Shipping innovation

Written by Michelle Warren

Marport Canada Inc.
St. John’s
Five-year growth: 5,234%

It’s fitting that Karl Kenny helms a firm whose marketplace is the ocean, because seawater is in his DNA. But whereas the Newfoundlander’s ancestors trawled for fish, Marport Canada Inc. trawls for product ideas. And it has landed a rich catch indeed, launching almost 100 products over the past five years that have made Marport a global leader in advanced sonar technology.

Marport designs and manufactures a wide range of equipment that uses sound waves to create digital images for underwater sensing and communications. Clients include the U.S., Canadian and Swedish navies, oceanographers, offshore oil and gas producers, and more than 60% of the world’s deep-sea fishing fleets. As an idea factory focused on those four vertical markets, Marport generated $10.7 million in revenue in 2009 — up by a sizzling 5,234% over the past five years.

The big idea behind this exponential growth is a proprietary software platform called Software Defined Sonar (SDS) that drives every Marport product. SDS — which Kenny, Marport’s president and CEO, calls “the invisible engine” — makes the firm’s equipment far more flexible, scalable and cost-effective than traditional sonar. “You have to have a platform to leverage from,” says Kenny. “It allows you to quickly develop prototypes and test new products.”

Marport became a new-products pacesetter by investing heavily up front in its core technology, spending $6 million over two years to develop SDS. The firm then leveraged this platform into scores of niche products, such as surveillance systems that navies use to detect intruders in harbours and unmanned underwater vehicles that scientists use to explore the seabed. Marport has cultivated a company culture that weaves intercontinental brainstorming into daily worklife. It ensures that its product developers spend face time with customers getting to know their needs. And it has negotiated partnerships and acquisitions to deepen its expertise in advanced sonar.

Marport’s roots lie in Iceland, where the firm developed sonar that could transmit over far greater distances than rival systems could. Kenny — who as a naval officer had specialized in communications, electronic navigation and digital imaging, and who as a tech-focused serial entrepreneur had co-founded a firm later sold for more than $50 million — says this “nifty technology” intrigued him. He assembled an investor group that bought the Icelandic firm in 2003 and moved its head office to St. John’s.

The now-Canadian Marport crafted the platform that took the firm into hypergrowth. Traditional sonar equipment can execute only those functions built into it at the factory, but devices with SDS inside can be programmed and reprogrammed on demand. A fishing boat, for instance, can upgrade the software wirelessly without having to raise the sonar equipment from the sea. Kenny says that to his knowledge, Marport remains the world’s only maker of programmable-on-demand sonar devices.

This gives Marport impressive agility. Kenny says most of the firm’s products go from concept to market in just three to six months because Marport can easily and cheaply reprogram SDS-driven equipment to add functions. This allows Marport to set prices well below those of its rivals. For instance, the company sells a popular $20,000 sensor that offers fishing fleets multiple functions such as tracking how many fish are in the area, how many of those are in the ship’s nets and how much they weigh. To attain all these functions, fleets previously had to spend more than $50,000 in total for five individual sensors.

Marport invests a hefty 15% to 20% of its revenue in R&D. That’s a necessity in a sector in which, says Kenny, “it’s innovate or die.” The firm is financing this through several private-equity placements and federal support from the Atlantic Innovation Fund and National Research Council (NRC). Marport also uses partnerships to stay on the cutting edge, such as working with scientists and researchers at the NRC’s Institute for Ocean Technology. And last November, Marport signed a deal with defence contractor General Dynamics to develop sonar products jointly for navies worldwide.

Despite Marport’s growth, with 110 staff the firm remains a small fish next to its rivals. That leaves only one way to succeed, says Kenny: “You have to innovate constantly with disruptive products, disruptive technologies and disruptive services.”

Staff spread across two continents come up with these disruptive ideas. Along with North American offices in Seattle, St. John’s and Cornwall, Ont. (where, last year, Marport bought C-Tech Ltd., which designs and manufactures sonar systems for naval defence), Marport has European operations in France, Spain and Iceland.

While having such a dispersed workforce may seem problematic, Marport positions it as a strategic advantage. Kenny says doing R&D in France, Iceland and the U.S. “helps us build a better and more global product, instead of just doing it from one perspective.” He says export-driven firms must embrace a networked innovation model, spreading R&D globally “so they can quickly seize regional opportunities, as well as drive creative synergies on an international scale.”

Making this work requires close communication among far-flung offices. Marport’s people intensively use Skype and videoconferencing to keep ideas flowing freely. An employee who pitches a concept in the morning will receive a torrent of feedback from both sides of the Atlantic by mid-afternoon. As well, Marport uses collaboration software to bandy about prototype designs from country to country. Its teams work as co-operatively across borders as they would across a cubicle wall.

They also work closely with colleagues in other departments. “We maintain a daily dialogue between engineering, marketing, sales, customer service and management executives,” says Kenny. Drawing on the diverse experience across the workforce means “we often find better answers to the problems a customer is facing, as well as being able to fast-track innovative solutions that the customer wants.”

That last bit is essential. It’s no good coming up with a boatload of ideas for products that clients don’t want. Kenny says his people have a penchant for “what if?” scenarios and a knack for devising useful products before clients ask for them — an approach he sums up by quoting Henry Ford: “If I had asked my customers what they wanted, they would have said, ‘A faster horse.'”

To figure out what your clients actually need, it helps to spend time with them. “We encourage all our employees to engage with customers at every possibility,” says Kenny. For example, senior design engineers work in the firm’s booth at trade shows so they’ll speak directly to customers. “Some companies keep their engineers in the back rooms because they’re fearful the engineers may give something away,” says Kenny. “That type of insecure thinking is silly in this day and age.”

Marport’s innovation culture is paying off. It doubled its sales in 2009, and expects to do so again this year. Kenny is continuing to focus on growth, with an eye to going public or eventually selling the company.

He’s confident that Marport’s prospects are as vast as the oceans themselves. “Our oceans are the future of life on our planet, including food, energy, knowledge and discovery,” he says. “They’re not the next big thing; they’re the big thing.”

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