2016 Canadian CEO Outlook

June 2016
kpmg.ca/CEOoutlook
The
race
ison2016 Canadian CEO Outlook

© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Contents
4 Overview
7 Executive summary
10 The race is on
15 The ever-changing customer
18 A call for innovation
20 Build, buy, partner
24 Success by the numbers
26 Security in the cyber age
28 A view to talent
33 Conclusion
34 Methodology
32016 Canadian CEO Outlook

75%
98% 92% 92%
82%74%
“Whether it’s investment strategies, innovation agendas
or strategic priorities, we can obtain important insights
between Global and Canadian CEOs.”
of CEOs believe the next 3 years
will be more critical for their
industry than the previous 50
of CEOs indicate innovation
is one of the top 3 issues on
their personal agenda
Customer loyalty Innovation Economic forces
concerned about the loyalty
of their customers
concerned about whether their
organization is staying on top of
what’s next in services/products
concerned about the impact
of the global economy on
their company
The complexity of the issues and the need for rapid response
is putting significant pressure on CEOs.
of CEOs expect their company
to remain mostly the same
over the next 3 years
Rob Brouwer, Managing Partner, Clients and Markets, KPMG in Canada
Top3concernsforCEOs
Theraceison

66%
Data Analytics
of CEOs are using DA effectively; 62% report using
DA to analyze brand via social media; 58% to
aid with maintenance and services; 57% to drive
strategy and change
Despite the changes enveloping their organizations, CEOs are
largely confident in their 3-year growth outlook.
Growthconfidenceishigh
13%
Cyber
of CEOs feel confident that they are fully prepared
for a cyber event; 87% are somewhat prepared.
50% of CEOs use DA to spot fraud
96% 85% 85% 81%
Company Country Industry Global economy
of CEOs are
confident in growth for
their company over the
next 3 years
confident in their
country’s growth
prospects
confident in their
industry’s growth
prospects
confident in the
growth of the global
economy
“Canadian CEOs are confident in their ability to outperform
the general economic backdrop, and that the next three years
will be more important in shaping their industry than the
previous 50 years.”
Bill Thomas, CEO, KPMG in Canada
Nearly 1,300 CEOs from around the world, including 53 CEOs from
Canada, share their perspectives on the unprecedented change
forecast for their companies and the world economy.

Executive
summaryAs CEOs race to secure the talent, innovation, and
capabilities for growth in the global digital age, the
question is: Are Canadian executives keeping pace?
KPMG conducted a survey of nearly 1,300 around the
world, including 53 Canadian CEOs, and the results of
that survey provide some interesting insights.
The good news is Canadian leaders are confident
in the health of their companies and industries, and
optimistic about their growth.They recognize the
importance of embracing
technology, leveraging
data and analytics (DA),
and pursuing innovation;
and they are taking
steps to connect on a
more personal level with
today’s ever-evolving
(and increasingly fickle)
customer.
“What stands out in this report is that CEOs are
confident in their ability to outperform the general
economic backdrop, and that the next three years will
be more important in shaping their industry than the
previous 50,” observes BillThomas, CEO of KPMG in
Canada.
That all sounds promising at first glance, yet our findings
suggest we might want to take more cues from our
global counterparts. Canadian CEOs, for example,
appear more insular in their thinking.They are less
inclined to drive significant business transformation,
and more concerned with existing customer loyalties
and accessing local talent, than their global counterparts.
Meanwhile, they assign a lower priority to innovation,
and show less concern for significant external business
influences such as geopolitical factors, new disruptors,
and competitors.
Interestingly, and perhaps of concern in our globally
connected digital world, Canadian CEOs are more
confident when it
comes to cyber security
and evaluating their
organizations’ skills and
event readiness at higher
levels than their global
counterparts.
“Whether related to
investment strategies
or innovation agendas,
CEO concerns, or strategic game plans, there are key
differences between the perspectives of global and
Canadian CEOs that are interesting and can generate
insights for all of us”, says Rob Brouwer, Managing Partner,
Clients and Markets, with KPMG in Canada.
This Canadian CEO Outlook explores why these
differences matter, and how learning from them can
help position Canadian companies as the leader of
the pack.
According to 75 percent of
Canadian CEOs, the next
three years will be more
critical for their industry
than the previous 50 years.

Canadian CEOs are poised to leave their mark on the
global economy. However, with telling differences
between them and global CEOs, it is clear there are
insights to be gained from their international peers.
Here are some takeaways:
Canadian CEOs are more apprehensive
about transformation.
While company growth and customer retention
are key focuses for Canadian CEOs, they
are less likely than global CEOs to undergo
a significant transformation over the next
three years.
Canadian CEOs are more confident in the
growth prospects for their companies
and their sector, than for the Canadian
economy as a whole, and believe that
new customers for existing products,
as opposed to new products, markets
or channels, will be the most important
source of that growth.
Interestingly, global CEOs are more outward-
looking, with more focus on new geographic
markets, new products, and related business
model transformation.
Canadian CEOs believe global economic
factors, technology, and access to talent
will have the most impact on their
growth over the next three years.
Meanwhile, they believe factors such as
current competition, geopolitical factors,
and new competitors/disruptors will play a
smaller role. Global CEOs agree that global
economic factors will have the most impact
on growth, but rank domestic economic factors,
current competition, and new competitors/
disruptors higher than Canadians.These
differences suggest Canadian CEOs hold a
slightly more insular view when it comes to
strategic planning.
Disruptive technologies are a key driver
of innovation/transformation.
The need to react to disruptive technologies
is informing MA practices, investment
strategies, talent development, and overall
approaches to innovation.
Canadian CEOs understand the need
to innovate, yet not as much as their
global peers.
A majority of Canadian CEOs say innovation is
in their top three priorities, with many planning
to drive innovation through the creation of
environments that encourage risk taking,
partnerships with educational and research
institutes, and fostering an overall culture
of innovation. However, global CEOs rank
innovation higher on their personal agendas.
Customer loyalty is keeping Canadian
CEOs up at night.
Where Canada was once a leader in loyalty
programs, the challenge of changing
demographics, disruptive technologies and
more customer choice has created new
challenges for customer retention. Other CEO
concerns include their organization’s ability
to keep pace with what customers want in
services and products, and the impact of global
economic forces on their business.
CEOs are underutilizing their DA.
While customer loyalty is a top concern,
less than half of Canadian CEOs use DA to
analyze their existing customers, develop new
products or services, or find new customers.
Still, they show higher levels of confidence
than global CEOs when it comes to the
accuracy, effectiveness, security, and ethical
use of their DA.
8 The race is on

Cyber risk is not a large concern for
Canadian CEOs (but it should be).
Canadians feel more confident in their level
of preparedness for cyber events than their
global counterparts, and only a quarter feel it
is a risk (compared to nearly a third of global
CEOs and only half use DA to spot fraud.
Certainly, Canadian CEOs are doing their due
diligence when it comes to protecting their
company and customers from cyber events,
however they are not beholden to the same
breach notification laws and other cyber
regulations in other countries.Therefore,
they may not be prioritizing cyber as much as
their global peers.This may change as cyber
regulations begin rolling out in the second
half of 2016.
Canadian CEOs are far more likely to
manage skills gaps with outside talent.
Compared to global CEOs, Canadian
companies are more likely to contract
labour, focus on offshoring, and outsource
internationally than global CEOs. This will
require a stronger talent management
strategy.
HR is evolving.
With plans to increase their headcount
more than global companies over the next
three years, and a stronger focus on looking
outwards to fill their skills gaps, Canadian
HR departments are more critical to all
company functions – and busier – than
ever before.

Innovation, talent, and technology are at the top of Canadian CEOs’ minds as many
secure the people and capabilities to compete in the global race.
“Transformation is a word that comes up today more
than it ever has before, and both our Canadian CEOs
and global CEOs recognize they are going to have to
fundamentally transform and evolve who they are, what
they do, and how they go to market,” says Jeff Smith,
Advisory Managing Partner, KPMG in Canada.
Yet while Canadian CEOs are talking the talk, their
outlooks, approaches, and risk assessments differ from
their global counterparts in ways that tell a slightly
different story. Specifically, 74 percent of Canadian
CEOs say their companies will be largely the same
in three years, compared to 59 percent globally
who believe the same. With a quarter predicting
transformation, it’s questionable whether Canadian
leaders are as committed to change.
Canadian CEOs are nonetheless optimistic when it comes
to forecasting growth for their companies, industries,
the country, and the global economy over the next
three years. Ninty-six percent foresee company growth
(over half predict top-line growth between 2-5 percent),
85 percent have high hopes for their industry, 85 percent
are confident in Canada’s growth, and 81 percent express
similar optimism for the global economy.
Still, 58 percent of Canadian CEOs recognize that Canada
is in a state of slow growth.This is clear evidence that
their confidence is tempered by an awareness for
domestic speed-bumps such as ongoing oil and gas
industry challenges and Canada’s depreciating dollar.
Economic forecasts aside, our data does suggest that
Canadian CEOs aren’t fully aligned with their global
counterparts when it comes to evaluating the impact
that certain external factors and risks will have on their
businesses’ growth. When asked what will have the most
influence on that growth, Canadian CEOs expressed
more concern over technology than global CEOs; whereas
the latter were more concerned about their respective
domestic economies, and ranked new and current
competitors higher than did Canadian CEOs.
Interestingly, Canadian CEOs also identify new customers
as the most important source of growth over the next
three years, whereas global CEOs rank new markets,
new products, and new channels as more important than
their Canadian counterparts.
Theraceison
10 The race is on

Ensuring KPIs are
fit for purpose and
accurately measured
Talent development/
management
Responding
to short-term
influence of activist
shareholders
Stronger client focus Talent development/
management
and implementing
disruptive technology
Top strategic priorities
Canada
Global
28% 19% 19%
21% 19% 18%
Loyalty of
customers
Impact of global
economic forces
on business
Organization’s ability
to stay on top of
what’s next in
service/products
Top CEO concerns
Canada
98% 92% 92%
Loyalty of
customers
Millennials’
wants and needs
impacting business
Impact of global
economic forces
on business
Global
88% 88% 86%
Fostering innovation

Does this suggest Canadian companies are more
inward focused? Brouwer observes, “As Canadians,
we appear to be somewhat more insular in our thinking
about the future of our businesses, whereas our
global counterparts seem more externally focused.
As Canadians, we aren’t as focused on new markets,
new channels, and new products as much as global
CEOs, and that’s a little worrying.”
Other disparities are seen relating to forecasting
potential growth in international markets. Over half of
Canadian CEOs (51 percent) view India as the region
with the most potential for market growth over the next
three years, compared to 38 percent of global CEOs.
And though both agree China and the United States
show equal promise, Canadian CEOs are more confident
than anyone else in these regions.This likely reflects
the strong economic ties between the Canadian and
US economies, and Canada’s increasing focus on China
trade. Elsewhere, Canadian CEOs expressed moderate
degrees of confidence for increased business in
countries like Australia (30 percent), Brazil (28 percent),
and Western Europe (26 percent).
Elsewhere, when asked to share their top strategic
priorities over the next three years, 19 percent of
Canadian CEOs list “responding to short-termism” in
their top three – nearly double that of global CEOs.This
is also very interesting says Brouwer, who notes, “There
has been significant focus in Canada on addressing the
perceived impact that activist shareholders, short-sellers,
and other market participants with an all-too-often short-
term view have had on management decision making
and strategic priority setting.”
70%new customers
49%new channels
41%new markets
40%new products
Most important
source of growth
in next 3 years
12 The race is on

“Despite all the changes at their
doorsteps, corporate leaders
around the world are largely
confident about their short-
term prospects and even more
optimistic for the growth of
their own companies and
the global economy over the
next three years.”
BillThomas
CEO of KPMG in Canada

14 The race is on

Keeping up with customers’ needs and wants can
be daunting.Today’s customers are more tech-savvy
and globally-minded.They crave greater convenience
with less hassle, more customization with fewer
complexities, and cutting-edge technologies without
security risks.
In short: customer loyalty can be tough to pin down, and it’s the
companies that effectively embrace DA, innovative thinking, and
flexible strategies that will help them in their corner.
It’s no surprise that 98 percent of Canadian CEOs cite customer
loyalty as their number one concern, while 92 percent admit to
having sleepless nights over their ability to stay on top of what’s next
in services and products, and 53 percent say they are worried about
keeping up with customer needs and expectations.
“Canada is a mature market where growth generally comes at
the expense of competitors – and re-cently there are many new
companies fighting for customer mindshare. It is only natural that
this is making CEO’s think more about how win customers and
keep them loyal in the face of new choices,” offers Andrea Baldwin,
Partner, Management Consulting, KPMG in Canada.
Theever-
changing
customer

of Canadian CEOs are concerned
they are not “leveraging digital
means to connect with customers
as effectively as possible”
(45% global).
are concerned about how relevant
their products/services will be
three years from now (82% global)
58%
85%
feel they are not keeping
pace with their customer
needs and expectations
(45% global)
believe consumers are more
concerned about cyber
privacy than their company
(82% global)
53%
94%
Further fueling loyalty concerns is the fact that
while Canadian companies have traditionally
enjoyed great success with loyalty programs
(and often more than their global competitors),
they are now contending with a more varied
mix of customers (Baby Boomers, Gen X’ers,
Millennials), each of which are coming to
the market with vastly different needs, more
choices, and higher expectations than ever
before. It’s also understandable, then, that
91 percent of CEOs are concerned about how
the differing needs and wants of Millennials will
change their business.
“Historically, the focus was on transactional
loyalty, and that’s changing. It’s no longer
about customers collecting points and giving
information about how they behave, it’s about
companies needing to build relationships
with customers by creating new and relevant
experiences with more tailored offerings,
and delivering these offers when and how
customers want it,” suggests Katie Bolla,
Director, Management Consulting, KPMG
in Canada.
Customer experience is not purely about
investing more, but rather about understanding
what matters most to customers and investing
there it is about better aligning resources and
investments to where there will be the most
“Canada was an early adopter
of loyalty programs – basically
defining the concept – but the
innovation that we are now
seeing globally is huge.”
Andrea Baldwin
Partner, Management Consulting
KPMG in Canada
16 The race is on

value to the customer and for the company.
Creating those tailored experiences requires a
meaningful approach to how customer data is
acquired, interpreted, and used. Still, only half
of Canadian CEOs say they use DA to analyze
existing customers, monitor the market, or even
assess how their products are being used. And
with only 21 percent planning to invest both in
data analysis capabilities and the measurement
and analysis of their customers’ experience and
needs over the next three years, there’s room for
greater focus.
“It’s essential for companies to turn their
analytics into insights and make data-driven
decisions centred around their customers,”
suggest Bolla. “Companies that are doing well
are ones who know their customers better than
the customers know themselves.”
With a third of Canadian CEOs ranking new
customers as the most important source of
growth over the next three years, companies
will need to invest in the capabilities to not only
understand their customers’ wants and desired
experiences, but develop a strategy for building
market share. And while 17 percent of CEOs
say being more client-focused is a strategic
priority, many are not leveraging technologies
and DA as effectively as they could be to help
analyze customer behaviours, target marketing
campaigns, find new customers, and –
perhaps most importantly – align resources
and investments to create unique customer
experiences and to build on their strategy of
customer growth.
Meanwhile, as disruptive technologies continue
to alter the market, larger companies can
find themselves challenged to redirect their
IT efforts and pivot as fast as smaller, more
flexible competitors.
“Technology is dramatically changing how
companies interact with their customers.
Progressive IT teams understand this and are
changing how they work to become more
nimble and responsive to new technology
solutions” says Baldwin, adding that this type of
culture change can be tough for teams that had
previously focused on big investment projects
like ERP system implementations.”
It’s the companies that understand the power
of DA, digital engagement, and tailor-made
experiences that will have the best shot at
customer retention. Still, Canadian CEOs are
showing less of an emphasis on innovation
or using DA to understand their customers
compared to global CEOs. As such, it’s fair to
reason that Canadians can do more with the
tools and data at their disposal to fully meet the
needs and expectations of today’s constantly-
“Customers expect security out of the box. They
want things like banking apps to be quick and
easy, but they also expect full privacy and security
around that.”
PaulW. Hanley
National Cyber Security Leader
KPMG in Canada

AcallforinnovationThe spirit of Moore’s Law is alive and well, and shaping conversations from the boardroom
to the break room. With every passing year comes disruptive technologies that possess
the speed and power to change the way companies engage, react, and adapt to their
customers.They are the catalyst for innovation, yielding new business models, products,
and services; while shifting economic buying power and altering the barriers to entry.
To be sure, disruptive technologies are changing the way both
companies and their customers behave.Therefore, staying
responsive in a global market affected by near-constant
disruptions requires creative thinking and keeping an eye for
what’s next.
“Change management will
be crucial as organizations
intend to match the speed
of their customers.This is
change management to a
degree that people have
not witnessed before,” says
Brian Miske, Chief Marketing
Officer, KPMG in Canada.
While this need is not lost on Canadian CEOs, only 13 percent
say innovation is their primary objective on a personal agenda
(compared to 23 percent globally). On the upside, 85 percent
of Canadian CEOs say it is still within their top three priorities.
As for how Canadian CEOs seek to drive innovation, a
majority (83 percent) plan to create environments that
encourage risk-taking, while 81 percent intend to foster
a culture of innovation and implement formal processes
through which innovative ideas can be commercialized
or adopted internally.
Collaborating and partnering with universities, research
institutes, and other external partnerships is a focus and
driver for Canadian companies.Three-quarters of Canadian
CEOs plan to drive shareholder value through collaborative
growth, compared to 58 percent of global CEOs.
In order to capitalize on the
opportunities that exist, it’s clear
companies need to be agile and
responsive to the constant change.
And indeed, 72 percent of Canadian
CEOs believe organizational agility
and being able to respond quickly to
developments, risks, and opportunities
is an effective way to drive innovation.
Globally, this is ranked as the most important factor in driving
innovation (ranked least important for Canada).
Still, with 60 percent of Canadian CEOs concerned that they
are not disrupting business models in their industry, compared
to 53 percent of global CEOs, the question is: Are Canadian
companies thinking far enough down the road on how they
can change the technology landscape?
The focus on innovation is no doubt strong, but our survey
suggests Canadian CEOs still lag behind global CEOs when
it comes to acknowledging the need to reach new markets
with new ideas.
66 percent are concerned
they don’t have an effective
strategy in place to counter
convergence in the market
18 The race is on

to improve productivity/
efficiency (57% global)
Top uses of disruptive
technologies
72%
of Canadian CEOs are concerned
whether they are keeping current
with new technologies85%
to improve product/service
offerings (61% global)
72%
to improve employee
satisfaction (54% global)
expect to form new partnerships and
alliances to fuel growth and execute
on strategy
indicate that connecting with university
and research institutes is a key driver
for innovation
plan to drive shareholder value through
collaborative growth (utilizing external
partnerships or collaboration with other
firms to achieve growth or expansion in
geographies, capabilities)
68%
40%
81%
74%
Innovation and growth

Build,buy,
partner
Navigating the global market means seizing
economic conditions and equipping the right data,
capabilities, and talent. It also means capturing the
interests (and wallets) of customers whose loyalties
can turn at the drop of an app.
Understanding this, forward-thinking companies are aligning
themselves with the technologies and capabilities to do just that
through acquisitions, mergers, and internal investments.Thirty
percent of Canadian CEOs plan to make significant investment in
the acquisition of a business, capabilities or assets (18% global),
making it one of the top areas of investment for Canadians
alongside cyber security solutions.
Interestingly, Canadian CEOs are also approaching MA as a
means to not only enter partnerships that will make them more
money, but also open doors to new customer categories, improve
their supply chain, or put them in a better position to compete
with their innovation agenda.
“A lot of the MA activity today may not be a traditional
straight buy; but instead be companies partnering with firms
with the technologies they need. In fact, a lot of the alliances
you’re hearing about now are situations where companies are
getting into partnerships to see if certain technologies and
innovations take off, and if they do, that’s when they’ll go ahead
and buy it,” says MattTedford, National Leader, Deal Advisory,
KPMG in Canada.
20 The race is on

“If Canadian corporations are going
to stay competitive in today’s
world, they have to create an
environment where risk taking or
‘safe to fail’ is part of their DNA.”
MattTedford
National Leader, Deal Advisory
KPMG in Canada

Changing the capital
structure through equity
(47% global)
MA activity over next 3 years
55%
Changing the capital
structure with debt/financing
(45% global)
51%
Creating partnerships, joint
ventures or collaborative
arrangements with other
firms (50% global)
47%
Selling businesses, assets,
or capabilities to other
firms (40% global)
38%
Merging with another firm
(35% global)
30%
No planned changes
(5% global)
0%
Buying businesses, assets,
or capabilities from other
firms (41% global)
45%
22 The race is on

This is creating new opportunities for Canadian tech
companies that are seeking new partnerships or
ways to expand their operations. And certainly, with
cross-pollination occurring between high-tech regions
such asToronto, Vancouver, the Waterloo Corridor,
and Silicon Valley, Canadians are taking the steps to
reinforce their global position.
Surely, the time to evolve is now; MA strategies
within Canada are being driven by a desire to build,
buy, or partner their way closer to new assets and
capabilities that will fuel their innovation agendas,
talent strategies, and technological growth (and, in
some cases, with greater intensity than global CEOs).
That makes sense, saysTedford, who emphasizes,
“Canadian CEOs don’t have the option to sit back;
they know that the speed at which things are moving
has never been faster.”
“Globalization continues and
the speed at which things are
changing is having a considerable
impact on how companies are
currently making their money. If
you look at Canada specifically,
there’s no question that our
access to capital and our low-
interest environment is allowing
them affordable capital structures –
both in equity and debt – to go
ahead and make acquisitions.
This is a pretty important time.”
MattTedford
National Leader, Deal Advisory
KPMG in Canada

The future belongs to those that not only collect the data, but wield it effectively.To that end,
companies must reposition their approach to DA from operationally-focused to one that
drives innovation and a deep understanding of their customers, suppliers and competitors.
“The most highly valued companies in the world are data-first
companies” says Shreeshant Dabir, Partner, KPMG in Canada.
“These companies have orchestrated their business around a
deep understanding of the interactions and transactions with
their customers. CEOs are recognizing the paradigm shift from
a digital economy to one where the
economy is digital and the number
one priority is the customer
relationship.”
It’s not enough to own customer
data; the advantage is how
one uses it. By using advanced
analytics, businesses can anticipate
individual customer needs and, in
response, customize their products
and services. Sophisticated techniques, such as machine
learning algorithms and cognitive computing, are allowing
companies to automatically deliver personalized service at a
significantly lower cost.
“Better products, at lower cost points with shorter response
times, are the seeds of disruption. Investing in social media
analytics is fine, but if Canadian CEOs are truly focused on
growth through the customer like they say, they need to be
focused on driving strategy and change, researching new
products and services, and understanding customer behaviour
through advanced analytics”, says Dabir in response to the
fact that a little more than half of Canadian CEOs (57 percent)
actually use DA to drive strategy and growth, while only
55 percent use it to develop new products and services, and
fewer (40 percent) leverage DA to find new customers.
When asked to rank their level of
trust in using DA, an average
of 20 percent of Canadian and
global CEOs admitted limited or
active distrust in the accuracy and
effectiveness of the data at their
fingertips.
“While CEOs are competent
and confident when it comes to
reactive analytics – what happened,
how much happened, and when it happened – they need to
start focusing on how their businesses will build trust in the
forward-looking sophisticated predictive analytics,” says Dabir.
DA will become even more important in the years to come –
especially with the rise of blockchain, which has the potential
to create new models of digital commerce, AI, and cognitive
analytics to increase the understanding of humans and service
by systems, and that more of us will be living in an always-
on interconnected world of instant commerce. Companies
that hope to make good on their predictions of growth and
innovation must therefore assess if they are truly ready to
make effective use of data and analytics.
Successbythe
numbers
Analytics is no longer
optional. It is essential to
build trusted intelligence
into everyday decisions,
products and services.
24 The race is on

of Canadian CEOs have a high
level of trust in the ethical use
of their DA (47% global)
level of trust in the accuracy of
their DA (41% global)
level of trust in the effectiveness
of their DA (39% global)
Level of trust in using DA
53% 34% 34%
Analyzing branding
via social media
Driving strategy
and change
Aiding with
maintenance
and services
Improving
financial reporting
Developing new
products and
services
Analyzing our
existing customers
Top uses of DA
Canada
62% 58% 57% 57% 55% 55%
to analyze how
products are used
41%
Driving strategy
and change
Developing new
products and
services
Driving process and
cost efficiency
Managing risk Finding new
customers
44% 44% 43% 43% 43%
Global
“The true value from digital comes from the
intersection of data, customer, and experience
across silos, then simplifying and helping everyone
within the organization to see the potential.”
Brian Miske
Chief Marketing Officer
KPMG in Canada

Securityinthe
cyberageIt’s impossible to talk about DA, online strategies, and cutting-edge
technologies without addressing the digital elephant in the room:
cyber security.
Canadian CEOs exhibit a heightened sense of confidence (or perhaps unawareness)
when it comes to cyber security. Eighty-seven percent say they are somewhat
prepared for a cyber attack compared to 69 percent globally; and only a quarter
perceive it as a top risk, compared to 30 percent of global CEOs.
“Things are certainly different here in Canada compared to Europe or the US when it
comes to the perception of cyber risk, and that comes down primarily to legislation,”
explains Paul W. Hanley, National Cyber Security Leader, KPMG in Canada.
That legislation includes data breach notification laws and privacy acts which are
applicable within countries in Europe, and have motivated CEOs therein to enhance
their focus on cyber defenses. Canada has some controls in place, but not to the
extent of its international colleagues.
“If you look at the reason Canadian CEOs may be feeling comfortable with their
cyber capabilities, it is likely the same reason why a lot of hackers feel comfortable
with executing cyber crime within Canada. It just comes down to the lack of focus
on legislation and litigation,” offers Kevvie Fowler, National Cyber Response Leader,
KPMG in Canada.
“There is this view in Canada that we’re a friendly
nation and less likely to be hit than other nations,
but that’s just not true.”
PaulW. Hanley
National Cyber Security Leader
KPMG in Canada
26 The race is on

of Canadian CEOs agree
that security prompts
innovation in products/
services (88% global)
of Canadian CEOs say their
customers are more concerned
about their privacy than the
organization (82% global)
of Canadian CEOs say they
are “personally comfortable”
with sharing cyber attack
experiences with peers to
apply collective learnings and
reduce risk (82% global)
of Canadian CEOs are
personally comfortable with
the degree to which mitigating
cyber risk is now part of their
leadership role (83% global)
94%
91%
94%
92%
The good news (depending on where you stand) is that
almost a third of Canadian CEOs still intend to invest in
cyber security solutions, and incoming regulations are
likely to push those investments higher. Coming soon,
Canadian organizations will be held to data breach
notification laws that require them to not only notify
the privacy commission about a cyber incident, but
directly notify anyone who is affected.
“With mandatory notifications and more customers
paying attention to cyber crime, that’s going to
help drive cyber to the boardroom and create a
perfect storm of risk that will affect anyone who is
unprepared,” says Fowler.
It is, however, positive to see that 92 percent of
Canadian CEOs are personally comfortable with the
degree to which mitigating cyber risk is now part of
their leadership role, compared to 83 percent globally.
Confident or not, the frequency of cyber attacks is on
the rise, as is the volume of cyber security litigations.
Eighty-seven percent of Canadian CEOs say they
are “somewhat prepared” for a cyber event (69
percent global), however Fowler suggests many of
the Canadian CEOs are focusing their preparation on
the routine types of cyber events, and not the ones
that are likely to result in a significant impact to their
organization: “When these organizations are faced
with a material event – such as a public data breach –
weaknesses within their plan are quickly exposed, and
unfortunately at the worst possible time.That often
results in increased impact and reputational damage.”
Big opportunities await those who can meet
customers’ demands for new technologies, but even
bigger consequences await those who do so without
the right security measures in place.
“It’s tempting to push for innovation
and adopt new technology, but
all of a sudden you could have a
security issue around it because
they haven’t done their due
diligence.”
Kevvie Fowler
National Cyber Response Leader
KPMG in Canada

AviewtotalentIn the race to become more agile and tech-savvy, it’s a company’s team that
makes the difference.This is no secret to CEOs across the globe. Fifteen percent
of Canadian CEOs cite access to talent as one of the top three areas that will
have an impact on their growth (compared to 7 percent globally) and 19 percent
list talent development and management as a strategic priority.
“Companies have to do more with less and at a
greater speed than they have before.That all comes
to managing talent, and HR plays an instrumental role
in that,” says Soula Courlas, National Leader, People
Change, KPMG in Canada.
There’s also no better time for CEOs to ensure their
companies have the skills and internal strengths
to remain competitive.
And while Canadian
CEOs believe they do
not have any significant
skills gaps, Courlas says
it is important that they
think beyond technical
skills and look critically at
their core capabilities and
competencies. That, and
prepare to adopt skills
down the road they aren’t
even aware of now.
So how are Canadian
CEOs building their
teams? A third plan
to lean on contract labour, offshore labour, and
international outsourcing – and more so than their
global counterparts. Reversely, global CEOs place a
higher focus on managing their skills gaps through
internal training (25 percent global vs. 11 percent
Canada), engaging and retaining mature workers
(21 percent vs. 9 percent), and automation (25 percent
vs. 23 percent).
Accounting for the strategic differences, Courlas
says, “This could indicate a preference towards
keeping strategic and core functions and capabilities
in-house, and ensuring the talent is flexible, agile,
and adaptable.That may also explain why their
global peers are placing a greater focus on trying to
enhance and develop the workforce through internal
training, engagement of mature workers, increasing
pay for retention, and
augmenting with targeted
hires with specific skills –
to create greater efficiency
and effectiveness against
current and future
business requirements.”
Herein, Canadian CEOs
can take some cues from
their global counterparts
by implementing leader
legacy programs,
mentorship opportunities,
or other engagement
tactics that leverage the
experiences of their mature workforce to foster
the next generation of leaders.There is also benefit
to appealing to Millennials and other upcoming
generations by delivering value propositions
that speak to their needs for meaningful work,
prosperous careers, corporate engagement, and
personal development.
And with 43 percent of
Canadian CEOs planning
to hire talent in order
to execute on their
top growth strategies,
HR departments are
becoming more critical
now than in recent years.
28 The race is on

“There’s no better time for the role that
HR can serve than now, particularly since
business leaders are becoming more
performance focused than ever and HR
is being drawn in as a strategic business
partner in driving that performance.”
Soula Courlas
National Leader, People Change
KPMG in Canada

Financial incentives
(e.g. pay, bonuses)
Non-financial
incentives (benefits,
vacation time)
Opportunities to
learn, develop, and
work with leaders
in the field
The chance to
innovate and work
in an entrepreneurial
or collaborative
environment
Non-financial
vacation time)
(e.g. pay, bonuses)
Top strategies for attracting talent
Canada
47% 42% 40% 37% 36% 35%
Opportunities to
learn, develop, and
work with leaders
in the field
Non-financial
vacation time)
Flexible work
assignments
Non-financial
vacation time)
(e.g. pay, bonuses)
The chance to
innovate and work
in an entrepreneurial
or collaborative
environment/promotion
opportunities
Top strategies for retaining talent
Canada
51% 49% 38% 39% 37% 36%
Global
Global
30 The race is on

“It comes down to believing in the power
of enabling your people to play to their
strengths and skills and focus on developing
their capabilities to be the best they can be
for what you need them to be.”
Soula Courlas
National Leader, People Change
KPMG in Canada
As for the degree to which Canadian’s see their
teams expanding over the next three years, a larger
percentage sees their headcount growing compared
to global counterparts.The difference is small,
but can be explained in parts by Canada’s overall
optimism in the economy and its historic tendency
to weather economic storms better than other
countries.
“It’s a Canadian tendency or characteristic to move
deliberately and conservatively, which has served
us well and resulted in a Canadian economy that is
resilient and can weather serious economic storms,”
offers Courlas.
Talk of talent management is never complete
without mention of the rise of automation and
machine learning.This is especially relevant within
the technology, manufacturing and operations,
and engineering sectors where a majority of
Canadian CEOs believe automation will replace
5 percent of the workforce at minimum. And while
Canadian CEOs know they can benefit from greater
efficiencies and lower costs, 89 percent admit
to being concerned about integrating automated
business processes with artificial intelligence and
cognitive processes.
Perhaps then, this is one of many new skills that will
soon be in high demand.
64%of Canadian CEOs say
they will increase their
headcount by 6-10%
(48% global)
30%of Canadian CEOs say
they will increase their
headcount by 11-25%
(23% global)
0%of Canadian CEOs
say they will stay the
same (2% global)
Headcount change
in 3 years

32 The race is on

ConclusionGoing the distance in a global digital market requires a
strong team, the willingness to innovate, and having a deep
understanding of the customers in play. And while Canadian
CEOs can match the pace of their competition, it will take
meaningful transformation to pull ahead.
Promisingly, Canadian leaders are confident in their ability to achieve growth
over the next few years. However, their areas of focus, strategic priorities,
and overall reluctance towards transformation suggest they maintain a more
insular view than global CEOs. Here’s where Canadian CEOs can benefit from
sharing their global peers’ heightened considerations for external factors like
geopolitical influences, new and existing competitors and disruptors, cyber
security risks, and the need to make innovation their top priority.
Canadian CEOs can also take greater steps towards addressing their number
one concern: customer loyalty.This includes using data and analytics more
effectively and delivering tailor-made experiences to customers with the digital
tools at their disposal. No doubt, in an age of instant communication and
online lifestyles, the onus is on companies to find new and meaningful ways of
attracting today’s ever-evolving customer.
The way forward is not without its challenges. Nevertheless, by expanding
their global perspective and aligning with the partners and technologies that
can give them an edge, Canadian CEOs can build on their domestic successes
to claim a greater stake in the world market.

MethodologyThis survey includes perspectives from 53 Canadian CEOs, and is
part of a global KPMG study including nearly 1,300 international
CEOs. A majority of the Canadian CEOs who responded (87 percent)
represent publicly-owned companies and over half of which report
revenues between $1.3 billion and $12 billion (28 percent earning
$13 billion or more, and 19 percent between $668 million and
$1.2 billion). Of the respondents, 79 percent have held their position
for a minimum of 6 years and 43 percent of which have been with
their company for over 15 years.
The study represents CEOs of companies from a wide range
of industries, the top three being banking, energy and utilities,
and infrastructure. CEOs from retail, automotive, manufacturing,
insurance, telecom, technology, investment management, and life
sciences sectors were also represented.
34 The race is on

kpmg.ca/CEOoutlook
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity.
Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is
received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a
thorough examination of the particular situation.
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with
KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 13091
The KPMG name and logo are registered trademarks or trademarks of KPMG International.
Contactus
BillThomas
CEO, KPMG in Canada
T: 416-777-8144
E: bbthomas@kpmg.ca
Rob Brouwer
Managing Partner,
Clients and Markets,
KPMG in Canada
T: 416-777-8542
E: rbrouwer@kpmg.ca

2016 Canadian CEO Outlook

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