New uncertainty highlights need to transform and reinvent in 2025

Our 28th Global CEO Survey highlights the need to accelerate the pace of change within Canadian organizations even as executives tell us they’ve been taking action to strengthen and, in some cases, reinvent their businesses. The urgency comes not only from the latest challenges around tariffs and trade but also from the global megatrends, such as geopolitical tensions, technological disruption, demographic shifts and climate change, that continue to accelerate and are dramatically reshaping business and society.

While many of the almost 170 Canadian chief executive officers who took part in our survey are taking some of the steps needed to adapt to these trends, the results also point to some notable differences from their global counterparts. For example:

• 46% (versus 58% among global respondents) of Canadian CEOs expect to integrate generative AI, a key transformative technology driving change in business models and disrupting entire industries, into their core business strategies in the coming years.

• 63% (versus 72% globally) said they’ve developed an innovative product or service in the last five years.

• 72% (versus 81% globally) say they’ve initiated climate-related investments in the last 12 months.

Before exploring the survey findings in more detail, it’s important to acknowledge the very real pressures facing Canadian CEOs with the continued possibility of trade measures by the United States against Canada. As a result, we expect uncertainty to persist for the foreseeable future, along with potential impacts on economic growth, the value of the Canadian dollar, business investment and deals activity. In the meantime, Canadian CEOs are trying to determine how to respond given ongoing questions about both US policy and potential responses by Canada.

In the short term, key actions could include the following:

Ensuring supply chain resilience: Diversifying suppliers and assessing risks in supply chains will help reduce exposure to trade disruptions.

Operational adjustments: This could include restructuring plans to reposition resources effectively in response to changing trade policies. 

Evaluating mergers and acquisitions strategies: CEOs will need to analyze how shifting policies may complicate cross-border mergers and acquisitions and adjust valuations accordingly.

In short, now is the time for leaders to proactively prepare for new trade relationships, potential protectionist policies and a shifting currency landscape. But as they look to be agile in the face of immediate pressures like the US trade relationship, it’s also important for CEOs to consider long-term investments, which could include increasing research and development activities that support adoption of technology-driven solutions and other innovations that improve competitiveness.

A long-term perspective is particularly critical given the challenges around productivity growth, an area where we know Canada has been struggling for some time and which we believe will be key to successfully navigating potential trade actions. As we explore below, our annual CEO Survey looks at how Canadian CEOs are addressing three long-term issues—generative AI, reinventing business models and climate change—and highlights further actions they can take to harness new sources of value creation, strengthen their organizations and navigate the uncertain times ahead.

Business leaders have been carefully eyeing the potential of generative AI to boost productivity by automating complex tasks, enhancing decision-making processes and enabling the creation of innovative products and services. Recently, we’ve seen the technology evolve quickly to encompass AI agents that can autonomously perform tasks and even handle bigger projects over longer periods, helping transform and create more productive workflows.

It was positive to see that many Canadian CEOs are implementing the technology: 79% say they plan to adopt generative AI to any degree in the next 12 months, while a similar number have already done so. Even so, Canadian CEOs still lag their global counterparts, 87% of whom are looking to adopt generative AI this year.

This gap in adoption highlights a missed opportunity, especially when it comes to the depth of companies’ embrace of generative AI. As we can see from the chart below, Canadian companies are less likely than their global counterparts to be planning to incorporate generative AI into their strategies, processes and operations, product development, technology platforms and workforce and skills in the next three years, although the good news is there’s still time for them to catch up.

Looking beyond use cases

Part of the gap may reflect Canadian CEOs’ experiences with generative AI so far and the outcomes they’ve achieved from investing in it. Just 20% said the technology had increased company profitability in the last 12 months, versus 39% who expected it to boost their bottom lines last year. The lack of near-term, concrete outcomes and game-changing use cases has led to some speculation among business leaders we speak to that the promise of generative AI has been overhyped.

We hear the skepticism, but this is one technology where it’s critical to take a long-term perspective. Generative AI is more than a one-off technology play that can speed up and automate specific tasks. Rather, we’ve seen how it’s a general-purpose technology that has the potential to fundamentally reconfigure business models, accelerate the development of new products and services and reshape competitive dynamics within entire industries.

We believe that moving ahead even with some uncertainty allows organizations to benefit from learning about the technology as it evolves quickly so they can stay ahead of competitors—including AI-enabled startups—and avoid putting themselves at a lasting disadvantage.

Actions for Canadian CEOs

Canadian CEOs aren’t alone among peer countries in not being at the forefront of generative AI adoption: their colleagues in the United Kingdom, for example, were slightly less likely to say they plan to incorporate the technology into their core business strategies in the next three years, and even US respondents lagged global participants as well.

But there’s no time to lose, especially when, as we reported recently on shifting dynamics south of the border, a potentially lighter regulatory touch by the new administration could mean even bigger competitive pressures on Canadian companies to raise the stakes on their AI strategies. The imperative to move quickly becomes even greater when considering the role generative AI can play in mitigating the significant workforce challenges faced by Canadian CEOs, 53% of whom identified the low availability of workers with essential skills as a key threat this year.

So what can CEOs do? Key actions include:

Despite the challenges around AI adoption, many Canadian CEOs are aware that this isn’t the time for business as usual. Our survey found a growing recognition of the urgency to embrace business model reinvention as a way to not just ensure the long-term viability of their businesses but also deliver outperformance and productivity gains.

Even as our survey (which was in the field before it became clear that potential US trade actions against Canada could be imminent) found overall optimism about the world economy had risen—55% of Canadian CEOs expect global growth to improve, compared to 31% last year—respondents were clearly aware of the possibility for renewed uncertainty in 2025. In fact, macroeconomic volatility was a top threat identified by Canadian CEOs, along with other important issues like geopolitical conflict and concern about the availability of workers with key skills.

In fact, 35% of Canadian CEOs think their businesses might not be viable in 10 years, up from 32% and 24%, respectively, in our two previous surveys and showing a growing recognition of the need to accelerate business model reinvention. At the same time, we see evidence that Canadian CEOs are taking action to significantly change how their organization creates, captures and delivers value, as the survey responses below indicate.

Acquisitions, convergence among key opportunities to reinvent

Further analysis of survey responses found 60% of Canadian respondents had taken a least one significant action to reinvent their businesses. The findings show meaningful progress by Canadian companies, but we still can see gaps with global CEOs, 64% of whom have taken at least one significant reinvention action.

Take, for example, the number considering mergers and acquisitions, a key strategy for taking a big leap forward in uncovering new sources of growth and achieving the scale needed to invest in new technologies. Slightly more Canadian CEOs (58%) than global respondents (54%) are planning to make at least one acquisition in the next three years, highlighting the opportunities that inorganic growth can open for companies to access the capabilities and talent needed to create new value and become world leaders in their markets.

Just more than a third (37%) of Canadian CEOs say their company has begun competing in new sectors in the last five years, which put them on par with global respondents, at 38%. This shows the willingness of some Canadian CEOs to embrace the trend of industry convergence, in which traditional boundaries between sectors are coming down and shifting value pools among existing and new players in emerging business ecosystems.

Actions for Canadian CEOs

Importantly, almost half (46%) of Canadian CEOs said more than 20% of their revenues in the last five years came from competing in new sectors or industries, a promising finding showing the impact of some of the key changes underway. But we also encourage leaders to double down on reinvention given the opportunities it offers to deliver above-average returns and the threats and competitive dynamics that are reconfiguring industries faster than they may have thought.

So what can Canadian CEOs do next? Key actions include:

While decarbonization may be less of a focus for some Canadian CEOs in the face of the more immediate challenge of potential US trade measures, climate change, like geopolitical volatility, remains a defining force of our era. Even with today’s evolving landscape around climate change policy, we believe it will continue to be a key global megatrend that will shape business decisions and reinvention activity in the short and long term.

Consider one of the domains of business activity mentioned above—how we move—and the opportunities the push to decarbonize transportation systems opens up. The transition to electric vehicles, which remains a trend even as it has slowed down recently, will require key players, such as utilities, to significantly change and adapt their business models. At the same time, a shifting value chain clears the way for other providers—including mining companies, battery manufacturers and owners of charging infrastructure—to participate in a new mobility ecosystem.

When it comes to taking action on climate change and harnessing emerging opportunities from decarbonization, Canadian CEOs indicated they’re making progress but still show signs of holding back. Almost three quarters (72%) said they had initiated climate-related investments in the last 12 months, although this was lower than for global respondents, at 81%. This may in part be due to the fact that, as we can see below, some Canadian CEOs aren’t yet seeing the upsides of climate action.

Links between costs, profits and investment

These Canadian findings were broadly in line with global survey results, although it’s worth noting that CEOs elsewhere in the world were twice as likely to report having seen cost reductions as a result of climate-related investments. Advanced analysis of our global results also shows that making climate-related investments is associated with higher profit margins reported by CEOs.

Besides the direct bottom-line impacts, other research shows pressure to act on climate change continues to come from investors. Our 2024 Global Investor Survey found 64% of investors think companies should moderately or significantly increase investments in efforts to reduce carbon emissions, with large numbers saying they’d be willing to invest more in businesses taking a range of climate-related actions.

Actions for Canadian CEOs

Given the opportunities, how can Canadian business leaders reframe their approach to decarbonization and climate change? Key actions include:

The issues facing Canadian CEOs—including the megatrends highlighted in our survey and the major trade challenges that have risen to the top of the agenda since the US elections—are a good illustration of the tension between short- and long-term pressures business leaders have told us they’ve been grappling with in recent years. Besides some of the actions highlighted earlier that CEOs can take in the short term, other key steps include:

• Engaging in scenario planning: It’s more critical than ever for businesses to be able to monitor potential policy changes, not just south of the border but also globally, and model their impacts on revenue, costs and supply chains.
• Market diversification: Companies will need to embrace opportunities in rising global markets while maintaining strong US ties.
• Examining geographical footprints: Leaders can look at balancing potential nearshoring/reshoring activities with selective offshoring where competitive advantages remain.
• Embracing partnerships and alliances: At a time of disruption and uncertainty, organizations will need to work even more closely with industry associations and other groups to engage with policymakers and positively influence outcomes.

More broadly, it’s important for CEOs to consider the many opportunities available to transform, reinvent and, ultimately, increase the productivity of their businesses as we believe this is the best response leaders can have to the current trade challenges. Ultimately, turning the tide on productivity growth in Canada will require policy measures, supports and investments by governments, but there’s also an important role for the private sector and organizations of all types to play.

When it comes to what the private sector can do, our survey highlights not only the efforts Canada’s top executives are making but also areas where they can move faster. By increasing the scope of initiatives aimed at capturing the potential of generative AI, taking bigger, bolder actions to reinvent their businesses for a changing world and building the scale required to become global leaders in their markets, Canadian CEOs can strengthen their companies to successfully face what’s to come in 2025 and beyond.