Rapid advances in technology like robotics, artificial intelligence and collaborative platforms are already disrupting many industries that anchor Canada’s economy, bringing significant and permanent changes to the country’s business landscape – and most Canadian firms are “woefully” unprepared for what’s coming. That is the conclusion of a new report by consulting firm Deloitte in their “Future of Canada” series, which found that almost 90% of organizations are unready to handle the impacts of technological disruption.
“In addition to the core readiness problem, Canadian businesses are suffering from a preparedness perception gap,” said Terry Stuart, Chief Innovation Officer at Deloitte Canada. ”Disruption isn’t going to happen in the distant future – it’s happening now. Technologies like advanced robotics, artificial intelligence and 3D printing have considerable disruptive potential. Canadian organizations need to understand how to adapt to these technologies to remain competitive, both within Canada and abroad.”
Deloitte surveyed 700 business leaders across the country to better understand whether Canadian companies have what it takes to withstand significant technology-driven disruption. Each firm’s performance was measured in four key areas of importance to disruption preparedness:
Awareness: understanding changing technologies, the accelerating pace of change, and the potential for technology-driven disruption in the firm’s industry and business environment.
Organizational culture: the extent to which a firm promotes, encourages and provides incentives for innovative behaviours and practices.
Organizational agility: the ability to rapidly redeploy systems, assets and people to address external opportunities or threats.
Effective resources: the technology, human capital and financial assets that firms can use to enable change.
The study found that more than one-third of the companies scored poorly on each of these key measures that research had shown to be characteristics of successful, sustainably innovative organizations. “No matter the measure, Canada has a preparedness problem,” said Stuart. ”A majority of organizations will be caught off guard if they don’t take steps today.”
“The disruption could be reduced revenue for them because their competitors are leveraging the technologies to be more effective, or it could wipe out their businesses altogether because others are taking advantage of the technologies and delivering new business models,” Stuart said.
Deloitte’s findings would appear to be confirmed by complementary research into Canada’s lagging productivity problem that is traditionally attributed to businesses in this country being more risk averse than those south of the border and frequently investing less than their sectors’ average on innovation and improving productivity.
According to a Statistics Canada study of innovation among Canadian firms, almost 40% of them – representing roughly $740 billion of Canada’s GDP – describe themselves as non-innovative. In sectors such as mining and oil and gas, that proportion rises to nearly 50%. “These non-innovative firms and sectors will be among the first to feel disruption’s sting,” the report says. “Our risk-averse, slow-growing, underinvesting businesses will be caught off guard by the rapid changes transforming our world.”
The good news is that highly prepared firms provide a roadmap for other organizations on how to prepare for disruption.
“Highly prepared firms not only excel in the four areas that impact a company’s ability to withstand disruption, they also demonstrate the attitudes and behaviours of Canada’s most productive companies. They are more committed to R&D investment, more likely to be internationally focused, and perhaps most compelling of all, report greater revenue growth. Getting prepared sets a firm up for success in the future, and also pays off today,” said Stuart.
Click here to view the report.