What Fast-Growing Firms Know About Innovation

3 Key Charts: startups' chief creativity constraints, sharing economy truth and a key export market.

Written by PROFIT Staff

Welcome to 3 Key Charts, a weekly department in which we explain the graphs, maps, tables and diagrams that you must understand to guard and grow your business. The diagrams and graphics displayed below could help you discover a new opportunity, alert you to an impending risk, or teach you how to be a better manager.

In this instalment, we look at the barriers to innovation for Canadian startups, the real job prospects of the sharing economy, and what a new free trade agreement means for exporters.

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Innovators really are different

Where it’s from: The Stars Come Out: Innovation Management in Start-up Businesses” by The Conference Board of Canada.

What is shows: The restrictions that prevent startups from innovating broken down by the speed at which the business is growing (fast or slow). Slow-growing firms (those with annual revenue increases less than 20%) are most constrained by regulations or taxation, and by a business culture resistant to innovation. Finding funding to finance innovation and the time to foster it are the chief difficulties of fast-growing businesses (annual revenue increases greater than 20%).

Why it matters: The correlation between a high tolerance for risk and growth is hardly surprising, but this graph shows how important an innovation-friendly culture can be for increasing revenue. If innovation and growth are on your agenda, it’s important to encourage creative thinking within your company and to spend time exploring new opportunities. But make sure you set up a steady stream of funding to finance your new ventures, because trying to raise capital mid-innovation is difficult to do. Your business infrastructure and procedures also also need to keep pace with your growth, or else you’ll be left without the supply train and support systems to make the most of revenue development.

MORE INNOVATION TIPS: The Case for Stealing Your Success »

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A small business sideshow

Where it’s from: “Policymaking for the Sharing Economy: Beyond Whack-A-Mole” by the Mowat Centre.

What it shows: The number of hours per week that drivers for car-share service Uber spend behind the wheel compared to drivers and chauffeurs for more traditional taxi companies. More than half of Uber drivers operated for less than 15 hours per week, and less than 20% work more than 35 hours weekly.

Why it matters: In a speech to the Canadian Club of Toronto in December, Uber Toronto General Manager Ian Black claimed that the service would create 15,000 jobs in Ontario alone in 2015. But this graph suggests that most of those positions will be of the part-time variety—car-owners looking to make some extra pocket money rather than rake in major profits. To be fair, the $40 billion-valued Uber doesn’t promote itself as a platform to establish a small business. But the low number of hours worked by most Uber drivers does suggest that the way to profit from the sharing economy might be by building the platforms that facilitate it rather than by renting out your possessions on them.

MORE UBER: What Happens When a Great Company Has Terrible Marketing »

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The major market you’re missing

Where it’s from: “Canada-Korea Free Trade Agreement” by the Canada West Foundation.

What is shows: GDP growth for the period 2003€“2013 for Canada’s top five trading partners (the U.S., China, the U.K., Japan and Mexico) as well as South Korea. The top markets for Canadian goods and services all recorded lower rates of growth during that time than South Korea.

Why it matters: The U.S. is the only foreign market for a large number of Canadian businesses, but it and other traditional trading partners are stagnating. But South Korea is doing better, and the Canada-Korea Free Trade Agreement (CKFTA) came into effect on January 1, 2015. The deal between the two Pacific nations will gradually remove tariffs on a number of key Canadian exports, including duties of up to 15% on wine immediately and 40€“72% on various beef products over the next 15 years. Other exports that will be cheaper once they reach the other side include lumber, pork, wheat, LNG and berries. If you’re looking for a new market to expand into, the CKFTA plus the country’s relatively elevated growth rate make South Korea an attractive proposition.

MORE CKFTA: What Free Trade with South Korea Will Mean »

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What conclusions do you draw from these charts? Let us know using the comments section below.

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