MDA | AbeBooks

No. 1: MacDonald Dettwiler and Associates Ltd.

For all the top-level technology that has come out of MacDonald Dettwiler and Associates Ltd. (MDA) over the decades – in satellite operations, imaging, robotics, computing and other areas – the company’s success in converting its business model stands out as possibly its greatest innovation.

The early MDA was focused on winning big government contracts by promising world-class engineering at a low price. Founder John MacDonald, who was an engineering professor at UBC, was able to recruit top minds from among his students, recalls one such grad, Dennis Connor, now founder and chair of QuestAir Technologies Inc. Connor was hired in 1976 and, like many other bright engineers, was quickly moved into a management position. This core team helped set a culture of innovation that has persisted in the company, he says. “You took the very best people you had and you had them interview the people you were potentially going to hire,” he says. “The challenge was, Let’s build a team that’s as good as us.”

But underbidding and overcommitting to win contracts led to several near-death experiences for the company, Connor recalls, and by the late ’80s MDA was looking for ways to get steadier commercial business out of its technology. Based on its background doing satellite imaging for governments, MDA jumped to a completely new way of making money in the mid-’90s, selling information services to companies involved in land management. With a leadership team schooled in front-line custom engineering, MDA brought a new level of ambition to IT services. John Geddes, MDA’s vice-president of business development and a 30-year veteran at the company, describes how in 2000 MDA built a national land data service in the U.K. from scratch in just six months. “This was a condition of our licence,” Geddes says with a chuckle. “But they never expected us to actually meet that condition. . . . That was unheard of.”

This new business wing targets mostly clients in real estate, banking and insurance that need to track vast amounts of housing data. MDA gathers info on such things as home sales, insurance renewals and material costs; manages the reams of statistics; and applies some heavy math to squeeze out useful information. If a client who owns housing in Florida wants a good guess on how much spare plywood to buy before the next hurricane season, MDA can crunch those numbers, Geddes explains. It’s perhaps not as glamorous as putting the Canadian flag into space atop a big robotic arm, but it protects the company from the boom-and-bust world of government contracts and now accounts for 60 per cent of MDA’s business.

BCB’s panel agrees that it is MDA’s culture of consistent innovation over a long period that makes it an example to follow. And MDA is still at it. In January it announced it had helped carry out its first surveillance mission for the Canadian Forces in Afghanistan with its new unmanned-aircraft service. It’s a new technology that will collect new kinds of data that, in turn, could generate new kinds of data-management services – the MDA model all over again.

No. 2: AbeBooks Inc.

Like in a fairy tale, AbeBooks Inc., a small Internet company founded by two Victoria couples – Rick and Vivian Pura, and Keith and Cathy Waters – stole a fortune right out from under a giant’s nose.

In 1995 AbeBooks recognized what many (including our panel) would consider an untapped niche in the used-books market. Buying a used book was once a cumbersome process, with potential buyers having to physically enter a bookstore and rummage through large collections of scattered, uncatalogued titles. AbeBooks changed all that. By putting the inventories of used-book stores on an online search engine, AbeBooks built a database of millions of books, which shopkeepers could display to customers worldwide in an easily searchable format. This created both a more competitive and accessible marketplace for customers and a bigger customer base for booksellers. “It was a service that completely didn’t exist,” says Christopher Hoefgen, chief technology officer of Backstage Technologies Inc. and a senior software engineer at AbeBooks from 1999 to 2005.

Online retailing giant Inc. expanded into the used market in November 2000, but AbeBooks continued, by all accounts, to do it better. “Amazon didn’t embrace the business model of a competitive network of sellers,” says Hoefgen. “They still wanted the control – basically to be the Federal Express of everything.” Since Amazon had its own vendors, its markup was significantly higher – so many customers, given the choice of the two retailers, stuck with AbeBooks.

Recognizing its disadvantage, Amazon ultimately bought its Canadian competitor, with the deal closing in December 2008 (estimates peg the purchase at between $90 million and $120 million). And despite new owners, AbeBooks continues its innovative retailing work in Victoria as a stand-alone operation – with its brand, not Amazon’s, the trusted name within the used-book trade.