Focused on technology and M&A as key growth drivers; plan to be the disrupters in their sectors
Canadian CEOs are far more bullish on their ability to harness technology and grow their business than their global counterparts, finds KPMG’s 2018 Global CEO Outlook. The annual report surveys some 1,300 CEOs from around the world on the biggest risks facing their businesses and the strategies they are employing to address them and continue to drive growth.
Key findings in the KPMG 2018 Global CEO Outlook
|Confident in domestic growth||94%||74%|
|Plan to be the disrupter not disrupted||96%||54%|
|AI and robotics will create more jobs than eliminate||66%||62%|
|Already used AI to automate processes||22%||12%|
|Cyber attack will hit my company||50%||49%|
|Very well prepared to contain a cyber attack||58%||26%|
“Despite much debate about the potential trade headwinds facing the country, Canadian CEOs have a positive outlook for their own businesses and our economy as a whole,” says Benjie Thomas, Canadian Managing Partner, Advisory Services for KPMG in Canada. “In fact, business leaders in Canada are feeling an unprecedented level of confidence that has them aggressively ready to take on the challenges and opportunities facing their companies.”
A belief in growth
Canadian CEOs are confident the Canadian economy will continue to grow (94 per cent) over the next three years and they expect their businesses to grow (96 per cent) along with it. “Canadian companies have, for the most part, enjoyed strong earnings and profits over the past few years and are looking to deploy the large pools of capital they have stored up,” says Thomas. “While many will invest in organic growth, most CEOs say they are looking outside of the organization for new opportunities.”
Thomas expects 2018 will see a big uptick in M&A across the globe and Canada will be no exception. “Eighty-two per cent of Canadian CEOs said they will make an acquisition over the next three years. More than a third of those expect the acquisition to have a significant impact on their overall organization, suggesting some deals will be sizable.”
Thomas also thinks these deals will be transformative as CEOs cited a desire to speed up the pace of business model transformation, diversify their business and speed the adoption of new technologies as the primary motivations for acquisitions.
“The fact that Canadian CEOs are bullish about growth and looking outward for investment opportunities is great. But Canadian CEOs aren’t the only ones that think Canada’s fundamentals and open borders offer strong opportunities for growth. There are a number of strategic and financial investors seeking a foothold in Canada. So those CEOs who’ve been driving great business results should expect a knock on their door from a global investor looking for a piece of the action.”
Success in the digital age
KPMG’s 2018 CEO Outlook also found Canadian CEOs are focused on how to adapt to rapid technological advancements that are disrupting many industries. “Canadian companies don’t just feel they are embracing disruption, they feel they are creating it,” says Jonathan Kallner, KPMG in Canada’s Managing Partner, Clients and Markets. “In fact, 96 per cent of Canadian CEOs say that rather than waiting to be disrupted by their competitors they are actively disrupting the sector in which they operate. It is clear that Canadian CEOs have no plans to sit back and wait for startups to reshape their industries – our leaders plan to leverage technology to be the aggressor.”
Virtually all (98 per cent) are in the process of building Artificial Intelligence (AI) into their operations with nearly one-quarter (22 per cent) having already fully implemented AI in their processes and another 56 per cent using it in limited applications. “While the benefit of many of these applications is to drive costs out of the business, Canadian CEOs also see technology as key in growing their businesses,” adds Kallner. “Nearly two-thirds believe that investments in Artificial Intelligence and robotics will create more jobs than they eliminate, slightly higher than the global view.”
But Kallner cautions that CEOs need to make sure investments are not just focused on incremental innovation but that they are also investing in business model innovation which will ultimately help future proof an organization against being disrupted. “While it can be a challenge to run parallel processes to transform the digital and non-digital aspects of your business, long-term success depends on both. Technology is not a ‘one-time’ event and innovation never stops so companies that continually work to push the boundaries in these areas are poised to lead the transformation race.”
Growing cyber threats
The Outlook also found Canadian CEOs believe the risk of a cyber-attack is the greatest threat to growth. Thomas notes that half of the CEOs said it is no longer a case of if they’ll be hit, but a matter of when, and many have taken personal ownership to protect clients and their company from an attack. “A focus on putting the right people and processes in place has 86 per cent believing they are now well prepared to contain the impact of a future attack – with 58 per cent saying they are very well prepared,” says Georgina Black, Partner & National Leader, Management Consulting for KPMG in Canada. “This personal investment by Canadian CEOs gives them a far greater confidence than their global peers, where only 26 per cent said they were very well prepared for an attack.”
Access a full copy of the KPMG 2018 Canadian CEO Outlook at kpmg.ca/CEOoutlook.