An Open Letter To The Premier

And How To Deliver Ontario's Most Sustainable Economic Recovery From COVID-19

In JFK’s presidential inauguration of 1961, we can find one of the most influential American History messages of the last century: “And so, my fellow Americans: Ask not what your country can do for you - ask what you can do for your country”. It was an inspiring peacetime message that galvanized the entire nation. However, amid the most severe existential threat of this century, we need to focus on a more balanced approach… 

Governments must act quickly and do whatever necessary to protect lives and prevent the economic collapse of businesses and individuals. Immediate public health threat posed by COVID-19 brought tough economic decisions and Ontario’s economy can’t escape the clutches of violent pandemics. Yet all businesses, together with all Ontario residents - must help the governments to plan for a better post-COVID-19 future and apply lessons learned. The recent Business Round Table declarations and Davos 2020 Forums all point in the same direction: sustainable leadership is a two-way street. Governments, businesses and ALL residents/stakeholders MUST work together - and I wrote about it in Capitalism 2.0 at Davos  

Since Donald Trump calls himself a war-time President, the Premier of Ontario and the CEOs of Ontario’s businesses can start calling themselves war-time leaders! And in war… all the assumptions drastically change. I know so, as I lived through one. So, what can governments do when corporate revenues & cash flows crawl to a halt? A quick answer: Plenty!

Success Is a Three-Legged Stool

I, therefore, propose the following to deliver: Immediate, Mid-Term & Long-Term solutions to the post-COVID-19 economic recovery in Ontario. Some measures are already planned to take place through the recently introduced Economic Response Plan by the Federal Government. However, the graveyards of good intentions are full of progressive initiatives that were bogged down by severe scalability issues. And to avoid such outcomes – it’s time to brush-up on the famous KISS Principle developed by the US Navy. In scientific terms, KISS means: “Most systems work best if they are kept simple rather than made complicated”. In a loose translation by Bill Clinton, KISS means: “Keep It Simple Stupid”

1.   Immediate Solutions

·      Basic income - When all the non-essential businesses are ordered to close and all non-essential Ontario workers are asked to stay home, the most immediate, practical and robust way to support the affected individuals is through the distribution of Basic Income (BI). And CRA is the only agency capable of doing so, en masse. The delivery of such a program and getting money into people’s hands is… immediate, and much faster than legislating rent or mortgage payment forgiveness, forceful reduction of credit card interest, etc., etc.

And since all the Federal, Provincial and Municipal employees stay employed during this crisis – the number of BI recipients is not too overwhelming. In similarity to CPP and OAS payments, BI can also be subjected to our progressive tax system and fully recovered - above a pre-defined annual income threshold. So, call it Canada Emergency Response Basic Income if you will as it would be the most practical and the most straight-forward benefit of the entire Canada Emergency Response program!

Granted, after the current COVID-19 crisis is behind us and the austere economic restrictions are lifted – the BI concept can be replaced with what I frequently described as Universal Job Guarantee (UJB) in conjunction with Warren Buffett’s Earned Income Tax Credit (EITC). You can find more details on the above in my post “Capitalism 2.0 - Part 2 To Work, Or Not To Work - That Is The Question” – where I recommended a practical and sustainable solution for lifting millions above the poverty line.

·      Interest-Free & Forgivable Loans

Until the new Purchase Orders begin to flow and companies can resume delivery of their products and services without interruption – the above loans are crucial to keep the Ontario businesses afloat. It will compensate for the missing TOP-LINE revenues.

·      Wage Subsidies

Yet the P&L statements are not just about the top line. The 75% employee wage-subsidy will help to reduce the ongoing expenses and significantly lower job-losses and bankruptcies. It will bring-down the proverbial BOTTOM-LINE costs.

2.   Mid-Term Solutions

·      50% Canadian Content Rule – Never again Ontario manufacturing and Ontario products should be decimated by the globalization forces. And no sourcing of supplies and products from China or the US should be allowed to exceed the 50% threshold. COVID-19 is not the last pandemic we’ll face. So, it’s important to have Ontario’s manufacturing capacity in place to scale-up and expand the local supplies - when it is urgently needed.

Whether we are dealing with ventilators, respirators, PPEs or any other ICU equipment – beefing up Ontario manufacturing capacity will prevent the paralyzing reliance on foreign logistics. And all the single source manufacturers from abroad should be also required to open local manufacturing facilities to fulfill the Made in Canada rules.

More local content means more local jobs and more purchase orders to sustain such jobs long-term. So, if anyone worried in the past that the promising ESG trends are not enough to galvanize the public opinion behind the Made in Canada laws – think again. The COVID-19 pandemic changes EVERYTHING!

·      SMB Set-Aside Rules – Yet on top of the benefits of 50% Canadian Content Rule we should also mandate all large-scale manufacturers in Canada to guarantee immediate sales to a startup by imposing a set-a-side provision. For example, if 10% of the $100B procurement MUST BE USED to generate Purchase Orders for goods and services offered by a startup – we are talking about $10B in guaranteed sales! This could significantly help ANY startup, regardless of what financing round it is seeking: Series A, B, C, etc., etc.

And since imitation is the sincerest form of flattery, let’s remember that existing U.S. Small Business Administration set-asides programs “are a powerful tool for helping small businesses compete for and win federal contracts. Every year, the US federal government purchases approximately $400 billion in goods and services from the private sector. Such opportunities are “set-aside” exclusively for small business”. US Congress created the Small Business Administration (SBA) back in 1958 and mandated small business contracting goals ever since. So, should we!

3.   Long-Term Solutions

·      Ontario Healthcare Manufacturing Sector – It doesn’t take Einstein to conclude that such a sector is expected to grow exponentially post COVID-19. Our existing manufacturing base needs to embrace such a trend and quickly pivot away from other less profitable sectors – including the struggling ICE automotive industry. Enhanced focus on Drug Manufacturing involving Pharmaceuticals and Biotechnology companies is here to stay. So are Medical Instruments, Drug Delivery Systems, Cardiovascular & Orthopedic Devices, Testing and Diagnostic Equipment, PPEs - as well as manufacturing support for healthcare logistics and facilities.

·      Ontario University Health Network/MaRS/Centres of Excellence – It’s a true Factor Endowment of Ontario and must be “intelligently” expanded to compete with the much larger R&D budgets of US, China, Germany, etc. Canada is competing for the same R&D talent with the entire world! And each of the 140 countries from The Global Competitiveness Index (GCI) by World Economic is using almost identical objectives as Canada does.

IMHO, to do more for less – Ontario and other provinces must deliver more value by leveraging industrial contributions, significantly. And when the industry spends more on R&D, it creates more high-paying jobs – an ultimate societal benefit. Since the business enterprise is already the largest funder of R&D expenditures – we can call it a “low-hanging fruit”, or a “Bright Spot”. And all Bright Spots should be replicated, as soon as possible!

I worked with many companies in the past and some have done very well by analyzing their customers with granular details. Logically, they are selling their products and services to existing customers they thoroughly scrutinized. And yet, I firmly believe that there are HUGE and untapped opportunities to generate new revenues by focusing on …. noncustomers!

So, instead of simply competing for existing enterprise customers, my recommendation is to bring NONCUSTOMERS to the table, and HELP THEM to embrace innovation, too! Noncustomers do exist and tapping into such a group expands the entire pool of R&D spending.

Instead of competing for VC investments with many larger and better-financed VC firms in California, Ontario enterprises could embrace a more “intelligent” Corporate Venture Capital (CVC) model. And as an alternative to spending hundreds of millions of dollars on competitive acquisitions, Ontario’s CVCs can simply focus on “grooming” the startups for PE’s investment – at the fraction of the cost!

And as valuations of Silicon Valley startups are shooting through the roof, tapping into unique CVC/PE Factor Endowment, will help Ontario startups to raise 10X more capital at 1/10 of the cost from innovative Ontario enterprises – see more details at “LeanCVC - A Match Made In Heaven”

·      Ontario HealthcareAI – Ontario’s AI supercluster often referred to as “The Toronto-Waterloo Innovation Corridor” has a true opportunity to become one of the world’s top innovation hotbeds. I say so as one of the ultimate BusinessAI? veterans on the planet w/ over 30-yr hands-on AI expertise. And, therefore, I’m in the business of joining Advisory Boards/BODs of some of the most innovative companies all around the world. My goal is to bring supreme business savvy, separate the wheat from the chaff, and deliver results.

What I learned over the years is that it’s not just technology innovation, but also the exponential increase in the value offered to clients at a much lower cost – that makes all the difference. Yet I see too many companies focused on pushing their product out the door – while losing ~70% of neglected revenue streams, ready for picking... I often describe how such loses can be averted using “The Push, The Pull and The AI Bull?” process - that generates huge secondary and tertiary revenue streams. And such a strategy is scalable and sustainable.

We can’t solve all the AI problems in this world. So, a sharp focus on HealthcareAI would offer Ontario companies an effective “monopoly” linked to such a sector – and allow such companies to concentrate on solving unique healthcare problems and challenges. No matter how much the entire world needs healthcare today, only the firms that offer a superior solution for a specific healthcare problem – will succeed. We already have a huge strategic advantage in robust Ontario University Health Network/MaRS/Centres of Excellence endowment. Let’s use it wisely…

The experience of going through a major market crash was never as important as it is today. If an advisor recovered from the collapse of the financial markets of 2008 – you can say it was a random event. If the rapid recovery also followed the 9/11 & dotcom crash – you can still claim that it’s a coincidence. But if it also includes the recovery from the recessions of the 1980s – it’s a PATTERN! Let me help… 

Oleg Feldgajer is in the business of joining Advisory Boards (ABs)/BODs of some of the most innovative companies all around the world. And as one of the ultimate BusinessAI? veterans on the planet with over 30-yr hands-on AI expertise - I also bring AI business acumen to deliver growth & profitability. The promises of AI are all around us. But you also see & hear a lot of hand-waving and “imagine-the-future” narratives. So, what I do, is help separate wheat from the chaff & share my 30-year “wisdom” - to distinguish facts from fiction. What I learned over the years is that it’s not just technology innovation, but also the exponential increase in the value offered to clients at a much lower cost – that makes all the difference. Yet I see too many product-oriented entities focused on pushing their product out the door – while losing ~70% of available revenue streams. My ground-breaking “The Push, The Pull and The AI Bull?” process, generates huge secondary and tertiary revenue streams. Such a strategy is scalable and sustainable, and it also offers revenue smoothing. As an Operating Advisor and “Jack of All Trades”, I work with VC/CVC/PE supported companies at a granular as well as strategic levels, to tackle: rapid innovation issues; disruptive marketing strategies; operational efficiency improvements; brand enhancement; and securing untapped growth capital. And in addition to promoting organic growth by making the right introductions to the new clients and VC funds – I also: Design, Structure, Finance and Deploy Opportunistic Joint Ventures to create profitable AI business models & avoid unexpected losses.