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EY Growth Barometer 2018 The better the question. The better the answer. The better the world works. Your presenter Franois Tellier Partner and EY Growth Markets Leader Page 2 Does the speed of change blur or sharpen your focus? Does the
The better the question. The better the answer. The better the world works. EY Growth Barometer 2018
Page 2 Does the speed of change blur or sharpen your focus? Does the speed of change blur or sharpen your focus?
Your presenter
François Tellier
Partner and EY Growth Markets Leader
Page 3 Does the speed of change blur or sharpen your focus? Does the speed of change blur or sharpen your focus?
Agenda
Page 4 ey.com/growthbarometer
EY Growth Barometer
A global survey of middle-market business leaders
EY Growth Barometer is an annual survey that explores middle-market leaders’ growth strategies and how they are being delivered across a wide range of capabilities. These capabilities are linked to the EY 7 Drivers of Growth — EY’s framework to help companies accelerate growth. The survey was conducted on behalf
Investor Thought Leadership with 2,766 C-suite in companies from 21 countries and with annual revenues
Page 5 Does the speed of change blur or sharpen your focus? Does the speed of change blur or sharpen your focus?
Americas findings
Steady revenue growth predicted:
Brazil: 57% predict 6-10% Canada: 67% predict 6-10% Mexico: 71% predict 6-10% US: 72% predict 6-10% Companies across the Americas are driving growth by expanding into adjacent sectors The vast majority
across the Americas plan to adopt AI over the next 5 years US and Canadian entrepreneurs lead the world in customer- centricity Mexico is looking to drive growth within the country, shying away from international expansion Brazilian companies are focused on improving organizational culture
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Canadian middle-market leaders are putting the customer experience, talent and tech at the heart of their growth strategy
Canadian findings
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Main themes
33%
view digital-powered Industry convergence as the most disruptive megatrend see new tech as the most important factor in improving productivity
27% 92%
2023
New technology seen as the catalyst for disruption – and the means to growth Canada surpasses the ROW in its customer-centricity
40%
see customer demand as the top innovation driver
30%
believe that customer understanding is the key to agility
67%
expect growth of 6%-10% see cash flow is the greatest growth challenge
21%
Solid growth forecasts evidence positive economic prospects
36%
wish to sell part of their business
24%
see entry into a new Canadian market as their main strategic priority
Canadian businesses are looking to grow within their borders
want higher trade barriers to remove overseas competitors, vs 15% in the ROW
8%
win objectives of technology investment: are considering overseas expansion
11%
Talent shortages may compromise future growth plans
19%
skilled talent is the second greatest challenge to growth
far less for specialist skills than for more team players
42%
Canadian businesses define the best type of culture as
digitally-native talent’
36%
the customer experience is the primary reason for tech investment
Page 7 Does the speed of change blur or sharpen your focus? Does the speed of change blur or sharpen your focus?
Page 8 Does the speed of change blur or sharpen your focus? Does the speed of change blur or sharpen your focus?
What is your expected growth rate for the next 12 months?
Revenue growth projections
Where do you see your growth coming from in 2018?
► Almost 1 in 7 Canadian
middle-market companies is growing at high single digits this year – a 46 percentage point jump on 2017.
► We see a drop in the
numbers of low growth as well as high growth companies, as CEOs focus
digitization for growth.
► Uncertainty in the primary
trading relationship with the US is adding a note of caution.
► Of the very highest-growth
entrepreneurs globally (those with 15%+ growth rates), 23% are in Technology, 16% in FS and 13% in DIP.
People, behaviors and culture Digital, technology and analytics Operations Customer Funding and finance Transactions and alliances Risk
EY 7 Drivers of Growth
1% 22% 67% 6% 2% 2% 0% 0% 13% 59% 22% 4% 1% 1% Negative growth 0-5% 6-10% 11-15% 16-25% 26-50% More than 50% Canada Rest of world
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Which of the following growth strategies is a strategic priority for your company?
Strategic growth priorities
Are you targeting any new markets in the next 12 months?
► Domestic expansion
dominates with company leaders also looking to grasp new opportunities thrown up by convergence and digitization.
► The 2017 Canadian Free
Trade Agreement that has removed trading barriers between the country’s provinces and territories is also facilitating local growth and mobility.
► Among high-growth
entrepreneurs globally (growing at 15%+) entry into new overseas market is the top-ranked strategy (by 27%
People, behaviors and culture Digital, technology and analytics Operations Customer Funding and finance Transactions and alliances Risk
EY 7 Drivers of Growth
4% 23% 6% 18% 11% 20% 18% 2% 11% 12% 13% 17% 21% 24% Divestment opportunities (sale of whole or part of the business) Entry into a new overseas market Digitalization/Technology investment M&A acquisition opportunities Increasing market share Growth into an adjacent business activity/sector or subsector Entry into a new geographical market within our borders Canada Rest of world
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Which of these disruptive forces is having the biggest impact on your business?
Disruptive forces
How are you creating new opportunities thrown up by convergence?
► Canada’s C-suite joins peers
across the Americas and the UK in highlighting the impact
business, 5% ahead of demographic shifts which dominates this ranking in the rest of the world.
► New technologies, changing
consumer behaviour and shortened supply chains are creating new ecosystems that threaten traditional sector boundaries.
► Unlike the broader cohort,
high-growth entrepreneurs see digitization as having the biggest impact on their business (32% rank it first)
People, behaviors and culture Digital, technology and analytics Operations Customer Funding and finance Transactions and alliances Risk
EY 7 Drivers of Growth
33% 28% 14% 11% 8% 6% 23% 33% 14% 10% 16% 4% Industry convergence Demographic shifts Digitalization Climate change Shifts in working patterns (including gig economy) Urbanization (people moving to cities) Canada Rest of world
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Will AI be adopted by your company?
AI adoption
Are you tapping into additional revenue streams and performance improvements possibilities that are now possible with AI?
► In a massive swing, reflected
across the world, Canada’s middle-market C-suite is embracing AI.
► 92% of companies will have
adopted AI by 2023, while just 12 months ago 74% of Canadian CEOs said they would never adopt RPA.
► Canada’s ‘Made in Canada
Silicon Valley’ tech hubs are testament to the country’s ambition to be a leader in AI and digital technologies.
► 22% of high-growth
entrepreneurs have already adopted AI, compared to 6%
People, behaviors and culture Digital, technology and analytics Operations Customer Funding and finance Transactions and alliances Risk
EY 7 Drivers of Growth
6% 42% 44% 3% 5% 6% 68% 22% 1% 3% Yes, we are already adopting AI for some of our business processes Yes, in the next 2 years Yes, in the next 5 years Yes, in the next 10 years Never Canada Rest of world
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What is your primary technology investment objective?
Technology investment
Are you cyber-resilient or do you need a digital security audit?
► In line with the Americas as a
whole, Canada focuses technology investment on improving the customer experience (36%).
► Reflecting the strong focus on
digitization, for more than 1 in 4 (26%) respondents, creating new business models is the priority.
► As companies grow their
digital footprint, they may be in danger of underestimating the increased risk of cyber threats – just 12% are investing to mitigate risks and
company leaders see cyber risks as a challenge to growth.
People, behaviors and culture Digital, technology and analytics Operations Customer Funding and finance Transactions and alliances Risk
EY 7 Drivers of Growth
36% 26% 14% 12% 11% 1% 26% 18% 23% 26% 7% 0% Improve the customer experience Create new business models Improve financial data Improve process efficiencies Reduce risks Reduce staff costs Canada Rest of world
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Which of these describes your hiring plans over the next 12 months?
Hiring plans
How are you managing the different types of workforce — full time, contingent and robotic?
► Reflecting some caution in
the market, half of Canada’s middle market is looking to retain current staffing levels.
► But for companies growing at
a higher pace, full-time hires is the strategic choice, while more flexible options (part- time, contractors and freelancers) drop off hiring plans.
► As with most western
economies, talent shortage is an ever-increasing challenge, company leaders may be keen to lock in talent and build strong teams.
People, behaviors and culture Digital, technology and analytics Operations Customer Funding and finance Transactions and alliances Risk
EY 7 Drivers of Growth
50% 42% 4% 3% 1% 0% 34% 39% 11% 6% 1% 9% Keep current staffing levels Hire more full time staff Hire more contractors/freelance staff Increase the use of AI for some routine processes Reduce staff Hire more part time staff Canada Rest of world
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Which of these describes your recruitment priorities over the next 12 months?
Recruitment and talent needs
How does your organization value and reward teaming?
► Diversity – a dominant theme
this year for most of the world – is dwarfed in importance by the need to build strong teams.
► Canadian CEOs recognize
talent with the right skills as the No.1 accelerator of growth (30%) and an improved organizational culture as the third priority (19%) for improving productivity.
► However, 17% of high-
growth entrepreneurs has a woman CEO.
People, behaviors and culture Digital, technology and analytics Operations Customer Funding and finance Transactions and alliances Risk
EY 7 Drivers of Growth
31% 18% 16% 12% 12% 11% 18% 13% 12% 42% 7% 8% More team players More people who are an excellent cultural fit More people who can work autonomously More diversity More people with specialist skills More people with leadership qualities Canada Rest of world
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What would an improved organizational culture deliver?
Organizational culture
How are you planning to recruit and retain talent with digital skills?
► While attracting rare and
increasingly globally mobile young talent is the No.1 benefit of an improved
1 in 5 (19%) of company leaders focus on empowering the existing workforce.
► Flattening structures can help
build agility too: 17% of Canada’s company leaders put faster decision-making as a priority after better customer understanding and talent.
People, behaviors and culture Digital, technology and analytics Operations Customer Funding and finance Transactions and alliances Risk
EY 7 Drivers of Growth
29% 19% 17% 17% 15% 3% 27% 36% 16% 9% 10% 2% Attract younger, digitally-native talent Flatten our structure to empower
Instil an entrepreneurial culture at the heart of our business Create a more fulfilled, productive workforce Include and harness the power of a more diverse workforce Unite our people in a common purpose Canada Rest of world
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What is driving the need for innovation in your company?
Drivers of innovation
What capability does your business have to collect and analyse customer data?
► Canada’s business leaders
look inside the organization and outside to customers in almost equal measure to drive innovation.
► The country is ranked 15th in
WEF’s Global Innovation Index, although recent government initiatives to build technology centres of excellence may improve this
People, behaviors and culture Digital, technology and analytics Operations Customer Funding and finance Transactions and alliances Risk
EY 7 Drivers of Growth
40% 17% 16% 13% 9% 5% 15% 25% 28% 16% 12% 4% Customer demand Regulation Profitability Competition Market consolidation Sector convergence Canada Rest of world
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Which of the following is the most significant challenge to your company’s growth?
Challenges to growth
Do you have full visibility of working capital needs? What would help?
► Insufficient cash flow is the
No.1 challenge to growth this year for more than 1 in 5 respondents, up 7% on 2017.
► However, as in the US, the
problem is less critical than in the rest of the world, where 34% of company leaders say it is there No.1 challenge.
► For Canada, talent shortages
are an almost-equal challenge, as companies struggle to find the skills they need.
► This is reflected in Canadian
C-suite putting investment in education in the top three of government measures that would boost growth.
Digital, technology and analytics Operations Customer Funding and finance Transactions and alliances Risk
EY 7 Drivers of Growth
3% 6% 6% 10% 17% 11% 13% 34% 6% 7% 9% 9% 13% 16% 19% 21% Access to capital New market entrants Cyber threats Sluggish demand Technological disruption Increasing production costs Lack of skilled talent Insufficient cash flow Canada Rest of world People, behaviors and culture
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Which of the following poses the greatest external risk to growth?
External risks to growth
How do you plan to overcome the challenges presented by a slowing local economy?
► Given this year’s focus on
domestic growth, unsurprisingly, slow local growth is the No.1 risk.
► Slow global growth, which
dominates this question for peers in the rest of the world, is an issue for just 10% of Canadian respondents.
► Geopolitical uncertainty,
reflecting the potential of trade wars and increased tariffs, takes second position.
► Close to one-fifth (19%) of
high-growth entrepreneurs place the threat of slow/flat global growth #1.
People, behaviors and culture Digital, technology and analytics Operations Customer Funding and finance Transactions and alliances Risk
EY 7 Drivers of Growth
22% 15% 14% 14% 12% 10% 9% 1% 17% 9% 17% 7% 10% 26% 11% 3% Slow/flat local growth Geopolitical uncertainty Cost/Availability of credit Increasing competition Supply chain disruption Slow/flat global growth Cost/Availability of equity finance Regulation and/or trade barriers Canada Rest of world
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So what can you do to accelerate your growth?
01
Recognize that the time to adopt digital is now. Leading private companies are incorporating AI, RPA and data analytics into their organizations.
02
Consider domestic and/or international expansion. Many companies are experiencing the benefits that expansion can provide – increased market share and accelerated growth.
03
Hold your talent close and create a work culture that attracts the best in your industry. Partner with local learning institutions to gain access to next-generation talent.
01 02 03 04
04
Remember that at the end of the day, your customers should always be your #1 priority. Seek new ways to innovate for your client base and get outside your comfort zone with product/service
Where to go from here
The EY Growth Navigator™ is an interactive tool that walks through the EY 7 Drivers of Growth to help you and your leadership team assess your business’ current and aspirational position, and then create a detailed road map to help get you there.
You have a vision for your company’s growth. But is your leadership team aligned on how to achieve it? To learn more about the EY Growth Navigator™ please watch our short video: https://bcove.video/2ND1IJi
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Any questions?
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Thank you!
François Tellier
Growth Markets Leader, Canada francois.tellier@ca.ey.com
The better the question. The better the answer. The better the world works.