Finding an opportunity is a matter of perspective. Some individuals are curious, some are frustrated, and some are accident-prone. We all find problems to solve in different ways. But I wanted to illustrate the emergence of one present opportunity and how we can assess it. We all know some technologies and capabilities that are absolutely inevitable, but that does not mean the time is right now.
This is a short story about policy, geography, changing climates, politics and technology; buckle up.
Arrive-Can’t
If you have been following the Canadian news recently, you will likely have heard about the ArriveCan app procurement debacle. In essence, the Canadian Federal Government paid a contracting organization an astronomical amount of money to build a travel management app during the COVID pandemic. It’s hard to imagine how a company of 5 could spend $54m in 6 months, but that’s what happened.
This piqued my interest because my team has always had a hard time winning Canadian federal government contracts. We have won a couple, but we are not well-designed for them. Generally, the boilerplate in these Requests For Proposals (RFPs) asks for the resume of the actual developer on the project. As a small team of experts, we have to try to keep our team busy, so it’s hard for us to guarantee that a particular team member will be available for a competitive bid we may or may not win. We’ve always felt that if we won the project but had to change the project team immediately, our customers would think of it as a bait-and-switch. So we’ve avoided these projects; much bigger companies or much smaller companies are better designed for these. Those, and contracting companies.
In fact, contracting companies are by far the winners in serving the Canadian federal government. This means that most of the Canadian technology sector serving Ottawa could be described as techno-gig workers. In many ways, contracting is fine; it’s a low commitment for all. Contractors just take on what they want and can write off their expenses as a small business. The companies have minimal fixed staff on payroll while commanding an army of resumes to attach to RFPs.
But this arrangement has resulted in a dearth of major Canadian primes because, in techno-gig land, no one retains any meaningful IP. Without that IP the contracting companies never do anything other than rent resumes to take on roles. One could argue that this simple accident of boilerplate has resulted in a structure which directly impacts Canadian productivity. Government spending is one of the major levers of fiscal policy. If that lever never creates IP then it has no long-tail impact.
I have always felt that investing in staff development is a more respectful employee-employer relationship, allowing us to build some human and intellectual capital.
So, in Canada, we have a government procurement problem. That’s no real surprise. But for the sake of this discussion, however, it means we have few major defence primes. In this industry article highlighting the Canadian defence industry punching above it's weight, all the six listed top companies are foreign.
MDA is an exemplary and notable exception to this pattern.
Mercator’s conceit
In Canada, we generally assume that our only border of concern is that with the US to the South or West (yeah, Alaska, remember?) Mercator inadvertently taught us* to think East and West. But in many ways, we also share a border with Russia, not to our far West (so far it’s almost East), but to our North. The Canadian Northern border is absolutely enormous, and it’s largely empty. There are some critical Northern First Nations and Inuit communities, but the vastness and ruggedness of this area cannot be understated. It’s also ripping cold, or at least it was.
Because of the nature of this area, one could say that our backyard is somewhat unfenced. For the last fifty years, that was largely fine. We’ve had the Dew Line in case things got really bad, but we are still here, so the gambit of mutually assured destruction seems to have paid off. But now, our political and environmental landscapes have changed. We have a belligerent Russia, we have an opening Northwest Passage, and we have a resource-rich North defrosting. Our backyard has become much more attractive.
Side Note: The Panama Canal is getting shallower as less fresh water is available from the surrounding forested mountains and lakes to keep the canal full. Less precipitation in the surrounding rainforests is having a drastic effect. This will ultimately be an economic disaster for Panama. As that route becomes less viable, the Northwest Passage will be enormously attractive as the quickest route from Europe to Asia.
Complementary Assets
We have thousands of sensors in various orbits around our planet—far more than ever. The sheer sensory capability we have access to today, even commercially, is stunning. We also have this notion of infinite compute. Obviously, that’s hyperbolic, but in practical terms, we have more storage and compute capability available than any of us are willing to pay for.
In fact, we have five critical complementary assets that can be put to work. In combination, these assets can be used in various patterns to build modern geospatial applications.
Knotty problem
So, We have several threads which we can consider in parallel.
We have a vast, rugged, remote area which is of increasing value.
That increasingly valuable asset is subject to an increasingly inhospitable political environment.
We have a procurement system which has been identified as problematic, thus creating political interest in demonstrating an alternative (sunnier?) way.
Critically, we have a technology environment that can be used to tie these threads together.
Not discussed above, but relevant:
Canada has been under increasing pressure to meet NATO commitments, which is hard to do without those major Canadian defence primes to buy things from.
The Canadian Defence budget has just been bumped up (as of today)
But what does a venture like this need to look like? Is this venture investable? What kind of company could build or operate this system? Should it be a company, or built by Canadian Government staff developers?
To define these options, we should consider the mechanics of a company like this and what organizations would be willing to pay for a Northern monitoring capability. Clearly, the Canadian Government would have an interest (that could be a combination of Canadian Border Services, the Coast Guard, the Territories, and possibly the Department of National Defence). Additionally, any shipping or shipping-related organizations would have an interest. Insurance and resource companies will also be motivated to understand ice presence or absence. But critically, each of these organizations will demand a slightly different product sculpted from a common monitoring service. These different products could be actuary reports, alert emails, anomaly maps, ice maps, and routing information wrapped up into PDF documents, emails, web maps and Application Programming Interface (API) endpoints. Each product demands a different complexity, time horizon, market positioning, sales structure, cost, and price.
So, would the juice be worth the squeeze? Only the market will decide!
This real-life thought experiment encourages us all to think about the threads we see lying about us. I have illustrated how modern geospatial technology could be leveraged to address a particular problem set which has developed within a particular policy, climate and political environment that I have been paying attention to.
So, what are you paying attention to? What do you see that no one else does? What collisions can you see? What threads are waiting to be tied together or woven into a tapestry? What technology or company do you think must be an inevitability? And, if you believe that, why would you not be the one to help that happen?
*euro-centric reductionists, see Transitions
Nice thread! I personally think that climate risk monitoring for regulatory reporting (e.g. CSRD) is a huge market that is opening up for geospatial companies and would love to hear your thoughts about it as well.