Editor’s note: grinding issues

Okey Chigbo, Editor of CPA Magazine, introduces the features in the October 2014 issue.

It is always a surprise when large companies that seemingly possess the sturdiness and stability of mountains and continental land masses suddenly sink beneath sea level. Despite the evidence that the death of large companies is the norm rather than the exception, the shock is often palpable when an RCA or Kmart ceases to exist. Why do large companies die? In typically fearless fashion, CPA Magazine elected to wrestle with this muscular question that has floored the best business minds for more than a century.

In Why Big Companies Fail, writer Yan Barcelo tries to uncover the key factors that led to the demise or diminution of Canadian corporate leviathans such as Nortel and RIM. Perhaps it is possible to dig far enough to discover universal rules that help, that make it possible to avoid such crises.

Barcelo’s inquiry suggests that, yes, "some factors stand out more than others." One of the biggest, the evidence suggests, is inertia and innovation avoidance. Bruce Good, executive director of the Centre for Business Innovation at the Conference Board of Canada, says that "large companies become complacent with their procedures and products ... the more rigid the processes, the more difficult it is to manage any innovation." It may be what happened to BlackBerry, the giant that thought it had an "unassailable position" among business clients. Then, to find out how companies might avoid such a fate, take a look at Genius at Work, which describes how firms are creating systems to successfully cultivate and manage innovation throughout their ranks.

Abuse in the public healthcare system is a well-publicized matter. But what about abuse in the private healthcare sector? According to some experts, Canada spends about $140 billion in the public healthcare sector and $60 billion in the private. The fraud figures may run up to $20 billion yearly. In The abuse of benefits, Yan Barcelo examines the rising costs to employers of providing benefits to employees. "Employers ... may not appreciate the extent to which fraudulent conduct on the part of some of their employees ... contributes to escalating premium levels," says Daniel Tourangeau, a director at LBC International Investigative Accounting Inc. Fraud costs everyone, writes Barcelo, and could result in reduced coverage for everyone.

The issue of corporate taxation appears to be of great interest to readers. In the April issue of CPA Magazine, we ran a feature about aggressive tax avoidance among corporations (A corporate tax to grind). Some of the back and forth correspondence about it can be found in this month’s issue. As part of the discussion on the subject we asked Brian Kingston, senior associate with the Canadian Council of Chief Executives, and Lincoln Schreiner, partner at PwC, to present the corporate side of the case. Please see Corporate Tax: the Bigger Picture.