Best Managed Companies

Artika for Living: Canada’s Best Managed Companies 2017

Canada’s Best Managed Companies

Marc Couture had only a vague plan when he left a comfortable job as a brand manager at Procter & Gamble to become an entrepreneur. He knew he wanted to build a well-known Canadian brand that turned a profit. Moreover, he wanted the freedom to shift direction as he pleased, to let his instincts guide his evolving pursuits.

One may wonder, then, what Couture saw in a little-known two-person trinket shop called Artika. But he definitely saw something. And his hunch—that Artika could be both a profitable commercial success and a personally fulfilling entrepreneurial venture—proved correct.

The business has transformed immensely since Couture and his partner (in business and in life), Isabelle Laforce, bought it in 2007. Since then, the couple has taken Artika from a modest-sized manufacturer of trendy desk lamps and candles to a tech company that sells consumer-friendly smart-home devices around the world. Its Smartika line, currently comprising predominantly indoor and outdoor lighting fixtures, are connected to the Internet and can be programmed and controlled using smartphones or voice commands. This nascent Internet of Things (IoT) portfolio represents Artika’s shift from a commoditized business to an innovation factory: the firm grew its sales by more than 1,000% from 2010 to 2015, and now sells more than 1.4 million products annually. In fact, the company’s hunger for boundary-pushing growth is what helped it earn a spot on this year’s list of Canada’s Best Managed Companies. “We always had big goals,” says Couture. “I don’t think we envisioned [growth] would take this form, but we certainly wanted to do better.”

Artika for Living electronic component

Artika for Living electronic component. (Richmond Lam)

Artika’s evolution is the result of an ongoing cycle of contemplation, revelation and adjustment. In the beginning, Couture’s growth strategy for the business involved a type of reverse engineering. Instead of creating products and then finding customers willing to buy them, he approached large distributors—leveraging connections he’d made at P&G—and simply asked what they were looking for.

This approach produced a plan to design household appliances and fixtures, like lighting, floor tiles and plumbing parts—all devised at Artika’s Dorval, Que., headquarters and manufactured overseas.

A year after Couture and Laforce bought the business, Artika’s products were being offered across Canada and the U.S. at such retailers as Costco, Home Depot and Lowe’s. Within a few years, Artika was selling more than one million products per year to buyers in 13 countries. The company was growing and prospering, but Couture wanted more for it. By 2013, he started to think the opportunity might be in the IoT.

It’s now clear smart-home devices are having a moment. Nearly every gadget or appliance—from refrigerators to door locks to shower heads—can be connected to the Internet and controlled by a hand gesture or vocal cue. Companies have been disparately working toward a Jetsons-style home for years, and their efforts are starting to take hold in the mainstream. Technology research firm Gartner predicts that by 2022, a typical family home will contain at least 500 smart devices, with overall adoption increasing 30-fold from 2009 to 2020. “There are no other markets I can see that are growing that fast,” says Couture.

That was less clear four years ago, but Couture had faith in his hunch. To start, he needed both people and funds—futuristic home doodads don’t invent themselves—so he secured $12.5 million in subordinated debt financing from the Business Development Bank of Canada and Quebec’s Fonds de solidarité FTQ, with flexible five-year payment terms (the latter a reward for years of solid financial management). “This allowed us to invest heavily in R&D without worrying too much about the short-term reimbursement,” says Couture.

With no tech background himself, Couture hired an outside firm to help staff a new skunkworks, which took the name Smartika. Couture’s self-described “fanatical” approach to hiring means he will leave a position vacant for months if he can’t find someone who fits, both culturally and professionally. It is an exhaustive process that often goes beyond Canada’s borders (one-third of recruits come from abroad), but it results in a highly engaged staff with an oversized output. Couture reports that each one of his 85 employees does work that contributes to a million dollars in annual sales.

If Artika’s people are the business’s foundation, the systematic way in which the company conceives and follows through on new ideas is the scaffolding that guides its progress. Artika’s formalized five-step innovation process, dubbed Stage Gate, is meant to transform notions on napkins to products on store shelves. The process is ongoing, kicking off every two weeks with a pitch meeting. If the an idea appears promising to the team, its creator drafts a business proposal outlining a budget and timeline. From there, a team is assembled and resources gathered to pursue the idea. The company ponies up for the equipment needed to make it a reality, and then, finally, mass production begins. “I think this [structure] makes innovation a lot easier and limits risk in a streamlined way,” says Couture. It also helps nurture a culture in which taking risks is encouraged and rewarded (folks who deliver on bold ideas get generous bonuses).

As a tech outsider, Couture plays a key role in the R&D process, too. “Even though I don’t understand all the technical aspects of what we build, I try to focus on the user experience,” he says. Not long ago, Couture took home an in-development Smartika outdoor light to install himself. He found the two-part assembly process was needlessly complex, as was the system for connecting the device to his smartphone. He brought his notes back to the Smartika team, who then simplified both procedures.

That’s not just meddling on Couture’s part: He believes creating a seamless user experience is a crucial competitive differentiator. “[Couture’s] vision is to democratize this space,” says Anne-Marie Sicard, a partner with Deloitte’s audit and advisory services who coached Artika in its pursuit of the Best Managed designation. “He wants his grandma to be able to buy and connect the device.” As Artika achieves that aim, Sicard says the challenge will be keeping momentum going, noting that until now, efforts to claim its share of an emerging market have meant executing ideas quickly often trumped big-picture planning.

But as Artika grows, Couture’s vision is crystallizing. In the next five years, the company aims to integrate the entire 300-product Artika line into the Smartika catalogue. It’s an ambitious goal, but he believes Artika’s early-adopter positioning and finely calibrated culture of innovation will allow it to lead in a white-hot sector. “We already have a product line and large distribution channels,” says Couture. “I think we’ll be able to grow this IoT thing faster than anyone else.”