The Two-Gear Economy, part 1 – Canada’s Innovation Predicament

Pascal Dennis, co-author of Harnessing Digital Disruption

It’s no longer enough to protect your core business with the proven methods of Operational Excellence - you also have to ignite new growth using the methods & mindset of the world’s Innovation hot spots. The ambidextrous will prosper in our brave new world.

What applies to companies, also applies to economies, no? Canada, my dear land, is in the midst of a historic decline. Among peer countries, Canada has been last in productivity growth for the past ten years and is projected to be last in the coming decades. Canada’s most prosperous provinces, Alberta & Ontario, are poorer than the USA’s poorest states. You read that right. Canada’s GDP per capita, a decade ago roughly equal to America’s, is now about 60% of America’s. To make things worse, Canada’s real estate is roughly twice as expensive as America’s. So, life is hard in Canada, and likely to get harder.

So, what’s a country like Canada to do?

What applies to companies, also applies to economies…And so, Canada must take steps to a) protect its core business, and b) ignite new growth.

Protect the Core

Canada’s core business is the physical economy including manufacturing, mining, oil & natural gas, agriculture, as well as financial services (including banking, insurance, leasing and real estate). Protecting the core business means developing a fair & competitive tax & regulatory system - one that attracts investment, and is appealing to talented people including entrepreneurs, small business owners and skilled professionals.

Investment & talent have fled from Canada the past few decades. My friend, Paul, a gifted Tech entrepreneur and graduate of Waterloo’s world class engineering program is a case in point. Paul is a senior leader in one of Silicon Valley’s most celebrated AI unicorns. ‘I left Canada as soon as I graduated,’ he told me. ‘I’d be crazy to stay. There’s nothing for me there.’

Free trade has greatly benefited Canada’s core industries, but is now in imminent danger thanks to Mr. Trump’s international trade war. Canada must do all it can to sustain free trade with all international partners, but it won’t be enough to slow the erosion in prosperity and wellbeing.

Ignite New Growth

Igniting new growth entails designing cool products & services everybody loves and is willing to pay a premium for. Design, data and digital methods are at the heart of Innovation.

Fair & Competitive Tax & Regulatory System

If you want to Protect the Core - and Ignite New Growth, you have to have fair taxes & regulations. Otherwise, people like Paul will continue to leave in droves. Why build anything when more than half will be clawed back by the government? Why not go across the border to Silicon Valley, where you’ll earn - and keep - much more of the value you’ve created?

National Innovation Infrastructure

But fair taxes & regulations are not enough. You also have to make it easy for smart people to connect & try stuff together. And that means fostering a national Innovation infrastructure. Singapore provides an excellent blueprint. I started going there in 2018, working with Laurent in FinTech & Consumer Goods. I met splendid people and explored the great city’s innovation labs, maker spaces and accelerators. I loved attending Friday ‘playbacks’ during which innovation teams would summarize the week’s activities - wins, losses, what they learned & what it means for next week & beyond. I loved attending the Singapore FinTech Festival (SFF), SNG Tech Week, and all the rest.

During SFF week, I’d meet people from startups offering a broad range of services in payment, lending, wealth management and insurance. I met engaging entrepreneurs from all over the world, whose minds seemed to operate at the speed of light. Laurent & I wrote a book about our Singapore adventures, trying to capture that energy, excitement, exotic neighbourhoods & marvelous cuisine.

I’ll talk about Singapore’s innovation infrastructure in an upcoming piece. For now, I’ll leave you with how I felt at the Fusionopolis innovation hub - three buildings full of innovation labs, maker spaces, and accelerators. Imagine open spaces, interesting visuals, a small stage in the center, the atmosphere electric, as in a great jazz club. Something like model launches at our old Toyota factory, but with quicker experiments & somewhat different methods & mindsets. And me thinking, ‘This is the place to be.’

Sure enough, Singapore, like Silicon Valley, is full of talented Canadians. Next time, how did Singapore become an innovation powerhouse, and what’s mean for countries like Canada?


Best wishes,

Pascal Dennis

E: pascal.dennis@leansystems.org

PS To learn more about my Strategy Execution program, Getting the Right Things Done in a Digital World, feel free to drop me a line.




In case you missed our last few blogs... please feel free to have another look…

Has OpEx/Lean Gone Wrong?
If It’s Not Simple, It's…
Igniting New Growth – Aristotle’s Two Worlds, Part 2
Igniting New Growth – Aristotle’s Two Worlds

Has OpEx/Lean Gone Wrong?

Pascal Dennis, author of Getting the Right Things Done

This question comes up repeatedly, so I thought I’d try to address it in a fresh way. My OpEx/Lean adventure began in the early 1990’s. I was a young engineer and manager fully absorbed with the Toyota Production System (TPS). My colleagues and I believed strongly that if we could master this way of thinking & working, we’d have a superpower: we could create Value in any industry and role we found ourselves in. Peter Drucker, Taiichi Ohno, Shigeo Shingo, and our formidable Toyota senseis were our guides.

Fast forward to today, and OpEx/Lean has truly lived up to its promise. Companies like Toyota, Honeywell, Danaher, and P&G continue to set the bar for excellence, and the Toyota Production System remains the gold standard for industries like energy, healthcare, and manufacturing If you dedicate your career to mastering these methods, you’re in good shape.

However, there’s a catch. Has OpEx/Lean kept up with the world of innovation? Have we incorporated insights from innovation giants like Clayton Christensen, Steve Blank, and Alex Osterwalder? And most importantly, do we understand the different mindsets and skillsets needed to continually Innovate at high level? I’ve written about Aristotle’s two worlds: Necessity (OpEx/Lean) and Contingency (Innovation). The key challenge is to understand them both at a deep level and figuring out how to switch between them seamlessly.

About a decade ago, I became absorbed by Innovation hot spots like Silicon Valley and Singapore. I began to study the achievements of Steve Jobs and Bill Gates, and the teaching of Clayton Christenson, Steve Blank, and Alex Osterwalder. I found an innovation sensei, my friend & co-author, Laurent Simon. Laurent & I developed a practice and wrote a book about our Innovation adventures in east Asia (here’s the book). My Innovation journey has been as rich & challenging as my TPS journey.

Pascal & Laurent – Innovation Sprint in Thailand during the Kratong Festival
© 2025 Lean Pathways Inc.

My eureka moment when Laurent and I started working together on innovation projects in the Asian plant-based drink industry. Our goal was to develop & launch a new product from scratch. Our inspiration and model was a French product that should have been a commodity but instead commanded a premium price (20%+) - even in countries that did not like the French!

We too, wanted to find our ‘blue ocean’ – engaged customers who loved our offering & were happy to pay a premium for the value they received. And we wanted to launch in half the time, and at half the cost. The innovation team succeeded; we met our targets, learned a ton, and had great fun. Moreover, the methods & mindset we applied have become the New Product Launch process standard.

Post-launch, the COO, a friend & supporter, said, “Every year, we work like crazy to reduce waste, and thereby boost profit by a few percent. You’ve just shown us how to boost profit by twenty percent…”

And this is perhaps why senior leaders see OpEx/Lean as necessary, but not sufficient. OpEx/Lean lays a solid foundation and reliably delivers waste reduction year upon year. But that’s not enough. We also need to ignite new Growth using the methods & mindsets of Silicon Valley and Singapore. We want to find our blue ocean, and the dedicated, engaged customers who happily pay a premium in return for offerings that delight them. Experimenting your way up the ‘hockey stick’ curve in pursuit of an elusive blue ocean is as exhilarating as launching a major new car model. The challenge for 21st C leaders is being able to lead both.

In summary, OpEx/Lean has not gone wrong, but OpEx/Lean leaders must embrace the methods & mindsets of Innovation. We must look outside the relatively predictable world of Operations, and into the volatile, uncertain, complex and ambiguous world of the customer.

Best wishes,

Pascal Dennis

E: pascal.dennis@leansystems.org

PS To learn more about my Strategy Execution program, Getting the Right Things Done in a Digital World, feel free to drop me a line.




In case you missed our last few blogs... please feel free to have another look…

If It’s Not Simple, It's…
Igniting New Growth – Aristotle’s Two Worlds, Part 2
Igniting New Growth – Aristotle’s Two Worlds
Innovation Does Not Begin with Technology

If It’s Not Simple, It's…

Pascal Dennis, author of Getting the Right Things Done

To paraphrase Kurt Vonnegut, "any scientist who can't explain to an eight-year-old what he's doing is a charlatan." This principle is especially true in Strategy execution, where human leadership & charisma cannot be replaced. In fact, it is my strong belief that in the age of AI, these will comprise the essential, irreplaceable app.

AI agents will eventually be able to handle many jobs, but can they define, deploy & execute Strategy? Can AI agents define Purpose in a transcendent way, such that gifted team members embrace it, and put their differences aside for a great goal? Can AI agents motivate a team to sustain its heart & fighting spirit in the face of inevitable setbacks, to keep going in spite of everything? (To be sure, the teams of the future will comprise both human and AI agents.)

"What are we trying to achieve? “How will we win - what is the logic?" In Strategy sessions, I`m a proverbial broken record. We've been taught that complexity is profound. In fact, complexity is a crude state. Simplicity marks the end of a process of refining.

The late great physicist, Richard Feynman, looked and talked like a New York City cabbie. His Caltech freshmen lectures in Physics, and all his books are classics for their simplicity & humor. How did Feynman achieve that level of clarity? Through slow, patient reflection, by turning a problem over and over in his mind until a 'simple' explanation suggested itself. Simplicity is the ultimate sophistication, and is a process of refinement.

© 2025 Lean Pathways Inc.

In our frantic, time-starved age, that's where the shoe pinches, no? These days, who has time to turn a problem over and over in their mind? Who has the time, as Einstein did, to imagine himself riding a light beam - so as to makes sense of time and gravity and light?

Which invokes the second great law of strategy: Less is more. Knowing we'll be time-starved, please let's not over-fill our strategy plates, like teenagers at a buffet. "First we'll do this, then this and this and that over there. Oh, and then we'll..."

Design Thinking & Lean Experimentation, core Innovation methodologies, force you to simplify and clarify your offering. Once we’ve answered a series of core questions around the customer, we work our way up the ‘hockey stick’ by defining & validating a series of ‘minimal’ offerings.

Similarly, in strategy, we want to define, deploy & validate our 'minimum viable plan', monitoring what happens, and adjusting as the inevitable 'known, and unknown, unknowns' arise.

Breakthrough entails walking up the stairs in the fog, continually making & easy quick experiments, most of them yielding a negative result. If it’s not simple, it’s BS.

Best wishes,

Pascal Dennis

E: pascal.dennis@leansystems.org

PS To learn more about my Strategy Execution program, Getting the Right Things Done in a Digital World, feel free to drop me a line.




In case you missed our last few blogs... please feel free to have another look…

Igniting New Growth – Aristotle’s Two Worlds, Part 2
Igniting New Growth – Aristotle’s Two Worlds
Innovation Does Not Begin with Technology
Getting the Right Things Done in a Digital World

Igniting New Growth – Aristotle’s Two Worlds, Part 2

Pascal Dennis, co-author of (Harnessing Digital Disruption)

The future belongs to the ambidextrous, those who can both protect the core business with OpEx/Lean & ignite new Growth with Digital methods. It has taken me years of Innovation sprints to understand what new Growth is all about.

In my previous piece I described Aristotle’s famous ‘two worlds’ framework:

The World of things that cannot be other than they are – (‘Necessity’): This realm includes the:

• Fundamental laws that govern the universe, like the laws of Physics, Chemistry & math, and
• Laws of logic e.g. the law non-contradiction

These truths are considered to be eternal & unchanging.

The World of things that can be other than they are – (‘Contingency’): This realm encompasses things that change unpredictably. These include:

• Consumer taste, fashion, style
• Public opinion, politics, the weather

Some people call this a VUCA world – Volatile, Uncertain, Complex and Ambiguous.

What does this have to do with business?

OpEx/Lean belong in the world of things that cannot be otherwise, the world of necessity. A production line designed in accord with the principles of the Toyota Production System & run by a well-trained team will perform in a predictable way.

Innovation, by contrast, belongs to the world of things that can be otherwise, the world of contingency. Igniting new Growth entails answering questions like:

• Who is the customer?
• What does the customer value?
• Why does the customer by, or not buy, from us?

But often, the customer does not know they are a customer, does not know what they value, and does not know why they buy from you or not. People routinely say they love your offering and will happily buy – and then don’t! When you ask, ‘Why did you say you’d buy it?’, they’ll often answer, ‘I don’t know.’ And if you ask again a few days later, you’ll get a different answer! Classic world of contingency move.

I’m sympathetic to the plight of senior leaders. They usually come from the world of Necessity – but are asked to ignite new Growth – in the world of Contingency! As a result,

• New product failure rates remain very high (90% or more), and
• Customer needs remain unsatisfied

I’m a Toyota-trained engineer; I thought I understood the Growth questions I posed earlier. But it has taken me years of Innovation sprints with my sensei & co-author, Laurent Simon, to understand what new Growth is all about. My personal mission is to help senior leaders understand it too.

Best wishes,

Pascal Dennis

E: pascal.dennis@leansystems.org

Note: To learn more about my executive mentoring programs: Exec 101 - Protecting the Core Business, and Exec 201 – Infighting New Growth, feel free to drop me an e-mail.




In case you missed our last few blogs... please feel free to have another look…

Igniting New Growth – Aristotle’s Two Worlds
Innovation Does Not Begin with Technology
Getting the Right Things Done in a Digital World
Igniting New Growth - My Improbable Journey, Part 2