Canadian CEOs embrace disruption as an opportunity not a threat Français
Jun 13, 2017, 06:59 ET
KPMG survey reveals CEOs optimistic about Canada's economic future yet wary of global outlook
TORONTO, June 13, 2017 /CNW/ - Despite today's economic, geopolitical and technological uncertainty, Canadian CEOs are more optimistic about their company's growth in the next 12 months than their global counterparts. In the face of these challenges and uncertainties, it is becoming clear that the time to "disrupt and grow" is now.
Launched today, the second annual KPMG in Canada CEO Outlook survey provides rich insights into the major forces disrupting the Canadian business landscape, and important perspectives on how CEOs are equipping their companies and themselves to manage these challenges over the next three years.
"This year's Outlook emphasizes that disruption has become a fact of life for Canadian CEOs and their businesses as they respond to heightened uncertainty," says Elio Luongo, Chief Executive Officer and Senior Partner at KPMG in Canada. "Importantly, Canadian CEOs see disruption as an opportunity to transform their business model, develop new products and services and reshape their business so it is even more successful than it was in the past."
Canadian CEOs embrace disruption as opportunity vs. threat; majority actively disrupting their sectors
Three-quarters of Canada's CEOs (75 percent) see disruption as an opportunity for their business, not a threat, and 86 percent say they are not waiting to be disrupted by competitors; instead, their business is actively disrupting its sector. Furthermore, the majority (98 percent) of Canadian CEOs (compared to 74 percent of global CEOs) believe that in three years they will largely be the same company they are today.
Canadian CEO strategic top priorities have shifted significantly from 2016; innovation missing from the top of the list
Business digitization is today's number one focus area, rising from sixth place last year. Limiting brand risk in an age of transparency rose from fourth place to tie at first place in 2017. Greater speed to market came in as the second top priority, while three others tied for third place – stronger client focus, talent development and becoming more data driven. Innovation, often seen as a strong path to growth, and part of the government of Canada's strategic economic agenda, is not among the top priorities.
To drive growth, 41 percent of Canadian CEOs are prioritizing increased penetration in existing markets, 20% by vertically integrating their supply chain and only 16% are focusing on innovation. This compares to their global peers who plan to drive growth through a wide variety of strategies including increasing penetration in existing markets (53 percent), focusing on innovation (47 percent), penetrating new verticals (32 percent), and expanding into new geographical markets (21 percent).
Canadian CEO confidence in global market has declined; Central/South America a priority focus
Down significantly from 81 percent in 2016, CEO confidence in the global economic outlook has dipped to 43 percent. Conversely, most Canadian CEOs (75 percent) are confident about Canada's economic growth, while 82 percent believe their own company will grow in the next three years. Similarly, most Canadian CEOs (55 percent) are confident in their own industry's prospects for growth in the next three years, down from 85 percent in 2016. When it comes to growth opportunities, 63 percent of Canadian CEOs are focusing on Central and South America, 31 percent are focusing on Canada and 24 percent see growth opportunities in the US.
Canadian CEOs focused on impact of geopolitical risk; protectionist policies on the rise globally
The majority (86 percent) of Canadian CEOs are bolstering their management teams to better understand geopolitical risk and 84 percent are spending more time on scenario planning given today's uncertain geopolitical climate. Globally, 52 percent of CEOs believe the political landscape has had a greater impact on their organization than they have seen for many years and 31 percent think protectionist policies in their country will rise in the next three years.
Majority of CEOs: top-line growth expected to rise amidst tax, inflation and interest rate increases
The majority (96 percent) of Canadian CEOs believe tax rates will rise, 90 percent say inflation will rise and 80 percent expect interest rates to rise over the next three years. And despite concerns that inflation, interest rates and tax rates will rise in the next three years, Canadian CEOs are confident their companies will experience top-line growth over the next 12 months.
Growing number of CEOs feel fully prepared for cyber event; many less prepared for hacking and ransomware attacks
Canadian CEOs clearly believe they are making progress in their management of cyber. Over one-third (37 percent) of Canadian CEOs feel they are fully prepared for a cyber event, compared to their global counterparts at 42 percent. While this is up from 13 percent and 25 percent respectively in 2016, it does not mean that companies will escape unscathed in a cyber breach. Nor does it confer equivalent levels of protection for every type of cyber event. What's more, 63 percent of Canadian CEOs say they are only somewhat prepared for social media hacking and 59 percent are only somewhat prepared for a ransomware attack, an employee-led breach or a distributed denial of service (DDoS) attack.
To learn more about Canadian survey results, visit kpmg.ca/CEOOutlook.
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About the KPMG in Canada's CEO Outlook survey
This is part of a study by KPMG member firms across the globe that included 1,261 international CEOs in 52 countries, the KPMG in Canada CEO Outlook survey includes perspectives from 51 Canadian CEOs in 11 industry sectors across a three-year horizon. Conducted between 21 February and 11 April 2017, the majority of Canadian CEO respondents (90 percent) represent publicly-owned companies, with 41 percent reporting revenues between $500 million and $999 million, 33 percent reporting revenues between $1 billion and $9.99 billion and 25 percent reporting revenues in excess of $10 billion. Sectors represented in this year's survey include energy and utilities, banking, retail/consumer markets, manufacturing, investment management, automotive, insurance, telecom, technology, life sciences and infrastructure. Of the respondents, 53 percent have held their position for five years or less and 58 percent have been with their company for more than six years.
About KPMG
KPMG LLP, an Audit, Tax and Advisory firm (kpmg.ca) and a Canadian limited liability partnership established under the laws of Ontario, is the Canadian member firm of KPMG International Cooperative ("KPMG International"). KPMG member firms around the world have 189,000 professionals, in 152 countries.
The independent member firms of the KPMG network are affiliated with KPMG International, a Swiss entity. Each KPMG firm is a legally distinct and separate entity, and describes itself as such.
SOURCE KPMG LLP
For further information: Jennifer Larson, National Manager, Communications, KPMG in Canada, 416.777.3895, jenniferlarson@kpmg.ca
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