Case Study

COCHRANE — At first glance, it’s an acreage like any other in rural Alberta — exceptional only for its stunning views of nearby mountains, pumpjacks and hay bales.

But the converted garage on the property just outside of Cochrane offers more than just quintessential Western imagery. It’s also the headquarters of mc Things, a thriving tech startup that’s bringing IoT (Internet of Things) solutions to business, industrial and agricultural clients.

The company’s founder, 30-year-old Tom Groenland, is a Cochrane High School graduate and says this town — with its easy access to both big-city amenities and mountain adventures — is precisely where he wants to be.

“Obviously, I’ve considered, ‘What if I move to Calgary?’ But ultimately why I don’t move there is because I know at the end of the day, Calgary can’t ignore the oil industry,” says Groenland, who successfully secured $2 million in seed funding for his company and now employs nine people.

“Even though they say, ‘yes, we want to attract all these tech companies here,’ they can’t ever ultimately put the focus on it. So that’s been a huge part of my decision.”

‘Poster community’

Five years of economic downturn in Alberta has made diversification a popular buzzword, and no sector has benefited from this new focus as much as the province’s burgeoning tech sector.

Since 2009, the number of tech startups in Alberta has increased by 89 per cent, and governments at all levels are taking notice.

In Calgary, the city has been busily awarding grants from a $100-million economic development fund to tech-focused companies that promise to create local employment, while in Edmonton, proponents are trying to take advantage of expertise at the U of A to build the city’s reputation as a hub for artificial intelligence work.

Under Rachel Notley’s NDP, the previous provincial government introduced a series of tax credits aimed at helping startups attract capital investment. While the current UCP government eliminated those tax credits, it has also identified tech as a focus and has appointed a special working group to come up with ideas to grow the sector. The group is expected to report back in early April.

But while tech may be Alberta’s new, hot thing, in Cochrane, it’s not that new. The town — located along the famed “Cowboy Trail” and once home to the province’s first large-scale cattle ranch in the 1880s — has been quietly building its own tech sector for more than 20 years. And as the community continues to successfully attract highly educated professionals from as close as Calgary and as far as Europe, its mayor believes the rest of the province can look to Cochrane as an example.

“I hope the provincial government can look at Cochrane and say, ‘look, they’re doing it,'” says Mayor Jeff Genung, who was elected in 2017 and has since thrown himself into supporting and raising awareness of the town’s tech industry. “We could be the poster community for the whole province.”

‘Relationships that go back 20 years’

Cochrane’s business development office estimates that of the town’s 30,000 residents, 500 to 700 are directly employed in the tech sector. By far the largest local tech employer is Garmin Canada, which has a 45,000-square foot facility in the heart of downtown Cochrane and employs approximately 130 engineers and support staff who design and develop fitness, outdoor and wireless products.

Garmin is not only the biggest tech company in town, it’s also the reason Cochrane has a tech sector in the first place.

The company that’s now Garmin Canada got its start in 1998 as a Cochrane-based tech startup called Dynastream Innovations, which was acquired by Garmin in 2006. Over the years, the company has outgrown six buildings in Cochrane and its current headquarters is designed for future growth, with a capacity for more than 200 employees.

Two of the company’s founders, Kip Fyfe and Victoria Brilz, have since gone on to found another company, 4iiii Innovations, which also works in the wearable tech space developing products for elite and casual athletes. 4iiii’s cycling technology has been used in professional road races around the world, including the Tour de France. The company employs about 70 people.

The small-town nature of Cochrane and the inter-related histories of some of its most prominent tech companies means that nearly everyone involved in the sector here knows each other. They play hockey together, cycle together on weekends, and mentor and encourage each other.

“I’ve always had an interest in electronics,” says Groenland. “But I think growing up in Cochrane made the idea of launching a start-up a little more real for me. It feels a little bit more like, ‘OK, I can do this,’ because the guys down the street are doing it.”

“A lot of us have relationships that go back 20 years. So it’s not just business, it’s personal,” adds Jim Rooney, managing director of Garmin Canada. “But we also really feel that passion to help this sector continue to grow and make it sustainable.”

Challenges and opportunities

There are challenges to growing tech in small-town Alberta — not the least of which is recruitment. Communities everywhere are competing to attract highly-skilled, technologically literate workers and Cochrane is no exception.

“Garmin’s a global company and hiring tech workers is challenging everywhere, including here. So we’ve cast the net really wide, we draw from Alberta and B.C. but we’re also recruiting internationally,” Rooney says.

Local companies also have to compete with financial incentives offered by other jurisdictions, says Fyfe. For example, in last fall’s provincial budget, the UCP government eliminated the Scientific Research and Experimental Development (SR&ED) tax credit, a program which 4iiii used to be able to use to cover some of the costs of an engineer’s salary and which other provinces still offer.

“I now have to pay 10 per cent more for an engineer than someone in B.C. does and 30 per cent more for an engineer than someone out of Quebec . . . so it’s a pretty big hit to our economy in the tech space,” Fyfe says.

“The DNA of people in Alberta is very can-do, get-it-done — that hard-working ethic,” says Brilz. “So Alberta has what we need (to build the tech sector) but we do need those programs and incentives in Alberta to help us leverage all that talent so it doesn’t leave.”

‘Why not benefit from both?’

According to Genung — who has travelled to the Canadian tech hotbed of Waterloo, Ont., several times to get ideas about how what he can do as mayor to support Cochrane’s tech companies — it takes more than just low taxes to encourage the growth of a budding sector.

That’s why town council has set aside $10.5 million (part of which comes from a provincial grant) to build a three storey transit hub which will also serve as an “innovation centre,” offering low-rent workspace and business support services to start-up tech companies.

“Once they reach a certain size threshold, we’ll ask them to leave and hopefully they’ll set up their business in the community and more start-ups will move in,” Genung says.

Council is also working to build Cochrane’s reputation as a tech hub by employing future-forward solutions to municipal problems. The town was the first in Canada to offer a fully on-demand transit service that allows riders to summon a bus through an app, and it’s also looking into installing smart sensors on garbage cans that could alert town staff when the bins need emptying.

The town also has a volunteer tech advisory committee that meets every two weeks to discuss other ways the municipality could support and enhance the growth of Cochrane’s tech sector.

Genung says he is thrilled to see increased interest in the tech sector from the province as well as other communities, because he believes it will lead to better post-secondary programs, better supporting infrastructure, and a larger base of skilled workers that will benefit everyone.

“I’ve had some pushback from some people, saying ‘why are you so quick to jump off of fossil fuels? We need the oil and gas industry in this province,’ ” Genung says. “And I say, ‘Yes. We’re not saying we’re not doing that anymore. But we can have both. Why not benefit from both?”

Question

Conduct an analysis of the technology Industry in Canada based on Porters Diamond framework and the chapter on globalization. Each of the four dimensions AND the role of government and chance should be evaluated in your analysis.

Identify and discuss 3 to 5 points from each dimension of the diamond framework. As a part of your response answer the following question:

Can Canada develop an industry cluster in the technology industry and develop a competitive advantage over other nations?