Bennett Gold LLP Earns Mention In Toronto Life Magazine, April 2005.

Canadian Dotcoms... Forever in the Shadows

Why our "wannabees" will never "be"

It seems as if we can't pick up a newspaper without reading headlines telling us that Canadian companies aren't living up to expectations. Government whitepapers, private sector surveys, thinktank roundtables and academic studies are shouting that in the areas of productivity, innovation and profitability Canadian businesses just aren't up to snuff. And, Internet-focused companies are among the biggest offenders. Meanwhile, pundits from across industries and disciplines scratch their heads in unison: Why aren't Canadian businesses, online and offline nearly as successful or competitive as they're supposed to be?

Three prevailing themes provide revealing answers. They also point to how we can turn ourselves around, if we make the necessary investment in how we conduct our businesses.

1. Canadian Businesses Don't Really Understand Clients

Despite being part of one of the most reflective societies on the planet, Canadian companies do not really understand business or consumer clients. Why? Because, frankly, we don't listen to consumers. For the most part, we believe that as long as we build a great service or product, we'll be successful. But the harsh truth is that no amount of product or service refinement will yield anything positive if it is done in isolation of the intended users.

Case in point: Since 1995, every Internet study that has explored why businesses and consumers are hesitant to conduct business online has identified privacy, not security, as the key issue. Simply put, people and businesses alike want to know that their private information is respected and protected. Despite this loud and recurring message, only a handful of Canadian companies with an Internet presence have done anything other than post a privacy policy. Internal procedures have for the most part remained the same. Finally, no large, well-respected Canadian company has taken it upon itself to market its advances in protecting client privacy as a point of distinction. (For more on Privacy issues, visit WebTrust.net and PrivacyDetective.com ).

Furthermore, most companies' Internet budgets rarely allow for the involvement of intended users in the development, testing or refinement of web sites. Rather, funds are allocated to building the 'perfect' site. The result: sites with mountains of information and unnecessary functionality that are expensive to maintain and have no direct link to return on investment. If you've bought into any of the following arguments, chances are your web site was developed in isolation of the people who it was intended to serve:

1. "We've done a management survey/brainstorming session and we know what we want."

2. "We have a team with great ideas, so we can design a great site."

3. "Asking users doesn't fit into our planning schedule."

4. "What we're developing is something completely new."

5. "Users don't know what they want."

2. Canadian Businesses Don't Develop Robust Business Models

The most fundamental element of any business is its business model. And, even if you've only casually scanned the media over the last few years, you will have seen Canadian companies, particularly Internet companies, boasting their new business models. Such claims were made in the hopes of generating excitement and potential investors. Unfortunately, many of these claims are, to say the least, unrealistically optimistic. Why?

Because most of the companies, while perhaps identifying a new stream of revenue, haven't really figured out their business model. Business models succinctly answer considerably more than just where the money is coming from. If your business model doesn't also consistently and uniformly answer the following questions, your model is likely to crumble:

- Who are your target market segments?

- Why would these segments choose your service/product over that of your competitors?

- How will you attract/retain desired segments?

- Who are your current competitors today and who will they be in one year?

- How are the products/services delivered to clients in a way that is valuable to them?

- What skills do you need to succeed?

- How have you organized your operations so that you can succeed?

- Why is now the right time for offering the service/product?

- Where is your profitability going to come from?

3. Canadian Businesses Don't Have Role Models for Success

As a result of not understanding clients and the absence of robust business models, few Canadian businesses with an Internet presence can boast success. Recent high profile dotcom developments underscore our inability to create home-grown winners: Samtherecordman.com, brainchild of one of the most recognized retailers in the nation logged off the Internet earlier this year; Whodunet.com - one of the leaders in business-to-business supply chain integration has closed; and Rebel.com - one of the most promising technology innovators is now in receivership.

Furthermore, Canadian Internet businesses turn their focus elsewhere. For example, Onvia left Western Canada, moved to the United States, and subsequently sold some of its operating assets. Another example is HMV.com. Long considered one of this nation's greatest online successes, HMV is modeled after the parent UK site. The result: Canadian firms have yet to establish a truly Canadian online identity.

Until Canadian businesses actively listen to clients, develop well thought out business models, resist the temptation to go south and focus on developing a truly Canadian web identity - our businesses will continue to be uncompetitive, uninspired and unprofitable.

Bennett Gold LLP invites your questions, comments and feedback: E-Mail: action@BennettGold.ca Telephone: 416-449-2249. Read Bennett Gold LLP's Privacy Policies and Practices.

WEBTRUST is a trade mark of the Canadian Institute of Chartered Accountants. All other cited trade names and marks are property of their respective owners.

BennettGold.ca is a P3P compliant and W3C validated web site, coded and developed by Planetcast.