When billionaire investor Michael Lee-Chin was applying for his first finance job, he had to fill out a psychological profile. Part 1, he recalls, was a series of questions reflecting his view of himself; Part 2, what others thought of him. It seemed perfectly natural to Lee-Chin that the two parts should be identical. His would-be employers disagreed, and he failed the test.
It’s a measure of Lee-Chin’s self-confidence that he got the job anyway, and went on to build fund company AIC into a multi-billion-dollar success. Its subsequent decline and ignominious sale made an impression on Lee-Chin, no question. But this fall, he came back swinging, launching a new fund company, Portland Holdings. He’s as confident today as he was when he filled out that survey, and just as unwilling to take no for an answer. He learned from his mistakes, his core buy-and-hold principles were only strengthened, and he wants another kick at the can.
What makes Lee-Chin different from other entrepreneurs who stumble and choose to retreat instead of retrench? I personally wonder if it’s his status as a first-generation Canadian. “New” Canadians like Lee-Chin may in fact be the only thing standing between us and an even more radical decline in fortune, because it seems left to our combined devices, Canadians will steer our collective economic boat slowly, steadily—and yes, politely—right into the weeds.
Canada’s dismal productivity—a measurement of the amount of value created per hour of work—doesn’t seem to have a galvanizing effect on us. Partly that’s because productivity is a creeping crisis: the harm isn’t felt today or tomorrow, but a generation or two down the line. If we don’t change course, it’s all of our kids who will suffer, or certainly their kids, because we are eroding our nation’s wealth.
So what’s the problem? It isn’t that we aren’t entrepreneurial. In fact, according to a recent study by Deloitte, we rank impressively high when it comes to the creation of new businesses. Canadian firms in operation for fewer than five years are just as productive, or even more so, than startups in the U.S., Sweden or Israel. The problem is what happens when those companies hit mid-size. Suddenly their relative productivity plummets. Deloitte compares it to a bunch of gazelles turning into water buffalo.
The researchers believe that risk aversion is our problem. Those fast-moving, hard-fighting entrepreneurs were, at first, willing to take chances and put their own money in harm’s way. But having found a modicum of success, they turn trepidatious. And for any business, unwillingness to take chances is the beginning of a slow decline.
Why are we risk averse, but only once we’ve hit a certain level of success? It’s possible it’s because of how we have constructed our social contract. After all, most Canadians would say our spirit of inclusiveness—health care for all, revenue transfers among provinces—is what defines us. Could it be that hard on the heels of that well-intentioned vision trails complacency—along with its ignorant and often mean-spirited twin, mediocrity?
A quick glance at our country’s roster of billionaires turns up a number of first-generation Canadians—people like Peter Munk, Frank Stronach and Stephen Jarislowsky. People for whom risk was bred in the bone. Who knew luck comes to the prepared, and who are never quite ready to say enough is enough.
That drive appears to be rarer than we’d like. In fact, there is evidence that Canadian business leaders prize lifestyle over lucre—choosing to work less in exchange for more personal time. That may be a choice that seems commendable. But if that, and our group sense that we’re all in it together so no one should get too far out front, is keeping real champions from emerging, then we have a problem that may be bigger than any government policy can solve. Any policy, that is, but one: upping the number of new Canadians. Newcomers willing to take a chance, risk a fortune, fail, and try again. Newcomers who quickly become Canadians who can remind us all of how great Canada can be.
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