Over the past year, an increasing number of companies have worried that they will not survive amid rapid technological change and growing economic uncertainties unless they reinvent themselves, PwC’s 27th annual global CEO survey found.
The report finds that artificial intelligence could be the key to reinvention, and consequently, to higher profit margins.
PwC interviewed 4,702 chief executives across 105 countries and territories, including 114 in Canada.
Forty-five per cent of CEOs said that their companies might not be viable in the next 10 years. This represents a 39 per cent increase from last year. A third (32 per cent) also suggested their businesses may not be around in a decade.
CEOs are also concerned about inflation, geopolitical conflict, and cybersecurity risks, as well as climate change, but the key area of concern remains the economy, with only 25 per cent of Canadian CEOs believing that the local economic growth will improve this year, compared to 44 per cent of global respondents who expect better times for their country’s economy.
A recent Capterra report also showed that the stalling economic growth rate in Canada would be the top factor influencing business goals.
“We are operating in a continued poly-crisis environment, further complicated by tough economic headwinds. Therefore, it is not surprising that Canadian CEOs are more pessimistic than their global counterparts when it comes to their outlook on economic growth,” said Nicolas Marcoux, CEO, PwC Canada. “While a soft recessionary landing may be anticipated, CEOs find themselves under increasing pressure to reinvent their organizations.”
On the bright side, the vast majority are taking action, mainly driven by the impetus of technological change and AI, the PwC survey indicated.
Many of them have already kicked off their generative AI journeys, with 36 per cent of Canadian respondents (versus 32 per cent globally) saying they’ve adopted the technology in the last 12 months. However, they continue to exercise caution, with most citing cybersecurity as a top risk, followed by misinformation, legal/reputational risks, and bias towards employees or customers.
For those who are optimistic about AI, upskilling, budget constraints and operational inefficiencies remain top barriers, the report highlighted.
Fifty-five per cent of Canadian CEOs, in fact, agreed that generative AI will require significant upskilling of their workforce in the next three years.
Additionally, they revealed that 44 per cent of the time currently spent on a range of work processes was inefficient.
“Reducing inefficiencies is one area where investments in technologies like generative AI can help,” the report reads. “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.”
However, while investing in new software is also critical to reinvention initiatives, 56 per cent of Canadian decision makers end up regretting a software investment decision, with a third blaming unforeseen costs, Capterra noted in its 2024 Tech Trends survey.
The survey advises companies to drill down on four challenges before making a software investment decision:
- Identifying the right technology
- Security concerns
- Staff acceptance and training
- Compatibility with existing systems
Companies should also create a list of potential product vendors, gather information using diverse sources like software comparison websites, online reviews, and even generative AI tools such as ChatGPT.
PwC, on the other hand, advises Canadian companies to focus on resource allocation to enable reinvention initiatives. This includes making tough calls about an organization’s assets and focusing on the benefits of looking beyond a company’s walls by embracing strategic partnerships, alliances, and ecosystems.
Canadian CEOs should also acknowledge the scale and the urgency of the challenges they face, and question the viability of their business models as well as the risks they are exposed to.
“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,” the PwC report said. “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.”