Elio Luongo is CEO and senior partner, KPMG in Canada
Canadian CEOs are confident. They believe in the Canadian economy, they believe in their industries and they especially believe in the ability of their own companies to grow.
But after a year of turbulent capital markets, continued geopolitical shifts, growing trade fights that have seen new tariffs and frictions, and the advancement of new technologies that are disrupting the way business is done, that confidence is waning.
KPMG’s 2019 Canadian CEO Outlook found that confidence in the Canadian economy dropped 15 percentage points over the past year and now sits at 79 per cent. This is still a strong number, but the downward trend among our chief executive officers is in sharp contrast to that of their global counterparts who reported an increase in confidence over 2018.
In compiling the Outlook, we talked to about 1,300 CEOs from across the globe about the biggest issues that keep them awake at night – and the strategies they are employing to address these risks. Both Canadian and global CEOs told us the environment, territorialism and disruptive technologies were their top three concerns.
For Canadian companies, lack of consensus on environmental issues weighs heavily given our disproportionate dependence on the resource sector. And with nearly a third of our gross domestic product tied to exports, growing trade differences with and between Canada’s two largest trade partners raises concerns about the continuing health of our economy.
While our leaders are carefully watching how these national and geopolitical issues pan out, they are putting their focus on technology. Almost two-thirds plan to increase investment in disruption detection and innovative processes – with the same number planning to collaborate with innovative startups.
But CEOs must also brace for the effects of automation and artificial intelligence on their work force. It comes down to culture, and three-quarters of CEOs say they want a culture in which failure in pursuit of innovation is tolerated. However, barely half say that it exists today.
The human side of the technology equation is key to not only the success of individual organizations, but for our economy as a whole. To be competitive in an increasingly digital world, Canadian organizations will need to find and foster talented people who can drive and sustain the resulting transformations. But unfortunately, Canada is on track for a major technology talent shortage in the next five years.
Nearly two-thirds of CEOs say difficulty finding employees with the required skill sets is already hurting growth and with tech juggernauts such as Amazon, Google, Uber and others increasingly jockeying for workers in Canada, the competition will only get tougher.
This means nurturing talent within their organizations will be more imperative than ever. While it is encouraging to find that 44 per cent of Canadian CEOs plan to upgrade the digital skills of more than 40 per cent of their work force, this likely is not enough. The commitment of their global peers is nearly twice that of Canada, with 81 per cent planning to increase the skills of their work force.
Of note, 79 per cent of Canadian CEOs say they believe technologies such as artificial intelligence and robotics will actually create more jobs than they eliminate – putting even more pressure on a tight skills market.
And where talk of digital disruption is near, cybersecurity is never far behind. Concern over a cyberattack has increased with 60 per cent of Canadian CEOs now seeing it as inevitable. And despite continued investment in corporate defences, they are increasingly less confident in their ability to weather the digital storm.
Interestingly, Canadians are even more anxious about cybersecurity than their global peers. It is little surprise, then, that more and more Canadians view information security as a key strategic function – one that is a near necessity to maintaining integrity in an increasingly risky environment.
However, there is an important distinction. In conversation with our clients, many view their investments in cybersecurity as less about generating tangible benefits and more about avoiding a severe competitive disadvantage in an evolving digital landscape.
The good news is we are making progress. As more Canadian organizations explore how to leverage the might of new tech such as artificial intelligence, blockchain and “big data” analytics for their operations, they are doing so with a greater confidence and a heightened awareness of their potential risks.
But in today’s world of lightning-fast change, being anything less than full-in means you are falling further behind. Chalk it up to less experience with new technologies or the cautious “Canadian way,” but Canada has been slow to catch up to the new digital “normal.”
Digital is driving fundamental change at a rapid pace and to continue to compete with the world, Canada needs to step on the pedal.