steps on the sustainability path

The complexity of sustainability issues can make youthrow up your hands in despair over deciding where to start.

Philip Ling suggested companies begin by checking outgreen organizations within their industry association orthe industry association of their customers.

Environmental issues have become part of the business mainstreamand many companies are trying to figure out how to respond. Thosethat get it right can gain a significant edge in the market.

It’s a growing opportunity that brought four panellists together, andthey quickly and unanimously agreed on two core ideas.

SUSTAINABILITY AS A COMPETITIVE ADVANTAGE

WORKSHOPS

MODERATOR

Rick JamiesonCo-founder and CEO,ABS Friction Inc.

Philip LingVice-President Technology,Powersmiths International

PANEL

Brett WillsSenior Green Consultant,High Performance Solutions

Leon WilliamsSenior Business Advisor,Ministry of EconomicDevelopment and Trade

Rob ColmanEditorial Director,Environmental Group,CLB Media Inc.

The Canadian Manufacturers & Exporters (CME) recentlyjoined with Ontario’s Independent Electricity SystemsOperator (IESO) to publish The Bottom Line on ManagingYour Electricity Costs: A Guide for Manufacturers.

Brett Wills pointed out that there may also be greenbusiness associations within your community. Partnersin Project Green www.partnersinprojectgreen.com, forexample, is an organization involving businesses in thePearson airport eco-zone which encompasses Toronto,Mississauga and Brampton. Supported by municipalities,power utilities and the Greater Toronto Airport Authority,the association is helping local businesses “green” theirbottom line. It recently published a financial assistancedirectory of federal, provincial and municipal energy- andwater-efficiency incentive programs.

Leon Williams, from the Ministry of Economic Developmentand Trade, described PROBE (PRO-moting BusinessExcellence), a business sustainability benchmarking toolthat he is piloting with a number of companies.

For this initiative, the ministry is partnering with one ofthe world’s leading benchmarking organizations.

PROBE tools come with impressive credentials. Theyhave been used by 7,000 organizations in 40 countries.They are built on a research foundation that includesdevelopment partners such as Cambridge University (U.K.),Chicago Manufacturing Center (U.S.), Enterprise Connect(Australia), Fujitsu Tokyo & Centre for International PublicPolicy Studies (Japan), Harvard Business School (U.S.)and London Business School (U.K.).

Essentially, PROBE is a self-assessment processinvolving teams of employees from across theorganization. The objective is to provide companies witha comprehensive sustainability profile that positionsthem within their industry. It also identifies areas forimprovement that can help them achieve their goals.

“What we’ve found is that presidents and owners ofcompanies are already thinking about sustainability butthose thoughts are not filtering down through theorganization,” said Williams.

Leveraging the power of your people

PROBE is designed to help companies engage staff inthe sustainability process.

That step is absolutely essential, said Wills. “If you wantto fully leverage sustainability and green businesspractices, you have to focus first on internal change andtransformation.”

The best way to get staff engaged is to show how theirworkplace sustainability efforts can connect with theirpersonal commitments.

People spend more time at work during the week than atany other activity. As Philip Ling pointed out, by helpingto design and build a more efficient transformer thatconserves energy for the next 40 years, an individualemployee’s work has a huge impact. The key is totranslate that long-term broad impact into somethingmeaningful for the individual.

The “green” skills employees learn in the workplace canalso be useful to them in their homes, communities orfuture jobs.

The panellists agreed that, however and wherever youstart on your company’s path to sustainability, youshould start now – and the sooner the better.

“You have to be prepared to answer the basic question –what are your sustainable business practices?” saidworkshop moderator Rob Colman. “It’s a question that’sgoing to be asked if not by journalists then by yourcustomers, shareholders and potential employees.”

Going green: Learnings from the pros

• Sustainability is not just a current trend; itrepresents a fundamental and permanentchange in how companies do business.

• Contrary to what many business owners believe,going green can reduce – not increase – costs.

• Customers that want your “greener”technologies and services sometimes needadditional support to handle barriers withintheir own companies.

• Take advantage of environmentally-focusedindustry groups or business associations inyour community to find out how sustainabilitypractices can help you.

• Provincial, municipal and federal governmentsalso offer a wide range of incentives and otherprograms that can help offset some of yourinitial costs and help you “green” your company.

• Good environmental policies and businessactivities can help attract “the best and thebrightest” potential employees.

9

10

Jill Anderson of Aecometric Inc., manufacturers of heavyindustrial combustion equipment, is constantlyexpanding her company’s products and markets served.

Aecometric, which started as a home-based business in1972 with sales to the cement industry, now has amanufacturing and R&D facility in Canada, a plant inChina and a recently opened office in India. “The key hasbeen building on our core and entering new marketswhile always focusing on what the customer wants,” said Anderson.

A motivating factor in the global growth was Anderson’sdesire to eliminate dependence on a single industry ormarket. The danger of relying on the U.S. marketbecame abundantly clear after the recession of the 90swhen the company’s revenues tumbled and staff had tobe cut, a situation which fuelled her decision to goglobal. Although Aecometric’s equipment was sold inover 40 countries worldwide through engineering firms,she decided to go direct – first to China, then the MiddleEast. It took patience and time – two years – to get thefirst sale in China.

A pro at modifying equipment, penetrating variousindustries and expanding into new countries, Anderson isnow preparing for yet another change with the increasingdemand for green technology in the marketplace.

“There are all kinds of things happening in the biomassarea, so I’m trying to position us to go in differentdirections,” she noted. “It’s a whole new world dealingwith green energy companies coming on the scenecompared to doing business with large, established andoften conservative industries, like oil and gas.”

Door opener

Sometimes a marketplace “shock” will create anopportunity for a company to get on the radar and growexponentially.

That was the case for John Dominelli of NRT TechnologyCorp. His technology solution for the gaming industrybecame very attractive to Las Vegas casinos post 9/11when casino visits dipped and they sought to lowerlabour costs and automate. Today, the company is aglobal leader in cash handling redemption technology inthe gaming industry, with 4,000 of its devices in 350 casinos worldwide.

NRT, which exports 90 per cent of its products, hasoffices in Toronto, Macau and Las Vegas and will soonbe opening a Singapore operation. NRT is also enteringthe Korean, Philippine and South African markets.

But the success of the company did not come without itsshare of challenges such as dealing with gamingcommissions and securing gaming licenses in this highlyregulated industry. Maintaining a laser-like focus hasbeen key. “We have 140 employees, mostly engineersand developers, and we design, manufacture and installeverything ourselves since strict gaming regulationsmean that outsourcing is not an option,” explainedDominelli. “We just keep developing new products inresponse to what the casinos need.”

He feels strongly about continually adapting and teachinghis staff to do the same. That was a lesson he learnedearly on when he started in the tech business developingsoftware and hardware for retail stores. Since marginswere low, he moved on to providing ATM transactionsolutions for casino floors. He said it was the best thinghe could have done. “I’m passionate about this businessand will never retire,” said Dominelli. “It’s just too muchfun…and I get to travel all over the world!”

Capitalizing on new trends

Market changes can also present opportunities for thestart-up and growth of new companies, like SyncapseCorporation.

This technology firm is taking advantage of the burgeoningsocial media trend. It provides products and services tohelp companies strategically manage and leverage theirpresence in this fragmented space – an opportunity thatis eluding many firms, particularly B2B marketers.

But with the exploding growth of social media such asFacebook, which has 13 million users in Canada and750 million globally, and with digital media spendingexpected to grow to $28 billion annually in the U.S. by2012, Syncapse is banking on its own explosive growth.

Started in 2007 by serial entrepreneur Michael Scissons(who launched Facebook into Canada), Syncapse landedRIM as a client in 2008, which forced it to expand itsservice line quickly. It also fast-tracked the company’sgrowth globally. Today, the firm can execute global mediaprograms across a wide variety of geographic regionsand languages.

“It’s been a wild ride,” admitted Kevin Astle, ChiefAdministrative Officer, who expects the pace to continueas the company shoots for its target of $100 million insales within five years. The goal is to stay ahead of thegame in what is emerging as a very competitive industry.Syncapse has already expanded to new headquarters,attracted new clients like Sony, Pizza Pizza and Rogers,launched two new products, and acquired a softwaredevelopment company.

Evangelism is an important aspect of the company’sgrowth strategy, explained Astle. “We speak regularly atglobal conferences on new technology to generateinterest.” This is part of their competitive positioning –differentiating themselves “by emphasizing technologyand measurables, rather than showing pretty pictures.”

Whether it is expanding globally or tapping into potential new marketsthrough innovative ways like leveraging social media tools, CEOs findthey must be flexible in shifting their businesses and adjusting theirproducts and services to respond to the speed of change anddemands in the marketplace.

DRIVING GROWTH: NEW MARKETS, NEW REVENUES

MODERATOR

Jill AndersonPresident, Aecometric Corporation

John DominelliPresident and CEO, NRT Technology Corp.

WORKSHOPS

PANEL

Kevin AstleChief Administrative Officer,Syncapse Corporation

Rick SpencePresident, Canadian EntrepreneurCommunications

Top talent a must

Whether in pursuing rapid or more measured growth, oneof the biggest challenges for all the panellists is findingand retaining good people.

“Because we are so focused and specialized, our biggestchallenge is finding and attracting top talent to drivecontinued growth,” said Astle. More than half of itsworkforce are developers.

Anderson cautioned against parachuting in someone at asenior level in a small company due to the potentiallydamaging ripple effect on employee morale.

Dominelli said that NRT has had good success lookingabroad for talent when it’s not available here.

The panel emphasized that learning about differentcultures and ensuring that your work environmentrespects differences are critical when employing adiverse workforce. Anderson has invested in cross-cultural training for staff to address this.

If someone is not the right fit for a key role and lacks theskills to take the company where it needs to go, thepanellists all agreed that it was necessary to cut tiesquickly even though it can be very difficult.

Business owners tend to defer the decision to let peoplego when they’ve built relationships with them. “Be totallyupfront and professional and don’t let your emotions ruleyou,” emphasized Dominelli.

The panellists shared a number of additional tips thatcan help drive growth in the rapidly changing marketplace.

• Tap into opportunities to provide green business orgreen applications by offering innovative solutionsand green payoffs. Aecometric, for example, is provingthat its industrial burners can use wood dust, municipalwaste, char ash and even peat moss as fuel.

• Build relationships with customers and prospects.As Dominelli said, “It’s important for your people tohave EQ (emotional quotient), not just IQ.” Share yourexpertise as a fellow business person, not just as avendor or supplier.

• Explore sales to Tier 2 companies. “The majors arebeginning to skip over Tier 1 suppliers and go to Tier 2,” observed Anderson.

• Avoid dismissing social media quickly. As onedelegate pointed out, there is a lot of apprehensionabout social media among business people. The trickis separating the facts from the noise amidst all thehype. NRT has found it can sometimes glean betterand quicker market intelligence from social mediasites than from its global offices. Astle suggestedusing social networking sites like LinkedIn as arecruiting tool to let potential employees know whatyour company is all about and to attract new talent. He also recommended establishing a presence onFacebook to position your company as the educationalfunnel for your industry.

In addressing challenges going forward, Astleanticipates growing competition. “Don’t just allow yourbusiness to evolve,” he cautions. “Look at it in a holisticway.” As part of its response, Syncapse is building itsinfrastructure to hopefully absorb new competitors thatcould pose a threat. For her part, Anderson is grapplingwith supply chain challenges since many companies didnot survive the recession. “I don’t want to oversell andunderproduce,” she emphasizes. As Aecometric gainsbigger contracts, her need for good process engineers isheightened. “We started out building simple burners.Now plants need more complex burners that can switchfuel sources.” Dominelli’s advice to drive growth in aconstantly shifting marketplace focuses on the businessplan. “Share it with all your people, and be prepared toadjust it if necessary monthly.”

Going global: Learnings from the pros

• Join associations, participate in trademissions to gain valuable contacts, and sharesolutions to problems and challenges.

• Hire someone who is willing to travelextensively, build relationships and feedmarket intelligence back home.

• Attend the best trade shows for your industrysince visitors are scouting for new productsand ideas there.

• Be creative in packaging your product. NRTtweaks its legacy system in many ways toadapt to the international market.

• Ensure after-sales service. The internationalmarket can sometimes be very complex interms of laws and regulations, but the recipefor success is the same as in the domesticmarket. Provide excellent, ongoing customerservice to uphold your reputation.

11

NEW TECHNOLOGIES AND YOUR BUSINESS: Ways to market and collaborate onlineCanadians are heavy Internet users – more so than either Americans or Australians. Some 74 per cent of us are online, averaging 44 hours per month, and 96 per cent of users visit search engines monthly.

With all aspects of the web increasingly being used byand for business, Mike Miller, Head of Online Sales,Google Canada, emphasized it’s more important thanever for CEOs to stay on top of current trends and takeadvantage of the technology that is dramaticallychanging the business landscape.

Originally known as a search engine, Google has had its fingers firmly on the pulse of the user community forsome time. Clearly a game-changer, it uses this marketknowledge to innovate and advance technology. Millershared his insights both on Internet trends that willradically shift how businesses market and on newtechnologies, like cloud computing, that make it easierto conduct business.

Pumping up the search volume

A single word can sum up current online search trends:it’s all about “more.”

Search engine volume has been increasing over the pasttwo years “and people are searching differently now,”said Miller. “It’s important to understand this becausethe Internet is not just a consumer-related tool anymore.”

B2B (business-to-business) searches are on the rise,too, with B2B buyers seeking lots of information prior topurchase. Some 64 per cent of C-level executives usethe Internet to search for products and information. Andonline searches are a growing source for small businessprocurement. In addition, searchers are becoming moresophisticated, using several search terms, not just asingle word or two. Marketing departments need to beaware of this to refine keywords that will improve rankings.

But perhaps the most important search trend tounderstand in terms of business marketing is the Zero Moment of Truth (ZMOT), says Miller. Unlike theFirst Moment of Truth, a phrase that refers to the firstinteraction a customer has with a product on a store’sshelf, the ZMOT occurs when consumers research aproduct online before even entering the store. In fact,since the recession began, 54 per cent of consumersare spending more time researching products onlinebefore they buy them in a store. Companies need toensure that all interactions between the buyer andproduct are positive, regardless of where this interactionhas taken place – online or in person.

Mobile usage on the rise as business tool

“A phone is no longer just a phone,” Miller noted,urging CEOs to “really pay attention to the rise inmobile usage in the next one to two years. You will seehuge strides that will affect the way we do business.”There have been big leaps in operating systems and anumber of vendors have gravitated to open computerspace as a platform.

Miller offers this advice to leverage technology formaximum business benefit:

• Understand how your customers are searching onlineChanging search patterns point to the need to tweakyour website to maximize SEO (Search EngineOptimization). Free tools available through Google likeGoogle Analytics can help. Also take note that thesecond largest search engine in the world is YouTube,where there is significant B2B interest. There are morethan 1.5 million business-oriented queries on YouTubeevery week.

• Reinforce your search placement with ads Since peoplesearch ads for both B2B and B2C (business to consumer)products, using search and ads together will enhanceyour presence and brand awareness on the web.

• Use web technology to reach your customers You canget valuable insights into what is happening in yourmarket and use this information to sharpen your onlinemarketing efforts. Analytics, Google’s core free tool,provides myriad data about web visitors and its keywordtool gives you information to show search volumes ofkeywords by month, how much it costs to advertise insearch ads, and paid alternative keywords. Insights forSearch provides information about how people thinkabout your products and brand and how they search.There are also tools that allow you to compare searchvolume patterns across specific regions, categories andtime frames. This can help you determine inventorylevels and anticipate seasonal demand. You can alsotarget a customized geographic area because you canget a sense of search volumes by city, giving you theability to market very narrowly.

As for social media, Miller believes they are very usefultools but you must understand if and how your customersare using them. If you want to develop a community offollowers, be prepared to invest time and generatevaluable content regularly. What he recommends ishaving a designated space on YouTube to upload videodemos, especially if you have a complex product.

• Leverage the power of online tools to marketinternationally Google has a translation toolkit that

translates documents and ad campaigns in order toenhance global marketing and help grow your businessin non-traditional ways at little expense. There are alsotools to build ad campaigns targeting a specific city,region or country. “You can choose very sophisticatedtargeting options,” said Miller. “But seek out a thirdparty to help you because this can be complicated.”

• Develop in-house expertise When hiring someone tomanage your online activities, it’s not essential to find aperson who has taken courses in online marketing andsocial media. “Find someone who understandstechnology and has a marketing degree, an engineeringdegree or just good marketing sense,” he suggested.Google offers a certification program which is a goodfirst step to understand what is going on in this space.

• Use Google Apps to make business easier and morecollaborative This is a burgeoning, critical area,” Millersaid. Through Google Apps, you can run applicationslike Gmail, calendar, documents, slides andspreadsheets then store your files and data on a

remote data centre via the Internet. This concept of“cloud computing” allows files to be accessed, workedon or shared with anyone with access to the Internet.It’s a powerful and economical way to operate andcollaborate in real time. It also means that a hard driveis less important because your data is securely storedat a data centre elsewhere. “If you lose a computer,”Miller noted, “you don’t have to reload everything.”

• Get ready for the mobile wave “A mobile is not just aphone,” said Miller. “It’s a powerful computing devicethat can now do more than your laptop or desktop.”There has been exponential growth in mobile searches(3,000 per cent growth in three years). Similar to otherchanges in search trends, the B2B mobile searchsector is growing rapidly. Mobile usage amongprofessionals is rising and 49 per cent of C-levelexecutives use mobile technology to search. Millerpredicted this trend will grow more than any other andrecommended that businesses stay abreast of wherethe industry is going and how people are usingmobiles to not only email and text but increasingly tosearch for B2B products and information “The wholeworld is headed in this direction,” he said. Over thenext few years, huge technological strides will affecthow we do business. To prepare for that change, Miller advised companies to take several steps:

• Optimize your website for mobile viewing

• Ensure your ads are visible on mobile

• Have good search rankings

• Make sure your employees know how to use mobile devices

Where to get help

Businesses can choose to manage Google toolsthemselves, or hire third party search engine agencies.“The latter may be preferable if you have a sophisticatedproduct,” Miller suggested.

At the same time, it’s a good idea to have yourmarketing department responsible for all online activity.If you choose to manage in-house, use YouTube andGoogle Help Centres. Google is one of the biggest usersof YouTube and posts video tutorials focused onmarketing and how to best integrate Google tools.Businesses can also work directly with Google, throughits account management teams that specialize in B2B,to help maximize online activity.

Miller recommended caution if you are pitched by SearchEngine Optimization (SEO) and Search Engine Marketing(SEM) agencies that offer to help you with your searchengine rankings. Verify their work first.

What’s ahead?

The future will be in applications, predicted Miller,because it’s a huge area especially for B2B.

“Whether you are using Google or competitive applications,it will fundamentally change the way you do business.”And watch the mobile space.

Miller also predicts that the iPad will spawn a whole setof new advancements and tools that will, once again,change how employees and consumers interact.

To contact a Business Advisor at the Ministry of Economic Development and Trade, Business Advisory Services, in your area, visit www.ontario.ca/economy –click Small and Medium Enterprises/Talk to Experts

Printed in Ontario, Canada on recycled paper

Mike Miller, Google