Leaders, insights and challenges to Canadian business PwC Up front Up front

Up frontupfront.pwc.com Changing markets: Changing markets: at home and abroad companies Canadian for Opportunities Opportunities for Canadian companies at home and abroad companies Canadian for Opportunities COVER STORY p22 Ian Clarke, CFO of Maple Leaf Sports and Entertainment, on building the foundation for winning teams

published by PwC Canada Winter 2014 Winter 2014

Changing markets: opportunities for Canadian companies at home and abroad/ Issue 4 / Winter 2014 / Rajesh Sharma, Export Development Canada p6 / Edward Kennedy, The North West Company p14 / Jervis Rodrigues, British Columbia Lottery Corp. p26 / Brian Conlin, Golder Associates p32 / Marc Parent, CAE p38 / Kelli Saunders, Morai Logistics p46 / Joyce Usher-Mesiano, National Brokers Insurance Services p48

DM140797_PgOFC_PWC_WINTER_2014.indd 1 14-01-15 11:56 AM Leader’s message | Bill McFarland

Up front Winter 2014 Changing markets

There’s a great anecdote about Bill Clinton’s advice to Barack Obama when the latter took office as President in 2008. He said: “The daily pressures on your time will seem insurmountable. The most important thing you need to do is to have big chunks of time during the day when all you’re doing is thinking about the future.” Organizations have three- and five-year visions and strategic plans. That’s a given. But what Clinton was really talking about is carving out the time to think about the fundamental changes that are taking place; the changes that will shape your industry, the marketplace and the players in it over the next 20 years. RETAIL REINVENTED Not too long ago, it was fashionable for CEOs to say “change is RETAIL REINVENTED constant” when asked about the business climate they operated Innovator of the Year at the PwC Vision to Reality Awards in. Today, it’s just a given, but the pace of change has accelerated rapidly in the last few years. Frank & Oak wins Innovator of the Year This edition of Up front showcases examples of how some Canadian CEOs are adapting to the pace of change, and Bill McFarland at the PwC Vision to Reality Awards committing to align and develop their people to prepare for CEO and Senior Partner, those challenges. PwC Canada CFOs like Maple Leaf Sports and Entertainment’s Ian Clarke and British Columbia Lottery Corporation’s Jervis Rodrigues champion the use of technology to help transform their organizations. Other executives like Edward Kennedy, CEO of The North West Company, and Brian Conlin, Global President and CEO of engineering company Golder Associates, are creating opportunities for Canadian companies outside this country. The same objective drives Rajesh Sharma, Senior Vice-President of Business Development at EDC. I hope you find these conversations interesting and informative. I also wish each of you a happy new year and all the best for 2014. Please visit us online at upfront.pwc.com to receive ongoing insights from Canadian business leaders.

Frank & Oak is a leading online menswear brand and retailer that designs, manufactures and sells a monthly collection of premium clothing and accessories. Since its launch in February 2012, Frank & Oak has seen explosive year-over-year growth. The Montreal-based startup has attracted more than one million members, quickly becoming one of North America’s fastest-growing retail brands.

Each year, the PwC Vision to Reality Awards celebrate the outstanding achievements of Canada’s most successful and fastest growing technology companies. For more visit: www.pwc.com/ca/v2r

Up front Winter 2014 1

DM140797_PgInside_PWC_Winter_2014.indd 1 1/15/2014 12:59 PM DM140797_PgInside_PWC_Winter_2014.indd 1 1/17/2014 4:06 PM Up front Changing markets: opportunities for Low interest rates, sluggish and uncertain these market challenges head on, finding Canadian companies at home and abroad economic conditions, fluctuating innovative ways to reach customers here in commodity prices, racing technological Canada and around the world. A common Publisher Gino Scapillati innovation and increased global thread that runs through these pages is the Gino Scapillati Vice Chair, PwC Canada competition have reshaped the business indispensable importance of an inclusive Vice Chair, PwC Canada landscape. The executives we talked culture that empowers talented people. We to for this issue of Up front are tackling couldn’t agree more. Editors

Robert Mackay Senior Manager, National Marketing and Communications, Up front Winter 2014 In this issue PwC Canada Challenges Insights Nicholas Greenfield Director, Communications, PwC Canada Case studies from Canada’s Analysis and insight from Blue sky business worlds respected professionals Contributors Chris Atchison, Salvatore Bianco, Mary Teresa Bitti, Changing markets: latest research and fresh thinking about where and Growing global The conditions for Karen Burshtein, Dave Chan, David Detomasi, Jennifer 4 how Canadian companies can seize opportunities to grow 10 12 D. Foster, Tim Fraser, Lauren Friese, Chuck Green, Canadian chemical supplier economic recovery Mark Hacking, Peter Holst, Mike Harris, Betty Ann Jarrett, Deirdre Kelly, Christopher Korchin, Mario Ingenia Polymers establishes David Detomasi, Assistant Longpré, Douglas Mason, Terri McKinnon, Neal itself as a global force in order Professor of International McLennan, Matthew O’Grady, Stephen C. Peacher, Aayaz Pira, Nick Rockel, Dr. Kim Rossmo, John to mitigate risk and grow Business, Queen’s University Simcoe, Sandeep Tatla, John Woods The leaders School of Business Stocking the PwC Canadian executives talk about the changes and challenges in their own industries 18 retirement pool and markets, the opportunities they see and the priorities they’ve set. 20 Tapping the millennial Bill McFarland AltaGas turns its aging- talent pool CEO and Senior Partner, PwC Canada workforce quandary into Lauren Friese, founder of Faye Mattachione an asset with a talent bank TalentEgg.ca Director, National Marketing and Communications, Rajesh Sharma Brian Conlin of potential part-time and PwC Canada temporary workers The pension legacy Senior Vice-President of Global President and CEO, 30 Kelly Nicoll 6 32 challenge Business Development, Golder Associates Operating ethically Design Manager, PwC Canada 36 Stephen C. Peacher, Export Development Canada Canadian mining company Executive Vice-President and Globe Edge First Quantum Minerals Chief Investment Officer, overcomes significant risks in Teena Poirier Sun Life Financial Director, Client Engagement and Globe Edge the Democratic Republic of Geographic profiling, Charlene Rooke Edward Kennedy Marc Parent the Congo 44 in criminal investigations Group Editor, Globe Edge CEO, The North West President and CEO, Bringing down the cost of and in business 14 Company 38 CAE 42 Lauren Heintzman being green Dr. Kim Rossmo, University Art Director, Globe Edge A Toronto architecture firm Endowed Chair in Liz Massicotte finds success with sustainable Criminology, Texas State Program Manager, Globe Edge housing, for the energy University conscious and for those who Cara Czech Ian Clarke Kelli Saunders are most in need Production Co-ordinator, The Globe and Mail CFO, Maple Leaf Sports President, Morai Logistics End game Up front magazine is designed and produced by The Globe and Mail 22 and Entertainment 46 Spirited effort Custom Content Group on behalf of PricewaterhouseCoopers LLP. 50 All correspondence: Long Table Distillery, the PwC Tower attention: Robert Mackay 18 York Street, Suite 2600 first new distillery in urban Toronto, Ont. M5J 0B2 Vancouver in 40 years, cuts [email protected] upfront.pwc.com Printing and Pre-press by DM Digital+1 through the red tape and 52 © 2014 PricewaterhouseCoopers LLP, an Ontario limited liability Jervis Rodrigues Joyce Usher-Mesiano partnership. All rights reserved. PwC refers to the Canadian member trailblazes a promising firm, and may sometimes refer to the PwC network. Each member firm CFO and Vice-President, President, National Brokers is a separate legal entity. Please see www.pwc.com/structure for new path further details. 26 Finance and Corporate 48 Insurance Services PwC Canada helps organizations and individuals create the value they’re looking for. More than 5,700 partners and staff in offices across Services, British Columbia She shoots, she scores the country are committed to delivering quality in assurance, tax, consulting and deals services. PwC Canada is a member of the PwC Lottery Corporation Winning strategies from three- network of firms with close to 169,000 people in 158 countries. Find time Olympic gold hockey out more by visiting us at www.pwc.com/ca. Up front is a registered trade-mark of PricewaterhouseCoopers LLP, player Jennifer Botterill Canada.

2 Up front Winter 2014 Up front Winter 2014 3

DM140797_PgInside_PWC_Winter_2014.indd 2 1/17/2014 4:08 PM DM140797_PgInside_PWC_Winter_2014.indd 3 1/15/2014 1:02 PM 3% “To succeed, jump

as quickly at 8% opportunities as you do at conclusions.” Cinderella countries 11% We asked 478 business leaders to 5% Benjamin Franklin Benjamin Franklin pick the one Asia Pacific economy 19% Blue sky % 19%that might hold the biggest surprises INDONESIA19% 7% 7 INDONESIAinINDONESIA the next three to five years. Here’s INDONESIA 19% INDONESIA % who they’re watching: 19 11% 7%19% 11% 7% 11% 7%INDONESIA19% MYANMAR11% THE7% PHILIPPINES 11% 7% MYANMAR THE PHILIPPINESINDONESIA MYANMAR THE PHILIPPINES MYANMAR THE PHILIPPINES 8%19%19% 5%11%11%7%8%7% 5% 4% 8% 5%4% 4% INDONESIA8%INDONESIA 5%MYANMAR THE PHILIPPINESCHINA8% INDIA5% 4% CHINA INDIAUNITED4% STATES UNITED STATES “Five years ago, globalization would have been CHINAINDONESIA INDIAINDIA MYANMAR THECHINA PHILIPPINES INDIA UNITED STATES UNITED STATES 11% 7% 7% 3% 7% 3%3% 3% the most powerful lever for growth and every 7%11%11% 3%7%7%8%8% 5%5%7%19% 3% 3% 4%4%VIETNAM MALAYSIA,3% JAPAN, RUSSIA COLOMBIA Top six sectors MYANMAR THE CHINAPHILIPPINES INDIA VIETNAM MALAYSIA, JAPAN, RUSSIA UNITED STATES COLOMBIA VIETNAMMYANMAR MALAYSIA,THE PHILIPPINES JAPAN,CHINA RUSSIA INDIAVIETNAMINDONESIAMALAYSIA,COLOMBIA JAPAN, RUSSIA UNITED STATES COLOMBIA business would have been talking about China. for global growth 8%Towards8% resilience5% and5%7% growth:7% Asia Pacific3% business3% in transition (PwC, 2013)4%4% 3%3% CHINA INDIAINDIAVIETNAM MALAYSIA, 11%JAPAN, RUSSIA 7%UNITED STATES COLOMBIA But now, the growth lever that has greatest Looking to expand your company into CHINA INDIA UNITED STATES Looking to expand your company into VIETNAM MALAYSIA,MYANMAR JAPAN, RUSSIATHE PHILIPPINES COLOMBIA an emerging economy in the next impact is innovation.” 7%7% 3%3% 3%3% decade? You’re in luck if you’re a: VIETNAM MALAYSIA,Entertainment JAPAN, RUSSIA industry:COLOMBIA Insights from a business school David Percival, PwC’s Global Client Innovation Lead VIETNAM MALAYSIA, JAPAN, RUSSIA 8% 5%COLOMBIA 4% Growth and disruptionCHINA INDIA Finding a new marketUNITED STATES – in Canada Breakthrough innovation and growth (PwC, 2013) Niche high-value-added 1 manufacturer Eighty-eight per cent of CEOs in the global entertainment 1 There’s an intriguing class of emerging markets for which firms based in and media industry are changing7% their customer3% growth, 3% Canada have a competitive advantage: countries with high population Creative-industry retention and loyalty strategiesVIETNAM in response MALAYSIA,to shifting JAPAN, RUSSIA COLOMBIA immigration flows into Canada. That population flow creates business professional consumer spending and behaviour. 2 opportunities and relational opportunities that have a strong Canadian Healthcare and/or The Canadian entertainment and media sector is component. projected to achieve a 5 per cent compound annual According to the most recent Canadian immigration data, from 2011, Maple leaf myopia education provider 3 growth rate between 2013 and 2014. While existing the number one country is the Philippines. It’s comparable to India and business models will continue to dominate for the China in terms of the five basic things that emerging market infrastructures Many Canadian tech startups are starting to see their Global foreseeable future, rapidly changing technology will lead need in order to produce business activity, and economic and social home turf as a good test market, not an endgame. Yet brand owner 4 brand owner to innovative ways of linking customers and content. wealth: availability of capital, availability of high-quality labour (with 68 per cent of Canadian tech startup CEOs still focus 4 some flexibility as to how it’s used), reasonably transparent rules and legal their sales efforts on the domestic market, with only Business and 16th Annual Global CEO Survey (PwC, 2013) and Rising to the challenge: Canadian 23 per cent looking to the U.S. – and a mere 9 per environment and reasonably strong infrastructure. That creates a lot of financial service provider perspectives on the Global Entertainment & Media Outlook: 2013–2017 (PwC, 2013) cent have their eyes on the global prize. 5 areas of opportunity for Canadian firms: building infrastructure, increased Retail wars continue retail, education, healthcare, financial services. Some of these are specific Report on emerging Canadian technology companies Retailer with a to the country, like infrastructure, and some are cross-border; there’s a huge (PwC, 2013) According to Capital Markets Flash: Canadian 6 strong franchise model The globalization business opportunity, for example, for providing financial services to recent immigrants or to people considering immigration while they’re still in the M&A Deals Quarterly, Q3 2013, massive deals in World in 2050: The BRICs and beyond: Prospects, maturity model % % % Canada’s retail and consumer sector illustrate challenges and opportunities (PwC,(PwC, 2013)2013) Philippines. 68 23 9 three trends that have defined 2013: There are three phases to opening up a new market: After the Philippines, the countries with the next-highest immigration 1. The returning confidence in U.S. to Canada are China, India, the U.S. and Iran. Iran is potentially Canada U.S. Global 1. Export: Selling your usual product to similar consumer spending. interesting: it’s very sophisticated with a strong technology base, and if customers, only in a new market. 2. The global appetite of Canadian “Evolution is a process the very nascent signs of opening up continue to play out, there will be pension funds. of constant branching 2. Regionalize: Adapting your products to the local some huge business opportunities there. 3. The impact of U.S. retailers’ strategies needs of your new market. Will Mitchell, Anthony S. Fell Chair in New Technologies and Commercialization, on their Canadian counterparts. and expansion.” 3. Originate: Now you’re fully global. and Visiting Professor of Strategic Management, Rotman School of Management, Download the full report | www.pwc.com/ca/deals University of Toronto Stephen Jay Gould, Biologist Growth in new markets: It’s all about how (PwC, 2012)

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DM140797_PgInside_PWC_Winter_2014.indd 4 1/15/2014 1:02 PM DM140797_PgInside_PWC_Winter_2014.indd 5 1/17/2014 10:54 AM TheThe leadersleaders || GrowthGrowth TheThe leadersleaders || GrowthGrowth

Globalization, disruptive technology, economic upheaval, fi nancing gaps, investment risk – where some Canadian business people see challenges internationally, Global Export Development Canada’s Rajesh Sharma sees vast international opportunity

Export Development Canada (EDC) is a fi nancially self-sustaining Crown corporation based in Ottawa, with roughly 1,200 employees in 33 offi ces and 12 countries worldwide. What EDC does best is help Canadian companies to view compete and grow in more than 200 markets worldwide each year, all while providing innovative ways to mitigate the kind of risk – everything from By Chris Atchison corruption and corporate social responsibility challenges, to the threat of local political unrest in some markets – that so often stifl es their ability to seek out new offshore opportunities. The Senior Vice-President of Business Development with EDC, Rajesh Sharma, says: “Our model is about partnership and mobilizing capital to get deals done for Canadian companies. We tap into fi nancial institutions at home and abroad to provide the fi nancial capacity for companies to do what they need to do.” Sharma adds that collaborating with public-sector partners, like Foreign Affairs, Trade and Development Canada and, in the small and medium-sized enterprise (SME) market, Business Development Bank of Canada, is key to EDC’s success. With a mandate to help Canadian exporters and investors going international with everything from risk- and supply-chain management to providing fi nancing, credit insurance and working capital, EDC has a key role to play in a Canadian company’s development internationally and a corresponding impact on our economy. Consider the months following the fi nancial crash of 2008, when banks were retrenching and credit began drying up worldwide. “We stepped up and were able to use our lending capacity for the benefi t of Canadian companies to help them get into more supply chains,” Sharma recalls, adding that EDC worked hard to leverage its partnerships with fi nancial and other key institutions to help local Our ability to get companies seize the many global opportunities that emerged during that period. Many international banks began to vacate their traditional fi nance businesses, international companies to do resulting in a shortfall in capital to fund new projects. In stepped EDC. “We were always in that space, but we took on a greater role,” recalls Sharma. “It required business with their Canadian us to put more capital in, but … we deploy capital to create opportunities. That strategy has been good for Canadian companies and for Canada.” counterparts requires us to So, too, is one of EDC’s other main activities: promoting Canadian businesses abroad and bringing opportunities to the attention of the country’s leading play more of a marketing or business owners and executives. “In addition to being a fi nancial services matchmaking role. provider, we’re the face of Canada in the international fi nance market: sometimes we’re following our companies, other times we try to lead them to where we think the business is going to be,” he notes. While other countries such as Germany and the U.S. have the advantage of Rajesh Sharma being able to position their large multinationals as an anchor in new markets, thus creating vast opportunities for smaller fi rms to follow in their wake, Senior Vice-President of Business Development, Canada’s market is far more SME-driven and lacks much of the multinational Export Development Canada Photo by Dave Chan

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DM140797_PgInside_PWC_Winter_2014.indd 6 1/17/2014 10:56 AM DM140797_PgInside_PWC_Winter_2014.indd 7 1/15/2014 1:03 PM The leaders | Growth The leaders | Growth

firepower of larger economies. “Our ability to get in Asia, and they’re connecting with each other. All about Export Development Canada international companies to do business with their Countries are doing business with the rest of Asia in INSIGHTS ONLINE Canadian counterparts requires us to play more of a south-south trade pattern, and for our companies Export Development Canada a marketing or matchmaker role, and that’s what to be part of that game, they have to figurefi gure out Asia Pacifi c business (EDC) is this country’s export credit we’ve been doing over the past several years,” how to position themselves to serve that market.” agency, supporting Canadian firms in transition Sharma explains. “With our international presence, Sharma also sees major potential in markets such and investors as they do business we look at areas of demand – like healthcare as Colombia, where infrastructure development internationally in more than 200 infrastructure or agricultural resources in Southeast will remain a government priority, as well as Africa. markets worldwide. Asia, Africa and South America – and we then try Although he admits many African countries face a While expanding manufacturing capacity remains Founded in 1944, the self-financing to match supply with the demand to open doors for raft of challenges, he feels the continent “is going to Crown corporation helps Canadian important for businesses operating in the Asia Pacifi c Canadian companies.” The organization also offers look very different in the next 10 to 15 years,” and businesses find new opportunities region, it’s not the investment driver it once was. access to products on both the trade and export he encourages Canadian firmsfi rms to adjust their export abroad, while providing support on a finance side, such as its political risk insurance strategies accordingly. number of fronts, including insurance coverage for companies opening offices or facilities Given those trends, Sharma feels Canadian and financial services, bonding Now, with the rise of middle-income consumers, businesses in emerging markets, receivables insurance or direct companies should brace for increased demand for products and direct overseas are actively investing for a future of consumption-driven lines of credit providing access to expansion capital. primary goods such as lumber and oil, as well as investment – as well as into Canada growth. Thus, product development, services and distribution – and customized support for small Of course, another of EDC’s strengths is its ability for high-value-added exports such as machinery, capabilities and talent development are expected to capture to medium-sized business owners to shed light on emerging trends and markets around aerospace components, wood products, processed over half of all increases in investment over the next year. who hope to do business on the the world, thanks to its web of regional offices and foods and consumer goods. That’s not to mention international stage, but may lack roving team of economists and researchers. The the growing demand that EDC is predicting in As shown below, fi ve selected Asia-Pacifi c Economic the financing or brand awareness to question that Sharma is asked so often by Canadian specialized clusters such as green technology, Cooperation (APEC) economies that grew more than compete. EDC is also committed to entrepreneurs is always the trickiest to answer: healthcare, oceans-monitoring technology and 5 per cent in 2012 have experienced steep declines in exports building and maintaining partnerships Where will the most lucrative export opportunities natural resources infrastructure – all areas where relative to GDP since the fi nancial crisis. with other organizations such as emerge in the next year and beyond? Canadian companies can bring their unique financial institutions to help Canadian One view of the data over one year does not make a trend, but firms seize key export opportunities. According to the EDC’s spring 2013 Global Export expertise to bear on the global stage. for a region whose dynamism has been largely defi ned by its Forecast, the United States will remain our strongest Although the recent recession years have exports, it’s a startling shift. Last year alone, EDC helped more than export market, as it has been for decades. Case jeopardized the success of many Canadian 7,400 companies drive export sales in point: North-South trade grew by 18 per cent businesses and threatened their fifinancial nancial and investments totalling $87.4-billion. in the past year alone, a trend that’s expected to sustainability in the short term, Sharma sees an The organization estimates its Decoupling from export-led growth in Asia Pacifi c investments helped generate continue. While Japan and the European Union export-related silver lining to the crisis. While trade Changes in exports as a percentage of GDP from 2008 to 2012 $52.7-billion of Canada’s nearly will face ongoing economic pressures, the report with the U.S. still accounts for nearly 75 per cent of in selected Asia Pacifi c economies, and 2012 growth in private $1.8-trillion GDP in 2012, while helping predicts that China will experience growth in the this country’s $427-billion in annual exports, EDC consumption (the volume of goods and services consumed by to sustain nearly 574,000 jobs. neighbourhood of 8.2 per cent this year and 8.5 per has witnessed a major diversificationdiversifi cation of trade among households), in local currency. cent next, while emerging markets are expected Canadian fi rms, particularly directed toward regions “We’re involved in anything to do Canadian firms, particularly directed toward regions with international trade activity where to post a collective growth rate of 5.9 per cent such as Asia and Latin America. Canadian companies are trying to next year. At the same time, markets such as India “In the last fivefi ve years our companies have started Chile 5.6 manage risk, break into global supply are showing signs of renewed life and presenting to realize there are opportunities to be had in 6.0 -6.1 chains or connect and do business tantalizing business opportunities, thanks to that emerging markets,” Sharma states. “We’re seeing with big multinationals around the country’s trillion-dollar core infrastructure gap. a diversificationdiversifi cation of trade away from our traditional The Phillippines 6.8 world,” explains Rajesh Sharma, 6.6 “The next major emerging hub in Southeast G7 partners and into the emerging markets. And -7.7 Senior Vice-President of Business Asia is Indonesia, which has 240 million people as the U.S. comes back, we predict that Canadian Development with Export Development Peru 6.3 and is growing at more than 5 per cent each year,” companies will not stop selling to these new 5.8 Canada. “As they tap into those, we according to Sharma. “There is a need in Indonesia markets: the trend is clearly for our companies -5.2 can go to the borrowers and potential in the infrastructure space, in healthcare and to look globally and into the international and 7.8 buyers and provide them with debt China 8.4 education. Behind that you have the Philippines emerging market space.” Uf capital if they are buying, or will buy, We’re involved with anything to do -6.6 from Canada.” and Thailand with well-established supply chains Malaysia 5.6 with international trade activity 7.7 -11 In conversation with Rajesh Sharma where Canadian companies are trying 0 Lori Watson is a partner in the Ottawa office of PwC % change GDP to manage risk, break into global % change consumption and the leader of the Federal Finance Effectiveness % change exports as percentage of GDP and Enterprise Performance Management practices. supply chains or do business with big Lori leads large and complex multidisciplinary projects that require collaboration across geographies and multinationals around the world. lines of business. APEC CEO Survey Report (PwC, 2013) Download the full report | www.pwc.com/us/en/apec-ceo-summit [email protected]

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DM140797_PgInside_PWC_Winter_2014.indd 8 1/15/2014 1:03 PM DM140797_PgInside_PWC_Winter_2014.indd 9 1/15/2014 1:03 PM Challenges | Growth Challenges | Growth

A large multinational can create its own ecosystem. A company our size has to put in an effort to assimilate. John Lefas Founder, Ingenia Polymers

Growing global A Canadian chemical supplier establishes itself as a global force in order to mitigate risk and grow

By Mary Teresa Bitti

The strategy The results The future

Several of Ingenia’s customers were investing Today, Ingenia Polymers is a respected global Ingenia is scouting new opportunities in Latin The challenge heavily in the Middle East and encouraged Lefas to supplier of chemical and plastic raw materials America, Mexico, Southeast Asia and Europe. “We A chemical engineer by training, John Lefas spent in Canada. “We knew if we limited ourselves to follow. Saudi Arabia ticked the right boxes. It has a and specialized products for multinational have an established model of how to assess a new about six years working in Imperial Oil Limited’s Canada we would be restricting our opportunity to plentiful supply of hydrocarbons. It is a high-growth petrochemical manufacturers. It also manufactures market, and we have a global reputation,” says

Uf plastic division before he decided to follow his own grow. It was a case of ambition, plus need. If you area. And it is a ready market for Ingenia. Lefas and its own brand of materials for downstream Lefas. “People know and trust us.” entrepreneurial goals. In 1986, Lefas entered into don’t grow, you stagnate,” says Lefas. At the same his team spent two to three years walking the land, converters, companies that make fl exible packaging a 50/50 joint venture with a New Jersey-based time, NAFTA had effectively turned North America talking to local governments, bankers, embassies, fi lms, greenhouse gas bags and packaging for supplier and established WedTech Inc. with a plant into one economic area. “Our customers started clients and suppliers, and learning about the convenience foods, for example. It has operations in Brantford, Ont., producing powders for the making North American purchasing decisions and culture and how business is conducted in order to in Canada, the U.S., Mexico, India, Saudi Arabia, rotational moulding industry. It was a small company that meant we had to satisfy their needs in a much assimilate. “Wherever we go as a mid-size company, Dubai and Luxembourg. that quickly grew. In fact, by 1990 WedTech had broader way. We could not afford to appear to be a we have to integrate with the local community. More than 80 per cent of Ingenia’s revenues opened a second plant in Calgary. In short order, it strictly Canadian company.” A large multinational can create its own come from its foreign operations. And the company built plants in Dewey, Okla., and Houston, followed Ingenia found itself in another grow or stagnate ecosystem. A company our size has to put in the is in growth mode. “If you are only in one place by a sales offi ce in Mexico. By 1998, Lefas bought situation seven years ago. In North America effort to assimilate.” it’s like building a stool with one leg. Expanding out his partner, and the wholly owned business was the industry was starved for the supply of a key It also put the effort into understanding the globally helps you mitigate risk and grow,” says renamed Ingenia Polymers Corp. raw material: gas. “No one was investing in new market, trends and building robust multiyear Lefas. Another benefi t of its global growth strategy: In many ways, the decision to grow outside petrochemical plants to build capacity here because strategic growth plans based on its knowledge of employee engagement. “People want to be part of a Canada was made out of necessity. Ingenia had of the lack of resources,” says Lefas. “We started what existing and potential customers were buying, company that is growing and creating opportunities already achieved very high penetration rates looking around for the next logical place to grow.” their growth prospects and demographics. for them to grow professionally.”

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DM140797_PgRevisions_PWC_Winter_2014.indd 11 1/20/2014 10:36 AM DM140797_PgRevisions_PWC_Winter_2014.indd 10 1/20/2014 10:36 AM Insights | Growth Insights | Growth

that remains weak and that is still dependent upon the pull But these have not, until now, been enough. The dominant of the massive U.S. market. fear of rising infl ation – a strong indicator of an overheated Poised for takeoff? economy requiring a tighter monetary policy – seems in Five years later today’s environment to be a remote concern. In the U.S., the sizzle of fi nancial market recovery has not The conditions that are necessary for the recovery to (finally)(fi nally) get here been matched by the real economy steak. Financial The coming year markets continue to post record gains, but employment and output levels remain well below what might be expected To begin, a clear indicator of a full-blown, sustainable By David Detomasi of the U.S. economy fi ring on all cylinders. Europe faces recovery will be increased investment in production its own set of challenges. Its banking sector remains a capacity. This would mean that business people are September 2013 marked the fifthfi fth anniversary of the onset of the subject of suspicion: unlike the U.S. banks, which appear confi dent that they can sell what they make. A second global financialfi nancial crises, and the outlook for the global economy to be in sound condition after fi ve years of repair work, sure sign that recovery is taking hold is the growth of new looks anything but clear. The U.S. seems perpetually poised for a European institutions have lingering fears of overexposure businesses. The Bank of Canada monitors this closely, so full-fledgedfull-fl edged recovery that has yet to fully take off. Europe remains to sovereign debt, clouding the picture from Greece to pay attention to what it says. cautiously optimistic that the worst of its banking woes are over, Germany. Moreover, the massive accumulated debt levels To prepare for recovery, think carefully now about what but the investing world remains unconvinced. The Brazil, Russia, of these regions continue to mire political systems in that recovery would mean for you. When it comes, it will India and China (BRIC) emerging markets, typically thought to be endless and fruitless debates about how best to pay them. come quickly, and there will be little time to plan once the rising bright spots that could fuel global growth, are suffering If a single theme could be said to unite these lists of it’s fully underway. Into what geographic markets would from capital outflowoutfl ow and stock market malaise. Even the Canadian challenges, you want to economy, a relative economic success story over the past fivefi ve it would be: To prepare for recovery, think expand that years, has yet to fully regain its pre-crisis self. uncertainty you currently The travails of the global economy look different, depending and caution. carefully about what that recovery avoid? What on where you sit. In Canada, what economic growth that has Business leaders new product occurred over the past several years has depended heavily on can be forgiven for would mean for you. When it comes, ideas do you consumer spending. Consumers, taking advantage of continuing showing plenty have on the record-low interest rates, seem to be regaining their pre-crises of that; having it will come quickly. shelf you’ve bounce. Business, however, lags behind, as exporters remain managed through forgotten, unsure of the continuing demand for the things they make. They the crises, they are careful about expanding too rapidly. convinced the time was not ripe? What bottlenecks in remain worried about overcommitting to an economic recovery Indeed, much of the effort by central bankers and fi nance your production system could exist, preventing you from ministers to jump-start their economies has been focused meeting a rapid rise in demand? Asking these questions on reinstilling confi dence. And they continue: interest rates now – in effect, “stress-testing” your own organization’s remain at an all-time low, and the U.S. Federal Reserve ability to ride a rising tide – would be a good investment of continues its bond-buying efforts to increase liquidity. Yet energy and time. these efforts only seem to keep things as they are. The bottom line? Uncertainty breeds caution, which leads to low growth. Government and policy-makers have The economic response employed innovative tools to combat that caution, but the In response, count on innovative policy responses designed global economy remains sluggish. They will continue to to inject confi dence not only now, but also well into the do everything they can to reawaken the “animal spirits” future. Former Bank of Canada Governor Mark Carney’s that will drive a full economic recovery and will pursue

proposals on “forward guidance” are predicated on giving innovative ways of doing so. Uf a longer-term time horizon for business leaders on what central banks are likely to do. Rather than viewing an interest rate announcement as a moment-in-time snapshot of the economy’s health, the likely course of monetary Expert opinion policy is projected well into the future. In doing this, David Detomasi is Assistant Professor of central bankers are trading monetary policy fl exibility International Business at Queen’s University for an uptick in long-term confi dence that real recovery School of Business in Kingston, Ont. requires. This is a bargain many seem willing to make. For the near future, count on continuing stimulus by the U.S. Federal Reserve to maintain the ever-building U.S. momentum, and count on central bankers looking at innovative ways to extend their assurance in the future. As long as infl ation remains low and output gaps subdued, there will be little incentive to either raise interest rates or severely taper the Federal Reserve’s bond-buying efforts.

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Shopping around Canadian-based retailer The North West Company uses ingenuity in supply- chain logistics and market localization to thrive in far-flung communities, says CEO Edward Kennedy

By Karen Burshtein

When you’re serving customers in extreme climates Everybody can back up at least two others. A lot of that are far away from head office, you necessarily ingenuity comes into play. That’s the skill set we try have to deal with unique challenges. You might say to refine over the years,” Kennedy says. the unexpected is the norm. Making your stores Other chains might not find small communities feel a genuine part of small, isolated communities worth their while, but North West has used its is a consideration. So are recruiting and retaining history in the North to hone a unique set of logistics staff. These are some of the matters that have skills. Systems and redundancies are built into the preoccupied Edward Kennedy, CEO of Winnipeg- company’s supply-chain management. In a market based The North West Company (NWC). where it can cost six, seven or eight dollars in Founded as a fur-trade enterprise more than freight shipping to bring in a carton of milk, “our 300 years ago, today the company operates 226 freight spend is bigger and the unpredictability is We’ve invested a lot in logistics stores in Canada, Alaska, the South Pacific and the higher,” says Kennedy. “We learned that hundreds management and track-and-trace Caribbean under the Northern, NorthMart, Giant of thousands of dollars in spoiled milk is something Tiger, AC Value Center and Cost-U-Less banners. to cry over.” capability that is unique in For those challenges and others, Kennedy has Information bandwidth has helped curtail found original solutions – solutions that have waste, Kennedy says. “Our store remoteness risk northern Canada. We think that helped put his company on a multiyear, double- is mitigated with communications. You can get digit growth spurt. Kennedy says that the trials instant information that leads us back to root capability can be bundled with our of serving remote, lightly populated communities causes. If we have an inventory-planning situation almost guarantee a creative, problem-solving where the manager or the algorithm they’re using freight buying power to provide portfolio. “As you get into these remote settings aren’t synched up with the sales, we go back and and the infrastructure becomes second-world in address that on a real-time basis. Whether we more services to the customer. nature: community and political issues, lack of change the way we order merchandise, load our infrastructure, weather … everything compounds planes or get bigger planes, for example, we’re itself to become incredibly complex.” able to better manage inventory.” Kennedy says Adaptability and staffing flexibility, he says, efficiencies are systematically passed on to the are key. “Cross-training is incredibly important. customer as cost savings.

Edward Kennedy Photo by John Woods

Photo by John Woods Photo by John Woods CEO, The North West Company

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E-commerce development might suggest that “very granular.” For example, the company uses All about The North West Company online shopping will take a big bite of North West’s a decentralized approach in buying. “We don’t local retail presence, but the company has come to superimpose products from the U.S. onto, say, Fiji. 2012 Annual earnings: $64-million understand that, in the communities it serves, the There’s a mix.” Store and regional managers source 2007 NWC acquires Cost-U-Less and role of the store goes beyond everyday products and local items. “Their ideas for sourcing, combined becomes a presence in the Caribbean services like groceries. “A social purpose is served with the buying power of our international buying market in a small town with a tactile shopping experience.” offioffice ce in Seattle, bring the best of all worlds.”

2001 NWC signs franchising agreement For instance, small-town shoppers might not want The company builds an authentic presence in with Giant Tiger for Western Canada express lines, like urban shoppers. “They don’t its communities, including through philanthropy, necessarily want a short line, because it’s a chance out-localizing large chains. For example, Kennedy 1997 Edward Kennedy becomes CEO to talk and spend time with their neighbours. With contrasts his Cost-U-Less warehouse stores with 1990 NWC goes public other retailers, productivity is measured by how a foreign-owned counterpart on the islands they 1992 NWC enters Alaska market many items you scan per minute. If you go too hard serve. “They haven’t shown the inclination for doing with purchase of Alaska Commercial on that, you’ll go upside-down on the rhythm that’s what we do in community relations. They actually Company called northern time, or island time in the south.” scratch their head and wonder why we spend so North West is committed to food education much time. But it’s just part of our makeup. I can’t 1987 NWC is reborn when Hudson’s Bay Company’s northern trading post in its locations, which include some of Canada’s tell you that it always translates into X number is sold to an employee consortium. highest incidences of obesity and related diseases. of shoppers coming through, but it connects us The name The North West Company is Kennedy champions federal government programs with customers who want to be listened to.” It also revived three years later like Nutrition North Canada that have helped bring resonates with staff, he adds. Kennedy looks at remote healthcare as one down the traditionally high price of nutritious foods North West is focused on sales momentum, potential area for growth. “Health needs to be para- A social purpose is served in 1821 NWC merges with Hudson’s Bay Company, making the one-time rivals in those parts. North West also develops healthy growing horizontally by driving the shopping basket professionalized more. It gets bifurcated in a hurry.” a small town with a tactile partners cost-saving recipes for its customers. and honing its “More in Store” strategy, which And this creates ineffi ciencies, he believes. “We North West’s foray into foreign markets like involves tailoring specifispecific c services to the needs of need nurses, more technicians who can take blood 1779 The North West Company is shopping experience. Alaska, Guam and the Caribbean might sound the community. “What seems to be under-served samples and then get into more remote medicine created as a Montreal-based fur trader. surprising, considering its northern history. But today that you could add to your mix and product delivery, so doctors don’t spend time fl ying. They By the 1790s the company is a leader today that you could add to your mix and product in fur-trading and a rival to Hudson’s foreign interests account for 40 per cent of North or services over time?” Kennedy asks of local can do video diagnosis.” It’s that thinking the Bay Company West’s business and are driving the company’s properties, considering everything from pharmacy company uses in its own stores and is trying to adapt growth. Was it simply as easy as applying northern to fifinancial nancial services, a coffee shop or a post offioffice. ce. to new service areas. 1670 Hudson’s Bay Company success to southern outposts, what Kennedy “We’ve invested a lot in logistics management and “If we can keep getting it right, this is where we establishes its first trading post on the shores of James Bay in northern jokingly called switching “blizzards for typhoons”? track-and-trace capability that is unique in northern have a lot to offer,” Kennedy believes. “Everyone Canada While he saw some business synergies, Kennedy Canada. We think that capability can be bundled struggles with these issues; others throw up their says, “You build on what you’ve learned.” This with our freight buying power to provide more hands because it’s an adjunct to what they do. It’s

means a market strategy that is localized and services to the customer,” Kennedy says. the core part of what we are.” Uf

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DM140797_PgInside_PWC_Winter_2014.indd 16 1/15/2014 1:04 PM DM140797_PgInside_PWC_Winter_2014.indd 17 1/15/2014 1:04 PM Challenges | Talent Challenges | Talent

I think we’re going to have to be more nimble Stocking the in terms of meeting the needs of an aging retirement pool workforce. A company turns its aging-workforce quandary into an Michelle Dulmadge Manager, Talent Development asset with a talent bank of potential and Employee Relations, AltaGas part-time and temporary workers

By Chuck Green

The challenge The strategy

About 30 per cent of the workforce at AltaGas Facing the risk of losing these employees’ wealth provide meaningful contributions and stay in touch, Ltd. consists of employees over the age of 50 – of knowledge and abilities, in 2011, AltaGas and mentor and train other employees. “It’s a win- meaning retirement isn’t so far down the road introduced the Retiree Resource Pool, which win for everyone,” says Dulmadge. for a hefty number of those whose talents the provides the opportunity for retirees to continue The program, although successful, has not been company values highly. The impending loss of to make meaningful contributions to the company without some challenges. AltaGas had to address that rich reservoir seemingly had the potential in the years following retirement by acting as the fact that those employees who’d spent years to pose a major quandary for the organization. temporary relief or project-based resources on with the company had little desire to update their However, perhaps not surprisingly, instead of an as-needed basis. The program is designed to resume after their fifinal nal day of work. The lack of The results The future accepting that inevitability, AltaGas sought a way provide temporary assistance to ease the workload updated information made it more diffidifficult cult for to maintain a relationship with those soon-to-be- pressures while offering viable options for retirees AltaGas to effectively match the temporary roles While the company has not experienced a signifi cant Dulmadge says AltaGas is in the process of former employees who were similarly interested in “to balance the enjoyment of retirement with with the individuals. AltaGas resolved the matter number of retirements since the program was establishing the pool among a number of its maintaining contact with the firm. opportunities to stay connected and to remain a by developing what it calls a skills checklist. The introduced, perhaps 50 per cent of retirees have subsidiaries. “I think we’re going to have to be more contributing member of the AltaGas team,” says checklist enables retirees interested in temporary expressed interest in the pool, with the others nimble in terms of meeting the needs of an aging Michelle Dulmadge, Manager, Talent Development ad hoc work with the company to describe their interested in the full practice of retirement, says workforce and anticipate that the pieces we’re laying and Employee Relations. experience and skills without fifilling lling out an Dulmadge. “We’re starting to see a trend of people down today are helping us build for what probably The pool offers workplace balance and some application or additional paperwork. who are looking for greater work/life balance and will be a greyer pool of retirees in the future.” As that work flexibility for retirees, and it can augment “If we’re looking to bring in a temporary work-hour fl exibility as they ease into retirement, or momentum becomes more fi rmly entrenched, she their retirement income and balance it around the contractor, we can identify someone from the retiree those who are choosing to postpone retirement past believes that participation in the pool will grow. As activities they want to pursue in retirement, she says. pool instead of, for instance, bringing in someone age 65,” she says. it does, “we’ll welcome back even those who retired Furthermore, it’s a chance for them to stay connected from an outside agency,” says Dulmadge. predating the pool and who might reach out to us.”

and use their knowledge of the organization to Uf

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that the majority of millennials are not pursuing. hiring practices to better meet Gen Y’s needs. Ultimately, employers need to commit to Next, find ways to motivate and inspire young Thanks to the “do what you love” parental advice, For example, in a study by the Kenan-Flagler recruiting outside the lines and adjusting strategies hires; the same study found that 65 per cent value Recruit outside and the dying-but-not-dead-yet misconception Business School at the University of North Carolina to reflect Gen Y’s unique characteristics. the opportunity for personal development, meaning that any university degree will land them a job, at Chapel Hill and the Young Entrepreneur Council, millennials feel more comfortable and are more millennials are pursuing traditional university 52 per cent of millennials say that opportunities for likely to stay in work environments that support How to make the most of your new hires degrees, such as history, English or philosophy. career growth are an important factor in choosing employee growth. Meanwhile, employers are overwhelmingly hiring an employer. Employers should, therefore, give Once you’ve hired top millennial talent, you’ll have Finally, millennials are team-oriented and want to the lines from non-traditional or vocational degrees. examples of career progressions in their recruitment to similarly adjust your employment practices work for organizations that promote collaboration. To tap the millennial talent pool, employers need to adapt their hiring A 2011 study by the National Association of Colleges communications (websites, pamphlets, info sessions) to keep them. According to the University of Address this by creating cross-functional teams and Employers (NACE) found that 61 per cent of and discuss potential for promotion in interviews. North Carolina study, a whopping 70 per cent of across departments, pairing millennials with practices to better meet Gen Y’s needs employers planned to hire business graduates and Similarly, be aware that Gen Y excels at “turning millennials plan to “change jobs once the economy mentors and encouraging employees to work 63 per cent planned to hire engineering graduates. off” advertising and values authenticity and improves.” It’s no wonder millennials have a collaboratively to solve problems. By Lauren Friese This may seem logical for employers, who are transparency. Employers should address this need reputation for being disloyal employees. But is that The last 10 years have changed the face of the looking for degree titles that match job titles, but it’s by developing recruitment strategies that use reputation fair? workplace. Whether it’s through technological not a problem-free approach. clear, jargon-free language. They should also give With the right employment practices, employers innovation, increased interconnectivity or the rise of By following this degree-specifidegree-specific c hiring hiring plan, plan, millennials insider access to their organizations can keep new hires and turn them into long-term, social media, no industry is unchanged. Meeting this employers are limiting themselves to just 27 per cent via interviews, videos and other transparent, happy, successful employees. Here are three things unique challenge and ongoing change will demand Over the last few years, the media has been fl ooded also known as Gen Y, grew up in a then-unique of the total Canadian undergraduate population. engaging content. you can do now to maximize your millennial talent. the equally unique skills and adaptability that Gen with articles about Generation Y in the workplace. environment – one that included unlimited access It’s no wonder some employers are struggling to Providing digital media to your youth audience isn’t First, provide regular, real-time feedback. The Y has to offer – but you’ll have to get them to stick Thoughtful pieces about hiring and retaining to information and constant feedback from parents, fifind nd top top millennial millennial talent talent – –they’re they’re overlooking overlooking a a pandering to a generation addled by YouTube videos – University of North Carolina study found that 80 around. The organizations that look to the future

tomorrow’s leaders have jostled for attention against coaches and teachers. They also grew up being told whopping 73 per cent of potential candidates. it provides the information your potential hires want, per cent of millennials value on-the-spot feedback today will have the most to show for it tomorrow. Uf emotional works which argue that Gen Y will either to “do what you love” by well-meaning parents who Furthermore, many recruitment programs only in a medium with which they’re highly engaged. compared to traditional performance reviews. ruin or reinvent the workplace. Take your pick; wanted their children to pursue careers that led to target specifispecific c schools, schools, another another tactic tactic that that further further there are many examples of each. more than just steady paycheques. reduces the talent pool. Driving all of this attention is Campus-specifiCampus-specific c strategies strategies may may a big change that’s coming and have made sense when the cost of coming fast. As baby boomers By 2020, millenials are expected travel and other barriers made remote retire and millennials enter the recruitment costly, but this challenge workforce in ever-increasing to make up an overwhelming 40 no longer applies in the age of the numbers, employers are scrambling per cent of the workforce. Internet. Employers can now share to fi gure out the latest generation their recruitment message quickly and and its hiring needs. According to a effiefficiently ciently using using online online media, media, corporate corporate labour force survey conducted in 2010 by Statistics Furthermore, millennials have been exposed to websites, email marketing and more. Simply put, Canada, by 2020, millennials are expected to make an overwhelming amount of media and, as a result, digital media eliminates the need to only hire from up an overwhelming 40 per cent of the workforce, tend to tune out and even distrust advertising. a select few schools. And employers who target meaning employers have just six years before These unique characteristics result in a generation specifispecific c schools schools because because they they think think it’s it’s the the only only way way millennials are the largest generational cohort that values specifi c things in employers, namely to hire the best students are wrong. on the job. authenticity, transparency and meaningful work. Many bright students choose their school and A serious disparity still exists between employers’ program based on factors that aren’t reflreflected ected in in recruitment strategies and the millennials they’re the career ambitions and skills they have once they Why employers struggle to fi nd top trying to attract, and the time to close that gap is leave school. Bright students exist everywhere, and millennial talent running out. hiring from only a few schools seriously limits an But this news isn’t new. Why are employers still Faced with the unique cohort that is Gen Y, organization’s diversity potential. struggling to hire and retain millennial talent? employers are struggling to fi nd and recruit top Expert opinion millennial talent. Traditional strategies which have How to tap the millennial talent pool Lauren Friese is the founder of TalentEgg.ca, Canada’s worked for previous generations don’t address Gen Millennials are from Mars, boomers leading online career resource for students and recent Y-specifi c characteristics. If you’re still stuck on tired stereotypes about youth are from Venus graduates. She attended Queen’s University in Kingston, For example, the majority of recruitment entitlement in the workplace, it’s time to let them Ont., holds a master’s degree from The London School The fi rst step in successfully hiring and managing programs target specifi c university or college go. To break the cycle and successfully tap the of Economics and Political Science and has worked in millennials is understanding them. Millennials, degrees, such as business or engineering – degrees millennial talent pool, employers need to adapt their consulting and financial services in the U.K. TalentEgg was awarded Best Business in the 2012 Canadian Youth Business Foundation Chairman’s Awards.

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Keeping score As Chief Financial Offi cer of Maple Leaf Sports and Entertainment, Ian Clarke provides the foundation for building winning facilities, teams – and fans who are their loyal customers

By Chris Atchison

My job is really to help us Long-time fans of the Toronto Maple Leafs might remember few exceptions across the continent, the days when an the experience of attending a game at the old Maple Leaf owner could run a sporting empire, while micromanaging run the business effi ciently, Gardens. It was simple: fans paid for tickets, sat in their everything from concession sales to player contract seats, bought hot dogs and beer from concessions in jam- negotiations, are gone. so we can have the resources packed concourses and were focused on the game, and the Nowadays those empires are highly diversifi ed corporate game only. Once it was over, they bolted for the exits. machines, and executives such as Clarke are charged with “to support our teams. We try That all changed in the late 1990s and early 2000s ensuring their bottom-line performance. “My job is really when a new trend, driven by the NBA and the NFL, saw to help us run the business effi ciently, so we can have the to take away the excuses and live sporting events shift into entertainment experiences. resources to support our teams,” says Clarke. “There are no barriers that hold our teams Fans wanted more than hat tricks and slam dunks; discussions where requests from [team] GMs are turned they wanted to be wowed. Maple Leaf Sports and down. We try to take away the excuses and barriers that back from winning. Entertainment Ltd. (MLSE) – the parent company of the hold our teams back from winning.” Toronto Maple Leafs, the Toronto Raptors, the Major When veteran sports executive Tim Leiweke took the League Soccer franchise Toronto FC and the American MLSE helm as President and CEO early last year, his Hockey League’s Toronto Marlies – responded to that shift message was clear: success for Toronto’s sports teams with multisensory experiences, including video, light will be measured in championships. MLSE may be highly shows and live dancers. profi table and regularly sell out its Leafs and Raptors As MLSE CFO Ian Clarke notes, it’s all part of the games, but championship seasons have been non-existent Ian Clarke ” increasing sophistication that’s driving the business of for nearly half a century. That, Clarke concedes, is bad for CFO, Maple Leaf Sports sport in North America. “Because of the risk-reward business. “We have loyal fans for all three sports, but and Entertainment nature of the business in terms of the cost base – the we haven’t given them the teams they deserve. When investments that owners have to put into their facilities we do, the city’s going to go crazy. When you win, the and what they have to pay players – if you don’t operate hot dogs taste better, the beer is colder … everything properly, you could lose a lot of money,” he explains. With is better.”

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While the CFO can’t control the number of game- Clarke points out, simply buying rink boards or stadium All about Maple Leaf Sports winning goals scored by Leafs sniper Phil Kessel or advertising is no longer enough: MLSE’s clients want and Entertainment predict the number of field goals Raptors shooting direct access to consumers, particularly MLSE’s many Originally founded as Maple Leaf guard DeMar DeRozan might make on a given night, highly sought-after corporate customers. Gardens Ltd. in 1931, Maple Leaf he can help improve the experience for fans and Facility improvements don’t end with technology. Across Sports and Entertainment (MLSE) has drive stronger return on investment for sponsors and town, MLSE is examining options to add more seating and grown to become one of the most partners. But revenues achieved by the teams help possibly a roof to BMO Field. “We had 16 of 19 [Toronto formidable sports empires in North improve the game, by giving them fat budgets to sign FC] home games this year that had inclement weather,” America with a current market valuation elite players, for example. MLSE owns the four sports Clarke points out. “That’s not the ultimate fan experience.” of more than $2.2-billion. That empire teams, the Air Canada Centre (ACC), Ricoh Coliseum Neither is having a core groups of fans (namely families) includes four teams – the Toronto and BMO Field and their respective practice facilities, shut out of a Leafs or Raptors experience due to the Maple Leafs, the Toronto Raptors, the six restaurants, three television stations and several increasing cost of tickets. MLSE is currently exploring Toronto Marlies and the Toronto FC – merchandise stores, not to mention event, and food and ways to auction cheaper seats to families and ensure that five sporting venues, including the Air Canada Centre, Ricoh Coliseum and beverage divisions. Those diverse business lines have subsequent generations of Toronto fans remain passionate BMO Field, as well as six restaurants, driven the organization’s market valuation to more than about their hometown teams. three television networks, retail stores $2.2-billion, according to recent reports. Clarke is interested in using technology to make and thriving events, and food and Clarke’s winning strategy is to constantly share ideas fans part of the team and deepen their ties to MLSE’s beverage divisions. on best practices with his MLSE peers and implement franchises. “It’s about the stratification of [customer]

Beyond the organization’s impressive new ones, while staying abreast of the latest and greatest affinity,” according to the CFO. That means using data operational diversity and strong technology to guarantee that fans’ experiences will gleaned from surveys or point-of-sale transactions bottom-line performance, what’s be unforgettable. That starts with making constant to develop direct understanding and communication especially unique about MLSE is improvements to the organization’s facilities. with customers. That could involve using data to feed its ownership structure. MLSE is MLSE is currently in the midst of a $15-million specific content to hard-core fans or providing other co-owned by construction magnate upgrade project with San Jose, Calif.-based network loyal customers with discounts on merchandise through Larry Tanenbaum, BCE and Rogers equipment maker Cisco Systems Inc. (and aided by new loyalty reward programs. Communications – the latter two being ownership partners, tech giants Rogers Communications While the specific fan-interaction strategies still need bitter telecommunication industry Inc. and BCE Inc.) to retrofit the ACC with Wi-Fi to be defined, what’s clear is that today’s MLSE has rivals. But as MLSE CFO Ian Clarke insights online technology, allowing up to 10,000 fans at a time to live- evolved light years beyond the days when ticket and beer points out, in the boardroom the tweet, participate in contests, watch replays or order food sales were the primary drivers of revenue. competitors put their differences aside Measuring innovation success and focus on one common business or beverages from their mobile phones. Wi-Fi will not “The experience of premium seating, extra service and and sports goal: winning. “When we only boost fan engagement, but also the long-term plan is more specialized service, that’s the sophistication of our win, there’s more flexibility for us,” to capture user data the organization can use to improve business now,” Clarke explains. “It’s about understanding To innovate at a higher level, savvy companies realize they Uf Clarke explains. “When we win, more services and enrich advertiser and sponsor returns. As what we’re doing now, and how we can do it better.” need to buckle down with formal, open and discipline- people read and talk about us. That’s good for business. When you look at driven innovation processes. Top performers also realize Bell and Rogers, more people become that the true measure of innovation success extends beyond engaged in a conversation on their traditional return on investment. As such, they’re likely phones about what’s happening with the Leafs. Right up the chain, it to use a range of measurement criteria to analyze their just works.” innovation efforts.

How is innovation success 47% In conversation with Ian Clarke measured in your company? 40% John Simcoe is an audit partner in the Aayaz Pira is a Director in PwC’s Customer By explicit business value added 47% Technology, Communications, Retail and Impact Consulting practice. Aayaz and his number of ideas brought to life 40% 33% Consumer practice in the Toronto office of PwC. team help leading Canadian brands develop John advises both privately held and publicly world-class customer and digital strategies and number of ideas generated 33% listed clients. He has significant experience create personalized, distinctive and engaging number of patents filed 18% 18% conducting audits and reviews of financial customer experiences. statements and due diligence investigations for [email protected] Digital IQ Survey (PwC, 2013) purchase, sale or other financing transactions. Download the full report | www.pwc.com/us/digitaliq [email protected]

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If Europe is any indication, digital games could eventually account for as much as 25 per cent of BCLC’s A winning “total business. hand ” British Columbia Lottery Corporation Chief Financial Officer and Vice-President Jervis Rodrigues takes the Crown corporation into the digital age with a dynamic online and mobile strategy and a partnership-based approach

By Nick Rockel

When Jervis Rodrigues joined the British Columbia Lottery Corporation was the first provincial lottery corporation to offer a full suite of digital (BCLC) as Chief Financial Officer and Vice-President, Finance and games. On BCLC’s PlayNow.com website, which has some 190,000 Corporate Services, last February, he was no stranger to the public registered users throughout the province, visitors can choose from more agency. In his previous role as a partner at a major accounting firm, than 100 games, including bingo, blackjack and sports betting. he did extensive work for BCLC, which runs casino, lottery and online E-gaming accounted for $77-million or 7.2 per cent of total B.C. gaming on behalf of the B.C. government. gaming revenue in the latest fiscal year, versus 2.9 per cent in Alberta Rodrigues has been both an accountant and a turnaround and and 0.4 per cent in Quebec. But several European countries are well restructuring consultant, a combination that meshes well with the ahead of B.C. In Finland, which has offered digital gaming for 16 years, changes underway at BCLC. “The whole BCLC organization is going the segment makes up almost 33 per cent of total revenue. After 15 years through a transformation,” he says. “It’s an exciting opportunity for me in the business, Austria derives 39 per cent of its gaming sales from Jervis Rodrigues to be involved on the inside with the transformation process.” online sources. As part of that process, Rodrigues is helping drive BCLC’s push into “In Canada, we’re still in our infancy. You have B.C. right at the CFo and Vice-President, Finance digital gaming. The corporation was an early Canadian adopter of forefront, you’ve got Loto-Québec in some e-gaming areas and you’ve and Corporate services, British e-gaming, an ever-evolving market that offers high growth potential got this big void,” says Rodrigues, a director of the Toronto-based Columbia lottery Corporation through national and even international partnerships. As BCLC bets on Interprovincial Lottery Corporation, which manages Lotto 6/49 and other those opportunities, it must compete with private players and manage national games. Catching up to Europe will require all of the provinces the regulatory, security and other risks of a digital platform. to embrace digital gaming, he notes. “And if we get the U.S. [on board], BCLC generates roughly $1.2-billion a year in net income, the most which is now thinking about getting into the Internet gaming business, I of any B.C. Crown corporation. The bulk of that money goes to the think in a few years you’ll start to see significant growth in this area.” government, which allocates it to general operating costs, healthcare and Why was B.C. relatively early to the e-gaming table? The BCLC charitable purposes. “It’s going to very, very good causes, going back into executive team has long regarded its operations as more of an the community and also helping to defray costs to the province and to entertainment business than a gaming enterprise, Rodrigues explains. every taxpayer in the province of B.C.,” says Rodrigues. “BCLC benchmarked itself against some of the European countries many, BCLC first ventured into e-gaming in 2004. As Rodrigues points out, it many years ago and decided that this was an opportunity it needed to

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explore, and BCLC needed to be front out of the gate that BCLC handles credit card numbers and other

All about BCLC to develop its e-gaming site.” personal information from PlayNow.com users. In But for a government agency, running what is addition to a corporate security department, the British Columbia lottery Corp. is a effectively a technology business has its challenges. organization has a risk unit that sits under the CFO’s Crown corporation with revenues For starters, there’s the cost: BCLC spent between office. “Every business group is integrated, with the benefitting the citizens of British $50-million and $60-million to develop PlayNow. finance group leading the charge on risk overall,” Columbia. Founded in 1985, BClC com, Rodrigues estimates. Rodrigues says. is led by President and Ceo Michael Internet gaming is also highly competitive. BCLC has big plans for e-gaming. It’s cautiously graydon. in the fiscal year ended Although the provinces have a monopoly over optimistic about hitting $100-million in annual March 31, 2013, the corporation netted casinos and major lottery games, the online revenue within one or two years, Rodrigues says. a record $1.13-billion through its three business units. space includes dominant brands like Bodog and And if Europe is any indication, digital games could PokerStars. “The pace of change is very significant,” eventually account for as much as 25 per cent of its 1. Casinos: this division oversees Rodrigues admits. “Players get tired of certain total business, he estimates. 17 casinos (including two at games and tired of the same group of people they’re The B.C. version of PlayNow.com is off limits to racetracks), seven bingo halls and playing with, so they want to continuously have new anyone who doesn’t reside in the province of 4.6 19 community gaming centres. insights online the largest BClC unit, with a products and services.” million people, so interprovincial partnerships are gross revenue of $1.64-billion for BCLC’s solution: where it used to create most a key element of the growth strategy. BCLC already Going east – and going digital fiscal 2012-13, it licenses casino games in-house, over the past year it has accelerated hosts Manitoba on PlayNow.com, and Rodrigues operations to operators. the shift toward a hybrid model, through says it’s in discussions with other jurisdictions about partnerships with developers such as the Las Vegas- similar business partnership. Meanwhile, the agency 2. Lotto: Available at some 3,800 The financial balance of power in the global casino Projected global gaming based International Game Technology (IGT) and is seeking regulatory approval for Canadians visiting retailers and on the gaming website market revenue share the London-based OpenBet Technologies Ltd. “We B.C. to use the provincial site. gaming industry is heading east, with Asia Pacific Playnow.com, lottery products 2015 include national games like lotto can get new games on PlayNow.com much more BCLC has also been talking to U.S. and other expected to overtake the U.S. as the biggest regional Max, provincial offerings such as frequently,” Rodrigues says. foreign countries about options that include market in terms of revenue by 2015. Our projections BC/49, and scratch-and-win and Another challenge is reaching the 20- to 35-year- B.C. hosting its Internet gaming businesses. One suggest that by 2015, Asia Pacific will account for Asia Pacific pull-tab games. old demographic, the age group most likely to potential barrier is the litigious environment 43.4 per cent of global spending on casino gaming. % 3. Online gambling: BClC is a gamble online. Besides using Twitter, BCLC is stateside, Rodrigues concedes. 43.4 Canadian e-gaming pioneer. its talking to Facebook about launching its lottery But PlayNow.com is built to handle a global This seismic change will be accompanied by a U.s. Playnow.com site hosts 100-plus games and tickets on the popular social network. clientele. “The capacity and the potential are there dramatic evolution in several aspects of the industry, % games, ranging from sports betting The corporation is also making PlayNow.com more for anybody in the world to play on our regulated 40.1 as online gaming becomes an increasingly regulated to poker. easily accessible via mobile devices like smartphones site,” says Rodrigues. “If we did get that approval, it in 2010 the B.C. gaming industry and tablets. would be quite significant. You could be in Macau or mainstream activity and as usage and revenues take generated the equivalent of 37,500 Then there are the risks of digital gaming, which Singapore saying, ‘I’m tired of that site; I’m going to off in many markets. full-time jobs, according to the toronto- include cyber attacks and privacy concerns, given play on PlayNow.com.’” Uf based Canadian gaming Association. the B.C. government allocated almost The pace and scale of the migration to online spending is $707-million of BClC’s 2012-13 net much more difficult to call, given the fragmented regulatory revenue to the province for public landscape for online gaming, the varying speeds at which services. the provincial health special regulation is changing in different jurisdictions and the Account received roughly $147-million current uncertainty in many countries over the boundaries for research, healthcare and education, between legal and illegal services. and $135-million in gaming grants went In conversation with Jervis Rodrigues to charity and community groups. Experience to date suggests that online gaming will be mainly Asia Pacific 43.4% Mike Harris is a Vancouver-based partner within the complementary to bricks-and-mortar revenues. There will be U.S. 40.1% Consulting and Deals practice of PwC Canada. he more than enough room in the market for both, provided they leads the Canadian Corporate governance practice each offer a compelling experience in their own way. eMeA 10% and the firm’s British Columbia Public sector and Canada 3.4% government practice. Global gaming outlook: The casino and online gaming outlook to 2015 (PwC, 2013) latin America 3.1% [email protected] Download the full report | www.pwc.com/e&m

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A growing practice in the pension sector is to set up investment policies with two distinct categories: a return-seeking portion and a liability-hedging portfolio.

Low interest rates Advances in risk management

In today’s low interest rate environment, solvency and a liability hedge portfolio, it is important to On a fi nal note, advances in the enterprise-wide risk funding positions are predominantly in defi cit anticipate the impact of longevity risk. The historic management fi eld are adding rigour to pension risk The pension territory. Corporations understand the impacts of trend has been that people continue to live longer, mitigation strategies. Because of its combination of this rate level all too well. A growing practice in the and this can be an unexpected expense in the longer accounting, investment analyst and rating agency pension sector is to set up investment policies with term. Plans can address this longevity risk through focus, the corporate pension payout stream is two distinct categories: a return-seeking portion and a risk-transfer solutions for the retirement cohort of viewed as having debt-like characteristics. liability-hedging portfolio. the plan. Risk-transfer solutions exist in the form of The debt focus applied to pension liabilities legacy challenge The return-seeking element (specifi cally, equity longevity insurance or buy-in or buy-out annuities is changing views on how a risk budget should investments) grows with an improving economic driven by client-specifi c preferences. The liability be allocated. Having the risk budget include the Why factors like longevity of workers and volatile markets present challenges for environment. As these investments rise in value, hedge portfolio can be constructed to support a risk- pension fund, where the upside surplus is not Canadian pension funds equity can be sold and the proceeds invested in fi xed transfer solution. shared, triggers a rethink in corporate fi nance. This income. As a result, the liability hedge portfolio rises Solutions to these pension plan challenges are progressive alignment of corporate fi nance with because of this transfer of funds. This rise in the coming from a sector that has historically managed its pension investment management is contributing to By Stephen C. Peacher liability hedge portfolio over time mitigates interest own balance sheet exposures. Specifi cally, insurance the growth in de-risking strategies globally. rate risk. The liability-hedge component can be companies are becoming actively engaged with DB “The times they are a-changin’,” as Bob Dylan It was a decade of innovation: the 1950s offered up an array of new products such as colour television, aligned to a solvency, accounting or going-concern pension plans as they have deep experience managing sang. With respect to the legacy challenge of DB microwaves and the Ford Edsel. Some were successful; others became marketing case studies with titles liability. Another benefi t of this dynamic progression assets in concert with the characteristics of liabilities. pension plans, there are solutions available to like, “The wrong car at the wrong time.” We can add the design of enhanced corporate defineddefi ned benefitbenefi t (DB) toward an increased hedging position is a less volatile Leading insurance fi rms have additional advantages. plan sponsors that can provide a progressive and pension plans to that list. With the benefitbenefi t of hindsight, we now understand the flflaws aws inherentinherent inin bothboth thethe asset mix from the resulting lower equity position. Their strength in derivatives management adds value. innovative answer to their pension challenges. Edsel and the actuarial assumptions that supported DB plans. This dynamic hedge (also referred to as a glide They also have advanced systems infrastructure Coming full circle, practitioners now have a greater Just as marketers learned from the Edsel case, institutional investors have developed enhanced strategies path) is an important consideration for pension plan for liability asset metrics and experience in the awareness of specifi c design impacts from the

to address the risk-return parameters for DB pension plan management. Today, executive teams are sponsors to review. development of customized portfolios. decisions made in the 1950s. Uf designing and implementing solutions to legacy DB pension plan issues. Meanwhile, increased accounting With the anticipated future growth of the liability disclosure from International Accounting Standard 19 has raised the profileprofi le for reporting. Shareholders hedge portfolio, there is a continuing search for are focused on risk mitigation solutions as rating agencies have published extensive guidance on pension higher yield strategies. Proprietary asset classes Expert opinion deficitsdefi cits and their rating impacts. These factors have led teams to assess strategies that mitigate the volatility such as investment-grade private fi xed income and Stephen C. Peacher is the Executive Vice-President and of plan costs and stabilize asset/liability positions. high-quality commercial mortgages add income to Chief Investment Offi cer of Sun Life Financial. He spoke A number of factors can be assessed in a review of DB pension plan volatility. Plan design is an important the portfolio as a result of the liquidity premium on this topic at The International Economic Forum of the area to revisit. But aside from closing or freezing plan benefits,benefi ts, this review option mainly stems the tide of and credit risk. Mitigation of this risk is typically Americas in Toronto in October 2013 (forum-americas.org). future exposure. A methodology to address plan volatility takes into account the solvency funding position managed through appropriate diversifi cation and by and realigns the asset portfolio to specifiedspecifi ed liability characteristics. partnering with experienced asset managers. When assessing the mix of return-seeking assets

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The servant

In a unique employee-owned management structure, Golder Associates Global President leader and CEO Brian Conlin puts the needs of clients, staff and the communities they serve first

By Matthew O’Grady

What sort of an impact are we having globally – and is anybody paying attention? Canada’s place in the world has long been the stuff of existential debate. Our seventh prime minister, Wilfrid Laurier, famously promised in 1904 that while the 19th century was the century of the United States, Canada would “fill the 20th century.” Most would argue that we didn’t really hit our stride as an economic and social power until late into the 20th century. In two areas in particular, our wealth and expertise in natural resources and in the livability of our The Canadian way communities, Canada has become world-renowned, with Toronto the undeniable centre of financing for the mining sector and Vancouver regularly of getting things atop lists of the world’s most livable cities. Our expertise in developing both is something that’s finally put Canada on the map. done – working with Brian Conlin doesn’t think this is an accident. The company he helms, governments, industry Golder Associates, has 8,800 employees in 37 countries speaking 18 languages. “ What started off as a small partnership based in Toronto is now a truly global business, offering expertise in consulting, design and construction for ground and the public – is a engineering and environmental solutions to mining, oil and gas, urban real advantage. development and infrastructure, manufacturing and power industry clients on six continents. It is, as the company puts it, “engineering earth’s development while preserving earth’s integrity.” Fully 58 per cent of Golder’s business now comes from outside of Canada. Conlin, who grew up working on farms in Metcalfe, Ont., just outside Ottawa, feels that being Canadian – specifically, the Canadian tendency to try to find common ground in business dealings – has been key to Golder’s global growth. ” “The Canadian way of getting things done – working with governments, Brian Conlin industry and the public – is a real advantage,” explains Conlin, a 36-year Golder veteran, from his Burnaby, B.C., office. “You contrast that to somewhere like the Global President and CEO, U.S., which is highly regulatory and legally driven. U.S. clients get very nervous Golder Associates when we talk to the regulators. In Canada, we do that all the time. If we’re trying to get an environmental assessment for an oil sands project, we’re right in there from Day One. We’re all on the same team.”

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If we’re going to take on a new service, we’re not going to take it on a part-time, toe-in-the-water way.

All about Golder Associates owners. I’m in the middle, balancing the views and strategic advantage, such as slope depressurization interests of these stakeholders.” at an open pit mine, lining a landfi ll or remediating Golder Associates started in 1960 Conlin’s job is a diffi cult balancing act. On the one a contaminated site. in Canada as the brainchild of Hugh hand, there’s the challenge of managing a diverse “Our philosophy is, if we’re going to take on a new Golder, an expert in soil mechanics workforce: different languages, different work sites, service, we’re not going to take it on a part-time, toe- from the U.K.; Larry Soderman, an Ontario highways expert with a wealth and increasingly, different generations of workers in-the-water way,” says Conlin. “We want to do it and of local contacts; and Vic Milligan, an (38 per cent of the Golder workforce are millennials, be the best in it – we want to strive for excellence.” Irish civil engineer. entering adulthood at the turn of this century). And in a typically Golder sort of way, Conlin is The company has made great strides in recent content to let his competitors do their thing – to be In the early days, the firm specialized years to broaden its diversity. In addition to hiring all things to all people – while Golder continues to in the field of soil mechanics: understanding the properties of soil locally wherever possible, Golder’s strategy includes hone its leadership in earth, environment and the to help in things like building and a black empowerment program in South Africa, related areas of energy. bridge foundations, retaining walls, First Nations cultural training in Canada, a diversity “There’s enough space and enough scope – and dams and buried pipeline systems. council (currently being piloted) in Australia and enough work – for everybody.” Uf Today, Golder’s work has expanded young professional groups in many of Golder’s to include ground engineering, natural operating regions. In conversation with Brian Conlin resources management, environmental Once internal needs have been addressed, Salvatore (Sal) Bianco is a partner in the Assurance and social assessment, environmental there’s the pressing challenge of managing client practice of PwC’s Toronto Metro North offi ce. Sal management and compliance, Another way in which Golder has brought a years and they’re gone. Typically there’s enduring expectations, as economic conditions ebb and fl ow. decommissioning and decontamination specializes in the consumer and industrial products and typically Canadian sensibility to its increasingly infrastructure (roads that were built, an airstrip) but “When commodity prices are high, there tends and planning and design. In addition services industry, with a focus on public companies, global operation is trusting and empowering local increasingly that’s not enough. to be more exploration – more properties, more to working with prominent mines Securities Exchange Commission registrants and large and oilfields throughout the world, talent, rather than sending people from elsewhere “It’s very clear that in most places where there opportunities,” explains Conlin. “If prices come private companies. to “show them how to do it.” “When we go to new is a non-corrupt regime, just paying money isn’t down, they come to us and say, ‘We’ve got an the firm has also had its hand in the [email protected] construction of Toronto’s subway places to set up business, we would only go there the solution,” says Conlin. “The reality today is operating mine. We’ve invested $2-billion. We’re system and remediating Vancouver’s if we had local people we trust in our fields to run communities want more: they want long-term not turning back on this – we’ve got long-term Expo lands, among many other it,” explains Conlin. “We have 325 people in our royalties, they want a seat at the table, they want to commitments – but we are squeezed for profi tability.’” INSIGHTS ONLINE projects. office in Santiago. When you go into that office, it’s be a partner.” Golder’s task is to help clients fi nd ways of The founders realized that they had indistinguishable from this office: they do the same That sort of collaboration in sustainable optimizing their operations. “They come to us and Innovation improves environmental performance to expand their sights to keep up with things as us, except they mostly do it in Spanish. development is very much a part of Golder’s DNA. say, ‘Can you fi nd ways of doing it more effi ciently? business. As Vic Milligan put it in a There are maybe three or four expats, and they’re Started in 1960 with three founding partners, the Can you fi nd us steeper slopes? Can you fi nd ways of company biography, “To get great there just to help out. But the operation is led by and firmfi rm has maintained a unique employee ownership getting the grade out that allows us to blend it?’” Canada is emerging as a world leader in environmental quality work in Ottawa, we had to driven by Chileans.” structure for over 50 years, despite its tremendous Interestingly, one of the things that has stayed mitigation technologies for unconventional resource be in Ottawa. To get quality work in Golder’s long-held culture of trusting local growth. In the early days, existing partners would relatively stable over the decades is Golder’s focus Vancouver, we had to be in Vancouver. talent and embracing their priorities aligns nicely sell some of their shares to the new guy, and so on. on its core strengths in ground engineering and extraction practices. The pursuit of better environmental We never went after jobs, we went after with Conlin’s preferred leadership style, what he Today, all employees have the ability to purchase environmental services. This dedication to purpose outcomes is a push and pull; a push from within the clients who would give us jobs.” calls “servant leadership,” putting the needs of shares, and the senior ownership succession process comes even as some of its competitors have tried industry and a pull from regulatory institutions. Today’s controlled but steady growth, employees, clients and communities first. is supported through a defineddefi ned sell-down policy. to move toward a one-stop-shop model: doing not Environmental performance capabilities keep improving with operations now on six continents, When Golder helps its clients with their resource “In terms of private companies, there’s probably only the permitting and planning, but also the remains true to Golder’s original developments now, they have to identify what only three or four companies our size in the world detailed design and building the plant at the end. while regulatory standards keep getting stricter. But it’s concept of building relationships with the beneficial use of the site will be in the long- that have a similar share ownership structure,” Golder, too, is seeking to build its detailed design not always clear which is leading and which is following. clients and allowing the business to term, because the majority of these developments explains Conlin. “We have an operating company, and construction services, but focused on projects grow organically. tend to be fairly short-term, says Conlin: 10 or 20 a board, and principals and associates, our senior where the company’s specialized knowledge is a

Innovation surge sparks oil sands opportunities (PwC, 2013) Download the full report | www.pwc.com/ca/innovation

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Operating ethically in The company always knew that it would one of the most challenging win arbitration; although, recovering a judgment from a sovereign government countries in the world would be more diffi cult. Canadian mining company First Quantum Minerals overcomes significant risks in the Congo Christopher Lemon, General Counsel, First Quantum Minerals By Douglas Mason

The challenge The strategy The results The future

In 2010, Canadian mining company First Quantum Even these actions, based on complying with With the value of its former Congo assets written First Quantum Minerals’ recourse strategy began Valuable lessons were learned from the Congo Minerals Ltd. had its three mines in the Democratic international norms, proved insufficient to protect down to zero, and legal avenues in the Congo to pay off when it opened litigation in 2010 against misadventure about operating in jurisdictions Republic of the Congo expropriated without its assets in a challenging jurisdiction. exhausted – it was also levied a $12-billion (U.S.) Eurasian Natural Resources Corporation PLC with weak commitment to the rule of law and the compensation and transferred to other businesses When the Congolese government announced finefi ne by a local court – First Quantum Minerals (ENRC), a company listed on the London Stock success of a mitigation strategy that conformed to under irregular conditions. The company was faced a contract review for mining companies in 2007, fought back based on international recourse. Exchange that purchased one of the disputed mines. good practice. “We are proud of how the company with the loss of assets valued at $2.5-billion (U.S.) First Quantum Minerals felt it was on strong legal The company opened arbitration under the ENRC was accused of accepting stolen assets and of conducted itself in a challenging situation and stuck after years of work developing greenfield mining grounds to defend tax and contract terms. Offers to International Chamber of Commerce International material breach for failing to disclose the disputed to a defendable strategy,” says Lemon. “We followed projects in one of the riskiest countries in the world. settle the issue by irregular means were refused. First Court of Arbitration in Paris, disputing the status of its asset purchases. A complaint was recourse even when it looked like we would not get First Quantum Minerals had been a model Quantum Minerals’ General Counsel, Christopher grounds for seizure and lack of compensation. It lodged with the U.K.’s Financial Services Authority, anything out of it.” corporate citizen in the Congo – its mines were the Lemon, states that, “The company’s policy is that it also launched legal action against the Congolese and an investigation of ENRC was opened by the Five years later, First Quantum Minerals is a larger country’s largest taxpayers and it followed corporate will not enter into unethical practices.” government at the International Centre for Serious Fraud Offi ce. ENRC eventually agreed to and more successful company, operating more social responsibility guidelines and international What followed were a series of rapid decisions Settlement of Investment Disputes in Washington, settle, accepting to pay First Quantum Minerals mines in more countries. It has moved on from the good practices, co-operating with efforts to promote described by First Quantum Minerals as “an D.C. “The company always knew that it would win $1.25-billion (U.S.) in January 2012. Congo situation, something that might have once good governance and transparency. orchestrated attack.” Its mines were expropriated arbitration; although, recovering a judgment from sunk the company. The mines there accounted and transferred to state companies before being sold, a sovereign government would be more difficult,”diffi cult,” for one quarter of its production at the time of the at a fraction of the value, to a foreign businessman says Lemon. The cases were expected to continue seizure and would have accounted for half had they with close ties to the country’s president. for years. eventually reached full output. “The real tragedy is for the Congo. Kolwezi, the largest mine taken from First Quantum Minerals, is still not operating fi ve years later,” says Lemon. “We do not counsel

unprincipled things; it is a downward spiral.” Uf

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Canada is the fi fth-largest aerospace country in the Success world, and that’s completely disproportionate to our population. I think aerospace beyond should be seen as an example that Canada can succeed on the world stage. simulation As a provider of training solutions and simulation technology to civil and military aviation customers, Quebec-based CAE has become a leading force in the high-tech world of simulation. But as President and CEO Marc Parent explains, the company’s global growth is based entirely on real-world strategies

Marc Parent By Christopher Korchin President and Ceo, CAe

“I always say, ‘Listen to your customers; deliver on-time, quality products. This Today, CAE focuses primarily on designing and building flight simulators at way they have no excuse to go somewhere else.’” Marc Parent is talking about its plant near Montréal-Pierre Elliott Trudeau International Airport, supporting building and maintaining client relationships – a traditional notion, to be sure, its products worldwide and providing flight training for both civil and defence but one that has acquired new importance in today’s shifting markets. As the clients. It has customers in some 190 countries. Parent, who joined CAE in leader of a publicly traded, multinational corporation with more than 8,000 2005 and became President and CEO in 2009 (after previously working for employees, he’s keenly aware of the importance of stable, long-term business Canadair Ltd. and Bombardier Aerospace), says that in the current climate, partnerships. And working in the high-tech world of aerospace, which is as where companies seek a global presence in the face of declining opportunities at vulnerable to the vagaries of international economics and politics as almost home, “We are somewhat fortunate because we are already there.” any sector you can name, he’s also aware of the value of traditional business In terms of defence contracts alone, CAE was destined to become a global philosophies. He’s fond of words like “trust” and “full service” – touchstones in company. “In Canada we’ve never had a very large home market for military- an ever-changing environment. related hardware. So, we’ve had, by necessity, to go international. What that Luckily, CAE Inc. has never lacked customers. The company was born in means is that CAE already has partnerships in the military, with personnel on Montreal on St. Patrick’s Day in 1947 as Canadian Aviation Electronics Ltd. the ground and a history of doing business around the world in 50 separate Within a week, founder Ken Patrick, a former Royal Canadian Air Force (RCAF) countries where we have defence customers,” says Parent. officer, had secured his first contract, building and installing radar detection Combining its defence revenues with robust results from its civil aviation systems above the Arctic Circle, for the RCAF. With the Cold War looming, the activities and new endeavours in simulation services for the mining and government was worried about Russian bombers. It was the first sign that CAE’s healthcare sectors, CAE reported gross revenue in fiscal 2013 of more than very existence would be linked to global matters. $2.1-billion. Still, with defence budgets being slashed globally and, crucially,

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Parent: “What I’m proud of is that even during the spread out over the globe (with around 1,500 in the recession that we just had, in 2008 and 2009, we U.S. and 1,300 in Europe). maintained that level.” Given the size and diversity of that workforce, And whether through strategy or good Parent preaches the importance of having talented, fortune, the company’s revenue distribution is as motivated people – yet another traditional business streamlined as a business jet: 40 per cent defence, notion, but one that has kept CAE in the forefront. 55 per cent civil and 5 per cent new core markets “We want to have engaged employees,” says (healthcare and mining), with roughly a 50/50 Parent. “And what I mean by engaged is that people split between simulation products, and training and come to work and they feel that their individual services. Geographically, revenue also splits along contribution matters in the overall picture.” clean lines, with just under one-third (30 per cent) Most of all, he looks for leaders. “I look for coming from the United States, 31 per cent coming passion, I look for energy, I look for the ability to from Europe and 39 per cent coming from the rest energize others – you recognize that kind of person of the world. Even the workforce is neatly divided: in a room.” For Marc Parent, some qualities simply

4,000 employees in Canada and another 4,000 can’t be simulated. Uf All about CAE

in 1947, CAe, then known as Canadian Aviation electronics, began operating out of a vacant hangar at the saint- In conversation with Marc Parent hubert Airport, on Montreal’s south shore. today, it is a global leader in We have 1,600 engineers here, which is Mario Longpré is a partner in the Assurance practice of PwC, working in the the design, production and supply Montreal office. he is also the national leader for the Aerospace and Defence of simulation devices and full-fl ight the largest concentration of engineers and industry practice. simulators for the civil aviation and defence industries. CAe also offers civil technical staff under one roof in Canada. he helps his clients get ready for the conversion to international Financial aviation, military and helicopter training Reporting standards (iFRs). he is also the Montreal iFRs leader for the technology, in more than 50 locations worldwide, Communications, Retail and Consumer practice. and trains more than 100,000 pilots [email protected] every year. CAe also operates the CAe oxford Aviation Academy, the a decade’s worth of mandated defence budget cuts amount of potential demand,” says Parent. He world’s largest network of ab initio in the United States now kicking in, the question points to last November’s Dubai Airshow, where fl ight schools. CAe Parc Aviation is insights online the company’s pilot and technical becomes one of maintaining those revenues. But more than $200-billion worth of deals for new crew sourcing division, offering trained Parent is optimistic: “Simulation and modelling aircraft were signed. Every one of those planes will Narrow bodies drive the need for technology personnel on assignment to airlines and actually provide a solution, because training in a require trained crew. Indeed, later that month, leasing companies around the globe. simulator can be done at 10 per cent of the cost of CAE and InterGlobe Enterprises inaugurated a improvements in aerospace

the company’s most recent venture is training in a real aircraft. So, what’s happening simulation centre in India that will train more than into simulation products and training now is that you see a trend toward increasing the 5,000 pilots a year. It is the latest addition to CAE’s for the mining and healthcare sectors. use of simulation in the military, and for us that’s global network of more than 50 training locations. As Boeing’s 737 and Airbus’ A320 – the workhorses of many 19% these new core markets offer a very positive.” Parent also underlines the success of the airline fleets – near the end of their anticipated life, a step Wide-body promising avenue for the expertise That trend mirrors the rush toward simulation in Canadian aerospace industry in general and change in innovation will be more important than ever. But, that CAe has been honing for more the 1970s, when high fuel costs forced the civil and dismisses the notion that Canada is fated to be a % than 65 years. throughout, CAe has military aerospace industries to seek alternatives resource-based economy, unable to compete in these companies will face competition from Bombardier’s new 4 maintained the vision of its founder, to “live” training – the same phenomenon, in fact, manufacturing. “Aerospace in Canada has been CSeries, China’s COMAC and aircraft from Japan and Russia. large Ken Patrick, “to create something that led CAE to specialize in simulation in the fi rst proving that wrong for a long time,” he says. “The Canadian … extremely innovative and place. The same is true in the health and mining fact of the matter is, we punch way above our very technology-intensive.” sectors, where training is costly and errors can weight. We’re the fifth-largestfi fth-largest aerospace country in Regardless of the details, suppliers will play an important role in % % President and Ceo Marc Parent be fatal. CAE has parlayed its success in aviation the world, and that’s completely disproportionate developing advanced technology for these new aircraft. While the 16 61 Regional narrow-body notes that the company has stuck simulation to creating surgical, patient, ultrasound to our population. I think aerospace should be seen aerospace industry has already made progress in terms of co-innovating, to its Canadian roots: “All of our and clinical simulation tools for the healthcare as an example that Canada can succeed on the the bumps in the development of the Airbus A380 and the Boeing B787 manufacturing of simulators, all of industry and creating high-fi delity training world stage.” Dreamliner suggest there’s still room for improvement. Looking to other Aircraft in service by size, 2009 the design, is done right here in environments for mining-industry clients. Parent credits the company’s historical focus industries – notably automotive and IT – and drawing on their successful Montreal. And the R&D, as well. We narrow-body 11,580 (61%) strategies should help. have 1,600 engineers here, which is Meanwhile, the civil aviation market is on R&D as a prime source of its ongoing success. Regional 3,010 (16%) the largest concentration of engineers fl ourishing, with emerging markets leading the Innovation isn’t driven by government legislation in and technical staff under one roof in way. Parent attributes the boom to a growing the aerospace sector; the company simply believes large 800 (4%) Gaining technological advantage (PwC A&D insights, 2013) Canada. i think that’s something we middle class and the rise of low-cost carriers in that R&D is essential, so roughly 10 per cent of Download the full report | www.pwc.com/ca/aerospace-defence Wide-body 3,500 (19%) should be proud of as Canadians.” developing nations. “That has fuelled a huge expenditures are earmarked for it annually. Says

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DM140797_PgInside_PWC_Winter_2014.indd 40 1/15/2014 1:08 PM DM140797_PgInside_PWC_Winter_2014.indd 41 1/15/2014 1:08 PM Challenges | Technology Challenges | Technology

Bringing down the cost of being green A Toronto architect findsfi nds success with sustainable housing, for the energy conscious and for those most in need of affordable roofs over their heads

By Mark Hacking

The challenge The strategy The results The future The idea of launching a business as the worst Principal architect Paul Dowsett has forged a reduce the energy demand of the building, rely The company has experienced impressive year- The message of “affordable sustainability” is gaining economic downturn in history is playing out is reputation for listening to his clients. While this on passive sources of energy and then incorporate over-year growth right from the start (the partners traction, particularly in areas where recovery is a either inspired … or insane. Choosing to start said seems obvious, an established architect often active technologies to provide any renewable estimate 50 per cent a year since 2009) and has key consideration. Building on its successes with the business with just one client – particularly when that possesses a healthy ego and strong convictions. A energy that may be required. “The perception is that expanded from being a two-man operation to New Orleans project and others, Sustinable.TO is sole client becomes one of the partners in the new bemused Dowsett begins many stories with, “This sustainability is expensive,” Dowsett explains. “But a fi rm that employs 10 people. Furthermore, embarking on what could well be its most promising venture – adds another layer of challenge. To top it client called because his architect wasn’t giving him to be effective, sustainability has to come from the the fi rm has received signifi cant recognition in venture yet: affordable, healthy, sustainable housing all off, when your core purpose is to provide cutting- what he wanted.” ground up: that means it has to be affordable for the its brief history. Last year, Dowsett became the for Canada’s native communities. Dowsett and edge environmental solutions of an architectural When looking for an architect to renovate his average homeowner.” fi rst architect to receive Canada Mortgage and Daniels are in the process of bringing together all kind, there’s a fair amount of misinformation and 1935 art deco home and to make it more eco- A new home build in Willowdale, Ont., completed Housing Corporation’s (CMHC) Healthy Housing the key stakeholders to work on a solution to this

some resistance to cut through. Yet, since 2009, friendly, David Daniels found Dowsett, who was in 2012, provides the evidence. Named the Recognition for a lifetime commitment to healthy complex, politically charged situation. Uf Sustainable.TO has managed to overcome all these with another firm at the time. Nearing the end of the “Willowdale Passive Solar House,” this project housing practices. In 2011, the fi rm won a obstacles and, in the process, become one of the project, Dowsett decided that it was time to strike features solar panels to provide electricity, along prestigious international competition for designing most innovative and respected architectural firms in out on his own and, pleased with their working with geothermal heating and cooling. But it also a passive house for New Orleans, a response to the country. success together, Daniels suggested they become incorporates an airtight envelope, a self-venting the devastation from Hurricane Katrina, in a very business partners. The result is Sustainable.TO. and highly reflreflective ective metal metal roof, roof, sun sun shading, shading, challenging building climate. To be effective, sustainability has to come Although a cornerstone of the business is rainwater collection and grey water reuse. This list environmental sustainability, even here the firm’s of innovations may sound wildly expensive, but the from the ground up: that means it has to be approach differs, by leading with simpler solutions costs came in at just $165 per square foot – less than drawn from nature before involving more expensive, the average new home build. The clients, a couple affordable for the average homeowner. more technology-intensive systems. The firm takes of actuaries, were very pleased with the outcome, a three-step approach with each new project: particularly as their monthly energy bills are $0. Paul Dowsett Principal architect, Sustainable.TO

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Expert opinion

Dr. Kim Rossmo holds the University Endowed Chair in Criminology at Texas State University. He is also Director of the Center for Geospatial Intelligence Finding patterns and Investigation in its School of Criminal Justice. Previously, he was the detective inspector in charge of the Vancouver Police Department’s Geographic Profiling Section, where he worked on cases in spatial data spanning the globe. Geographic profiling, in criminal investigations and in business, involves data analysis to make smart decisions in uncertain conditions

By Dr. Kim Rossmo

Using a common foundation of readily Focusing resources and getting results Connecting geospatial analyses of criminal investigations to data determine the most likely area of the offender’s residence. The available data analytics in business is not the stretch it may first appear to be. purpose of a geoprofile is to provide an optimal search strategy • Databases frequently contain address information; geography Both police and corporate officials must make decisions under and an information management tool for suspect prioritization. • Input is limited to data typically available in a police is, therefore, a more useful prioritization metric than other conditions of uncertainty. Data can reduce uncertainty, but first it Geographic profiling was originally developed from my PhD investigation. offender traits. must be analyzed and developed into information and knowledge. research at Simon Fraser University’s School of Criminology • A scientific method for crime linkage was developed to better • The capability of the model to be applied in a wide variety of Once you look behind the Hollywood image, a criminal in British Columbia. I was a member of the Vancouver Police identify a crime series. situations is just as important as its precision. investigation simply consists of turning data into knowledge. Department at the time, so I tried to combine criminological • A robust methodology is used to minimize sensitivity to missing • The ability to visualize and manipulate the geoprofile helps A police detective collects and analyzes evidence in order theory with my background in mathematics and police and erroneous information. users understand the results. to determine what happened and who was responsible. An experience. Understanding the operational requirements of Following an analytic process investigation has two basic functions: find the offender; and detectives (users) and the nature and type of information It turns out that several disciplines have a need to find lost or yet- prove his or her guilt. In some cases, the first stage may generate available in a criminal investigation (task) was central to this • The division of analytic labour recognizes that some tasks are undiscovered things. Over recent years, this has led to a number thousands of potential suspects. Detectives, therefore, need a effort. To help meet the need of police agencies for a suspect best done by computers and others by humans. of innovative applications of geographic profiling. Zoologists reliable system for prioritizing searches under conditions of prioritization tool, Environmental Criminology Research Inc. • The process is theory-based and, therefore, adaptable to new and biologists have used the technique to study great white information overload. (ECRI) was formed to develop an operational geographic profiling circumstances; assumptions are clearly articulated to prevent shark foraging off the coast of South Africa, bat-hunting patterns Crime sites are carefully examined for DNA, fingerprints, software system. In 1997, ECRI released the first version of Rigel, misapplication. in Scotland, bumblebee search patterns and the spread of tire marks and other physical evidence. However, the fact that named after the star in the constellation Orion the hunter. The • A high-quality training program helps users maximize the invasive algae in the Mediterranean. The military is interested the crime site’s location is also a clue is sometimes forgotten. RCMP was the first customer. system’s potential. in applications for counterinsurgency, and the intelligence Moreover, in a serial murder, sexual assault or arson case, there The integration of the software with the analytic methodology community for counterterrorism. Epidemiological researchers are multiple sites that, when considered together, produce a of geographic profiling was important to the development of have used the model to locate mosquitogenic water sources larger geometric pattern. The examination of this pattern is called Rigel. We tried to accomplish this through the adoption of a few from malaria cases in Cairo and contaminated water pumps geographic profiling – the analysis of a series of crime sites to key design principles. from cholera deaths in 19th-century London. Currently, we are exploring its use for hunting cyber-attackers and maritime piracy bases. Other suggested but still untested uses include archeological excavations, mineral exploration and business marketing. Data turned into information and knowledge can be very powerful, although this process must be followed by logical and unbiased thinking. Developing methods of finding the best paths through data jungles and cognitive mazes are important and necessary undertakings. Identifying patterns that others have missed in a mass of data provides a key advantage both in public

safety and in business. Uf

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DM140797_PgInside_PWC_Winter_2014.indd 44 1/17/2014 11:09 AM DM140797_PgInside_PWC_Winter_2014.indd 45 1/15/2014 1:14 PM The leaders | Growth The leaders | Growth

As one of the few female business owners in the clients sell via the Web. It’s the reason why Morai largely male-dominated North American logistics recently began expanding into the small package industry, it would have been easy for Kelli Saunders delivery e-commerce and web design, along with to consider herself at a disadvantage when she logistics management consulting, improving clients’ founded Mississauga, Ont.-based Morai Logistics Inc. online revenue and helping them move products to in 2010. market faster. Indeed, Saunders surprised more than a few of Saunders has also been keen to continue exploring her prospective clients – nearly all of whom were new opportunities in international markets such as Sandeep Tatla used to being pitched by men – when she stepped Mexico. The reason: a growing number of North Director, PwC Office of Inclusion On the into meetings in those early days. But they quickly American companies across sectors ranging from realized that the long-time logistics industry veteran food products to consumer goods have begun to was at the top of her game and ready to shake up repatriate some of their offshored manufacturing the traditional logistics experience as her team processes, thanks to growing shipping costs and Women of the world helped them co-ordinate the shipment of goods, the push to reduce transportation-related carbon Sandeep Tatla, Director of PwC’s Office ranging from small packaged items to hazardous emissions. That shift has helped the firm bolster its of Inclusion, talked to Kelli Saunders materials, by rail or truck across North America. Her international presence, while addressing another move about the role that female networking insistence on nurturing an entrepreneurial culture pressing supply chain concern: sustainability. Cross-border shipping guru Kelli Saunders, focused on service innovation, then delivering on With so many organizations insisting their organizations have played in her success. President of Morai Logistics, branches out into her every promise, quickly won clients’ attention suppliers and service providers incorporate e-commerce and management consulting and respect. So, too, did her ability to overcome sustainable practices into their business models, ominous challenges. Saunders had to take action or risk being overtaken ST: You’re an active member of several “This business is very competitive because some by a strengthening green wave. As such, the organizations dedicated to helping female By Chris Atchison of our suppliers can also be competitors,” Saunders company has shifted much of its logistics strategy entrepreneurs succeed. How have networking explains. “You dance on both sides of that line and, to focus on more environmentally friendly and groups such as Women Presidents’ strategically, it can be a challenge. It also seems cost-effective intermodal transportation, while Organization helped propel your career? weekly there’s another third-party logistics provider developing innovative solutions to some long- KS: I truly think WPO has changed my life. that pops up, so there’s a lot of change.” That’s not standing challenges. “We’re starting to work with I get really emotional about it. It’s given me to mention a steadily shifting regulatory landscape companies that would normally move cargo in the opportunity to have access to people and – particularly in the wake of disasters such as last refrigerated units, but, instead, we’re encouraging opportunities I never would have had before. year’s train derailment in Lac-Mégantic, Que. – them to ship those goods in trucks covered with That said, I caution women that because we’re All about Morai Logistics as well as growing demand for environmentally cargo quilts, which are more environmentally female shouldn’t be the reason we’re getting friendly transportation solutions, all of which can friendly and just as efficient,” she says. business. We should be getting business because Founded in 2010, Mississauga, Ont.- put downward pressure on profit margins. That innovative streak extends into Morai’s we run a good organization and provide a unique based Morai Logistics was built on As her firm’s bottom-line performance customer service department or, as Saunders product or service and we follow through with a simple premise: putting order into demonstrates, Saunders seems largely nonplussed by what we’re delivering. logistics chaos by helping clients move prefers, the “client success” department. “A client is products (ranging from small-packaged these obstacles to her success. Morai has experienced somebody you want to help make strategic business goods to hazardous materials) across impressive annual growth in both revenue and margin decisions; whereas, a customer is someone who is ST: Do women-run organizations encourage North America as effi ciently as possible. gains. Perhaps just as impressive is Morai’s cross- more transactional,” she says of that key difference in work-life balance more than those managed by The fi rm’s specialities include full border reach: roughly 70 per cent of the company’s cultural perception. Morai’s staffers are encouraged men, or is that a myth? truckload, less-than-truckload, small business is done in the United States and Mexico. to identify and act on specific operational challenges KS: I think it’s a myth. I’ve seen both. I know package and intermodal transportation, My business increased 30 So how has Saunders taken her firm successfully by becoming as deeply entrenched in their clients’ female business owners who are more nurturing, while Morai has also begun diversifying into an aggressive and competitive marketplace? It businesses as possible. “People have the autonomy and I’ve also seen female CEOs who run very into areas such as e-commerce and started by tapping cutting-edge technology. Morai to make good decisions, and no one gets in trouble traditional organizations. I think it’s important to logistics management consulting. per cent this year by talking licenses TRITAN, a third-party logistics management for making a mistake,” she explains. They’re also have work-life balance. My environment is very As Morai Logistics President Kelli to clients. You don’t have to software through their Mode Transportation agency encouraged to learn by listening, a rule the president nurturing because if my employees are happy Saunders explains, achieving success in agreement that allows her staff to track and manage has herself begun to apply more fervently of late. with their home life, they’re going to be happy at the highly competitive North American “sell them anything, just go shipments, ensuring on-time delivery. With so “My business increased 30 per cent this year by work. If they’re stressed at home, they’re stressed logistics market means focusing less many shoppers purchasing goods online, Saunders talking to clients,” she says. “You don’t have to sell at work. on rivals’ strategic moves and more and listen. saw another tech-related opportunity: helping her them anything, just go and listen.” Uf closely on delivering the best client PwC is a Global sponsor of the Women Presidents’ experience possible. “We have a Organization (WPO), a non-profit membership philosophy that competition is good, but organization for female presidents and CEOs of multi- we don’t get too concerned about what In conversation with Kelli Saunders million-dollar companies. The members of the WPO competitors are doing,” Saunders says. take part in professionally facilitated peer advisory “We worry about what we’re doing. Kelli Saunders Betty Ann Jarrett is a Tax Services partner in the Oakville, Ont., The competition is always going to be office of PwC. She advises Canadian and foreign-based multinational groups in order to bring the “genius out of the group” President, Morai Logistics” around us, but by focusing on them we corporations on cross-border transactions, mergers and acquisitions, and accelerate the growth of their businesses. can lose perspective on our priorities.” tax planning and compliance, and assistance with tax authority audits.

[email protected]

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DM140797_PgInside_PWC_Winter_2014.indd 46 1/15/2014 1:14 PM DM140797_PgInside_PWC_Winter_2014.indd 47 1/15/2014 1:09 PM The leaders | Risk TheThe leadersleaders || RiskRisk

Monarch Intermediaries Inc., which offers a unique service benefi t that allows individual patients or employees, members or customers of participating businesses who have serious illnesses to access second opinions from a network of top academic Safe and hospital specialists around the world in as little as fi ve days. Knowledge is power to The product proved to be a resounding success with a range of clients, including major our clients, and if we can multinationals, which offer it as a standardized benefi t to their employees or members worldwide. help them understand secure Although Siobhan Usher lost her battle with cancer, why we’re doing National Brokers Insurance Services is driving innovation in the growing her legacy lives on: a U.S report has indicated that these second opinions have changed 15 per cent of something for them and All about National Brokers insurance and benefi ts market diagnoses and have recommended revisions to Insurance Services 70 per cent of treatment plans among patients we understand what National Brokers Insurance Services By Chris Atchison who access the service, according to Usher-Mesiano. is a full-service insurance brokerage And Monarch’s global reach is spreading. The they need, it works out offering coverage on both the fi rm now maintains a network of sales commercial and personal front, as well representatives in markets as diverse as the for everyone. as group life and disability benefi ts. United States, the United Kingdom and South Based in Vaughan, Ont., the fi rm was If the ability to turn adversity into advantage is the in an increasingly digitized world. She credits a Africa, to name a few. founded with a simple goal: to provide mark of entrepreneurial mettle, Joyce Usher- series of simple, yet critical, steps such as those for While managing through gut-wrenching personal proactive insurance solutions to Mesiano may be one of the most savvy, resilient driving her fi rm’s bottom-line success. With annual adversity is challenging enough, handling the rapid customers ranging from individuals to Joyce Usher-Mesiano major multinational corporations. business owners in Canada. growth between 20 and 25 per cent, Usher-Mesiano growth of multiple companies posed its own set From the moment in 1998 when she founded is predicting that pace to spike next year to about 40 of obstacles for Usher-Mesiano. One of which was President, National Brokers As President and a 27-year industry veteran Joyce Usher-Mesiano National Brokers Insurance Services Inc. (a leading per cent, thanks to the recent hire of a new vice- ensuring her companies maintained a proactive Insurance Services Canadian and international broker of property president of business development. The fi rm also approach when selling to clients, not only offering explains, National’s success stemmed largely from the founders’ ability to and casualty insurance products and services), its recently acquired a competitor, Grant Jones & Stuart insurance products they might need today, but also spot and address a lucrative market President and her partners faced an uphill climb. Insurance Brokers Inc., in a move to bring new talent commercial, personal or group products designed to opportunity. “We started in 1998 and The challenge was not just to build a presence in the into the organization to brace for expansion. suit their requirements in the years ahead. Constant fell into a niche at the time when the crowded Canadian insurance market, but to fend But not all of the fi rm’s growth has been strategic. client communication and consultation have market was starting to recognize that off a direct legal attack from a former employer, In one case, it was the byproduct of a family crisis. proven ideal tools to achieve that goal. “Knowledge large corporations could get discounts specifi cally the threat of a lawsuit to the tune of When Usher-Mesiano’s sister Siobhan (one of is power to our clients, and if we can help them for home and auto insurance for their $15-million that could have easily crippled the her three business partners) was diagnosed with understand why we’re doing something for them employees. That gave us our start fl edgling fi rm. terminal cancer while pregnant with twins in and we understand what they need, it works out for because we had National Brokers Usher-Mesiano was forced to curb National’s December 2008, doctors in Toronto had diffi culty everyone,” Usher-Mesiano explains. Insurance writing group plans for expansion and instead seized a strategic opportunity developing a treatment plan. When a cancer drug While the entrepreneur has been able to maintain Fortune 500 companies and other to build out key operational infrastructure.“For the failed to chase the disease into remission, the family a high-touch approach to customer service, she major organizations. Then we were approached by a Canadian union that fi rst fi ve years, we were very cautious,”Usher-Mesiano sought a second opinion from leading medical concedes that protecting that key aspect of her wanted us to do the same thing for recalls. “We took [the threat] as a compliment centres in the United States. Several top American culture will become more diffi cult over time. Given them.” because we thought they would only sue a startup for doctors pointed out that hospitals in Canada her impressive track record staring down even $15-million if they thought we were worth something. hadn’t yet recognized the rare cancerous mutation the most formidable managerial threats, there’s In response, Usher-Mesiano and her partners founded National Union It started a fi re under us, but we made sure that the ravaging her sister’s body. After extensive lobbying little doubt Usher-Mesiano will be able to manage In conversation with Joyce Usher-Mesiano Insurance Group to handle union- proper people and automation were in place.” by the Usher family and U.S. doctors, a previously the task – and probably send bottom-line growth specifi c business. They later added That included taking time to hire only the best unavailable experimental drug was brought into soaring in the process. “As you grow, you tend to Terri McKinnon is an Assurance practice partner Monarch Intermediaries to the and the brightest her industry had to offer, while Canada. With access to that cutting-edge medication, lose that close connection with clients, but I want in the North York, Ont., offi ce of PwC. Terri company portfolio and also acquired a provides her private company clients with a wide also looking at some key innovations. At that point, Siobhan’s cancer soon slid into remission. to make sure we never do because then we’re no key competitor, Grant Jones & Stuart range of audit and business advisory services, paperless offi ces were unheard of in the document- After that initial recovery, acquaintances began different than a call centre,” she stresses. “We Insurance Brokers Inc., while rolling including succession planning, lease securitization, driven insurance sector. Undeterred, Usher-Mesiano asking the sisters for help in obtaining medical get recommendations and referrals from clients their top talent into the organization as acquisitions, divestures, fi nancing and accounting. automated virtually all of her processes and second opinions for their own loved ones. The all the time, and if that ever stops, we’ll have the fi rm prepares for greater growth in

paperwork to prepare National for future growth serial entrepreneurs saw opportunity and formed a problem.” Uf [email protected] the years ahead. Photo by Tim Fraser

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Challenges | Trust Challenges | Trust

Spirited effort The fi rst new distillery in urban Vancouver in 40 years cuts through the red tape and trailblazes a promising new path

By Neal McLennan

The challenge The strategy When they started Long Table Distillery, After a 2010 visit to craft-distilling-crazy Portland, The Tremewens had patience, patience and then regulations. But the distribution was trickier. Ore., product development consultant Charles more patience. When they started Long Table Key to the Tremewens’ business plan was to have they assumed the entire procedure would Tremewen and his wife, Rita, became convinced Distillery, they assumed the entire procedure would a modern tasting room in the distillery, located that his hometown of Vancouver needed its very take 18 months. It took three years. streetside. Patrons, Charles imagined, would belly take 18 months. It took three years. own urban distillery. The problem was that such a Perhaps the easiest to deal with was the federal up to a huge slab of redwood (the Long Table, business hadn’t existed in the city for more than 40 government, which simply wanted to inspect which gives the company its name) to sample the years, and fi nding a location in pricey Vancouver and and bond the pricey German-made still to ensure liquid wares before buying a bottle or two. But then getting permission to install a still was going to that appropriate tax was collected. The city was under B.C.’s then-laws, the Tremewens would have be tricky in the bureaucracy-heavy jurisdiction. concerned that any working still had the unlikely had to distill and bottle the spirit and send it to the The diffi culty with being the trailblazer was but theoretical potential to go boom, so Tremewen provincial warehouse, then buy it back and return it that few people at the three levels of government was confronted with a diffi cult zoning designation to the distillery, to sample and vend it 15 feet from he had to deal with had much experience in what that required rezoning applications, public where its journey started. Thankfully, the laws were The results The future he was proposing. Key throughout was building a consultations, seismic upgrades and a litany of changed before Long Table opened its doors. level of trust between Tremewen and the governing development permits. Another key strategy was getting the fifinal nal product In February 2013, Long Table Distillery opened More products will be offered, including some bodies that are designed to protect citizens from the But it was the province of British Columbia into provincial liquor stores, where competition at the foot of Vancouver’s Hornby Street, with a cask-aged spirits and some interesting seasonal potential evils of liquor consumption. that held the key to the operation: not only does is fifierce erce for shelf space. In their meeting with the view of False Creek and Granville Island. Its first offerings like limoncello liqueur. And despite the it regulate liquor production, but it also controls buyer, the Tremewens focused on the importance summer saw a lot of excitement and foot traffic and new challenges (including a number of other small liquor distribution – the former key to getting the of locally produced spirits being available in B.C., a solid book of reservations for custom tastings. The distilleries soon to open in the city), the Tremewens distillery up and running, and the latter key to being emphasized the unique attributes of their product company’s first two offerings, London Dry Gin and are confident that the continued evolution of the able to make it profi table. The production aspect and assured that they could produce the spirits in Texada Vodka strained though limestone brought province’s liquor regulations will enable them to was straightforward: show them you’re trustworthy an adequate quantity to satisfy stores requirements. over from Texada Island, part of the Northern Gulf increase profitability. “When it comes down to it, we’re by passing a background check, and prove that They left with the only answer their business plan Islands, have taken their places beside major brands just a small business like any other,” says Charles.

you’re in compliance with the relevant municipal allowed: a yes. at provincial liquor stores and are selling well. With a product that goes better with olives. Uf

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DM140797_PgRevisions_PWC_Winter_2014.indd 50 1/20/2014 10:36 AM DM140797_PgRevisions_PWC_Winter_2014.indd 51 1/20/2014 10:36 AM End game www.pwc.com/ca

She shoots, she scores Three-time Olympic gold medalist Jennifer Botterill says a positive attitude Making a difference to the toward her competitors has been a key factor in her own success success of our clients, people By Deirdre Kelly and communities

Jennifer Botterill was on the Canadian women’s achievements, you can create PwC Canada’s hockey team that beat the United States 2-0 to win some potent, positive the Leadership Team the gold medal at the 2010 Olympics in Vancouver. momentum to drive you choice (From left to right) The Harvard-educated, Winnipeg-based Olympian and your goals forward. to embrace a has since pursued a career as a public speaker and It is important to focus positive rivalry. Say Brian McLean broadcaster, and will be part of CBC’s broadcast team at on the journey, not the to yourself about your Managing Partner the upcoming Olympic Winter Games in Sochi, Russia. outcome. opponent, “I genuinely hope Consulting & Deals Botterill says she was raised believing that goals that you perform well, because Bill McFarland are attainable if you set your mind to them and work Which is better: that means I will need to perform CEO and Senior Partner hard. It’s a formula that has helped her achieve a An individual even better.” It’s an approach that winning edge. Here are more of her secrets to success. leadership generates an honest sense of drive. Tahir Ayub approach or a Managing Partner How do you handle competition? team effort? And if it ever feels too much...? Markets & Industries Competition is a natural part of athletic careers, but On our 21-member Gratitude is a powerful emotion. Tracey Riley the element of the joy of sport and the positive rivalry Olympic hockey team, During a demanding Managing Partner are what allow elite athletes to find a new level of we told ourselves that we weren’t schedule at Assurance performance. Having recently watched the U.S. Open necessarily going to be best friends. But we all Championships, the finalists in both the men’s and the realized that each of us brought unique talents and Harvard Chris Kong Managing Partner women’s tennis, in terms of their great rallies, I noticed strengths to the group. Within that perspective lay University, every Tax how the best of them cheered with their rackets when power. As a national-level athlete, I embraced that day I would try to take their opponents made a great shot. It was a reminder approach. It literally helped me achieve gold. what I called “a moment of Serge Gattesco that perhaps we need to start celebrating the small appreciation” as I walked from Managing Partner successes along the way, even in our opponents. It is What gives you your winning edge? classes across the bridge to Cities, Clients & Operations FPO how we can gain a competitive edge in everything we Instead of being jealous of the success of others, the athletic do. Of course, striving to make an Olympic team and celebrate yourself and who you are. Ask yourself: How venues. Training for the winning a gold medal included throwing myself into do you choose to feel about yourself? How do you national team, the Harvard some pretty competitive environments. But it was how choose to see strong performances and driven people? hockey team, travelling I chose to look at those situations which helped me get If you can see an opportunity in whatever is facing you, for competitions, what I could out of them. you have a chance to raise your level of performance. writing essays, exams and Do you ever feel like stretching out and What about others who might want to get in attending classes relaxing, letting someone else shoot the puck, your way, block your advancement? added up to We’re proud to announce changes to PwC Canada’s leadership team. Together, they bring proven so to speak? Competition suggests that it’s about an end result. a demanding experience and innovative thinking to help you succeed in today’s rapidly changing markets. Life isn’t always about grinding it out, about reaching But focus more on how you are performing. That can schedule. But when To learn more about our new leaders, please visit: www.pwc.com/ca the top of the corporate ladder or whatever that high create a freedom and authenticity in how we behave I took time reflect, standard might be in your world. It is about allowing and express ourselves. If people are too consumed even for a moment, yourself to feel happiness in the pursuit. The journey by comparing themselves to others, it doesn’t seem I felt thankful, and can be a sense of inspiration in itself. It sounds like productive. It’s easy to get distracted, instead of that helped keep me

a cliché, but it is true. When you celebrate your focusing on what you can control. But we can make focused. Uf

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UpFront_AdInserts_Edition3_v3.indd 4 14-01-22 2:02 PM DM140797_PgRevisions_PWC_Winter_2014.indd 52 1/20/2014 10:39 AM Get yours to go Selected online content includes: Building markets and consensus Desjardins Group CEO Monique Leroux banks Visit us online to hear more from on running a fi nancial services co-operative Canadian business leaders: with a difference. A made-in-Canada solution upfront.pwc.com Celestica CEO Craig Muhlhauser suggests the rumours that Canada’s manufacturing industry is dead are only that—rumours. The partnership paradox Canadian companies want collaboration without the sharing of risks and rewards. This will impact innovation, warns GE Canada President and CEO Elyse Allan. M2M explosion Rogers is positioned to take advantage of the growing demand for machine-to-machine transactions, says Mansell Nelson, Vice- President, Advanced Business Solutions. The virtues of virtual healthcare Dr. Ed Brown discusses a fundamental shift in the delivery of healthcare – through your PC, tablet and phone.

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