What does a changing landscape and renewed uncertainty mean for Canadian private company CEOs?

When we surveyed chief executive officers for our 2022 CEO Survey late last year, Canadian private company leaders were very optimistic about global growth. But so much has changed since then, with many of the threats CEOs were watching out for even more relevant now than a few months ago. So what should private company leaders be thinking about given renewed uncertainty?

Building on the strengths of private companies

The good news is Canadian private companies have several strengths that will help them navigate the uncertainty. An important one is their agility. Our survey found private companies are able to move more quickly to approve and commit resources to new initiatives, which will be critical to the digital investments and other changes necessary to create sustained value and outcomes.

Another advantage is their trusted relationships with their stakeholders. This year’s survey looked at several issues related to trust, which has emerged as a critical challenge at a time of rising disruption and polarization. On many of those issues, private company CEOs saw a clear edge for their organizations.

For example, more Canadian private company CEOs (63%) said customers choose their products and services because of their organization’s values than their counterparts at publicly listed entities (51%). Private company leaders were also more likely (83%) to say their customers recommend their products or services to family and friends. Among respondents at public companies, 71% of respondents said this about their customers.

Cybersecurity the top concern for CEOs

While these strengths will be key to navigating change, they won’t be enough to address the significant challenges leaders are facing. Our survey showed Canadian private company CEOs are paying close attention to key threats, with 51% very or extremely concerned about cybersecurity risks and 42% saying the same about macroeconomic volatility.

Private company CEOs were also clearly aware of the impacts of these threats: our survey showed 48% of those expressing high levels of concern about these risks worry they could hinder their ability to sell products and services. A large number (35%) also believed cybersecurity threats could impact plans to innovate through technology. These findings are a clear illustration of the interconnected nature of the issues organizations are dealing with: even though private companies are able to move quickly to adopt new initiatives, other challenges—like cybersecurity risks—could hold them back.

A growing urgency around ESG matters

Canadian private company CEOs may also be underestimating other key threats, notably climate change. Just 28% said they were very or extremely concerned about this threat, with only 9% signalling their organization has committed to reducing greenhouse gas emissions to net zero. This is one example of areas where we saw gaps between the responses of Canadian private company CEOs and their counterparts at publicly listed entities, 24% of whom say their organization has committed to net zero. There was also a gap with global private company respondents, 15% of whom cited a net-zero commitment by their organization.

The gaps also showed up in other questions around environment, social and governance (ESG) matters: for example, 26% of Canadian private company CEOs (versus 50% of respondents at publicly listed entities in Canada and 31% for global private companies) say their organization incorporates gender representation rates into its long-term strategy.

Some of these gaps reflect size differences between Canadian public and private companies whose CEOs participated in our survey. There was a higher proportion of bigger organizations among the public companies surveyed, and our findings in Canada and globally showed larger businesses tended to be further ahead on many ESG-related issues. That’s understandable given the greater resources available to larger organizations, but it still doesn’t reduce the urgency around these issues or the need to harness the many opportunities and manage the risks they present.

Key opportunities for private companies

At the heart of many of these challenges are deeper forces of change impacting all organizations, which adds to the urgency to take action. These complex global forces include disruption caused by technology and climate change as well as declining trust amid rising concerns about issues like digital security. While they carry significant implications for all organizations, I see three significant opportunities for private company CEOs as they navigate these forces of change:

1. Closing the ESG gap: Whether or not you’re able to commit to net zero right away, what’s most important in the immediate term is to identify your strategy around ESG issues like climate change and the actions you can take that will make a difference now. By executing on those actions effectively and having credible reporting on your results, you’ll enjoy the many benefits of showing leadership on ESG matters.
2. Building digital trust: Despite the growing importance of digital security in today’s evolving trust agenda, as a private company executive, you might think your organization isn’t a likely target of cyberattacks. But as threat actors increasingly gain access to sophisticated tools at minimal cost, it’s more important than ever to embed cybersecurity into your culture. And as the threat landscape continues to change, leaders need to have a plan to address a breach. This includes deciding in advance what steps you’ll take and who you’ll call to help manage the situation.
3. Harnessing your agility advantage: While your organization may enjoy an advantage in being able to move quickly to adopt new initiatives, it’s also important to take a considered, strategic approach to your investments. This means identifying the capabilities that truly differentiate your organization from competitors, adopting the right technology and data to support your vision and aligning your portfolio—including the businesses you invest in and divest from—accordingly.

Creating sustained outcomes for your organization

While the challenges our survey revealed and renewed global uncertainty are adding to the long list of priorities CEOs are managing, I believe there are many opportunities for private company leaders to build on their organizations’ underlying strengths to ensure resilience now and in the future. To discuss how you can create sustained outcomes for your organization, contact me any time.