In tech, specifically in Silicon Valley, LA, Seattle and New York, founders are not afraid to fail even though most do. When they fail, it’s a celebration; they wear it like a badge of honour. Then they fail again and again after that, each time learning from their mistakes. Some folks assume those places, especially the Valley, has a magical formula they employ to generate a higher success rate for startups than anywhere else. Their formula is simply to try more things more often and more quickly than anywhere else.

Is risk inherently a bad thing?

Not always and definitely not in all sectors.  Calculated risk is what you really want to make sure to keep your eye on – risk for the sake of risk doesn’t work out so well. A little bit of risk aversion in the right places (such as shady trading practices) is what made our banking sector the envy of the world during the financial meltdown of 2008, but in the #startup game, it’s a hindrance.

Many Canadians are so hesitant to avoid risk, but the irony is that there is often just as much danger in staying put…

…Not taking a risk is a risk…

…Taking risks is what propels you forward.

If a risk results in failure, rest assured that failure is not the end of something, it is just a step along the road.

Are Canadians oblivious to the risk-reward cycle?

In order for us to cultivate new ideas we need to not only cultivate but to actively encourage risk. Funny that we as a nation agree that risk-taking is good and that we should celebrate failure. But we stop short of actually executing on that ideology.

Prof. Peridis of York University’s Schulich School of Business contends that while Americans “celebrate winners,” Canadians tend to be more muted. “We are a little more shy, timid. We don’t do that in our culture. We’re not boasting,” he says.

A large majority of Canadians believe that business leaders should be open to taking more intelligent risks in order to foster #innovation. According to a recent Microsoft study 84% of Canadians believed leaders in business need to take more calculated risks for the sake of innovation, yet only 53% felt the company they worked for was doing so.

An overwhelming 97% of Canadians felt that companies must embrace new technologies to remain competitive, while 96% say that #technology is shaping the future of how they conduct their work.

What we need to do is overcome the misconception that risk automatically equates to danger. We need to transform the idea of risk into a true opportunity. Business leaders need to empower their teams and drive forward innovation.

Why the risk aversion Canada?

#Canada’s complacent culture can only be overcome by developing a national strategy that remains unimpeded by provincial or territorial variances and Canadian businesses can no longer continue to be insulated from foreign competition through protectionist measures.

While it’s understandable there are political realities and you can’t remove all protections overnight; where we do provide protection is actually not helpful for us because we don’t get competitive intensity and we end up being comfortable instead of competitive.

One of Canada’s saving graces may be its imminent influx of immigrants, many of which come from more risk-tolerant cultures. Yet, what remains to be seen is whether or not those immigrants influence Canada’s overwhelmingly risk-averse culture to be more risk tolerant, or if they will simply assimilate to Canadian complacency.

Many newcomers to Canada will find their way into country’s burgeoning Information and Communications Technology (ICT) industry. While most tech startups excuse the lack of ICT success (relative to the U.S.) as a condition of Canada’s desolate venture capital landscape, it’s important to note that venture capitalists remain elusive precisely because they lost so much money during the bursting of the dot-com bubble that they are now far too risk averse to take a chance on Canadian ICT enterprises – most of which are forced to go to the U.S. for funding.

Immigration policies and risk profiles

Most families that move to North America tend to come, earn a pay cheque and send back quite a bit of help to their mother country.  #Family really matters to them – in a way that, we in North America often pay lip service to, but they take it seriously. Most Caribbean, Asians and Africans tend to have much broader family responsibilities and family ties are a central part of their cultures.  Not only is a penny saved a penny earned, they also believe in the betterment of their entire bloodline.

Conclusion

Whatever the reason for Canadian business’ aversion to risky R&D, it is important to note that funding riskier projects does not automatically lead to R&D success. Although Canada does not have a large global competitor pursuing R&D such as Google or Facebook, there may be good reason for Canadian business’ and funding agencies’ safer approach to R&D.

Canada’s innovation has been affected in the past by the failings of Blackberry and Nortel. These experiences may have had an adverse effect on the enthusiasm at which riskier R&D projects in Canada are initiated and funded. However, diversifying the projects by funding some high risk (but not so much that the risk of failure would be monumental to business and the government) and other, lower risk projects may provide the boost that Canadian innovation needs and may appease critics of Canada’s R&D funding programs.