Sandra Stuart, President and CEO of HSBC Bank Canada, Wants Canadian Companies to Thrive on the World Stage

Leaders, insights and challenges to Canadian business PwC Up front

Up frontupfront.pwc.com Balancing profit and purpose and purpose profit Balancing

cover story p6 Sandra Stuart, President and CEO of HSBC Bank Canada, wants Canadian companies to thrive on the world stage

published by PwC Canada Fall 2016

Balancing profit and purpose/ Issue 8 / Fall 2016 Hubert T. Lacroix, CBC/Radio-Canada p14 / David Miller, WWF-Canada p20 / Robert B. Issenman, Leader Auto Resources LAR p25 / Bruce Archibald and Carolina Giliberti, Canadian Food Inspection Agency p30 / Daryl Wilson, Hydrogenics p36 / Ellis Jacob, Cineplex p38 Up front Fall 2016 Balancing profit and purpose

“Building trust in society and solving important problems” is the lens through which we make choices at PwC – the businesses we enter and the investments we select, the talent we hire, the community projects and causes we get involved in and the thought leadership we provide. In today’s world, businesses are becoming more aware that making money is only one criterion. We believe our work must be important to our clients and stakeholders, and to society at large, if we want to thrive over the long term. The Canadian results from our latest Global CEO Survey confirmed that we are on the right path. More than 90 per cent of Canadian CEOs think business success in the 21st century means looking beyond financial profit, and that living your values and purpose must be at the core of your strategy. Over the past few months, I’ve talked with a number of executives, and many of us are asking the same question: How do we build a broader, balanced and sustainable culture that resonates with our customers, investors, employees and society? It starts with a diverse workforce and an inclusive environment, where differences are celebrated and people are engaged and feel Losing the Signal wins the 2016 National empowered to make an impact. The conversations and stories in this issue of Business Book Award Up front offer some perspectives on these and other matters. Thank you to everyone who shared their Jacquie McNish and Sean Silcoff tell the riveting story of how BlackBerry time and insights. To our readers – enjoy, and give engineered a spectacular technology upset then lost its way, leading to us your feedback. the breakdown of one of the most successful partnerships in the history Bill McFarland of Canadian business. CEO and Senior Partner, www.nbbaward.com PwC Canada

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Up front Fall 2016 1 Up front

Publisher Tahir Ayub Up front Fall 2016 In this issue Managing Partner, Markets and Industries, PwC Canada

Editors Nick Rockel The Globe and Mail

Robert MacKay PwC Canada Contributors Bridgitte Anderson, Chris Atchison, Tahir Ayub, Sarah Barmak, Jason Boggs, Yves Bonin, Bryan Borzykowski, Brenda Bouw, Leigh Chalmers, Jim Crooks, Jeff Davidson, Chris Dulny, Karen Forward, Jennifer D. Foster, Tim Fraser, Blair Gable, Philip Haywood, Peter Holst, Marjo Johne, Christopher Korchin, Lila MacLellan, James Martin, Valérian Mazataud, Bill McFarland, Christinne Muschi, Howard Quon, Tracey Riley, Susan Smith, Josée St-Onge, Elisa Swern, Kevin Van Paassen, Lori Watson, Mel Wilson, Chris Young Blue sky Insights PwC Edge of tomorrow Bill McFarland Analysis and insight from respected professionals CEO and Senior Partner, PwC Canada The future, it seems, is upon us. A broader 4 In good company Looking beyond profit, businesses make social Kelly Nicoll definition of value is transforming 10 Talent, technology and the future of work responsibility a core value Creative Lead, Design, PwC Canada how, and why, businesses operate. To adapt to the work of tomorrow, talent leaders must Globe Edge Demographics are fundamentally champion technological skill, encourage innovation and changing consumer markets and workforce forge a new relationship with employees Teena Poirier dynamics. Advances in technology are The leaders Director, Globe Edge Sean Stanleigh leading to an explosion of data. Analytics Executives share their thoughts on championing innovation Social obligations 28 Managing Editor, Globe Edge Content Studio are fuelling innovation, and innovation is and giving organizations a strong sense of purpose In today’s peer-to-peer world, companies face growing public disrupting established industries. Society pressure to show that they make a difference. Here’s how to Simon Beck Senior Editor, Globe Edge Content Studio is demanding increased transparency leverage social media to engage consumers and build trust in 6 Sandra Stuart 25 Robert B. Issenman Lauren Heintzman and accountability. And corporate your brand responsibility is becoming core to strategy. President and CEO, President and CEO, Art Director Exciting times and, for many, uncharted HSBC Bank Canada Leader Auto Resources LAR Liz Massicotte territory. Balancing the demands of Program Manager, Globe Edge investors and customers Jennifer Reynolds 30 Bruce Archibald Challenges Isobelle Cabral while meeting the changing 12 President and CEO, and Carolina Giliberti Case studies from Canadian businesses Production Co-ordinator, The Globe and Mail expectations of employees, Women in Capital Markets President and Executive Cover photo society and government will Vice-President, Canadian 23 Doing it right Peter Holst be a challenge. Yet relevance Food Inspection Agency Mr. Lube finds the ideal buyer for the nationwide oil-change Up front magazine is designed and produced by The Globe and Mail tomorrow requires action today. Custom Content Group on behalf of PricewaterhouseCoopers LLP. 14 Hubert T. Lacroix franchise business All correspondence: In this issue of Up front, we PwC Tower Attention: Robert MacKay President and CEO, 18 York Street, Suite 2600 talk to leaders of public and 36 Daryl Wilson Strength in numbers Toronto, Ont. M5J 0B2 CBC/Radio-Canada 34 [email protected] private businesses, government President and CEO, Vancouver-based FrontFundr and other equity crowdfunding upfront.pwc.com and not-for-profits about the Hydrogenics Printing and Pre-press by DM Digital+1 platforms are a new frontier for startups and investors © 2016 PricewaterhouseCoopers LLP, an Ontario limited liability Tahir Ayub trends they’re watching and how partnership. All rights reserved. PwC refers to the Canadian member 18 Peter Mansbridge firm, and may sometimes refer to the PwC network. Each member Managing Partner, they’re focusing innovation to Chief Correspondent, firm is a separate legal entity. Please see www.pwc.com/structure for Markets and 38 Ellis Jacob further details. prepare their organizations for CBC News PwC Canada helps organizations and individuals create the value Industries, President and CEO, Cineplex they’re looking for. More than 6,500 partners and staff in offices the future. across the country are committed to delivering quality in assurance, PwC Canada End game tax, consulting and deals services. PwC Canada is a member of the I hope you find these PwC network of firms with close to 195,000 people in 157 countries. Find out more by visiting us at www.pwc.com/ca. conversations as interesting and 20 David Miller 42 Scott Tinker 44 Peer-to-peer lending pioneer Jessica Jackley urges informative as we did. President and CEO, CEO, Tinker Energy companies to make a difference to society by embracing WWF-Canada Associates causes they believe in

2 Up front Fall 2016 Up front Fall 2016 3 Creating a strong business and building a better world are not Global 40% conflicting goals – premium 42% EUROPE NORTH AMERICA they are both essential A poll of 30,000 consumers in 60 countries reveals that some parts of ingredients for long- the world are more willing to pay extra Blue sky for a product or service from a socially 63% term success. responsible brand. MIDDLE EAST 64% 63% AND AFRICA ASIA-PACIFIC LATIN William Clay Ford Jr., Global Survey on Corporate Social AMERICA Just watch us Executive Chairman, Ford Motor Co. Responsibility (Nielsen Co., 2014)

Websites and apps make it a breeze to buy goods and services. Technology is also making it easier than ever to research who you’re buying from – and We hear you Causes Responsible the impact they’re having on the environment and society. Over the next five years, CEOs think tech Eighty per cent of CEOs say they’re making changes for environmental, social for concern “All company will play a major role in transforming stakeholder and governance (ESG) reasons. When it comes to setting those strategies, investments expectations of their businesses. With that in mind, stakeholders have a bigger voice in the boardroom than ever – even if only half Where should companies direct their 51 per cent plan to significantly change how their of chief executives think ESG increases profitability. sustainability efforts? Consumers are most bosses want Researchers at Harvard Business School and London companies use technology to assess and deliver on likely to pay a premium for products that help Business School tracked 180 U.S. companies over those expectations. Who’s influencing my strategy? to support these causes: a policy on 18 years. Half of those businesses had strong environmental, social and governance (ESG) systems Global Investor Survey (PwC, 2016) Increasing access to corporate social and practices; the other half, not so much. When it clean water came to stock or accounting performance, the first 1 responsibility. group outpaced their low-sustainability peers. Ensuring environmental The positive “It takes 20 years to sustainability Evolution of $1 (U.S.) invested in the stock 2 effect is hard to market in value-weighted portfolios build a reputation and Improving access to 3 sanitation quantify, but $25 five minutes to ruin it.” 69% 67% 55% 43% Eradicating extreme the negative 20 Customers Government Industry competitors Employees poverty and hunger and clients and regulators and peers 4 Warren Buffett consequences of 15 Combating non- Canadian findings from the 19th Annual Global CEO Survey (PwC, 2016) communicable diseases 5 a disaster are 10

enormous.” 5 Not-so-risky The right way to do the right thing Global Survey on Corporate Social Responsibility business (Nielsen Co., 2014) Noreena Hertz, Economist Corporate responsibility can boost your market value, brand reputation, sales 0

and productivity, but it can’t be lip service. To get results, commit to: 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Potential investors like to see sustainability. A recent survey of cost-of-capital studies shows that 90 per 1. Concrete environmental, social, 4. Business strategy that is consistent Beyond profit cent of the time, sound environmental, social and governance (ESG) goals and aligned with corporate Low-sustainability companies governance (ESG) practices reduce the required rate 2. Buy-in from senior leadership responsibility management practices Although most CEOs still believe clients are primarily concerned with cost, High-sustainability companies of return on a company’s securities, making it a less 3. Accountability: measurable 5. Quantifiable outcomes and returns convenience and functionality, more than a quarter think their customers are seeking risky investment. performance metrics are key on investment relationships with organizations that address wider stakeholder needs. In a survey of 1,409 CEOs from 83 countries, 64 per cent say that corporate responsibility is core to The Impact of Corporate Sustainability on From the Stockholder to the Stakeholder: How Project ROI: Defining the Competitive and Financial Advantages of Corporate their business. That number is projected to climb to 70 per cent within five years. Organizational Processes and Performance Sustainability Can Drive Financial Outperformance Responsibility and Sustainability (IO Sustainability LLC and the Lewis Institute, 2015) (Robert G. Eccles, Ioannis Ioannou and George (University of Oxford and Arabesque Partners, 2014) Global Survey on Corporate Social Responsibility (Nielsen Co., 2014) 19th Annual Global CEO Survey (PwC, 2016) Serafeim, 2011)

4 Up front Fall 2016 Up front Fall 2016 5 The leaders The leaders

Everyone should be contemplating how to grow their business Taking on sustainably and beyond our borders. It’s good the world for all of us.

Sandra Stuart, President and CEO of HSBC Bank Canada, shares her thoughts on how mid-sized Canadian businesses can become global players

By Sarah Barmak

At a time of major change and uncertainty in the and Trade Agreement (CETA) with the European energy markets, Canada’s traditional dependence Union. But despite the fact that Canada has already on a resource-based export economy looks more signed dozens of free trade deals, only 10 per cent imperiled than ever. Economists have called on of Canadian companies export, Stuart says. Of this country to diversify what it sells to the world, those 10 per cent, just 550 account for 70 per cent with many pointing to industries that are ripe for of export dollars. Meanwhile, Canada’s exports are an export boom, among them health care, software dropping compared to imports: Our trade deficit and green energy. was $3.5-billion in May and reached a record A lower dollar should make Canadian-made $3.6-billion in June, according to Statistics Canada. products more attractive. But when it comes to What are the main obstacles to Canadian breaking into global markets, Sandra Stuart knows companies that should be jumping into the export Sandra Stuart that Canada’s mid-sized businesses have far to go. fray – and more important, what can they do to “Everyone talks about international trade, but what break through? Stuart knows the barriers facing President and Chief Executive we see in our numbers and research is hesitation,” middle-market companies, which represent 60 Officer, HSBC Bank Canada says the President and Chief Executive Officer of per cent of HSBC Bank Canada’s business. “There HSBC Bank Canada. are fears about going to different economies, so New free trade agreements are always positive, you have to make sure [mid-sized businesses] Stuart maintains, among them the Trans-Pacific understand where the opportunities in the Partnership (TPP) and the Comprehensive Economic economies are,” she explains. Peter Holst Peter

6 Up front Fall 2016 Up front Fall 2016 7 The leaders The leaders

insights online Embracing the fintech movement

All about HSBC Bank Canada Canadian banks are monitoring the The country’s largest international impact of the new, technology-enabled bank, Vancouver-based HSBC Bank fintech ecosystem and actively pursuing Canada serves customers from coast to coast. The firm is part of London- opportunities to play an integral part in headquartered HSBC Holdings plc, Middle-market companies represent 60 per cent of HSBC Bank Canada’s business. it. Soon many fintech-driven innovations one of the world’s biggest financial may become pivotal elements in banks’ institutions, with roughly 6,000 offices operating models, enabling them to reduce in 71 countries and territories. costs, reach underserved markets and open With almost two-thirds of its business up new products and revenue streams. coming from commercial middle- Canadian companies may worry about the risk and longer payment terms. As a result, the The World Economic Forum’s 2015-16 Global She recently visited a large factory that did market customers, HSBC Bank challenges of sourcing goods, navigating foreign company has generated goodwill, strengthened Competitiveness Index of 140 economies ranked some research to see how employees behaved on Canada concentrates much of its regulatory environments, dealing in local currencies its relationships with its Chinese customers and Canada 22nd in both innovation and business the floor. “They found too much time was spent resources on helping those companies and simply getting acclimatized abroad. The key to attracted new clients. sophistication and 18th in technological readiness. walking,” Stuart says. Realizing that a different to go global and employs sector helping those businesses get over their cold feet is Stuart laments that Mexico has supplanted The country has its share of success stories in these layout would allow workers to become more ovat stm experts to consult with clients in the n ion ve en to give them information to help them manage their Canada as America’s number one trading partner. areas. Stuart says there’s often a link between the efficient, the owner made changes that have In In t manufacturing, energy, automotive risks, contends Stuart, who took over as President Still, the North American Free Trade Agreement kinds of Canadian companies that take chances on expanded the factory’s capacity by 200 per cent iness and other industries. us e and CEO of Vancouver-based HSBC Bank Canada (NAFTA) represents $17-trillion (U.S.) in trade technological innovation and those that go abroad. and reduced costs by a third. B s President and CEO Sandra Stuart last year and also serves on the firm’s board. opportunity, and Canadian companies should be For instance, businesses that are early adopters of Although Stuart concedes that Canada can’t notes that if she could say one thing versitie al insti ni s nTec i tu The key trade regions for Canadian businesses, looking at both the U.S. and Mexico. communications technologies such as Skype and change its risk-averse business culture overnight, i h c t U F n i a o n n

i s to encourage mid-sized businesses, it China and the U.S., both have much to offer. When it comes to global competitiveness, mid- collaboration on e-documents are already better she focuses on adjusting attitudes one company at F is to be innovative and think about the lab to m ca ility ed a “China should be one of Canada’s strongest trade sized Canadian businesses would benefit from a equipped to keep overseas offices in touch. From a time. “Everyone should be contemplating how S e rk p e t next market opportunity domestically rnm S ve en o ts corridors,” Stuart says. “There is about $10-trillion stronger national focus on innovation. Although another perspective, Stuart observes, the more to grow their business sustainably and beyond our G and beyond. Even companies with no Uf export plans face competition from (U.S.) in economic opportunity there. But there are Stuart applauds the federal government’s agenda on efficient a company is, the more risk it can assume by borders,” she says. “It’s good for all of us.”

language hurdles as well as currency hurdles.” that front, she suggests that more innovation hubs selling abroad. She points to a Canadian manufacturer nt la abroad, Stuart says. “Everyone needs ale mi egu tio T x R n to be thinking about their next growth With that in mind, companies doing business in could play a role in boosting Canada’s rankings. that invested in its own 3-D printers; the company can opportunity – and what the plan is to China should consider opening a renminbi account. The good news is that the depressed Canadian now build its moulds much faster by producing them In conversation with Sandra Stuart get there.” “That helps the customer manage their foreign- dollar and a stronger U.S. economy should benefit in-house, cutting out courier and delivery time. Jason Boggs is the National Financial exchange risk,” notes Stuart. Canadian exporters. “The weak Canadian dollar Innovation doesn’t always look the way we Services Consulting Leader for PwC She gives the example of a leading Canadian allows our goods to be much more competitive in expect it to. “What’s really cool is when I go to a Canada, based in the Toronto office. distributor of building materials that set up an the U.S. than they would be otherwise and gives our company and I think, ‘This business is under threat Jason has some 20 years’ experience Canadian Banks 2016: Perspectives on the Canadian export sales business in 1998. When some Chinese customers U.S. income,” Stuart says. of disruption but they are really on top of it,’ ” working for and assisting financial banking industry (PwC, 2016) buyers expressed interest in paying for orders in On the innovation front, Canadian small- and Stuart says. “They are thinking about innovation, institutions in Asia, Europe and North Download the full report | www.pwc.com/ca/ renminbi, the company arranged to begin invoicing medium-sized businesses could invest more in efficiencies and how to grow, and they have America. canadianbanks in the currency, enabling a reduced exchange-rate developing cutting-edge, disruptive technologies. completely retooled their business.”

8 Up front Fall 2016 Up front Fall 2016 9 folioInsights | Talent Insights | Talentfolio

Moving from technology adoption to innovation

Technology-driven innovation to increase productivity and profitability puts a greater emphasis on skills such At yoga wear and running gear retailer lululemon as problem solving, intuition and creativity. It’s not athletica Inc., which uses cellulose fibre in some Engaging with a wider talent pool just about adopting technology to gather data; it’s of its fabrics, there’s an expectation that some With technological advancement comes a new set of about analyzing and interpreting information, gaining employees, especially those from the millennial skills that companies need to develop or hire insights, improving results and achieving outcomes. generation, will leave for other professional pursuits for. In forestry, more jobs now require the use of At TimberWest, for example, the search is within a few years. In fact, lululemon indirectly Talent, computer systems and data analysis. However, not ongoing for employees who can not only use the encourages it through open short- and long-term all employees have the flexibility needed to adapt to latest technology but analyze the data from it and goal-setting, both personal and professional. Those these new ways of working. drive innovative solutions. Marston says her team’s goals often include working at a different company or in another profession down the road. technology “We expect some turnover,” says Janelle Aaker, The way we work is transforming. A generation of “A talent leader has to be somebody who is People Potential Director at Vancouver-based baby boomers is set to retire, taking with them lululemon. “We’re okay with sending leaders out deep institutional knowledge accumulated over extremely adaptable, able to adjust to different into the world. As talent leaders, we have to reset many decades. Gen Xers are assuming the reins personalities and different groups of employees.” our goals and be okay with that.” and the of leadership. An up-and-coming millennial It does require a new way of thinking about talent generation, forecast to represent about half of attraction and retention. For Aaker, the focus is more the global workforce by 2020, is bringing new For example, Norbord Inc., a Toronto-based challenge, especially given the aging workforce on motivating employees to reach their potential expectations of and attitudes about work. And all manufacturer of wood products, recently in the forest industry, is to build a talent pool that than trying to pin them down on a career path at the future the while, exciting new technologies are changing implemented mobile technology to monitor remote aligns with technological advancements. company. The challenge then becomes helping new how, when and where we work, providing a operations from a central office and provide real- In the World Economic Forum’s January 2016 talent learn to work in the lululemon culture and wealth of insights and making individuals and time data. Future of Jobs survey, 66 per cent of HR officers with others to develop new ideas and fuel innovation. organizations more efficient and accountable. Nigel Banks, Senior Vice-President, Corporate list workforce planning and change management “In my experience, the key to innovation is diversity These new realities are upsetting long-standing Services at Norbord, says the changes required as a top priority. The main barriers are a lack of of talent,” Aaker says. “When we think of talent of work employer-employee relationships and forming three retraining of employees, some of whom were understanding of disruptive changes ahead, resource leaders driving an innovation strategy, it’s heavily interconnected priorities for talent leaders: reticent. “People couldn’t see the real value at first,” constraints, profitability pressures and weak geared toward bringing in diverse talent, the best To adapt to the work of tomorrow, talent leaders must Banks recalls. But once staff began to receive the data alignment between people and innovation strategy. talent and retaining that talent and developing them 1. developing and sourcing new skills to create a and use it to improve their work, they were hooked. Talent leaders can use new analytic technologies to so that they have long careers at their companies.” champion technological skill, encourage innovation and technology-enabled workforce; Banks believes talent leaders need to work across better grasp how employees are adapting to change, 2. applying skills such as problem solving, intuition generations to support this type of transition. “A managing their workload and responding to the forge a new relationship with employees The future of work and creativity to foster innovation; and talent leader has to be somebody who is extremely needs of the business. Measurements of knowledge 3. sustaining employee relationships beyond the adaptable, able to adjust to different personalities retention, the rate of retirement, turnover and other By focusing on these three priorities – technology, By Karen Forward traditional work life cycle. and different groups of employees,” he says. “They data can help provide valuable insights into how innovation and work life cycle – talent leaders can have to be able to connect with people right across employees are creating value for the business and not only stay on top of hiring trends but ahead of This dynamic environment brings challenges and the spectrum.” how the business is creating value for them. them, anticipate what work will look like tomorrow opportunities. Filling gaps in the workforce is no Talent leaders must champion a cultural shift in and adapt quickly. This is increasingly important longer enough. As they set their strategies, talent the workplace to foster much-needed innovation given today’s war for talent, which is intensifying Work, interrupted leaders are looking longer term, building out their throughout the business, says Jan Marston, Vice- thanks to the shift in attitudes among the analytic capabilities and working throughout the President, Human Resources and Corporate at The average work life cycle used to have a fairly generations in the workforce. business to become more data-driven. Workforce Vancouver-based timberland company TimberWest linear trajectory: You completed your education, got Proactive sourcing, training and communicating data is an increasingly powerful way to align Forest Corp. a job, then a promotion, maybe moved to different a with employees are critical if organizations are to employment practices with business objectives, “As talent leaders, we need to be able to job and then retired. That’s changed. Now you may better align their talent strategies with their business whether inside the human resources function or communicate to a variety of people in the workforce get an education, get a job, switch jobs after a year or needs and objectives. Analytics can help. As we move within a specific business unit. today, as well as those who are coming into the two, then switch again and again, maybe go back to toward the workforce of the future, those who get

A case in point is Canada’s forest and paper workforce,” Marston explains. “As we position our school, change careers, retire, then go back to work, this right will quickly outpace those who don’t. Uf industry, a traditional resource business that business and our value as an employer, the role then retire. It’s less of a straight path and more of a is transforming through technology-driven of a talent leader is going to become much more twisting, winding road with some switchbacks. innovation. We recently spoke to HR professionals important across the generations.” This altered sequence changes how talent leaders Expert opinion from across the supply chain – from forest view employee relationships. Instead of expecting Karen Forward is a Partner in PwC operations to manufacturing and retail – about people to stay on for decades and helping them Canada’s Toronto office, where she what it means to be a strategic talent leader and advance, talent leaders now accept that staff will leads the People and Organization how technology is influencing their work. come and go, depending on their own career goals. Practice. Karen brings 20 years’ They know that if an organization respects and experience in designing and delivering nurtures its employees, those people will go on to transformational change in global become brand ambassadors, recruiters, clients or financial services organizations. even business partners.

10 Up front Fall 2016 Up front Fall 2016 11 folioThe leaders The leadersfolio

insights online Reynolds, whose Toronto-based organization advocates for women in the financial services “Flexible work policies make it much easier to HeForShe: industry, has been trying to change that imbalance continue in a career and not force women to Accelerating global All in boardrooms and C-suite offices. There’s plenty of work left to do: Canada ranks among the bottom throw their hands up at a certain point.” momentum toward 10 of 91 nations when it comes to gender equality in the boardroom, the PIIE reports. Achieving a gender equity 50-50 split will require buy-in from both men and It’s not that men don’t want to more than that – it’s about helping things women, Reynolds notes. For their part, executives take time off, but there’s a stigma to pave a path to the executive level. must transform how they recruit talent and foster around them staying home. If men When a man’s name is put forward HeForShe is a United Nations initiative to employee growth. Fortunately, it can be done, and women can share the child- for a promotion, Reynolds has seen Reynolds says. rearing duties, women will have a situations where the C-suite applauds promote gender equality around the world more equal chance at progressing in and several people talk about how by engaging men as agents of change. This being effort recognizes that we all have a role to the workplace. “Flexible work policies great the guy is. When a woman Start with targets make it much easier to continue in a gets the nod, maybe one person play in supporting global gender equity in One way to boost the number of women on boards career and not force women to throw champions the choice. the workplace, and that the more men and and in the C-suite is by setting targets. In 2010, their hands up at a certain point,” Although sponsorship happens women actively encourage each other’s equal the Australian government launched its Gender Reynolds says. organically in an office, there success, the more we can all realize our full Equality Blueprint, which stated that within five are programs and networks that Jennifer Reynolds potential. When everyone reaches their years all publicly traded companies in the country can foster it, Reynolds explains. Avoid hiring biases President and Chief potential, we all benefit, as individuals Jennifer Reynolds of Women in should have boards comprising at least 40 per cent Executive Officer, Women Relationships should be built and as organizations. Capital Markets offers practical women or risk being delisted from the Australian Most people think they hire based on in Capital Markets between executives and talent, solutions for bringing gender Securities Exchange. merit and without any bias, but regardless of gender. That target remains a goal, but Australia is many studies prove that idea wrong. Executives There’s not much women can do themselves parity to the boardroom and the making progress. When the recommendation was promote in their own likeness, Reynolds says. to move up the ranks – working harder or “acting executive suite announced, just 8.3 per cent of directors at ASX That’s understandable, given that we tend to favour like a man” won’t cut it anymore, Reynolds 200-listed companies were female. That number people who resemble us and those we’re the most contends. Companies must adapt their culture, grew to 18.6 per cent in 2014 and to 23.3 per cent comfortable sitting with around the table. Because give the same feedback to women as to men, and By Bryan Borzykowski as of March 2016. male executives are hiring into the C-suite, they promote women so that future female leaders can Even if they aren’t binding, targets carry weight, choose the candidates most like them – other males. have role models. Reynolds observes: “A company says, ‘This is what we Reynolds doesn’t blame people for their bias – There’s a long road ahead, but Reynolds is are striving for aspirationally as a firm,’ and what gets “It’s there for everyone,” she says – but they need optimistic. Since she took the helm at WCM three measured is what gets done at the end of the day.” to be aware of it when hiring. Blind interviews years ago, more people are talking about gender that don’t reveal a candidate’s gender could equality. Meanwhile, the “comply or explain” work; Reynolds also suggests thinking hard about regime, which was introduced in 2014 by the Create a more flexible workforce When Jennifer Reynolds was a wide-eyed company fit. Is fit finding people who all think the Ontario Securities Commission and requires twentysomething working at her first job in finance, The countries with the highest gender equality are same? Or is it finding a diverse group of voices? Toronto Stock Exchange-listed companies to the vast majority of executives at her place of those with strong paternity laws – meaning they For Reynolds, it’s the latter. “Fit should be different disclose policies around female representation on employment were male. At some point, Reynolds have rules that specifically allow men to take time pieces of the puzzle fitting together,” she says. boards and in the executive suite, is a step in the figured, the gender balance would shift, and more off work to raise children. But Canadian companies right direction, Reynolds says. “We’re starting to women would occupy the C-suite. Maybe she’d shouldn’t wait until the government updates its see the right things happen to get the momentum Foster sponsorship make it into the corner office herself. legislation, argues Reynolds, who says they can here. What we really need is for everyone to get

Fast-forward about 20 years, and not much has create a more flexible work-life environment for Another reason why women get overlooked for involved.” Uf changed. Men still hold 86 per cent of executive both genders now by offering men leave after a baby promotions is that men develop relationships with positions and 93 per cent of board seats in Canada, is born and creating a culture that encourages both each other in a way that men and women don’t. In conversation with Jennifer Reynolds according to a 2016 global survey by Washington- sexes to help out at home. An employee might start chatting with a senior Leigh Chalmers is a Partner in the based think-tank the Peterson Institute for No one should be penalized for taking parental executive and find themselves invited to a round of Toronto office of PwC Canada. She has International Economics (PIIE). “I thought that leave, but when women do so it’s usually in the golf, where that conversation continues. The more a broad range of expertise in providing when I would reach the age that I am now, there 30-to-35 age range, the time when they also need to the two talk, the more likely it is that the executive audit and advisory services to the would be a lot of female CEOs,” says Reynolds, focus on climbing the corporate ladder. “The career ends up investing time in the employee. “This financial services industry. Passionate President and Chief Executive Officer of Women clock is at odds with the biological clock,” Reynolds doesn’t happen with women,” Reynolds says. about diversity and inclusion, Leigh in Capital Markets (WCM). “But these things just says. Because most men skip paternity leave, they’re Sponsorship is similar to mentorship in that it assumed the role of Chief Inclusion Are you #HeForShe? Take action now to create a gender-equal world haven’t evolved as you would have expected.” the ones making the big career moves. involves one person helping another to grow, but it’s Officer in 2015. www.heforshe.org

12 Up front Fall 2016 Up front Fall 2016 13 The leaders The leaders Broadcasting the digital revolution

CBC/Radio-Canada President and CEO Hubert T. Lacroix sees a clear path to modernization and new opportunities to inform, enlighten and entertain

By Christopher Korchin

Despite budget cuts, declining advertising revenues conventional TV offerings. Meanwhile, tech giants In corporate and a seismic shift in the communications like Apple Inc., Amazon.com Inc. and Google Inc. landscape, CBC/Radio-Canada has maintained were evolving into content providers, and private markets, we talk its relevance. Now, with a digital repositioning television and radio networks were consolidating

Valérian Mazataud Valérian about return underway and a new financial commitment from under huge telecom entities like Bell Canada and government, President and Chief Executive Officer Rogers. Job cuts at the public broadcaster deepened on investment Hubert T. Lacroix feels that the national broadcaster in the wake of a $115-million annual reduction in is ready for the future. funding announced in the 2012 federal budget. It is – ROI; in our When Lacroix left a successful legal career to estimated that 2,800 jobs have been eliminated at start his current job in January 2008, he knew CBC/Radio-Canada since 2009. environment, we there would be challenges, but they far surpassed Amid this turmoil, however, Canadians’ his expectations. “I had no idea what I was getting attachment to what Lacroix calls an “iconic brand” call it return on into,” he says. “I’ve discovered the meaning of the inspired the corporation to reinvent itself. He word resiliency since I’ve been here.” cites a recent TNS Canadian Facts Mission Metrics citizenship. Within months of his arrival, the Great survey in which “81 per cent of Canadians strongly Recession was shaking world economies, agree that it’s important to have a national public broadcasters’ ad revenues were softening, and broadcaster.” The corporation’s high recognition the federal government was looking to cut factor – from its familiar gem logo to radio and CBC/Radio-Canada funding. One small change TV programs as varied as Rick Mercer Report, The took on symbolic importance: The corporation Friendly Giant and As It Happens and, on the French relinquished the rights (later picked up by the CTV side, Découverte, Salmigondis and Tout le monde en Television Network) to the famed Hockey Night in parle – is a crucial strength. Canada theme song. In 2013, it would even lose “We understand the importance of these legacy the National Hockey League broadcast contract assets and of the great hosts and programs we have following a whopping $5.2-billion deal between had, en français and en anglais, over the years,” Rogers Communications and the NHL that Lacroix says. But he is starting to tell Canadians that Hubert T. Lacroix effectively prompted the corporation to get out of “conventional television might not be around in the professional sports. next 20 years, and that whatever widget they have President and Chief Executive In 2010, streaming service Netflix entered the in their hands is going to be the means by which we Officer, CBC/Radio-Canada Canadian market, joining a bewildering range of deliver our content.”

14 Up front Fall 2016 Up front Fall 2016 15 The leaders The leaders g es a too the news is positive, with the latest federal budget boosting CBC funding by $75-million in the first year and by $150-million in each of the following four, essentially reinstating the pre- tar/Getty Im

S austerity numbers and adding $35-million annually to further spur the digital shift. Lacroix, whose second and final term ends in oronto

T December 2017, thinks the zeitgeist has changed. “I’m lucky to have a minister that actually cares about culture and speaks about it as a motor for the rest of the economy,” he says, referring to the Connell/

c Minister of Canadian Heritage, Mélanie Joly. “For every dollar we get from government, we generate $3.50 of value for the economy and $2.50 for the All about CBC/Radio-Canada M Colin cultural industries that are connected to us.” Lacroix maintains that the corporation offers great A Crown corporation, CBC/Radio- The changes are starting to bear fruit. Growth accessed CBC’s different services, with 11 million value. Citizens of other countries pay, on average, Canada can trace its origins to the in traffic to CBC/Radio-Canada’s digital platforms using digital platforms – as a milestone. “That was $82 per person per year for public broadcasting. emergence of a revolutionary medium – radio – in the 1920s. By 1929, the – up by three million unique visits per month an indicator that the shift we were making was the The CBC, even factoring in the increased funding, Aird Commission had recommended compared to a year ago, and now sitting at 15 right one.” Lacroix expects the conventional-versus- costs each Canadian about $33 per year. “The BBC the creation of a nationally owned million visits per month, versus nine million in digital ratio to be 50-50 for the Olympic Summer costs $97 per person, and it has one time zone and broadcast system that would bolster 2014 – is “spectacular,” Lacroix notes. He cites the Games in Rio de Janeiro. one official language,” Lacroix says. “So in terms of the country’s cultural sovereignty coverage of the 2014 Olympic Winter Games in As a Crown corporation, CBC/Radio-Canada is what we give back to Canadians, we’re a pretty good in the face of Canadians’ growing Sochi, Russia – when 33 million viewers and visitors subject to government financial agendas. But there return.” He also believes the broadcaster provides tendency to set their dials to U.S. an intangible value that goes beyond dollars and radio stations. This led to the creation cents: “In corporate markets, we talk about return in 1932 of the Canadian Radio insights online on investment – ROI; in our environment, we call it Broadcasting Commission, which return on citizenship.” ultimately became CBC/Radio-Canada A world of differences CBC/Radio-Canada is under no pressure to in 1936. turn a profit; rather, it must be accountable for its Eighty years later, the corporation spending and the relevance of its product. In this pursues its mandate to “inform, respect, it has to answer not only to the federal enlighten and entertain” Canadians government but to 35 million “shareholders” with a coast-to-coast-to-coast network of radio and television stations in all across the country. But that’s an ongoing challenge 10 provinces and the Yukon, radio that Lacroix accepts. A marathon runner in his stations in the Northwest Territories downtime, he says the difference between his job and Nunavut, the information channels and a 42-kilometre course “is that there’s no finish CBC News Network and ICI RDI, line. You just start again.” digital properties including cbc.ca Lacroix says the future stability of CBC/Radio- and ici.radio-canada.ca, online music Canada will depend not only on the success of its channel CBC Radio 3 and a vast array digital shift, but perhaps also on the adoption of a of content available in French, English financing stream such as the so-called household and eight aboriginal languages. fee used in many other countries. In an industry From the introduction of colour tele- evolving at breakneck speed, though, the only given vision in 1966 to the Anik A1 satellite, is continued change. For his eventual successor, the which marked an international first broadcasting environment “will change even faster,” by bringing programming to the Far Lacroix says. Uf North in 1972, to classic series like CBC/Radio-Canada’s rich offerings in both official languages include talk show Tout le monde en parle The Beachcombers, contemporary (above) and newscast The National (opposite). Entertainment and media are everybody’s For the past 17 years, PwC’s Global French dramas such as Unité 9, the business today. New technology and the entertainment and media outlook has been flagship news programs The National resulting shifts in user behaviour are blurring a valuable and remarkably comprehensive and Le téléjournal and innovative That conviction is behind the new digital push Although that may be reason enough to embrace In conversation with Hubert T. Lacroix the lines across industries and sectors. As they guide to the evolution of these ever-expanding podcasts like Someone Knows in the corporation’s five-year plan, outlined in its a digital shift (CBC/Radio-Canada depends on Josée St-Onge is a Partner in PwC’s Something, CBC/Radio-Canada has Strategy 2020: A space for us all document. A 2014 advertising for between 20 and 30 per cent of its aim to reach, attract and engage customers industries. In a new editorial initiative, Outlook Montreal office. As Leader of the always sought to deepen its ties CBC Media Environment overview of the Canadian roughly $1.7-billion annual budget), the most more effectively, businesses in a wide range of is teaming up with strategy+business to Quebec Risk Assurance Practice, Josée with Canadians. “We’re there,” says broadcasting industry found that advertising compelling reason is that the corporation knows it sectors are seeking to build, buy and borrow broaden and deepen the conversation. provides management and boards with President and CEO Hubert T. Lacroix, revenue from the Internet (including users’ non- needs to keep up with how Canadians are accessing media capabilities. www.strategy-business.com/outlook strategic insights and services related in response to the current govern- media time spent on services such as Facebook content – namely, with a growing variety of devices. to governance, internal audit, risk ment’s desire to increase Canadian and Google, which can be measured and sold to “We’ve inverted our priorities,” Lacroix says. management, compliance, business content in the digital sphere. “That’s Global entertainment and media outlook: 2016-2020 (PwC, 2016) advertisers) has surpassed TV ad revenue from “We start with mobility, then we go Web, then process optimization and internal what matters for us.” Download the full report | www.pwc.com/ca/outlook conventional and specialty channels combined. radio, then television. This is a big transformation.” controls matters.

16 Up front Fall 2016 Up front Fall 2016 17 The leaders The leaders

In many ways, the stories we read and see in the How is social media changing what we see on media inform our opinions. Collectively, they the news? Are the millennials shaping the future also play a significant role in amplifying societal of news based on how they consume it? expectations, shaping public policy and holding We’re looking at the most informed generation businesses to account. But these stories, how they’re that’s ever walked on this planet. They have access being told and who’s telling them are changing. to more information than any of us ever had, Journalism now means finding truth and clarity than we could ever dream of. Now they’ve got to across a complex, crowded and fragmented network determine what they’re going to access, how they’re of traditional, social and digital platforms. going to access it and what they’re going to retain. I recently spoke to Peter Mansbridge, Chief What’s going to be the impact of that, and how Correspondent at CBC News, about the role and it’s going to transform the media industry, is what responsibility of journalism in today’s media. we’re all still trying to weigh and judge. I like to think that 50 years from now, people will still be Do you think what first attracted you to the reading books the way we do, but I don’t know what profession would attract aspiring journalists? they’ll be doing five years from now. I don’t know Most of our Those who make a success of it as a career still have what new technology will come along to replace the same natural instincts. They’re curious, what we think is just irreplaceable at this point. It’s audience doesn’t interested in what’s going on around them. They kind of scary. need to be told ask questions and challenge assumptions. They like to get information and share it with others. That’s What does that mean for the future of what to think. what journalism is all about. journalism? What I try to tell journalism students is that no We’re there to give Long-form writing, books in general – are they matter what the form of technology or platform the going to survive? journalism comes in, it will still depend on people them the facts and I think there’s an absolute need for long-form who can tell stories. That’s not as simple as many journalism. Young people say they get their people would think. Social media – there’s a lot of sometimes to give news from the Internet and their cellphone, but garbage out there. At the same time, there are great the majority of people still get their news from possibilities. It’s still coming to grips with itself. them opinions that television. But you’ve got to go beyond that. Long- may challenge form journalism is critically important for our Journalists challenge the way business leaders understanding of the world. It would be terrible if think. What are your views around stories that their assumptions. we lived in a world where people’s information was will help executives to consider the broader based on 140 characters. social impact of what they do? My feeling is that business leaders are no different Journalists play a major role in shaping stories than our political leaders, our academic leaders, the public sees and reads. How do you pick the our scientific leaders, our sports leaders, our news stories that we’re exposed to? union leaders. They’re all targets, and I use that Does the news shape our broadcast, or does our word loosely, for journalists to challenge. They Peter Mansbridge broadcast shape the news? You’ll have people shouldn’t be upset if journalists are challenging the Chief Correspondent, argue that quite a bit. Here’s how we approach it: assumptions they’ve made or the statements they’re The classic definition of news is pretty simple. It’s making. That’s a journalist’s job. My advice to them CBC News what’s changed, what’s different about today from is very simple, but my God, the number of times THE CANADIAN PRESS/Chris Young yesterday. It’s what’s good; it’s what’s bad. We’re I’ve seen leaders not taking this advice: Just tell trying to report what we think is important for the truth. Tell your story as best you can, but don’t people to know, that actually does impact their lives fudge it, because you’re going to lose. You’re going

in some way. It could be about their pocketbook; it to get trapped. Uf could be about their safety. Our focus is on what’s important. Then you ask, “OK, how are we going to tell these important Developing story stories in a way that people will want to see and will In conversation with Peter Mansbridge want to learn from?” The whole idea is to engage Tahir Ayub is the Managing Partner for the public. We figure most of our audience doesn’t Markets and Industries and former Leader Peter Mansbridge, Chief Correspondent with CBC News, reflects on the need to be told what to think. We’re there to give of the Private Company Services practice technological and other forces that are reshaping journalism them the facts and sometimes to give them opinions at PwC Canada. Tahir provides clients that may challenge their assumptions. with multidisciplined business advice and effectively co-ordinates specialized By Tahir Ayub resources within the PwC network.

18 Up front Fall 2016 Up front Fall 2016 19 The leaders The leaders y

ph insights online

The economy ra g Business redefined

exists within the oto h environment. A whopping 92 per cent of Canadian CEOs believe that business success in the 21st idson P

It can’t exist v a century will be defined by more than just without it. profit. A broad group of stakeholders,

Jeff D from customers to investors, employees and members of the public, is demanding change. And CEOs are listening. The reason for his optimism in the face of widespread environmental degradation? More businesses are realizing that making money and caring for the environment aren’t mutually exclusive. Rather, the two go hand in hand. “The economy exists within the environment,” Miller says. “It can’t exist without it. We have to have both. It’s not an issue of balance for me; it’s that you have to have both. You have to find things that work for both.” David Miller A big change that Miller sees is a move away President and Chief Executive from thinking of corporate social responsibility as an obligation to be a good neighbour – donating Officer, WWF-Canada to support the community and participating in recycling programs, for instance – toward the recognition that a sustainable environment is an economic necessity. WWF-Canada’s mandate includes protecting wildlife “There is a business need as well as a moral and such as humpback whales (top) and narwhals. ethical need,” he says. “The positive thing about David Miller starts the conversation with a stunning that is if you can build on the business need, you Besides joining forces with the Marine fact: Some wild animal populations tracked by the can have really quite incredible results that move Stewardship Council to help protect the world’s World Wildlife Fund (WWF) have decreased by much faster than simply a philanthropic or good- oceans, the WWF helped to create the Forest more than half over the past 40 years. neighbour kind of approach.” Stewardship Council’s certification process, which Force of “It’s an incredible statistic and very sobering,” Take seafood at Loblaw stores: If a product is not Miller says has also worked well in Canada. Abroad, says Miller, who has been President and Chief sourced sustainably, in the long run the company the WWF is collaborating with beverage giant Coca- Executive Officer of WWF-Canada since 2013. “We won’t have that product to sell. That’s the reality in Cola Co. on issues related to water. “This matters look at that and ask, ‘Who do we engage in order to many other industries, Miller notes. to them, of course, because it is a core part of their help solve these problems?’ Our approach is to bring Consumer demand is another force working to business,” Miller says. “Their goal is to replenish as together all of the different entities that are relevant align the goals of sustainability and profitability. much water as they use.” nature and try to find a solution.” The WWF educates people about what their The ability to hire the best and brightest is Orangutans are threatened by palm oil everyday choices mean for the health of the planet. another place where business interests and plantations, Miller adds. “Who do you engage? When consumers start making better choices, corporate responsibility intersect. That’s because Partly the landowners, partly people who consume companies listen. young people have a high degree of environmental David Miller, President and CEO of WWF-Canada, these products and partly the businesses that are “One of the factors that’s motivating and awareness and want to work for companies that makes the business case for environmental using palm oil.” driving business is reputational,” Miller says. share their values. sustainability Miller, who served as mayor of Toronto from “The consumer is very powerful. A company that “Sustainability is right at the top of that,” 2003 to 2010, is skilled at bringing people together wants to source products sustainably will benefit Miller says. “I think that’s a really fantastic thing, to solve problems. One example he likes to share economically if consumers are properly educated because it’s going to mean that the consciousness By Susan Smith is WWF-Canada’s work with Loblaw Cos. Ltd. on and knowledgeable.” of sustainability is at the core of every medium- sustainable seafood. It has meant engaging the He cites working with a cod fishery in southern to-large business in this country, because those supermarket chain, consumers, the fishing industry, Newfoundland and Labrador. With the help of its employers want to recruit really good employees. To distributors – all of the stakeholders. Toronto-based companies, as well as other industry stakeholders get the best, they have to be honouring these values Loblaw’s goal was to sell 100 per cent sustainable and government partners, the fishery gained in their everyday business operations. Once you seafood, and it got 94 per cent there in core sustainable certification, which has made its get that cycle going, there’s no telling the potential Canadian insights from the 19th Annual Global categories. “That’s an incredible achievement,” catch more marketable, particularly in Europe. difference it can make. That’s why we developed CEO Survey (PwC, 2016) Miller says. “We were really proud to be part of that, “There’s an economic case for them because the Living Planet @ Work program, to inspire and Download the full report and this kind of thinking is what we’re going to see consumers don’t want to eat fish that isn’t sourced empower passionate employees to drive sustainable www.pwc.com/ca/ceoagenda more and more of going forward.” sustainably,” Miller says. practices at work.”

20 Up front Fall 2016 Up front Fall 2016 21 The leaders ChallengesThe | Growthleaders

All about WWF-Canada

WWF-Canada is the country’s largest international conservation organization. With nine offices from Vancouver to St. John’s, it is committed to building a future in which nature thrives to sustain people and wildlife. From now until 2020, WWF-Canada will focus on seven approaches to demon- strate that healthy ecosystems can coexist with strong local economies: 1. Community-level, habitat-friendly renewable energy. 2. Low-impact sustainable fisheries for community prosperity. 3. Protected high-conservation-value marine and coastal areas to sustain communities and species. 4. At least one in 10 Canadians caring for nature, so communities and wildlife benefit. 5. Healthy, resilient watersheds to sustain people and species. Above: WWF-Canada works in regions such as New Brunswick’s Bay of Fundy. Below: Parent organization the WWF 6. Responsible development solu- has teamed up with the Marine Stewardship Council to help conserve global fish stocks. tions that conserve wildlife. 7. Land-use management to support Cutting-edge technologies that help companies Canada’s transition to a low- to measure greenhouse gas emissions and other carbon economy. activities that impact the environment will go WWF-Canada is working in iconic a long way toward creating transparency and regions that are both high in ecological accountability, Miller contends. riches and facing existing or pending “I’m absolutely convinced that not only can development pressures – places like the Northwest Passage, the St. we reach our climate goals while having a strong Lawrence River and estuary, the Grand economy, we can actually reach them in a way that Banks, the Bay of Fundy and the St. makes the economy better and allows us to have John River, the Salish Sea, and the better places to live,” he says. Skeena River and estuary. Reliable verification of environmental initiatives In the year ended June 30, 2015, is crucial. In addition to assuring the public that WWF-Canada raised $23-million and reporting is accurate, it helps businesses to innovate invested $15.3-million in conservation. by assessing their environmental impact in a At home, the organization is working measurable and transparent way. to protect wildlife such as whales, This is especially important today, given the fish, polar bears, turtles and caribou. ubiquity of social media: An environmental misstep Abroad, it supports efforts in Nepal to can go viral in minutes and cost a company millions When Mr. Lube Canada Limited Partnership (Mr. Mr. Lube struck a deal with Diversified Royalty grow the wild tiger population. in lost business. Lube) started looking for a buyer for the business, it Corp. (DIV), a publicly listed Vancouver firm that “It takes time and work, but I truly “From the narrow perspective of shareholders, kept its options open. purchases intellectual property and trademarks believe if you get people together there’s a real risk here if a business isn’t conducting Doing The owners, who included a mix of family interests, from privately held franchised businesses and from all of the sectors that have an itself to the highest sustainability principles,” along with George Melville and Jim Treliving, licenses them back to the franchisors in exchange impact on an issue, the vast majority Miller says. “The role of assuring the public that Co-Founders of restaurant chain Boston Pizza for an annual royalty payment. of people have goodwill and will want those principles are being adhered to, that the International Inc., were looking to monetize their “I’ve had about a 10-year history in Mr. Lube to do the right thing,” says President measurements are proper and real, and that they are investment and position Mr. Lube for future success. . . . you get connected with the management and CEO David Miller. “If you can find it right solutions and people see them, people being conducted using the best available technology The main criterion for the Richmond, B.C.- and team,” Melville says. “You get connected with the become very, very powerful advocates is essential. They won’t be credible without it.” Mississauga, Ont.-based company, which runs 170 franchisees. It’s like taking a family and giving it to for those solutions. We call it demon- Despite recent high-profile setbacks such as false Mr. Lube finds the ideal buyer quick-service oil-change franchises across Canada, somebody else. We really wanted to make sure they strating the possible.” In conversation with David Miller emissions claims by car makers, Miller believes for the nationwide oil-change was to find a buyer that would help it to expand were going to a good buyer. It was very interesting Tracey Riley is the Managing Partner more companies are seeing the light. across new and existing markets. to go through the process.” Melville credits the The World Wildlife Fund, WWF- franchise business Canada’s parent, was founded in 1961 of the Assurance Practice and former “If you look at the bigger picture, it’s a path up,” After looking at a range of potential buyers, successful outcome to strong communication with in Switzerland and now operates in Managing Partner of the Consulting and he says. “If you think back 25 years, businesses including private equity firms and strategic players, management along the way. more than 100 countries. Among the Deals Practice at PwC Canada. Working didn’t have a sense that sustainability was part of WWF’s other North American priorities out of PwC’s Toronto office, Tracey has their mandate. It didn’t mean that some weren’t are the Arctic, the Chihuahuan Desert, more than 20 years’ experience advising environmentally conscious, but I think far more today the Gulf of California, the Mesoamerican clients across all sectors in Canada, the it’s been internalized with the help of organizations

Reef and the Northern Great Plains. U.S. and the U.K. like ours. That makes progress possible.” Uf

22 Up front Fall 2016 Up front Fall 2016 23 Challenges | Growth The leaders

Finding a buyer Lessons learned

For Pamela Lee, Chief Financial Officer of Mr. Lube, Lee was warned that deal-making – from searching getting to the final deal was a long and exacting for a buyer to narrowing down options and doing due process. The company began by contacting banks diligence before striking an agreement – would be and other firms it had relationships with and asking like having a second full-time job. That was largely them to submit a proposal to support the sale. “We true, but she also found the experience rewarding. basically gave them some guidelines, and we told “You really have to go through that journey to come them what our target valuation was,” Lee says. out and appreciate it on the other end,” Lee says. “You Mr. Lube also asked each potential adviser for have to go through all those pieces, sit in all those detailed information on three key areas: ability to meetings and understand what was going on in the deliver the target valuation; buyer knowledge, access transaction to really appreciate the outcome.” Follow and relationships; and relevant experience. Choosing advisers who work well with the PwC Corporate Finance was selected management and ownership team is vital. For as the financial adviser based on its instance, by providing background on each would-be the credentials – including the successful buyer, PwC helped Mr. Lube’s management team to sale of a Mr. Lube competitor 18 better understand their motivations, Lee says. months earlier for a favourable valuation – and its demonstrated buyer The reason I’m very happy knowledge and access. leader “We knew that they understood with the sale to DIV is that our the industry very well and had good market knowledge,” Lee says of PwC. “I goals are completely aligned. Robert B. Issenman, President and CEO of think what impressed us most, though, Leader Auto Resources LAR, helps Canadian was the fact that they were very strong “If they were a company that was really on their buyers’ list. They not only interested in our fleet business, we would spend automobile dealers to drive profits by gave us a list of buyers, but they took more time talking about the fleet operations,” she harnessing their collective purchasing power Mr. Lube was looking for a buyer it many steps further. They showed us explains. “If they were a strategic company that with the company’s best interests the depth of the relationship that they was looking at complementing their footprint, then in mind, says Chief Financial Officer had with each of these buyers.” we would talk a lot about our network and where By Christopher Korchin Pamela Lee. Lee says her opinion of who might our stores were located. I think that worked really make the best buyer changed as the well in making sure that our presentations were due diligence proceeded: “It became quite apparent relevant and meaningful to the buyer. I also think that all buyers are not created equal.” She recalls we came out of that process feeling very proud of that one suitor was interested in complementing the our company and also developing a very deep level company’s current system; another wanted to see of respect for each other.” where head count and expenses could be cut, which What is Lee’s advice to other businesses working wasn’t part of Mr. Lube’s plan. on or considering a deal? With the rise of car-sharing services, electric cars “My preferences started gearing toward the 1. “Run your business as you normally run it and online shopping, and the increasing companies that I felt had our goals and our best … because you never know what’s going to happen. consolidation of independent car dealerships into interests in mind, whether it was strategic or private Things can take different turns, which is what large retail groups, the automotive dealership equity,” Lee says. happened with us.” business is in a state of flux. But for Robert B. 2. Don’t count on an unsigned deal to close. Issenman, President and Chief Executive Officer of Getting to yes “A deal isn’t a deal until it’s done,” Lee warns. Leader Auto Resources LAR Inc., it’s also a time of Before the agreement is signed, it’s business as opportunity – and the heart of the business is still After about nine months, Mr. Lube closed a deal usual. “Throughout the deal process, Mr. Lube not the car itself. with DIV, which bought a top-line royalty from only met but actually surpassed forecasts, which is a “I’m going to use a tautology,” Issenman says, the company. This agreement allowed the existing credit to the management team,” Lee says. “but the vehicle is the vehicle for making profits.” partners to monetize much of their holdings while 3. “Have fun, because this can actually be a Having led a Montreal-based dealership supplies retaining overall ownership, Lee notes. The two fun process. It doesn’t happen all the time. It’s great and services business for more than 20 years, he

parties were also on the same page when it came to to have the opportunity. Enjoy it.” Uf knows that for dealers success still begins with the growing the business. sale of a new car. But with margins so slim – dealers Lee is optimistic about the company’s future. In conversation with Pamela Lee often clear less than 1 per cent on the purchase

“One of the things that I’m very excited about, and Jim Crooks is a Corporate Finance i price of a vehicle – profits have to come from other the reason I’m very happy with the sale to DIV, is Partner and Managing Director at PwC sources within the dealership, from financing and that our goals are completely aligned,” she says. Canada, working in the Vancouver office. Robert B. Issenman administration to service, repairs and detailing. “They want growth in the system so that they can Jim has significant corporate finance LAR helps dealers to increase their margins in these President and Chief Executive continue to see higher royalty payments. We want experience, having worked on mergers key profit centres. It’s all about “good absorption,” growth in our system, and our franchisees want and acquisitions, divestitures, financings, Officer, Leader Auto Resources Issenman says. “The dealer’s fixed operations – ristinne Musristinne ch

growth in the system. So continued growth is financial due diligence, presale grooming, h LAR Inc. parts, service, body shop – all need to contribute.” C definitely on the horizon for Mr. Lube.” valuations and strategic business planning.

24 Up front Fall 2016 Up front Fall 2016 25 The leaders The leaders

The transparency of every transaction also gives dealers peace of mind, which allows them to pursue other opportunities rather than worry Dealers are by nature entrepreneurs and about internal issues. “Dealers are by nature very competitive, so they’re going to find entrepreneurs and very competitive,” says Issenman, “so they’re going to find opportunities opportunities everywhere. everywhere. If a dealer has been successful, if a dealer became a dealer, it’s probably because he was a very creative and entrepreneurial individual.” LAR mirrors this entrepreneurial nature. Issenman, a prominent lawyer “not from an automotive background” who assumed the role of LAR was founded in Quebec in 1980 by a group various levels of distribution. Their approach was, CEO in 1994, points to the innovative CarrXpert of eight car dealers who felt they could rein in ‘Let’s consolidate, even though we’re competing network, established by the Corporation des expenses by pooling their purchasing power to with one another, and buy together.’” concessionnaires d’automobiles du Québec (Quebec All about Leader Auto Resources LAR negotiate lower prices for supplies. The time- The co-op has since grown into an alliance of some Dealers Association) for its Quebec-based dealers, Headquartered in Montreal and incor- honoured system of freebies and kickbacks for 1,600 automobile dealers spread throughout Eastern which seeks to channel insured collision repairs to porated under the Canada Business parts orderers – “colour TVs, trips to Vegas,” says Canada and the northeastern U.S., and the business dealer-owned or -operated body shops. LAR is now Corporations Act, Leader Auto Issenman – effectively meant that a dealership’s model of cutting out the middleman and obtaining aggressively expanding that initiative throughout Resources functions as a co-operative employees were not always acting in its own best supplies and services at reduced rates has not only the rest of North America. of automobile dealerships. LAR lever- interests. “The idea was quite revolutionary,” he endured but flourished. By the end of 2015, LAR had Issenman is proud of partnerships with companies ages combined buying power to offer explains. “Dealers were up against all kinds of reached total sales of more than $3.2-billion since like Bell Canada. “Today, everything is about LAR is “unabashed” about the pursuit of profit, its shareholders automotive parts, forces within their dealerships. People were buying its inception, and remitted more than $304-million computers and phones and communicating, and in Issenman says: “Our role is to make money for accessories and services at reduced products for the wrong reasons – maybe there were to its member dealers in additional discounts and the dealership that means WiFi, it includes the server, the dealers. We are short on words, long on rates, along with additional discounts incentives, maybe there were other things that were dividends. Issenman says the company is akin to “a it includes having a salesman pick up a phone and dollars – that’s our job.” He sees the increasing and profit disbursements paid out not appropriate. But they also found they were Costco for dealers,” leveraging their collective buying walk off to the lot and still talk to a customer,” he sophistication of cars, and the training and three times per year. paying too much because they were buying through power to reduce costs. says. “We packaged that together with the purchasing equipment required to service them, as another The co-op was founded in 1980 by power of 1,600 dealers to buy lines, mobile phones, source of profit for dealers, with independent eight Quebec-based automobile PBX systems, all of that, and we’re able to provide garages lacking the resources to compete. dealers who wanted to gain control of their expenditures and circumvent insights online one-stop shopping with dedicated people within Bell Even the rise of telematics – popularized by who are focused on the car dealer.” the aircraft industry – may ensure that the dealer the industry’s rampant incentivization practices, whereby parts suppliers Industry 4.0 will revolutionize Success in the quickly changing automotive will be the first choice for service and repairs. would reward dealership personnel environment is going to require continued “With telematics in aircraft today, whether you’re with gifts for placing orders. Today, industrial production streamlining and an ability to adapt. Issenman flying Air Canada or Delta, they’re continuously LAR is the biggest car dealer buying says that before the financial crisis of 2008-’09, the transmitting data back to the company about how group in North America, with about The buzz around Industry 4.0 has moved from what some saw as PR hype in 2013 to automotive industry had “a lot of marginal players, the aircraft is operating,” Issenman observes. 1,600 dealer-principal members in investment and real results today. PwC survey respondents expect to significantly increase with too many nameplates, too many cars and too “The same phenomenon is coming to the Ontario, Quebec, all four Atlantic their portfolios of digital products and services; more than twice as many expect to be at many dealerships chasing too few customers.” automotive market, so that the manufacturer provinces and seven states in the an advanced level in this area by 2020. First movers have even more ambitious and far- But the bounce-back in recent years has been and the dealer will know maybe even before the northeastern U.S., planned expansions reaching plans. extraordinary. Total revenue for new-car dealers consumer that this vehicle is going to need repairs. stateside and in Western Canada, in Canada topped $100-billion for the first time in They’re going to know the parts that are required warehouses in both countries and 2015, with some 1.9 million cars and trucks sold. and they’re going to know how to do it.” some 85 employees. Thanks to online comparison shopping, average One disruptive factor in the industry may be The company offers a range of consumers may know so much about the car they’re a change in the very nature of car ownership. A finance and insurance products and interested in that a trip to the dealership might recent Los Angeles Times article reported that dense services through its LAR Finance seem unnecessary. urban markets “will see business models develop wing, and it continues to strengthen dealers’ bottom lines with initiatives But given the complexity of automobile around access to cars but not ownership.” But even like CarrXpert in the collision-repair transactions versus most types of online shopping, there, Issenman sees opportunities for dealers. As a co-operative, Leader Auto Resources LAR allows its alliance market and a strategic alliance with Issenman sees a bright future for bricks-and- “It’ll be a bit like NetJets,” he says, referring to the of car dealers to obtain supplies and services at reduced rates. TECAR International, a European car mortar dealerships. “Manufacturers have tried Berkshire Hathaway Inc.-owned company that dealership purchasing co-operative selling cars on their own. Ford tried that, and sells stakes in private aircraft. “You buy an interest with more than 13,000 members. LAR it was not a success,” he says. “A car is different in a transportation solution as opposed to buying also offers environmentally responsible – you’ve got a lot of components to it. You have a physical car.” Depending on the occasion, “you products that carry the Eco LAR financing, you have service, you have repairs might want a sports car or an off-road vehicle, so In conversation with Robert B. Issenman logo. “It’s a Canadian success story,” beyond the standard maintenance. You’ve got used people will be buying a timeshare — a solution Yves Bonin is a Partner in the Audit and says President and CEO Robert cars, trade-ins…” Even Warren Buffett has entered in a multitude of vehicles,” Issenman adds. “But Assurance Group at PwC’s Montreal B. Issenman of the company’s 36 this lucrative game: Last year, the famed investor at the end of the day, there’s going to have to be office. With more than 25 years’ years. “And there’s a great future for car dealers – the car will always formed Berkshire Hathaway Automotive, which someone who is servicing, delivering and doing experience as a trusted business adviser, be an integral part of our means of now operates a network of 81 new-car dealerships client contact, and that’s going to be the purview of Yves leads the Private Company Services Industry 4.0: Building the digital enterprise (PwC, 2016) Download the full report | www.pwc.com/industry40 transportation.” in the U.S. the dealer.” Uf Group in Quebec.

26 Up front Fall 2016 Up front Fall 2016 27 Insights | Trust Insights | Trust

Consumers no longer just use products and services; they make them part of their lives and will advocate on behalf of companies they believe in.

The public’s trust of an organization is 6. Speak peer to peer. Recognize that your increasingly key to successful engagement. audience uses many different social media platforms, According to the 2016 Edelman Trust Barometer, depending on factors such as demographics. The Social there is a huge shift in trust between the general 2015 Edelman Earned Brand Study shows that peer- population and those who are more informed to-peer channels had a six times greater impact on and better educated. The traditional pyramid of changing opinions than advertising. influence has been turned upside down: The most 7. Co-create content. Work with influencers to obligations influential group in society is no longer the elite but develop and share content creatively and credibly the other 85 per cent, who also happen to be the with key audiences where they’re already engaged. least trusting. The result is a peer-to peer, rather 8. Make video a key asset. Canada leads the In today’s peer-to-peer world, companies face growing public than top-down, communications dynamic. CEOs pack in consumption of online videos, and social pressure to show that they make a difference. Here’s how to and other leaders are being replaced by a “person platforms are upgrading their native video leverage social media to engage consumers and build trust in like me” as the most trusted sources of information. capabilities. New technology allows the creation The Trust Barometer also shows a significant of quality videos at lower cost, and video content your brand expectation on business to solve societal problems. helps to break through the clutter and tell stories The public is calling on companies to take specific that get shared. By Bridgitte Anderson actions that both increase profits and improve the 9. Create experiences that are social by design, so economic and social conditions in the communities that third parties can share with their own networks where they operate. This means not just telling and help promote your value. people you are helping society but showing it too. 10. Always listen. Help to protect your brand The shift in trust to peers and the public’s with an always-on listening approach, and make growing expectations of business provide a big sure to reply in a timely manner to those who are The explosion and fragmentation of online opportunity to engage through social media while engaging with your social channels. The public information is unprecedented. One recent study building trust. So how do companies do that? expects a response within 60 minutes. by digital marketing firm Smart Insights Ltd. showed that every 60 seconds there are 3.3 million 1. Inform and educate. Engage your consumers Consumers no longer just use products and Facebook posts, 400 hours of video uploaded to and offer transparent information so they can make services; they make them part of their lives and will YouTube and nearly 425,000 tweets. educated choices. advocate on behalf of companies they believe in. Consumers are demanding more than ever 2. Have a purpose. Show that you have value Successful organizations recognize this shift and

of their brands and are taking to social media beyond your product or service. embrace authentic, two-way engagement. Uf to engage. Yet social platforms have developed 3. Be unique. Inspire your audience by complex content-filtering algorithms that have demonstrating new and different thinking. resulted in the average piece of content reaching 4. Live with character. Be engaging, solicit input, only 9 per cent or less of their followers without and let your consumers participate in your brand. paid media amplification, according to 2015 5. Leverage your employees. They are essential data collected by communications marketing advocates. The 2016 Trust Barometer results show Expert opinion firm Edelman. that employees are more trusted than CEOs and Bridgitte Anderson is General Manager of Rather than flood channels with quantity, other executives to talk about financial earnings, Edelman Vancouver and an award-winning brands need to be more strategic with their digital business practices and the treatment of staff or former journalist who also served as Press and social media content. They must engage customers. They’re also important subject matter Secretary to former British Columbia authentically and transparently, be creative and experts who can provide different perspectives Premier Gordon Campbell. Edelman is an determine the best tactics to reach their audiences – from and engage with a wider audience than your independent communications marketing often through paid media. C-suite executives. company, part of a network of wholly owned offices in 65 cities worldwide.

28 Up front Fall 2016 Up front Fall 2016 29 The leaders The leaders

Safe and The next time you purchase meat at a local butcher, That reach extends well beyond food inspection. buy berries from your favourite supermarket or Archibald and Giliberti – the CFIA’s President and take a walk through a pristine forest, offer a tip of Executive Vice-President, respectively – oversee the cap to the team led by Dr. Bruce Archibald and a large organization of some 6,750 employees Carolina Giliberti at the Canadian Food Inspection responsible for matters as disparate as agricultural sound Agency (CFIA). policy, scientific innovation and even trade and The organization safeguards Canada’s food diplomacy. Not surprisingly, setting strategy for supply through a rigorous system of inspections an agency with such a varied workforce and a and compliance enforcement. The CFIA does that complex mandate raises hurdles at almost every Bruce Archibald and Carolina Giliberti are transforming the by working with industry and consumers, as well turn. “The fun thing about this place is that it’s very Canadian Food Inspection Agency into an outcomes-based as federal, provincial and municipal stakeholders, diverse and covers a wide range of subject matter organization for a rapidly changing world to help mitigate preventable health risks. From the and activities,” Archibald says at the CFIA’s Ottawa way that animals are slaughtered and processed to offices. “The challenge of this place is that it’s very protecting the natural environment from invasive diverse and covers a wide range of subject matter By Chris Atchison species and plant diseases, most Canadians would and activities.” be surprised to learn how much its work has an As the world economy continues to globalize impact on their lives. and Canada follows suit – particularly in the area of plant and animal imports – threats such as the spread of food-borne bacteria and crop-ravaging We have to be pests have become an increasing source of concern for the CFIA. Where production was once largely consistent and true localized, food and plant products are now sourced from countries worldwide, not all of which have to what the science top-notch food safety systems. “There’s a great opportunity from a trade point of view, but also a tells us and what our great threat,” Giliberti says. This fast-evolving reality raises the stakes for a regulations tell us senior leadership team that deals with a new food recall almost every day and, on rare occasions, we need to do, but outbreaks of diseases such as avian influenza or beyond that there’s bovine spongiform encephalopathy that threaten to shut down entire industries. Although the CFIA lots of opportunity for is a federal government agency, its challenges

b le would be familiar to senior executives at any large dialogue, debate and corporation: optimizing processes and systems to achieve key business goals in an era of rapid negotiations to get technological, economic and social change, while Blair Ga Carolina Giliberti also engaging and motivating staff who must the best results. implement that new strategic approach. Executive Vice-President, Canadian Food Inspection Agency

Bruce Archibald

President, Canadian Food Inspection Agency

30 Up front Fall 2016 Up front Fall 2016 31 The leaders The leaders

insights online Building a digital government

Citizens’ expectations are being shaped and influenced by their experiences across the spectrum, from luxury retail to technology. A global scan of leading All about the Canadian Food citizen-centric practices reveals that Inspection Agency governments in Canada can do more by The Canadian Food Inspection harnessing the right technology to build Agency (CFIA) is Canada’s largest trust and transform. science-based regulatory agency, ded- Canadian Food Inspection Agency icated to safeguarding food, animal and plant health to enhance the health The Canadian Food Inspection Agency’s duties include protecting consumers by preventing and and well-being of the nation’s people, managing food safety risks. environment and economy. The agency bases its activities on effective risk management, a commitment to But it also involved engaging in an agency-wide The other key focus is driving electronic service service and efficiency, and collabora- comparative risk assessment to ensure that new delivery. Archibald concedes that CFIA has a long tion with domestic and international rules and processes would adhere to strict safety way to go before becoming fully digitized in the way organizations that share its objectives. standards. The CFIA developed sophisticated it delivers services, but simply making the online The CFIA employs 6,750 professionals algorithms and methodologies to produce the data push has helped to energize staff and management, working across Canada in the National needed to make those comparisons and determine many of whom have long hoped to modernize their Capital Region and in four operational which practices might be extraneous, as well as those organization. The CFIA’s new electronic service areas (Atlantic, Quebec, Ontario and that needed strengthening. The CFIA will continue delivery platform – designed to help industry and Western). They develop and deliver to use those insights to modernize its inspection other stakeholders carry out tasks as simple as inspection and other services to: regime and compliance requirements. “We’re trying applying for export permits or paying bills – will • prevent and manage food safety to make sure we put the onus on the industry to have begin to roll out before the end of the year. risks; Canadian Food Inspection Agency preventative control plans and systems in place and Whether motivating staff, managing recalls • protect plant resources from pests, require these plans across all commodities, which with provincial regulators or working with foreign diseases and invasive species; isn’t the case now,” Giliberti explains. counterparts to align Canada’s food inspection The digital trends that will help • prevent and manage animal and “One of the successes for us last year was Perhaps most heartening for the two leaders programs with those in other countries, Giliberti governments get ahead: zoonotic diseases; identifying what we needed to transform,” Giliberti has been CFIA staff and management’s embrace of and Archibald both point to relationship and trust- 1. Think digital first:Adopting a digital-first • contribute to consumer protection; explains. “It was about mapping out, in a systematic their new vision. “It really seized the organization,” building as the most important aspect of their roles. mindset lies at the heart of faster and better and and simple way, the key milestones we were trying to Archibald says. “We’ve been looking for ways to “We have to be consistent and true to what achieve and when. We’ve created something called draw people together, but this particular exercise the science tells us and what our regulations tell service delivery. • contribute to market access for the Road Map. It allows us to take the key activities really galvanized the whole place.” us we need to do, but beyond that there’s lots of 2. Mobile now: Citizens want to use their Canada’s food, plants and animals. we’re working on and highlight significant milestones Archibald attributes part of that success to opportunity for dialogue, debate and negotiations mobile devices to access services on the go. With an average of 400 food recalls that we can celebrate when we achieve them.” introducing two new cross-agency themes. The first to get the best results,” Archibald says. “Everyone 3. Omni-channel: Governments can provide each year, the agency is constantly in That need for a change in strategy was driven is built around working better as a single operation in our space wants the same things. They want safe services seamlessly across channels. action, working to manage challenges largely by the renewed mandate given to the CFIA with one vision, mission and budget. Archibald and food, trade, to prevent bad things from coming into such as these and to educate con- 4. Leveraging citizen data: Governments can sumers on the risks posed by potential with the passing of the Safe Food for Canadians Act Giliberti have made it their job to manage the CFIA the country and for consumers to have confidence. use data to give citizens the right services as food hazards. in 2012. The new law consolidated and updated accordingly, breaking down silos and promoting co- For the most part, the agency has been highly they need them. numerous pieces of legislation outlining CFIA operation and collaboration along the way. The duo successful in delivering that.” Uf Part of that time is spent working 5. Tracking and transparency: Access to activities and responsibilities under one coherent has used a range of tools and practices, from improved with the CFIA’s foreign counterparts information and application status will increase to manage the import of potentially legal umbrella. The agency is currently going us, the responsibility for the proper handling of internal communications to empowering employees transparency and improve service delivery. hazardous products or keeping doors through the regulatory process; previously, CFIA animals, protection of plants and ensuring a safe to do their jobs with as much latitude as possible. Now 6. Cybersecurity: Protecting critical data and rules and regulations were inconsistent across the food supply rests in the hands of the people that the executives focus most of their time on high-level open abroad to Canadian food, plant reassuring citizens that information is secure food commodities, creating irritants for industry produce those things,” Archibald says. “Our job is to planning and setting organizational priorities. and animal products. “Many years are critical. ago, our various components were stakeholders and confusion for those who needed to create a regulatory framework that ensures a high Archibald cites his team’s management of a In conversation with Bruce Archibald 7. Efficiency is key: Operational excellence very domestic-focused,” explains CFIA comply with them. level of safety. We shouldn’t be telling them exactly recent avian flu outbreak in British Columbia as one and Carolina Giliberti and efficiency are important, supported by President Dr. Bruce Archibald. “Now With that new mandate in hand, Archibald and how to do it because innovation and technology will example of that hands-off approach in action. “We Lori Watson is a Partner in PwC’s the right technological tools. we trade with the whole world, so to Giliberti decided to take a very different approach, change all the time.” weren’t making decisions on the number of staff Consulting and Deals Practice. Lori keep a system in place to deal with shifting the CFIA from being a prescriptive Changing gears to focus on an outcomes-based working in specific areas or mapping out locations,” leads the federal public sector Finance those risks and react quickly means Building a digital government: Seven trends in regulatory body – specifying minutiae such as the strategy has meant retraining food inspectors and Archibald recalls. “We let our experts do that, Effectiveness/Enterprise Performance improving the speed and diversity of digital government (PwC, 2016) amount of acceptable standing moisture or even other front-line employees, transforming the way the and they did a phenomenal job. You need a clear, Practice and is also the PwC Lead our business. It only takes one incident Download the full report Relationship Partner for the Department of to turn everything on its head.” the size of exhaust fans in a food processing facility, CFIA analyzes challenges and opportunities, and even consistent message that people can buy into and www.pwc.com/ca/digitalgovernmenttrends for example – to one focused on outcomes. “For improving the speed at which decisions are made. have trust and faith in your staff to do their job.” National Defence.

32 Up front Fall 2016 Up front Fall 2016 33 Insights | Technology Insights | Technology

Crowdfunding websites must also register with “In Canada there is a lack of angel investors to the securities commissions in every province where serve those companies’ needs – to get that early-stage they operate and comply with reporting rules. capital to really grow and prove their concept,” says FrontFundr welcomes this level of scrutiny because Strength in Sean Burke, Chief Operating Officer of FrontFundr, it will help to sustain the equity crowdfunding model. a Vancouver-based equity crowdfunding platform “One of the great things about equity crowdfunding that as of this spring had raised about $500,000 for is that it is highly regulated,” Burke says. Although businesses such as mobile gifting platform Guusto the regulations are complex, “it shows that the Gifts Inc. and online global payment network securities regulators are fully supportive of this new numbers RentMoola Payment Solutions Inc. Crowdfunding form of raising capital,” he adds. “By putting these gives companies like these an additional opportunity rules in place, we can ensure that there is a robust Vancouver-based FrontFundr and other equity crowdfunding to access a broader pool of investors, Burke notes. system to protect the investors, while at the same platforms are a new frontier for startups and investors time helping young companies grow and succeed through early-stage financing.” Equity crowdfunding connects Sean Burke, Chief Operating Officer, FrontFundr investors of all sizes By Brenda Bouw It’s not just the little guys who are taking advantage of equity crowdfunding’s new life in Canada. One of the great “FrontFundr has designed a platform that brings in insights online angel and venture capital investors to lead a financing things about equity Entrepreneurs have more options than ever when it round,” Burke says. “Now we have the crowd, or retail What is fintech? comes to raising money for their startups, thanks investor, participating alongside venture capitalists crowdfunding is that it to a growing number of new and improved and getting the same terms on the deal.” technologies. This landscape includes financial That gives the entrepreneurs, and the retail is highly regulated. Fintech is a dynamic segment at the intersection of the financial technology, or fintech, companies that are investors, more exposure to bigger players with the services and technology sectors, where technology-focused harnessing mobile and other Web-based platforms clout to take startups to the next stage. “I think equity startups and new market entrants innovate the products and to change the way people save, borrow, invest crowdfunding has the potential to play a significant services currently provided by the traditional financial services and gather capital. A prime example is the rise of role, primarily in the earlier-stage companies, but Burke says there are several safeguards and industry. As such, fintech is gaining significant momentum and crowdfunding, whereby startups raise smaller sums also later as those companies mature and look to take mechanisms on the FrontFundr platform to protect causing disruption to the traditional value chain. Cutting-edge from a larger group, usually online. on a new pool of investors or a new pool of brand investors. “There is a difference between what they fintech companies and new market activities are redrawing the There are two main types of crowdfunding: champions,” Burke says. “That’s also where there is call a funding portal and a registered dealer funding competitive landscape, blurring the lines that define players in rewards-based platforms like Kickstarter – which an opportunity for different companies to utilize this portal,” he explains. “FrontFundr is a registered the financial services sector. let users donate cash to help launch a product or new fundraising mechanism.” dealer funding portal. Part of our due diligence is to prepay for it – and equity crowdfunding, where to make sure that we review each of the companies investors purchase a stake in the company and, that list on our platform and make sure that they Regulatory scrutiny key to equity ideally, share in its financial success. pass a certain level of due diligence screening that crowdfunding success Equity crowdfunding is gaining momentum we take quite seriously.” in Canada, thanks to recent regulatory changes Before new equity crowdfunding regulations were However, investors must do their own due in certain provinces that allow startups to raise put in place in parts of Canada, only family and diligence too. FrontFundr also performs a suitability money directly from ordinary Canadians, as well as friends of startup founders and accredited investors analysis to ensure that a particular investment from individuals and organizations deemed to be such as institutions and high-net-worth individuals aligns with an investor’s goals and objectives, Burke accredited. would typically invest in early-stage ventures. says. “That helps to protect the investors, making Equity crowdfunding is expected to fill a much- Equity crowdfunding opens the door for retail sure that they have a diversified portfolio and they needed funding gap for early-stage companies, investors to get in on the ground floor of a startup, understand the risks and rewards that are associated

and it could play an important role in encouraging but with strict guidelines for them, the companies when investing in early-stage private companies.” Uf Canadian innovation. and platforms like FrontFundr. For example, in Manitoba, New Brunswick, Nova Scotia, Ontario and Quebec, companies can raise up to $1.5-million annually, with a $2,500 ceiling In conversation with Sean Burke per deal for individual investors. Ontario also has Philip Haywood is a Deals Partner in an annual cap of $10,000 per year for all equity PwC’s Vancouver office, where he leads crowdfunding deals. In British Columbia, which has the Transaction Services Practice for separate regulations from Ontario and some other British Columbia. Philip is a Canadian provinces, companies can only raise $250,000 per Chartered Accountant and a Fellow of Global entertainment and media outlook: 2015-2019 (PwC, 2015) offering twice a year, and investors are limited to a the Institute of Chartered Accountants in Download the full report | www.pwc.com/ca/outlook maximum of $1,500 per deal. England and Wales.

34 Up front Fall 2016 Up front Fall 2016 35 The leaders The leaders

The confluence of legislative action, shifting of that clean power to be buffered to avoid waste. demand and emerging cost savings are all good news Enter Hydrogenics and its energy storage products, for Hydrogenics. “Once renewable energy technology which take the extra clean power, convert it to scales, there’s tremendous economic potential,” hydrogen and store it for use when it’s needed. Wilson says. “We’re bidding on projects worth Power And here’s the revolutionary aspect: Due to $50-million and $100-million now, where five years those buffering requirements, breakthroughs in ago we weren’t doing so. As we move through this energy storage may be the tipping point needed stage of scaling, our costs will decrease by another 50 to boost the viability of large-scale renewable per cent and that will catalyze more applications that energy across national power grids. As technology become cost-effective for our solutions. continues to advance and progressive regulatory player policies transform how we produce and use power, renewable energy technologies and the Daryl Wilson organizations that develop them have become far more appealing both to industry partners Once renewable President and Chief Executive

As the world moves toward renewable energy, and investors. Wilson and his counterparts in the Officer, Hydrogenics Corp. raser

energy technology m F Hydrogenics President and CEO Daryl Wilson sees big renewable energy industry are helping to lead i T opportunities for hydrogen power and energy storage power and utility market disruption; they’re now scales, there’s seeing growth accelerate thanks to market forces and increasing demand, and becoming less reliant tremendous economic All about Hydrogenics on government subsidies to survive. By Chris Atchison Hydrogenics (TSX: HYG; NASDAQ: Still, government intervention has been a catalyst potential. HYGS) is a world leader in engi- for the industry’s growth to date. Nations such neering and building the technologies as Germany have led the renewable charge with required to enable the acceleration of If you’ve ever wondered what it’s like to be on the surplus electricity into hydrogen with the aim of sweeping policies that favour technology like wind, a global power shift. Headquartered forefront of an energy revolution, ask Daryl Wilson. reducing waste, improving storage and facilitating hydrogen and solar over gas, coal and other legacy in Mississauga, Ont., the company He can provide a first-hand perspective. easier transport. According to Wilson, this is just power sources. “Germany has crossed the 30 per “One of the most important things in Canada provides hydrogen generation, energy Wilson is President and Chief Executive Officer the beginning. “In some areas, such as wind and cent renewable energy penetration mark,” Wilson right now is to discover the impediments to scaling storage and hydrogen power modules to of Hydrogenics Corp., a global leader in designing, solar technology, a mass inflection has already says of that country’s transition from centralized renewable alternatives,” Wilson adds. “Some of its customers and partners around the manufacturing and installing commercial hydrogen happened,” he explains. “The amount of wind to distributed power generation. “They’ve done those have to do with government policy; others world. Hydrogenics has manufacturing systems that produce and store energy without any energy being deployed around the world has gone the most thinking about technology alternatives have to do with the hard work of innovation, which sites in Germany, Belgium and Canada greenhouse gas or carbon emissions. Since 1995 up exponentially over the last 10 years.” for large-scale energy storage, and they’ve strongly we’ve been focusing on for more than 20 years. and service centres in Russia, China, India, Europe, the U.S. and Canada. the publicly traded company has been developing This shift presents a vast opportunity for a firm on embraced hydrogen as a key part of the package.” We’ve driven out more than 90 percent of the cost a range of advanced renewable energy products, the cutting edge of energy storage and conversion In Canada, both Ottawa and the provinces are of making hydrogen fuel cells over the last 10 years, including hydrogen fuel cells for electric vehicles like Mississauga, Ont.-based Hydrogenics. That’s trying to spur a similar transformation with extensive and all of that’s been purely through innovation and honesty. “What we have done is communicate very operation – Hydrogenics turned its sights to the and stationary power applications, hydrogen because renewable power fluctuates dramatically – climate change action plans that have introduced cap- simplification of the product.” forthrightly the opportunities and risks,” Wilson Canadian market in 2012. At that point, Wilson generators for industrial processes and fuelling think electricity produced by wind turbines or solar and-trade and carbon tax regimes, or will soon do so. Developing completely new technologies over says. “People who get involved with us understand and his team flagged energy distribution firm stations as well as critical power, and pioneering panels, for example – meaning it can be abundant Along with a range of new subsidies and regulations, decades requires not only patience but also the that there is huge upside possibility, but it takes Enbridge Inc. as a potential partner due to its power-to-gas (P2G) technology for energy storage. one day and virtually non-existent the next. The these plans are intended to accelerate the move to management acumen to maintain profitability – or time, and there can be ups and downs.” history of embracing innovation and making major P2G technology uses electrolysis to convert result is a localized swing in energy that requires all renewable energy across their own jurisdictions. at least minimize losses in a company’s early stages. One way to allay investor anxiety and manage investments in new technology. With the founding of Wilson was the person entrusted to achieve that volatility has been to diversify Hydrogenics’ its Pathfinders Group in 1999, for example, Calgary- lofty goal when he was named President and CEO in product offerings and customer base within the based Enbridge created an arm’s-length organization insights online 2006. Trained in lean production by Toyota Motor two standardized core product applications. That’s dedicated to finding and developing new technology Disruption brings customer relevance to the foreground Corp. earlier in his career, the tech industry veteran meant developing a range of renewable energy with commercial potential – exactly the kind of boost has maintained a focus on achieving peak resource solutions for everything from public transportation that an upstart hydrogen energy company might for utility companies efficiency, partly by introducing lean principles to manufacturers – the firm recently announced a need. Enbridge was interested and soon partnered Hydrogenics’ manufacturing efforts. $13-million hydrogen fuel cell sale for buses in with Hydrogenics on its first Ontario P2G facility, Case in point: To optimize costs, Wilson and his China – and continuous power generation projects New technological possibilities have the potential to transform the way people think about, produce and use which is slated to start running early in 2017. team standardized and simplified product platforms in South Korea, to P2G plants in Europe and North Hydrogenics’ experience offers lessons for other power. Developments such as self-generation and battery storage are disruptive whether or not competition across the company’s many applications to just America and nuclear waste-water treatment plants bottom line-focused tech leaders on the importance among utilities is a feature of the market. PwC anticipates that a step-change will occur in at least some of two: fuel cells and electrolyzers. Hydrogenics now in Japan. “The more applications we can find for our of finding customers with a strong bias for the key disruptive technologies within the next decade: grid parity of distributed-solar generation (already maintains the lowest break-even level in the industry, two standardized platforms, the better off we’ll be innovation and an early adopter mentality. “In some reached in some jurisdictions), lower-cost mass and micro-scale storage solutions, vibrant and secure micro- and Wilson predicts profitability in the near future as in having multiple ways to win,” Wilson says. “That ways, we’re selective about our customers,” Wilson grids, attractive electric vehicle options and ubiquitous beyond-the-meter devices. annual revenue edges nearer to the $60-million mark. multiplicity of applications means we have a good notes. “It takes a lot of patience and hard work to For utility companies, this combination of energy transformation and technological innovation poses Controlling costs and optimizing processes is shot at turning out a good overall return.” do things differently. Not every major customer or far-reaching challenges. As they navigate a much more dynamic and complex energy ecosystem, utilities complex enough, but Wilson has faced another Just as important as finding the right investors partner is wired to take these sorts of things on – will need a clear strategy for developing new products and services and delivering the enhanced customer task that’s perhaps even more challenging: finding is partnering with customers who are willing and they need patience to invest in these technologies the kind of investors willing to fund a research and able to invest in new technology, then stand by relationships to match. over a protracted period of time and then enjoy the development process that has taken decades to bear as products are moved through the development benefit of seeing opportunities scale. They have to fruit. His strategy for attracting those individuals pipeline. After gaining traction with its P2G solution have the stomach to go through all the challenges Customer engagement in an era of energy transformation (PwC, 2016) | For more, visit | www.pwc.com/utilities or organizations is simple transparency and in Germany – where it has a dozen facilities in that one faces in pioneering.” Uf

36 Up front Fall 2016 Up front Fall 2016 37 The leaders The leaders

We’re always paranoid, thinking about the next event that needs to happen. There’s so much Seeing the disruption taking place. It’s not only in our business; it’s all businesses. big picture

In the digital era, Cineplex President and CEO Ellis Jacob has kept his company ahead of the curve by diversifying the business and embracing change

By Sarah Barmak

It may be the age of the small screen – Netflix, HBO digital media through a string of acquisitions and and Apple TV – but the big screen isn’t going away new ventures. anytime soon. That’s no surprise to Ellis Jacob, Seeing opportunities where fellow legacy President and Chief Executive Officer of Cineplex media firms might see threats, Cineplex has built Inc., whose goal is to ensure that his movie theatre relationships with other content and technology chain outdisrupts the disruptors. partners over the past five years that have allowed “If I’d listened to all my friends 29 years ago when it to embrace change, whether that means virtual I started, I wouldn’t be here,” Jacob says. “They all reality or watching movies on a tablet. told me I was crazy and the business was going to be “We’re always paranoid, thinking about the next bought in two years.” event that needs to happen,” Jacob says. “There’s Instead, box-office hits like Star Wars: The Force so much disruption taking place. It’s not only in Awakens helped propel publicly traded Cineplex our business; it’s all businesses. If you don’t stay to its best year ever in 2015, with revenue of relevant, you’re not going to be there long-term.” Ellis Jacob $1.37-billion, up 11 per cent from 2014. Theatre Jacob, who became President and CEO in 2003, President and Chief Executive attendance hit an all-time high of some 77 million has moved the company forward by fostering a Officer, Cineplex last year, an increase of 4.6 per cent. One million culture of innovation and open communication – more people joined the SCENE loyalty program that leadership that saw Canadian Business magazine Cineplex runs with Scotiabank. name him Canada’s Most Innovative CEO in 2013. Movies are just one part of the Cineplex empire. “Cineplex and our company are a family,” he says. The Toronto-based company is one of the country’s “One of the things I pride myself on is the longevity largest entertainment conglomerates, with 1,666 of our executives. We wouldn’t have been able to screens in 163 theatres. But with Jacob at the do the things we’ve done, both from an acquisition raser helm, Cineplex has also broadened its horizons to perspective and a growth perspective, if we didn’t m F i

T amusement gaming, live entertainment, dining and have that interconnectivity.”

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amusement, and gaming and leisure – are growing in a big way. In the realm of media, people may not realize that when they walk into a McDonald’s, a Tim Hortons or a Royal Bank of Canada branch, the digital signs they see are from Cineplex Digital Media, one of the largest Canadian providers of such displays. Gaming and leisure – including competitive video gaming, or e-sports – will play a central role in the company’s future. The Rec Room, a series of upscale casual dining and interactive entertainment complexes, opened its first location in Edmonton in September. Cineplex plans to build a Toronto venue across from Rogers Centre. These destinations will allow the more than 7.5 million SCENE members to earn points while they eat, play games and take in live music. “It’s basically taking our skills and our infrastructure and maximizing the value from what we’ve created with our loyalty program and our media assets,” Jacob says. By acquiring the assets of WorldGaming in 2015, As part of its push into gaming and leisure, Cineplex has embraced competitive video gaming, or e-sports. Cineplex has moved into the burgeoning e-sports All about Cineplex space, which is less developed in North America Cineplex is a Canadian leader in than in Asia. In March, the two companies held entertainment, media and amusement That culture of communication extends far and talk, and provide a perspective or an idea. It is a was there in 2005, when Cineplex-Galaxy bought their first Canadian championships at Toronto’s gaming. The Toronto-based company beyond the executive team, says Pat Marshall, Vice- culture that we actively try to create.” Famous Players – a deal that helped it to secure the Scotiabank Theatre, featuring Call of Duty: Black operates 163 theatres nationwide President, Communications and Investor Relations. An instinct for innovative moves was evident lion’s share of Canada’s movie theatre market. Ops 3. “Sitting there as an older guest, it’s a whole under several brands, including “There isn’t the formality that exists where you in Jacob’s role in the 1999 creation of theatre At a time when audiences have unprecedented other activity,” Jacob says. “Seeing a video game on Cineplex Cinemas, Cineplex Odeon, would never go up and speak to Ellis,” she observes. chain Galaxy Entertainment Inc., and in Galaxy’s power to choose when and what they watch, Cineplex a 60-foot screen, that’s impactful. The amount of Galaxy Cinemas, SilverCity Cinemas “There is no fear that can be in larger organizations. 2003 merger with Cineplex Odeon Corp., which has given them more reasons to go to the cinema. money people are playing and winning in different and Scotiabank Theatres. Cineplex I think that it means people are prepared to walk up put Jacob in charge of a new public company. It “It’s a lot different than staying home and watching parts of the world is incredible.” also owns or has an interest in a a movie on a 100-inch TV, which most people don’t To spur innovation beyond the C-suite, Cineplex variety of other businesses. Among these ventures: Cineplex Starburst even have today, compared with a 60-foot screen has baked this willingness to try new things into insights online Inc., a top distributor and operator of with Dolby Atmos sound, which you can’t replicate at its corporate culture, letting employees know that arcade games; leading digital signage home,” Jacob says. “The analogy is, if you have food anyone can come up with the next big idea. “I’d The player experience: understanding provider Cineplex Digital Media; in your refrigerator, do you stop going out to eat?” rather you make a decision and make a mistake gourmet popcorn brand Poptopia; and Cineplex Odeon is just one theatre brand operated by Cineplex, the players, understanding the game Movie theatres have come a long way since than procrastinate,” Jacob explains. “It’s really all SCENE, a partnership with Scotiabank which has 1,666 screens across the country. digital replaced film. Today, customers can choose about being entrepreneurial as an organization, whose 7.5 million members make it from a dizzying array of viewing options. Close to even though we’ve grown as much as we have. Canada’s most successful entertain- The gaming industry is in the midst of a major upheaval. New technologies, real-time 40 per cent of Cineplex’s box office revenue comes We’ve introduced something called Transformation ment loyalty program. communications and social networking have created a dynamic environment where players from premium tickets, Jacob notes, whether it be Cineplex, where we get ideas from everybody, Cineplex’s audience will also continue to evolve. President and CEO Ellis Jacob has a are more connected than ever. 3-D, D-BOX, UltraAVX, VIP, IMAX or soon-to-open including the people right on the theatre floor in the Jacob says the market for films in languages long history with what is now Cineplex. 4DX, the brand-new immersive cinema technology. front lines.” other than English – such as Hindi, Filipino and In 1999, Jacob left movie chain Through a partnership with the world’s first 4DX Concepts such as UltraAVX auditoriums and Mandarin – is growing at an annual clip of 15 to 20 Cineplex Odeon Corp. to co-found provider, South Korea’s CJ 4DPLEX Co., Ltd., this lounge seating emerged from the Transformation per cent or more. Galaxy Entertainment, which served Today's player relies increasingly From real-time gaming to the use on more points of contact. Single- experience will premiere at Toronto’s Cineplex process. Those ideas are also a result of hiring In the end, the appetite for change will keep mid-sized theatre markets across the of digital currencies — innovative mode offerings aren’t enough — country. Four years later, with Cineplex technologies are opportunities for you need to provide immersive Cinemas Yonge-Dundas and VIP theatres this fall. To people who get as excited about the movies as he people flocking to theatres, he asserts: “Where business. Strategic use of such experiences. coming out of bankruptcy protection, tools will be key to future gaming make the cinematic illusion even more lifelike, 4DX does, Jacob says. “If someone comes to an interview else can you get an experience that’s a $100- to the two businesses merged to create industry success. features motion chairs and environmental sensations with a PhD and one doesn’t, go with the one who $200-million creation for the price of parking your Cross-industry alliances the publicly traded Cineplex-Galaxy Uf offering seamless such as wind, mist, bubbles and even scent. is culturally a fit and is passionate. You can always car?” Income Fund. In 2005, led by Jacob, experiences for players may Jacob has taken major changes in the industry teach someone skills; you can’t teach them passion.” be critical. When it comes the combined company bought more to the social marketing, the as cues for innovation and diversification. As Looking ahead, Jacob remains confident in than 80 Famous Players theatres from power of an industry could trump individual efforts. people consume films at home more and more, movies’ enduring ability to inspire people to enjoy U.S.-based Viacom Inc. Cineplex-

Businesses need to understand Cineplex is the only theatre chain anywhere to offer entertainment together. The Cineplex experience In conversation with Ellis Jacob Galaxy rebranded itself as Cineplex who the customers are and how SuperTicket, which lets customers watch a movie will evolve over the next five years, he pledges. Chris Dulny is a Partner in the Audit Entertainment in 2006. The company to make them front and centre Evolving threats can ruin reputations in real time — even when they aren’t in the — affecting financials, operational integrity and at the cinema and also buy it and download it on “There are going to be movies with faster frame and Assurance Practice of PwC, became a coast-to-coast business in same room. brand. The right governance and security 2013, when it acquired 24 theatres in structures will make all the difference. multiple devices. “When you think of movies, we rates, 4K [ultra-high-resolution] movies,” Jacob working in the Toronto office, and the Atlantic provinces from Halifax- want you to think about Cineplex,” Jacob says. says. “There’s going to be the environment where National Leader of the firm’s Technology based Empire Theatres Ltd. In fact, film, entertainment and content, the we put 4DX. You’re going to have screens with Practice. Chris works exclusively with Changing dynamics: Challenges and opportunities in the gaming industry (PwC, 2016) For more visit | www.pwc.com/ca/gaming company’s traditional business, has become just 270-degree viewing that we just saw demos of in technology, communications, retail and one of three pillars. The other two – media and Las Vegas, which were absolutely awesome.” consumer clients.

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But there’s another side to this story, explains geologist and energy industry veteran Dr. Scott Tinker, Chief Executive Officer of Tinker Energy Tinker points to key developments in recent years Discussions around moving global energy Associates LLC in Austin, Texas. As emerging that have shaped the current energy landscape, production and use toward low-carbon sources can’t countries ramp up energy use to support including the emergence of shale gas as a leading ignore these facts, Tinker warns. “It’s very hard demographic and economic growth, many source of natural gas. Thanks to advanced and to have a global conversation about … the energy developed nations in North America, Europe more cost-effective drilling technologies, shale now mix without thinking about what the world looks and Asia are seeing declines in per capita energy accounts for 60 per cent of natural gas production like and where the growing population and future Fuelling consumption. Several factors are influencing the in the U.S. Meanwhile, new smart technologies are demand centres are going to be, which is right there latter trend, including increased desire for low- or enabling everything from more efficient ride sharing in Southeast Asia as well as Africa,” he says. zero-carbon power as well as commitments made to driverless transport. Having this global conversation is an at last year’s United Nations Climate Change imperative, Tinker adds. Industry, Conference. governments, environmentalists tomorrow One thing is certain: Despite a thirst for energy It’s very hard to have a global and academics need to come in developing countries, a gradual shift toward together to find a solution in the Scott Tinker, Chief Executive Officer, Tinker Energy Energy geologist Scott Tinker calls for an orderly and renewables is underway. But how quickly and conversation about the energy “radical middle,” he contends. Associates LLC dramatically will this change happen? Tinker believes cities have a vital gradual shift to alternative energy, with cities playing a mix without thinking about role to play in the global energy central role transition. Citing high levels of of people, he says. That’s why it’s crucial to ensure A matter of time what the world looks like and urbanization and accelerating that the global energy transition makes economic, “Energy transitions take time,” says Tinker, who is migration to cities, the United environmental and societal sense across the planet. By Marjo Johne also Director of the Bureau of Economic Geology in where the growing population Nations projects that about 66 per Energy stakeholders need to boost investment in the Jackson School of Geosciences at the University and future demand centres cent of the world’s population will technologies that will advance efficient energy use, of Texas at Austin. “There are reasons for that. live in metropolitan areas by 2050. Tinker maintains. These efforts include technology Whether it’s pipelines, wires, trucks or trains, that are going to be. “In terms of efficiency of energy to capture and condense energy from low-energy Driven by emerging economies and rising infrastructure is there for a long time. Cars are on use, cities are very important,” sources; more affordable, reliable and scalable populations, global demand for energy keeps the road for 20 years or more – you may transition to Tinker says. “They’re so dense. You storage systems for renewables; and data analytics growing at a rapid clip. By 2040, the world will a plug-in hybrid, but somebody buys your gasoline Another significant change in the past decade can do things in the cities where you don’t have tools to help inform intelligent decisions on energy need some 30 per cent more energy than it did vehicle, and it stays on the road a long time.” is the move in many parts of the world from to get in a car, and you don’t have to travel long generation and consumption. in 2013, with electricity and transportation fuel This gradual shift is mostly a good thing, Tinker centralized to distributed energy generation, with distances.” There also needs to be a cultural shift toward use jumping an estimated 70 per cent and 50 per argues. “It’s good not to have radical changes in a variety of grid-connected devices and sites that Cities with well-planned mass transit systems a lower-consumption economy, Tinker says. cent, respectively, according to the International that structure, to have the transitions be more produce or store energy, usually from renewable are already ahead of the game, Tinker notes. The Governments, industry and communities must Energy Agency and the U.S. Energy Information patterned and predictable, so they can be stable, sources. This is largely the result of a greater same goes for municipalities that use Internet-based identify the major forces that can create a more Administration. secure and reliable,” he says. willingness among energy sector stakeholders to technologies – such as those that make ride sharing energy-efficient economy. invest in innovative technologies and alternative easier or collect data to track how people travel in For the energy sector, the way forward is a fuel sources such as wind, solar and geothermal. the city – to help whittle down the number of cars gradual move to low-carbon sources. With so much insights online Renewables provided 13.5 per cent of the world’s on the road. at stake, getting it right is crucial, Tinker stresses. “It Conscious uncoupling? total primary energy supply in 2013, according Still, transitioning away from gasoline-powered takes time,” he says. “I think there are people that to the Paris-based International Energy Agency, cars won’t be easy even for city dwellers, Tinker wish it would go quicker. I understand, but we’ve with biofuels, wood and other waste, and hydro predicts. Until electric cars are designed with larger- got to be realistic about how quickly we can move Without the rapid decoupling contributing the bulk of that power. capacity batteries capable of fueling a long-distance in that direction so we don’t end up with something road trip, many drivers will want to hang on to their that doesn’t work.” Uf of gross domestic product and gasoline and diesel vehicles, he says. emissions, climate change will Finding the radical middle present widespread threats to Although these numbers represent a welcome An energy transition that works for business and society. The current improvement, 85 per cent of global base energy everyone target set by governments under still comes from oil, gas and coal, Tinker notes. In In conversation with Scott Tinker the United Nations Framework Southeast Asia (including India and China), coal Most North Americans take energy use and Mel Wilson is a Partner in PwC’s Calgary Convention on Climate Change comprises 50 per cent of total energy use. “Over availability for granted. But as Tinker points out, 1.3 office. As Leader of the firm’s national is to limit the global average half the people in the world live there today – 3.5 billion people in other parts of the world have no Sustainable Business Solutions Practice, temperature increase to 2 C. To billion,” Tinker says of the region. “Half of the access to electricity, and many of them live in abject Mel works with clients across multiple prevent exceeding this limit, the world’s people get half of their energy from coal poverty. Delivering energy to these underpowered industries and countries on environmental, world economy must cut its carbon today. And population and demand continue to regions can kick-start and drive economic growth health and safety, climate change and intensity by 6.3 per cent a year increase in this region.” – and make a big difference in the lives of billions corporate responsibility projects. until 2100.

Conscious uncoupling? Low Carbon Economy Index 2015 (PwC, 2015) | For more visit | http://www.pwc.co.uk/lowcarboneconomy

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employee policies? What would it look like to have a smaller footprint?” You can go anywhere with it. But the closer the changes are to the heart of what the company does, and the more they can stay tied to those values, the better. For example, there are thousands A legacy of of companies whose founders, from the perspective of being entrepreneurs themselves, want to support other entrepreneurs and choose to do so through Kiva.

What about executives who say that making money really is their core mission? remarkable I’d say, “Let’s put that on the table and talk about it. How does that feel?” I would bring stats that show how millennials want a job where they are contributing something. They want meaning. If I’m talking to a leadership team that’s only about money, I can tell them that is a legacy that will not survive. leadership What are some common misconceptions about corporate social efforts? One misconception is that it has to be expensive and will affect the bottom line in a serious way, but there’s a ton of stuff that doesn’t require that. Social light Another misconception is that if you’re already leading and turning a profit, you don’t need to Peer-to-peer lending pioneer Jessica Jackley urges worry about this. The truth is, other people are watching you, and they’re going to be able to do companies to make a difference to society by embracing the same thing, do it better, and do it in a way causes they believe in that brings more meaning and value to customers, employees and society. I hope that there’s a healthy sense of fear or urgency with companies, and that By Lila MacLellan they realize this is not going away.

Where should social entrepreneurship go from here? Jessica Jackley has devoted her life to making the question is, is it positive or negative or neutral? Is The themes that are becoming so important to me 2016 Recipient of Canada’s world a better place. Jackley co-founded Kiva, the it something you’re taking responsibility for? How are frequency and commitment. I think when CFO of the Year™ Award first peer-to-peer microlending platform, in 2005. are you treating everyone who comes in contact people are engaged over time, that’s when the real Gord Nelson Kiva started out by matching seven low-income with what you do anywhere along the supply chain? magic happens. That’s when people change what Chief Financial Ofﬁ cer small-business owners in Uganda with American Every company needs to face these questions. At the they think about cause X, and when it becomes part Cineplex Inc. investors. Since then, the San Francisco-based same time, there are issues that cannot be solved of their consciousness. platform has helped to extend some $700-million through social entrepreneurship. I’ve worked with companies who say they value (U.S.) in loans, some as small as $25, to the environment. I ask, “How does that come thousands of people in more than 200 countries. How would you respond to a corporate leader through?” They say, “Every year, we give all of our Jackley, who also co-founded and served as who says, “We want to launch a social project employees a day off to go plant trees!” Ideally, they Chief Executive Officer of crowdfunding site that’s visible to our customers and stakeholders. would infuse more of what they do day-to-day with ProFounder, is now an independent consultant Where do we start?” that value of wanting to protect the environment. and a lecturer at the Marshall School of Business I’d ask why it’s important to be visible. If someone at the University of Southern California. In says they need something for a marketing How have advances in technology and data her first book, last year’s Clay Water Brick, she campaign, I’m not down with that, and people can gathering changed things for companies that recounts her experiences launching Kiva and see through that. It’s better to start doing the good pursue social initiatives? learning from resourceful entrepreneurs who you really care about and then figure out a way to More info, more data, more stories – whether of made the most out of the little they had. tell people about it. other people’s journeys doing projects or pursuing That attitude, so necessary in business, should Next I would challenge those companies to think careers in social entrepreneurship – mean more drive corporate social initiatives, Jackley contends. back to their original stories, their founding stories possibilities for all of us. Uf PRESENTED BY SPONSORED BY and values. What is this organization really all about? Is the question of social good relevant to Why do the people here come to work every day? Then For more about Jessica Jackley’s work, visit every company? you can ask questions like, “What would it look like to jessicajackley.com and follow her on Twitter Well, every company has a social impact. The serve more people? Is that a change in pricing? New @jessicajackley.

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