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Is storytelling Waterloo’s killer app? An unorthodox theory behind tech success

Updated: Feb 11, 2022

Researchers Darius Ornston and Lorena Carmago told us how RIM/Blackberry's corporate misanthropy was a blessing in disguise for the Waterloo tech sector. They explained that in being an "Apathetic Anchor", keeping local tech companies at a distance, the smartphone giant was alone in its eventual discomfiture leaving the other neighbourhood players unscathed. But that isn't the only innovative theory offered by Ornston and his Munk School team, as we shall see.

. . . there was a professor, a book, and a trip. The professor was Bruce Morrison, who taught a fascinating class on European politics at Swarthmore College near Philadelphia and now teaches at Western University in London, ON. The book was Small States in World Markets, written in 1985 by a German-American political scientist named Peter Katzenstein. Passed on to Ornston by Morrison, it fired his imagination about remote and sparsely-populated countries like Finland and Denmark and how they could have such an enormous impact on global technology.

The trip was a year-long Fulbright scholarship to Finland in 2001 where Ornston studied how the small Nordic outpost gave birth to Nokia, at one time the biggest cellphone-maker on the planet. Emerging from this was Ornston’s PhD thesis, authored at the University of California-Berkeley, on how small states like Denmark, Finland and Ireland could script their own version of the 1959 Peter Sellers movie The Mouse That Roared. The thesis became a book published in 2012 called When Small States Make Big Leaps.

In 2018, Ornston followed up his first book with what could be considered its antithetical sequel – Good Governance Gone Bad. Like Small States, the new work examined innovation in small European states, but suggested that the same strengths that led to their success—being small and agile—could lead to stultifying homogeneity in thought, overinvestment in one sector and their downfall.

After completing his PhD at Berkeley, Ornston, a native of Connecticut and son of two Yale University microbiologists, taught for four years at the University of Georgia until an ad from the University of Toronto in 2014 caught his eye: The Munk School of Global Affairs and Public Policy at University of Toronto was looking for someone to teach and study “innovation and the city.” It seemed right in his sweet spot. “People had been asking me for years what lessons the Nordics held for North America. This seemed like a nice way to explore that question, and the parallel rise and fall of Nokia and RIM (Research In Motion, now called BlackBerry) was particularly attractive.” Ornston’s initial plan was to compare the trajectories of Nokia and BlackBerry, but an all-Canadian context soon bubbled to the surface: Nortel versus BlackBerry—Ottawa vs Waterloo. This focus led to several research papers, including one, published in January 2021 and co-authored by labour market researcher Lorena Camargo, offering the innovative theory that RIM/BlackBerry’s indifference to its home community was actually a good thing. This paper argued that the distance placed by the smartphone behemoth between itself and the surrounding tech companies enabled Waterloo to recover faster than Ottawa where, in contrast, Nortel was deeply involved in the local tech sector. (See my last blog, “Apathetic Anchor Fails to Weigh Down Waterloo” for a discussion of that paper).

A second paper, published last July, offered another unorthodox theory explaining the success of the Waterloo tech sector—storytelling.

Any concept that posits an intangible like storytelling as the catalyst for high-tech glory is bound to be considered, at best, strange; perhaps more at home at a folk festival drum circle than in the lecture theatres of The Munk School. To hard-nosed skeptics the idea seems maddeningly abstract—there’s nothing concrete to hold onto here, apparently. The seasoned actors—circuit boards and superconductors, game-changing technology, disruptive serial entrepreneurs, killer apps, ground-breaking IP, UW’s world-leading co-op program—while still in the cast are relegated to the wings while the ingenue storytelling gets the star turn on stage.

Yet storytelling is an important part of the mix, Ornston argues. Waterloo has simply done a better job than other larger tech clusters in weaving a mythology, conjuring up heroes and icons, celebrating its successes and passing on narratives from one generation of entrepreneurs to the next, notes the study, called How Stories Shape Regional Development: Collective Narratives and High-Technology Entrepreneurship in Waterloo, Canada.

Protagonist A is Wes Graham, “the father of computing” at the University of Waterloo. He built the university into a computer science juggernaut from the 1960s to the 1980s. Graham was an evangelist for commercialization, walking the talk by launching Watcom, the university’s first software spinoff and urging other students and faculty to follow suit. He backed this up with a paradigm-shifting policy that allowed entrepreneurs to retain ownership of their intellectual property.

But Graham wasn’t the only story-telling stalwart. Doug Wright, president of UW from 1981 to 1993, spent so much time building bridges with industry and singing the university’s praises that Waterloo attracted the somewhat pejorative nickname “Waterloo Inc.” It also spawned a joke about the tireless, globe-trotting, "absentee president." “What’s the difference between Doug Wright and God? God is everywhere. Doug Wright is everywhere but UW.”

Thanks to professors such as Larry Smith, who has written books and given TED talks on entrepreneurship, UW has raised commercialization to an art form. The quirky, squeaky-voiced Smith is a character straight out of a Harry Potter book. Known as the “career-whisperer,” he seems to wield almost magical powers in persuading students to cast off their fears and leap into self-employment.

“Entrepreneurial content is common at most universities, but it is systematic at UW. The charismatic and influential Larry Smith has always encouraged his engineering students to think big in his introductory economics class, but recent cohorts repeatedly depicted a personally transformative celebration of entrepreneurship,” Ornston writes. The university’s messaging is so strong that it tends to attract students who are more likely to launch a tech firm to begin with, he says.

A defining moment for UW as an incubator par excellence came in the early 2000s when the accounting firm PwC created a map showing all the startups that had emerged from the university. Resembling a solar system with UW as the sun and hundreds of startups orbiting around it, the map was “an a-ha moment” and a great story-telling device, one source told Ornston. That said, having a university in the community is no guarantee of tech success. Other cities such as Hamilton and Kingston boast universities with strong engineering programs yet they have not been able to transform their surrounding communities in the same way that Waterloo has, Ornston says.

Beyond the university gates there is much support in the community. It all started in the early 1990s when a cadre of tech entrepreneurs calling themselves the Atlas Group gathered to share stories and solve problems. Rebranding itself as Communitech in the late 1990s, the organization expanded into a full-service incubator offering a broad range of programs for startups, including some of the best peer-to-peer networking and mentoring programs of any tech community on the planet, says Ornston. A form of story-telling in its own right, mentoring has become one of the defining features of the region, his paper notes.

Another characteristic of Waterloo is the use of common narratives or metaphors to inspire the troops. The Waterloo area has a significant Mennonite population, and tech leaders eager to foster collaboration are quick to cite the example of Mennonites quickly gathering to erect a new barn after a fire. The trait of using common metaphors is also popular in tightly-knit Nordic communities.

Sometimes, the story-telling can slip into hype and exaggeration. One source described pitch competitions at UW’s Velocity incubator getting blown up into “huge rock star events” attracting up to 1,000 students. And the university and Communitech have elevated “middling successes into local heroes and rock stars,” in the eyes of industry reps in Ottawa and Toronto, Ornston writes.

And yet a little hype can pay big dividends. Even though it is smaller in tech employment than Toronto or Vancouver, Waterloo is branded by Communitech as the innovation capital of Canada, and the message seems to stick with the federal government. Innovation Minister Navdeep Bains “is sitting in Ottawa … and talking about Waterloo because they’ve been able to implant upon them the importance of doing that much better than anyone else,” an industry rep from Ottawa said in 2018. When the feds allocated funding under its Scale-Up Program in 2019, Communitech got as much as Invest Ottawa and MaRS in Toronto even though it serves a much smaller region, Ornston notes. “The squeaky wheel gets the grease. They’re very loud,” an Ottawa policy-maker said of Waterloo tech leaders.

One of the reasons Waterloo has been able to pull this off is unity. All the players in the tech community “sing from the same song sheet,” in contrast to the dissension that plagued Ottawa in the wake of the Nortel collapse, Ornston says. Much of the credit for harmony in Waterloo must go to Communitech. Telling the story “of this place” is a central part of its mandate. Iain Klugman, chief executive of Communitech from 2004 to 2021, “has been one of the greatest marketers in the world,” an Ottawa tech rep told Ornston.

The Munk School prof was moved to study Waterloo because in many ways it is the Canadian version of The Mouse That Roared. Waterloo is “a low-density outlier,” and “an unlikely competitor” on the global technology scene. It has succeeded where other university towns have not, it was virtually unaffected by the collapse of BlackBerry, it does not specialize in any particular tech category and it has not relied on military spending to fuel spinoffs as many other tech pockets have, Ornston says.

In 2015, Waterloo was the only region with fewer than one million people to make the top-25 list of startup ecosystems, according to Startup Genome’s global rankings. Its tech employment grew faster on a percentage basis than Toronto, Vancouver and other larger Canadian cities from 2001-16 and its venture capital funding went from almost nothing 20 years ago to first in Canada on a per-capita basis, Ornston notes.

He cast a wide net to research the story-telling study. It was based on interviews with 78 sources at companies, associations, universities, media outlets and policy bodies. Roughly two-thirds were from Waterloo and the rest from Ottawa and Toronto. Waterloo sources were drawn from three generations, dating from the 1970s to the 2010s. Due to the sensitive nature of some of the material, sources were not identified.

Ornston doesn’t have a research team. Instead he collaborates with members of the innovation policy lab at the Munk School, including co-director Dan Breznitz, considered a global expert on innovation. Students in the masters of global affairs program have served as research assistants and co-authors on some of his projects. Balancing research, writing and teaching is not easy, he says. But it helps to teach courses that blend with his research. “I get great feedback from the students when we discuss my research in class, and they seem to enjoy the opportunity to dig into a case study in greater detail.” And sometimes this mix leads to some unexpected discoveries—like the importance of story-telling in Waterloo. It’s almost as if Ornston is a master of the unorthodox, teasing out the hidden, little-known theories behind a tech sector’s success.

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