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Canadian findings from the 18th Annual Global CEO Survey /
Finding opportunities with change p1 / Growth, but not as we know it p2 / Rethinking
what business means p5 / Focus on government priorities p8 / Creating new value through
digital transformation p10 / Leveraging workforce diversity and adaptability p12 /
Creating new potential p14 / Participant snapshot p15 / PwC Canada leadership team p16 /
PwC thought leadership p18
Working within
blurred lines
www.pwc.com/ca/ceosurvey
Introduction As a part of our 18th Annual Global CEO Survey, we interviewed 1,322 CEOs from 77 countries, including 44 from Canada, during the fourth quarter of 2014. Results from the global survey can be found at www.pwc.com/ceosurvey.
Canadian findings from the 18th Annual Global CEO Survey 1
Finding opportunities
with change
Change is the new norm. Not only is the
Canadian business landscape changing,
it’s changing swiftly and more rapidly
than ever before. As a part of our 18th
Annual Global CEO Survey, we spoke
with CEOs from across Canada to get their
perspectives on a range of issues, including
business models, digital transformation
and accessing a more diverse talent pool.
Canadian CEOs told us growth will
come from non-organic sources:
strategic alliances and joint ventures,
mergers and acquisitions (M&A) and
outsourcing. Digital technologies will
also be a key enabler. It’s changing the
way customers, employees, shareholders
and suppliers interact with business. Not
only do Canadian leaders recognize the
importance of having a digital strategy,
they also understand the need to be digital
advocates.
Many CEOs we spoke with tempered their
opinions with the recognition that there
are more business threats today than ever
before. Compared to last year, Canadian
CEOs are more concerned about the cost
of regulation, the threats of cyber-security
and changing customer preferences. CEOs
in Canada are also embracing the evolving
Bill McFarland
world around them to create long term
CEO and Senior Partner,
sustainable businesses.
PwC Canada
Thank you to the Canadian CEOs who
completed the survey and shared their
thinking with us. Your contributions
added richness to the data and provided
perspectives beyond the numbers.
2 Growth
Growth, but not
as we know it
From plummeting oil prices and other When it comes to driving future
If you focus on your economic disruptions to new innovations sustainability and building their businesses
customer and treat your and digital technologies—Canadian CEOs amid wide-ranging economic disruptions,
customers as if they're recognize that change is the new status Canadian CEOs are moving quickly to look
going to be with you for quo. But that’s not stopping them from outside of traditional growth avenues, both
thinking about the future, even as they from a jurisdictional perspective and from
the next 50 years, you move to address new and evolving threats. an operational one.
make decisions for the Two-thirds (66% of Canadian CEOs) agree
long term. The rest will that there are more growth opportunities
play out. today than there were three years ago,
and with recent disruptions, Canadian
David I. McKay
CEOs will need to adapt. The reality is that
President and Chief Executive
Officer, RBC significant changes often lead to significant
opportunities, and Canadian CEOs want to
capitalize on that.
Canadian findings from the 18th Annual Global CEO Survey 3
New directions, evolving threats
In an era of constant change, it’s not
surprising that Canadian CEOs are
concerned about a wide variety of
economic, policy and business threats. Of
Canadian CEOs, 57% say there are more
threats to their business today compared
to three years ago.
On the economic and policy side,
Canadian CEOs are most concerned Figure 2: Concern with business threats
about overregulation and the government
response to the fiscal deficit and debt
burden, although the increasing tax Canada US
burden and geopolitical uncertainty are
also significant threats.
Cyber threats,
including lack of 86%
data security
Technology matters lead the way when
it comes to business threats to Canadian 64%
organizations. Cyber threats, including
lack of data security (64%) and the speed of
technology change (64%) were identified
equally as a concern by Canadian CEOs
—although substantially more US CEOs,
Speed of
technological 66%
(86%) voiced concern about cyber-threats. change
64%
Figure 1: Concern with economic and policy threats
73%
Availability
of key skills 78%
Overregulation
78% 61%
Government response to 70%
fiscal deficit and debt burden 72%
Increasing tax burden
68%
New market
entrants 63%
70%
52%
68%
Geopolitical uncertainty
72%
Protectionist tendencies of
national governments
43% Shifts in consumer
spending or 54%
58% behaviors
50%
Canada Global
4 Growth
Figure 3: Six most important countries to the growth prospects of Canadian companies
US China Germany UK France India
50% 36% 16% 16% 11% 11%
New global directions
Figure 4: Types of restructuring activities expected to be
For many years, Canadian companies have seen undertaken by CEOs over the next year
the US as very important to their business growth
outside of Canada. While the US is still a predominant Canada Global
force when it comes to the growth of Canadian
businesses outside of Canada, there are indications
Strategic alliances
and joint ventures 51%
that this might be shifting. This year, only 50% of
Canadian CEOs said that the US was very important 80%
to their growth prospects, compared to 69% who
identified the US as a key country in last year’s survey. 67% last year
Meanwhile, China has gained attention from CEOs in
Canada, with 36% saying it is very important to their
growth prospects, compared to 24% last year. Implement a cost
reduction initiative 71%
Canadian CEOs are seriously looking at how they
grow their businesses—from restructuring to 70%
finding more cost effective ways to conduct work.
Restructuring options, including domestic mergers
79% last year
and acquisitions (M&A) and developing strategic
alliances and joint ventures, are gaining priority on
the corporate agenda. 80% of Canadian CEOs expect
Domestic M&A
29%
to enter a strategic alliance or joint venture over
the next year, compared to just 51% of their global
52%
counterparts. Compared to last year, there has also 31% last year
been a significant increase in expected activity; in
last year’s survey, only 67% of CEOs expected to
enter a strategic alliance or joint venture.
On the M&A side, over half of Canadian CEOs expect
Outsourcing a
business process 31%
to undertake a domestic M&A over the next year, or function
compared to just 32% last year. Expectations of cross-
border M&A have almost doubled, from 17% last year 43%
to 30% this year. Canadians are also expecting to
undertake more outsourcing, with 42% believing they
37% last year
will outsource a business process or function over the
next 12 months. Cross-border M&A
27%
30%
17% last year
Canadian findings from the 18th Annual Global CEO Survey 5
Rethinking what
business means
When CEOs in Canada look around, they
59%
recognize that their biggest competitors We are probably at a time where,
aren’t who they used to be. More and when we are looking forward five
more companies recognize that their
of Canadian CEOs believe years from now, the financial
competition is extending beyond their services industry will not be the
organizations will
traditional competitors.
increasingly compete in same. So it [puts] a lot of pressure
Of Canadian CEOs, 59% believe sectors outside of their own on the organization to adjust, to
organizations will increasingly compete in over the next three years adapt, to change…It brings you
sectors outside of their own over the next also to think about the diversity
three years. In fact, over 85% of Canadian
Figure 5: Percentage of CEOs of your people and how you can
CEOs see a significant competitor from
outside their industry emerging.
who have considered entering bring that sort of momentum
a new industry over the past within the organization to be
three years
This competitiveness, in addition to other more comfortable and look for the
threats to their long-term sustainability positive side of the change.
and relevance, is prompting a number of Canada
Canadian businesses to rethink not only Have entered a new market Monique Leroux
36%
their business model, but what business President and CEO, Desjardins Group
means to them. As a result, many are
looking beyond their industry for new
business ventures and opportunities.
Over a third (36%) of Canadian CEOs
have entered a new industry within the
past three years.
Have not entered a new
industry, nor considered it
55%
Have not entered a new
industry, but have considered it
9%
6 Parnterships and competition
Figure 6: Percentage of CEOs actively engaged with partners on joint ventures, strategic alliances and/or informal collaborations
Canada Global Canada Global
Suppliers
41% Academia
32%
55% 39%
Customers Customers Firms from other
industries 26%
48% 41%
34%
Non-governmental
organizations
NGOs Competitors
27%
(NGOs) 20% 30%
41%
Government Government Start-ups
19%
39% 23% 23%
Business networks, Business networks,
clusters and trade clusters and trade
organizations organizations
39% 29%
Canadian findings from the 18th Annual Global CEO Survey 7
Forging diverse and Figure 7: Reasons for collaborating in joint ventures, strategic alliances
dynamic partnerships or informal collaborations
When it comes to redefining business,
Canadian companies appear to see Canada
significant value in forging partnerships
Access to new Ability to
and collaborations for advancing their customers strengthen brand
business. Over 55% of Canadian CEOs are and reputation
already actively engaging with suppliers 50%
on some form of joint venture, strategic 34%
alliance or informal collaboration, while
48% are actively engaging with customers
and 41% with NGOs.
Ability to strengthen Access to new/
Compared to CEOs globally, Canadian innovation emerging
companies appear farther ahead when it capabilities technologies
comes to developing a diverse range of
partnerships with other organizations
45% 27%
and stakeholders. For example, 41% are
actively engaging with NGOs compared
to 20% of CEOs globally, while 39% are
engaging with government compared to Access to new Sharing of risks
geographic markets
23% globally.
27%
Canadian CEOs identified a wide variety
39%
of reasons for working with partners
through joint ventures, strategic alliances
or informal collaborations. Chief among
these were access to new customers
Access to talent
(50%), the ability to strengthen innovation
capabilities (45%), access to geographic 36%
markets (39%) and access to talent (36%).
8 Government
Focus on
government priorities
The government has a big role to play when While innovation is considered a key
Given that we face fierce it comes to creating a business environment building block for many successful
competition in a highly that’s conducive to long-term growth. businesses, only 32% of Canadian
global economy, we'll At the same time, it can sometimes be CEOs believe developing an innovation
challenging for governments to determine ecosystem should be a government
have to drive greater
what priorities should take precedence priority. This lack of enthusiasm for
productivity and efficiency over others when making regulatory and government involvement could be
in how we do things. policy decisions. 73% of CEOs believe that attributed to the fact that only 9% of CEOs
Steve Orsini
the Canadian government should make believe the government has been effective.
Secretary of the Cabinet, Ontario creating a skilled and adaptable workforce
a key priority. Unfortunately, only 39%
believe the government has been effective
73%
of CEOs believe that the
at achieving this priority, which suggests
room for improvement.
Figure 8: Government priorities versus effectiveness
in the eyes of Canadian CEOs
Other government priorities in the eyes of Creating a skilled
Canadian government should
Canadian CEOs include creating a more and adaptable 73%
make creating a skilled and workforce 39%
international competitive and efficient
adaptable workforce a key
tax system and creating adequate digital
priority Creating a more
infrastructure. The government has
competitive and
57%
been slightly more effective in achieving 45%
32%
efficient tax system
these priorities, with 45% saying the
government’s effective with respect to Creating
the tax system and 43% saying it’s been adequate digital
43%
of Canadian CEOs believe 43%
effective at creating adequate digital infrastructure
developing an innovation
infrastructure.
ecosystem should be a
Supporting the 36%
government priority wellbeing of the
workforce 57%
Developing 32%
an innovation
ecosystem 9%
% agree outcomes % confident in
should be a government the government’s
priority effectiveness at
achieving outcomesCanadian findings from the 18th Annual Global CEO Survey 9
Working together
Figure 9: Focus areas for collaboration with government over the next three years
to achieve outcomes
Half of Canadian CEOs say they are
focused on collaborating with the
government to create a skilled and Creating a skilled Developing
adaptable workforce over the next and adaptable an innovation
three years, while 32% are focused on workforce ecosystem
collaborating to support the good health
and wellbeing of the workforce. 50% 18%
When building billions of dollars Supporting the Creating a more
worth of infrastructure, there is wellbeing of the competitive and
a greater onus on the CEO to workforce efficient tax system
clearly demonstrate that there 32% 9%
is strong evidence to back the
investment decisions and choices
that were taken.
Bruce McCuaig
Creating adequate
CEO, Metrolinx
digital infrastructure
20%10 Technology
Creating new value through
digital transformation
With new innovations being announced
You ignore these almost every day, it’s not surprising Figure 10: Technologies considered strategically
important to Canadian CEOs
disruptors [digital that CEOs in Canada see a wide variety
technologies] at of digital technologies as strategically
your peril. You try to important to their businesses. In fact,
84% of Canadian CEOs believe mobile
understand everything technologies for customer engagement
from a client point of view are strategically important. Other
and because we know
clients are using multiple
important digital solutions for Canadian
CEOs include data mining and analysis,
84% 75% 75%
channels, you need to cyber security and socially enabled Mobile Data mining Cyber-security
business processes. technologies and analysis
understand their touch for customer
points as you build that CEOs in Canada attribute a high value engagement
relationship with them. to the digital technologies that they
use. About 80% of CEOs believe digital
Victor Dodig
President and CEO, CIBC
technologies have helped with operating
efficiency, while 80% also said it
helped with the customer experience.
Other areas of value identified include 64% 59% 55%
enhancements to internal/external
Socially Internet of Cloud
collaboration, data and data analytics, enabled things computing
and brand and reputation. business
processes
Figure 11: To what extent are digital technologies creating value for your organization?
80% 80% 75% 75% 70% 68%
Operating Customer Internal/ Data and data Brand and Innovation
efficiency experience external analytics reputation capacity
collaborationCanadian findings from the 18th Annual Global CEO Survey 11
Digital technologies may be strategically
important and have high perceived value
to organizations, but without a fulsome
understanding of how to implement
the technologies effectively, Canadian
companies may not be able to achieve their
desired outcomes in a cost effective way.
CEOs here in Canada believe the
greatest factor for getting the most out
of their digital investments is having
the CEO champion the use of the digital
technologies. Canadian CEOs are getting
the message. According to our latest
Digital IQ survey, 70% of IT leaders
indicated their CEO is an active champion
in the use of IT to achieve business
goals. Critical success factors in the
implementation of digital technologies
include a well thought-out plan for
specific hiring and training strategies.
Figure 12: How important are the following
in helping your organization get the most
out of your digital investments?
86% 84% 84% 80%
CEO championing A clear vision A well-thought-out plan f or Specific hiring
the use of digital of how digital digital investments. and training
technologies technologies strategies to
can help achieve integrate digital
competitive technologies
advantage throughout the
enterprise12 Diversity
Leveraging workforce
diversity and adaptability
Of Canadian CEOs, 57% expect to hire
in bigger numbers in 2015, a significant Figure 14: Expectations for headcount over the next 12 months
increase over the 42% who forecast
increases last year. Given the focus
of CEOs on redefining their business
models, however, it comes as no surprise
that CEOs are looking at alternative
methods of staffing to address their talent
requirements. The reality is that many
companies see alternative delivery options
25%
à Stay
as a key opportunity for the future. Over the same
57%
40% of Canadian CEOs say that they’ve
already increased their reliance on 35%
alternative service delivery. á Go up last year
42% last year 16%
40%
Over 40% of Canadian CEOs say that
â Go down
23%
they’ve already increased their reliance last year
on alternative service deliveryCanadian findings from the 18th Annual Global CEO Survey 13
Focusing on diversity
Figure 15: Diversity and inclusion strategies at Canadian companies
Many companies in Canada recognize the
importance of having different viewpoints
and perspectives when it comes to
building success as an organization. That’s
why diversity is such a critical component
of talent management—one that appears
to be gaining priority on CEOs’ agendas. In
fact, over 66% of Canadian CEOs say their Have a diversity Do not, but are Do not, and are not
and inclusion planning to develop planning to develop a
company has a strategy, while a further
strategy a D&I strategy D&I strategy
66% 9% 20%
9% are planning to develop a one.
CEOs who have D&I strategies in place
believe their strategies have resulted
in significant benefits. Benefits include
attracting talent, enhancing business Figure 16: Of those with D&I strategies, value achieved as a result of these strategies
performance, strengthening their brand
and reputation and serving new and
evolving customer needs. Their ability to
innovate has also been positively affected
through diversity.
While diversity and inclusion are
important to Canadian companies, they 86% 79% 72% 72% 69%
are lagging behind in how they search
for talent, which could be limiting their Attract talent Strengthen Serve new Enhance Innovate
brand and and evolving business
access to the talent they need to be reputation customer performance
successful in the future. While 59% of needs
CEOs say they actively search for talent in
different geographies, industries and/or
demographic segments, globally 71% of Figure 17: Percentage of CEOs that actively search for talent across
CEOs are doing so. geography, industry and demographic segments
Canada Global
59% 71%14 Final words
Creating new potential
Today’s global business environment is dynamic—full of
opportunities thanks to new innovations and technologies,
yet buffeted by evolving threats that can cause pitfalls for
organizations who are unprepared. Here in Canada, leading
companies are well prepared to succeed. From exploring
business opportunities in other industries to forging strategic
partnerships, Canadian organizations are ready to take the
future in their hands.
As you think strategically about the future and creating new potential in your
organizations – consider these actions as a starting point:
Be aware: It’s not easy to stay ahead of the competition. You need to be
knowledgeable about what organizations are doing – both within your
industry and outside of it. Investigate new innovations and technologies to
determine what they can do for you, and what they could do to help you stay
ahead of the competition.
Be a champion: Digital technologies may be a key to future success,
but without a champion to lead the charge and ensure objectives are
achieved, the costs associated with implementation can far outweigh actual
benefits. As the CEO, it's important to champion your digital strategy and
define clear roles, accountability and governance for how this strategy is
executed.
Build partnerships: You don’t need to deal with every challenge alone.
From government and academia to industry groups and your customers,
formal and informal partnerships and collaborations can help you figure out
how to meet the needs of your customers in a dynamic world.
Create a culture through diversity: Diversity and inclusion is more than
a catch-phrase. In today’s world it’s a business imperative—driving value
across all aspects of an organization. Diverse perspectives, viewpoints and
outlooks can help you solve problems more effectively and come up with
more creative ways to engage and attract customers.Canadian findings from the 18th Annual Global CEO Survey 15
Participant snapshot
Survey respondents Organization type
Canada Global Canada Global
44 1,322 64%
34%
private
publically listed
54%
43%
private
publically listed
5% other / unknown 3% other / unknown
Gender of respondents Age of respondents
Canada Global Canada Global
86% male 93% male 18% < 49 32% < 49
14% female 7% female 50% 50–59 43% 50–59
30% 60+ 20% 60+
2% N/A 5% N/A
Number of industries worked in prior to current one by respondent
Canada 11% 18% 30% 16% 21% 2%
None One Two Three Four Seven or more
Global 29% 18% 19% 15% 13% 0%16 PwC Canada Leadership Team Your questions have answers, and we’re ready to help Our commitment to you is to turn advice into action. We’ll start by getting to know you. You do the talking, we’ll do the listening. Our tailored solutions will help you meet the challenges and opportunities of doing business in the Canadian market, and beyond. Connect with us today and start the conversation. Bill McFarland Tahir Ayub Serge Gattesco CEO and Senior Partner Managing Partner, Markets and Industries Managing Partner, Cities, Clients and Operations bill.mcfarland@ca.pwc.com tahir.ayub@ca.pwc.com serge.gattesco@ca.pwc.com Tracey Riley Brian McLean Chris Kong Managing Partner, Assurance Managing Partner, Consulting and Deals Managing Partner, Tax tracey.riley@ca.pwc.com brian.mclean@ca.pwc.com christopher.p.kong@ca.pwc.com
Canadian findings from the 18th Annual Global CEO Survey 17 Dig deeper Other thought leadership Global Data & Global State of Analytics Survey Information Security 2014: Big Decisions Survey 2015 Find out the role big data and enhanced data analysis play Today, security compromises are a persistent—and globally in setting the agenda for big decisions in 2015, and the pervasive—business risk. Find out what 9,700 survey process that business leaders will go through in making these respondents from around the globe said about these risks. decisions. Visit www.pwc.com/ca/consulting for more. Visit www.pwc.com/ca/consulting to download a copy of the report. Total Tax 2014 state of the Contribution: internal audit Surveying the profession study Council of Chief Executives The survey provides an analysis of tax data for sixty-three This survey, combined with one-on-one interviews with 125 member companies of the Canadian Council of Chief stakeholders, told us that when given the adequate resources, Executives and highlights the contribution made by these internal audit can find opportunities to increase its value and companies to Canadian public finances. its contribution to the business. Visit www.pwc.com/ca/tax to download your copy. Visit www.pwc.com/ca/audit to download a copy.
Explore the data Find out what global business leaders had to say by visiting www.pwc.com/ceosurvey. Here, you can dig deeper and uncover current perspectives. CEO Insights blog: Explore and debate the topics at the forefront of business leaders’ minds. Authored by specialists from around the PwC global network. Industry insights: A number of industry specific reports available. CEO interviews: Videos and perspectives from global CEOs. Data explorer: View data the way you want to see it. Country data available and viewable by theme. Want to take part in the discussion next year? If you are a CEO interested in participating in next year’s survey, please contact Diana Moore (diana.moore@ca.pwc.com) and have your voice heard! www.pwc.com/ca/ceosurvey © 2015 PricewaterhouseCoopers LLP, an Ontario limited liability partnership. All rights reserved. PwC refers to the Canadian member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. 4341-01 1114
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