27th Annual Global CEO Survey—Canadian insights

Key highlights

25%

of Canadian CEOs expect economic growth will improve this year, an increase from 17% in 2023 but still relatively pessimistic compared to global respondents

36%

of Canadian CEOs say their organization has adopted generative AI, compared to 32% of global participants

14%

of Canadian CEOs think generative AI will lead to a decrease in headcount in the next year, versus 25% of global survey respondents

Last year, our annual CEO Survey uncovered a startling fact underscoring the pressures leaders are under to reinvent their businesses: almost 40% of global chief executive officers told us their organization wouldn’t be viable in a decade if it stays on its current path. This year, we asked survey respondents the same question, and the results show the reinvention imperative has only grown, with 45% of CEOs questioning whether their organization will still be around in 10 years. As they look ahead, they expect key global forces of disruption, such as technologies like generative artificial intelligence and climate change, to play an even bigger role in driving change than in the past five years.

This year, our insights into the views of CEOs in Canada and around the world examines the growing reinvention imperative in more detail, particularly when it comes to the actions leaders are taking, the barriers they face in moving forward and how they can overcome them. We explore not only what Canadian and global CEOs are thinking, feeling and doing about the heightened urgency to change how they create, deliver and capture value but also what their survey responses reveal about key opportunities to accelerate the pace of reinvention.

We’ve divided our survey insights into three parts:

The reinvention imperative: How are Canadian and global CEOs feeling about the viability of their businesses, the forces driving reinvention and the economic outlook in 2024?

Generative AI, climate change and the evolving business landscape: What are CEOs doing about two key issues—generative artificial intelligence and climate change—that stood out this year and are only adding to the pressure to reinvent?

Key actions to overcome barriers to change and accelerate reinvention: What’s holding CEOs and the organizations they lead back from reinvention, and what can they do to move past them?

1. The reinvention imperative

Many CEOs are clearly aware of the urgency to change, with 45% of global respondents saying their businesses may not be viable in 10 years. That was an increase from 39% last year. While fewer Canadian respondents have tended to see an existential threat to their organizations, a third (32%) suggested their businesses may not be around in a decade, which was up from 24% last year.

Importantly, the vast majority of CEOs in Canada are taking action. Almost all (95%) of Canadian CEOs report having taken some steps to change how they create, deliver and capture value over the past five years. Over that time, 72% took at least one action that had a large or very large impact on their company’s business model.

Despite the actions taken, our survey shows many Canadian CEOs still aren’t confident about their organization’s long-term viability. Indeed, many of them expect pressures on their business models to intensify. As the charts below demonstrate, they think changes associated with technology, customer preferences and government regulation will have a significant and even bigger impact on the way they create, deliver and capture value in the future than in the last five years.

The impetus for Canadian CEOs to reinvent their businesses is intensifying

Question: Please indicate the extent to which the following factors have driven/will drive changes in the way your company creates, delivers and captures value in the last five years/next three years? Showing only those who answered to a large/very large extent

Last five years

Next three years

Technological change

%

Changes in customer preferences

%

Government regulation

%

Competitor actions

%

Climate change

%

Supply chain instability

%

Demographic shifts

%

An uncertain near-term outlook for Canadian CEOs

As they look ahead to some of these deepening long-term drivers of change, Canadian CEOs are also grappling with more immediate pressures and threats. Key among them is geopolitical conflict, which 47% of Canadian respondents (versus 53% globally) believe they’re at least moderately exposed to in the next 12 months. Other challenges on the agenda of Canadian CEOs include inflation, cybersecurity risks and climate change, although they tend to view themselves as less exposed to these threats than global respondents.

A key area of concern is the near-term economic outlook, which Canadian CEOs are significantly more pessimistic about than their global counterparts. Just 25% of Canadian CEOs think economic growth at home will improve this year, compared to 44% of global respondents who expect better times for their country’s economy.

While the percentage of Canadian CEOs expecting growth at home to improve was up from 17% last year, their overall uncertain outlook for the economy, combined with the risks and intensifying forces of change putting pressure on organizations, only adds to the reinvention imperative in 2024. Importantly, they need to transform continuously while applying a broader range of reinvention initiatives that both accelerate and sustain organizational change.

2. Generative AI, climate change and the evolving business landscape

Among the issues and trends compelling reinvention, two stand out for their particularly wide-ranging impacts. One of them is generative AI, which has the potential to transform business models, work processes and entire industries. Canadian CEOs tell us they expect to see quick adoption: 50%, for example, say generative AI will improve the quality of their products and services in the next 12 months, while 59% believe it will significantly change the way their company creates, delivers and captures value in the years to come.

Many of them have already started on their generative AI journeys, with 36% of Canadian respondents (versus 32% globally) saying they’ve adopted the technology in the last 12 months. And perhaps significantly for Canadian workers eyeing the technology with some trepidation, only 14% of Canadian CEOs believe it will lead their company to decrease its headcount in the next 12 months. This number was significantly higher among global respondents, at 25%.

On the other hand, we also saw signs of caution among Canadian CEOs toward the generative AI opportunity and the benefits it can bring. For example, just 29% (versus 41% globally) expect it will increase revenues in the next 12 months. And as the chart below shows, they see significant risks to their businesses, with cybersecurity ranking as a key concern.

When it comes to generative AI, Canadian CEOs are most concerned about cybersecurity

Question: To what extent do you agree or disagree that generative AI is likely to increase the following risks in your company in the next 12 months?

Balancing generative AI risks with the need to seize opportunities

The findings speak to the tensions between the potential risks, uncertainties about the new technology and the pressure to move quickly to seize the opportunities. But they also reinforce the need for organizations to raise the stakes on their AI strategies.

A key focus of those strategies needs to be on the workforce, particularly when it comes to upskilling their people for the changes underway. Canadian CEOs appear aware of this challenge, with 55% agreeing that generative AI will require significant upskilling of their workforce in the next three years even as a similar number (53%) believe a lack of skills is inhibiting their organizations from changing the way it creates, delivers and captures value. Closing these skills gaps will be key, including when it comes to equipping employees to do their part in helping mitigate the increased risks CEOs foresee as a result of generative AI.

Planetary work in progress

The other mega trend that stands out as a critical driver of reinvention is one on which past iterations of our CEO Survey have tended to show significant gaps between Canadian and global respondents: climate change. But our results this year show this has shifted somewhat, with about three-quarters of both Canadian and global CEOs saying they’re making progress on or have completed efforts to improve energy efficiency. A further 61% of Canadian respondents (58% globally) have finished or are in the midst of developing new climate-friendly products and services.

On the other hand, our global survey shows the need for business leaders to recalibrate their views and expectations around climate change, including when it comes to perceived barriers to decarbonization. While Canadian respondents were more likely than global CEOs to cite barriers, such as lack of demand from external stakeholders (53%) and lower returns from climate-friendly investments (47%), it’s important to consider evidence to the contrary. For example, two-thirds of participants in our latest Global Investor Survey said companies should spend money on addressing relevant environmental, social and governance (ESG) issues even if it reduces short-term profits.

Given their views about the barriers, it’s not surprising that fewer Canadian CEOs (29%) than global respondents (41%) said they had set lower return requirements for climate-friendly investments. But with many CEOs also acknowledging that climate change will change how they create, deliver and capture value in the coming years and increasing evidence that companies’ track records on ESG issues will be a key lever of value creation, it’s important for leaders to find ways to turn perceived barriers to decarbonization into opportunities. This could include investing in nature-based climate solutions, working closely with their chief financial officers to identify which interventions will have the biggest impact and taking advantage of efforts to enhance ESG reporting to communicate the value of sustainability investments to stakeholders, including investors.

3. Key actions to accelerate and sustain your reinvention

If Canadian CEOs are looking for more evidence of the need to reinvent their businesses to adapt to today’s intensifying forces of change, our survey also uncovered a link to a critical outcome: profit. As shown below, an advanced analysis we conducted of the survey data revealed a positive association between self-reported profit margins and significant moves to reinvent the business. Among Canadian respondents, the survey highlighted a notable link between profit and new technology development.

Reinvention is associated with higher profit margins reported by Canadian CEOs

Question: To what extent have the following actions impacted the way your company creates, delivers and captures value over the last five years?
Question: What was your company’s profit margin for the most recently completed fiscal year?

As the link between reinvention and sustained outcomes becomes clearer, what can Canadian CEOs do to accelerate change? Our global survey identified several key actions, including:

Turn barriers into opportunities

When we asked about factors holding back companies from changing the way they create, deliver and capture value, several fell within the realm of CEO control, such as limited financial resources and bureaucratic processes. Organizational inefficiencies were a significant concern, with Canadian CEOs suggesting 44% of time spent on a range of processes we asked about were inefficient. Among the top areas of concern, as shown in the chart below, were performance reviews and emails.

Canadian CEOs estimate administrative inefficiency at 44%

Question: What percentage of time spent in your company on the following activities or processes is inefficient?

Emails

%

Performance reviews

%

Addressing technology issues

%

Procurement/contracting processes

%

Hiring processes

%

Information-sharing meetings

%

Payroll processes

%

Expense approval processes

%

Business investment approval processes

%

Decision-making meetings

%

Reducing inefficiencies is one area where investments in technologies like generative AI can help. And by engaging with employees to help them feel safe proposing new ways of doing things and giving them an active role in change and reinvention, CEOs can not only uncover opportunities to accelerate priorities like technology adoption but also find even more solutions to the inefficient processes holding companies back.

Pinpoint your most important moves

Our survey also highlighted the key role of nimble resource allocation in enabling critical reinvention initiatives. As further advanced analysis we conducted of the data shows below, higher levels of annual resource reallocation were associated with a greater degree of reinvention.

Higher levels of reallocation by Canadian CEOs are associated with a greater degree of reinvention

^{Note: Index score values are derived from a factor analysis of the extent of impact the following actions had on how companies create, deliver and capture value: adopted new technologies that enhanced our capabilities; developed novel products/services; formed new strategic partnerships; developed a new technology in-house; implemented novel pricing models; made acquisitions; and shifted from a global supply chain model to a regional one.}

But our survey shows Canadian CEOs could be doing more on the reallocation front. A larger proportion (70%) of Canadian CEOs than global respondents (64%) say they reallocate less than 20% of their companies’ resources across the business from year to year. This is an area that requires more attention given evidence of the positive impacts of making tough calls about an organization’s portfolio of assets and the range of capabilities it has as well as the benefits of looking beyond a company’s walls by embracing strategic partnerships, alliances and ecosystems.

Keep your antennae out

While our survey shows Canadian CEOs are taking important steps to strengthen their organizations, our findings also highlight the need to further acknowledge the scale and the urgency of the challenges they face. Not only are Canadian CEOs less likely than their global counterparts to question their organization’s viability after 10 years, but as we noted above, they also tend to view themselves as being less exposed to a range of key risks.

Staying ahead of deep global trends and emerging risks is critical because, as we’ve seen repeatedly in recent years, companies face complex threats—like geopolitical conflict, macroeconomic volatility, inflation and cyberattacks—that are increasingly interconnected. Our global survey also shows CEOs who are more concerned about their organization’s long-term viability are doing more than others to adapt to today’s intense business pressures, which only heightens the need for Canadian executives to look at additional measures to spot emerging risks and hazards. Those who do so will be better able to see the urgency to not just accelerate change and reinvention but also engage their teams and the whole organization in sustaining it.

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