By Brandon Kolybaba
We hear a lot about the Ivany report and how things are likely going to become more difficult for the average Atlantic Canadian in the future. Personally I don’t think it’s a scare tactic nor something that should be ignored because I do believe that the consequences are very real and if we don’t make some tough choices now we will be forced to make much tougher choices later and I for one don’t think that is an appropriate legacy to leave behind.
I spent a lot of time living on a farm in southern Saskatchewan growing up. My grandfather is 90 now; he lived through the depression and WW2 and was a very hard working farmer for over 50 years. His work ethic, integrity, and values made an impression on me that I am very fortunate to have known. One winter he borrowed an old snowmobile for us kids to play around on as there isn’t much to do on a farm in the dead of winter so even flying around on the flat in -30 snow beats the alternative. When we returned it to the farmer down the road he made sure the fuel tank was full, checking it twice. He did that always, especially when he sold a piece of equipment no matter how small, beaten up, or old it was; that was just how things were done, you left it better than you found it he would say.
Sadly sometimes I feel like that way of thinking is dying with that generation. We talk about paying it forward today and there are many great examples of that on a case by case basis for sure; it’s great to see it when it happens but I fear it doesn’t happen as much as it should. But when it comes to the big picture it seems like we are en mass much more complacent and the net effect is that we continue to empty the tank.
So what can I do about it you say? Well, only simple things really, there is no magic cure, and divine intervention is quite unlikely at this point I would say. It will take a lot of tiny drops in the bucket to realize change and it will only happen if we develop a culture not unlike the one my grandfather knew so well.
I don’t wish to belabour the Ivany report but for the record I agree with all the recommendations made there; we need to make very real changes, cut costs, balance the budget, make a plan to more aggressively pay off our debts now, not later. We need to start living within our means. It’s going to hurt and if it doesn’t then we really aren’t actually doing it and are instead just lying to ourselves like we’ve done in the past. We are at high risk of not making real change because we are not truly prepared to deal with the reality of the change required.
In business when you are faced with a challenge like this you really only have two levers to work with: cut spending and increase revenues. We must cut, that is clear, but there are risks on the other side of the equation to consider as well. The first pitfall to increasing revenues is that the investments we make in theory to promote new growth often won’t pay off as expected and as a result will only add to the problem in the long run. The only way to know if those investments are working is to measure them very well. I don’t think we are doing that today and if we are only left with the ultimate metrics of GDP and net jobs creation it should be clear to everyone that the investments we are making today are not working very well and we need to be prepared to deal with the consequences of that realization. It’s easy to make numbers lie and almost everyone can tell when someone gets up to a podium to tell a crowd of people how great things are especially when it’s so obvious that they are doing it to justify their own existence. We have to be brave and prepared to confront that type of rhetoric when we see it happening and not be complacent about it.
I love start-ups; I think they are great for many reasons and part of the solution to improve our situation for sure. But I think we need to be very cautious about making poor decisions and making bad investments in this area as well.
60 second Economics Interlude: Comparative Advantage:
There is a concept in economics called Comparative Advantage that basically says we can consume more than we produce if we specialize in the production of something and trade it for other things we consume so that in the end, we consume more than we could have produced all on our own.
The key here is SPECIALIZATION! If we invest and do what everyone else is doing then we are not going to see the benefit of this strategy. I keep hearing that we need to become the next Silicon Valley and every time I do I cringe. There are two fundamental problems with that idea: #1 It’s never going to happen (that’s a whole other blog post) and #2 almost every other major city in the entire civilized world has that plan on the books today so it’s not exactly a very unique idea now is it?
When I think of some of the truly great Atlantic Canadian companies that are bringing cash into this region (and creating jobs) I think of Ocean Nutrition, Oxford Foods, Major Drillling, DHX Media, Teamspace, Sports Direct and Nautel to name just a few. They have several things in common, chiefly they all export something (trade = they bring cash into the region) and they are all specialized.
The other way we can see benefit is to stop the flow of cash away from the region. This is where Buy Local has a very real impact. Every dollar not spent on a product or service that can be made or rendered by someone here is not only a dollar that remains in our local economy but it’s a dollar that creates a job.
So the next time you have the choice to buy local consider the long term economic impact of your decision. Consider paying it forward by putting a drop in the bucket, fill the tank!
About Brandon Kolybaba: I’m a founder and builder of teams that make great companies. Today I spend most of my time on my new startup called clouda.ca. I’m excited about it because we are launching Canada’s first public cloud that leverages Openstack. Previous to that, I founded Sheepdog, a company dedicated to helping organizations harness the power of what most people know as “the cloud” today to realize significant organizational change / benefit. Before that I was a Business Intelligence (BI) Analyst at Shell doing what most people refer to as “Big Data” stuff these days. For about 5 years, I worked with a truly world class team to build Shell Canada’s data warehouse reporting platform including business process design, product development, and data modeling. In addition to Sheepdog, I have also founded several companies including Norex.ca, Alfred NFC, & Dynamic Hosting. I enjoy finding solutions to complex challenges and creative solutions to interesting business problems. In my spare time I like to work with other entrepreneurs and their start-up companies.