EY Growth Barometer 2018 The better the question. The better the answer. The better the world works.
Your presenter François Tellier Partner and EY Growth Markets Leader Page 2 Does the speed of change blur or sharpen your focus? Does the speed of change blur or sharpen your focus?
Agenda • Welcome • About the EY Growth Barometer • Growth predictions • How are disruptive forces and technology impacting growth plans? • How is talent, innovation and culture impacting the middle-market? • What are the risks to growth? • Questions Page 3 Does the speed of change blur or sharpen your focus? Does the speed of change blur or sharpen your focus?
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 of EY by Euromoney Institutional Investor Thought Leadership with 2,766 C-suite in companies from 21 countries and with annual revenues of US$1m to US$3b. ey.com/growthbarometer Page 4
Americas findings US and Canadian Companies across entrepreneurs lead the the Americas are world in customer- driving growth by centricity expanding into adjacent sectors Steady revenue growth predicted: Mexico is looking The vast majority to drive growth Brazil: 57% predict 6-10% of companies within the country , across the shying away from Canada: 67% predict 6-10% Americas plan to international adopt AI over the expansion next 5 years Mexico: 71% predict 6-10% US: 72% predict 6-10% Brazilian companies are focused on improving organizational culture Page 5 Does the speed of change blur or sharpen your focus? Does the speed of change blur or sharpen your focus?
Canadian findings Canadian middle-market leaders are putting the customer experience, talent Main themes and tech at the heart of their growth strategy 67% 21% 36% Solid growth forecasts evidence positive economic see cash flow is the greatest growth prospects wish to sell part of their business expect growth of 6%-10% challenge 24% 11% 8% Canadian businesses are looking to grow within their want higher trade barriers to see entry into a new Canadian win objectives of technology investment: borders remove overseas competitors, vs are considering overseas expansion market as their main strategic 15% in the ROW priority 27% 33% 92% New technology seen as the catalyst for disruption – and see new tech as the most view digital-powered Industry the means to growth of companies will adopt AI by important factor in convergence as the most improving productivity 2023 disruptive megatrend 19% 42% Canadian businesses define Talent shortages may the best type of culture as compromise future growth of company leaders say they’re looking one that ‘attracts younger, of company leaders indicate lack of plans far less for specialist skills than for more skilled talent is the second greatest digitally-native talent ’ team players challenge to growth 30% 36% 40% Canada surpasses the ROW believe that customer of company leaders indicate improving in its customer-centricity see customer demand as the top innovation understanding is the key to agility the customer experience is the primary driver reason for tech investment Page 6 Page 6 Does the speed of change blur or sharpen your focus? Does the speed of change blur or sharpen your focus? Does the speed of change blur or sharpen your focus?
Canadian highlights Page 7 Does the speed of change blur or sharpen your focus? Does the speed of change blur or sharpen your focus?
Revenue growth projections Canada Rest of world People, ► Almost 1 in 7 Canadian behaviors middle-market companies is and culture growing at high single digits 1% Negative growth this year – a 46 percentage 0% Digital, point jump on 2017. technology 22% and analytics 0-5% 13% ► We see a drop in the numbers of low growth as EY 7 Drivers of Growth 67% Operations well as high growth 6-10% 59% companies, as CEOs focus on domestic expansion and 6% 11-15% digitization for growth. 22% Customer ► Uncertainty in the primary 2% 16-25% trading relationship with the 4% Funding US is adding a note of and finance 2% caution. 26-50% 1% ► Of the very highest-growth Transactions 0% entrepreneurs globally and More than 50% 1% alliances (those with 15%+ growth rates), 23% are in Technology, 16% in FS and 13% in DIP. Risk What is your expected growth rate for the next 12 months? Where do you see your growth coming from in 2018? Page 8 Does the speed of change blur or sharpen your focus? Does the speed of change blur or sharpen your focus?
Strategic growth priorities Canada Rest of world People, ► Domestic expansion behaviors dominates with company and culture Entry into a new geographical market 24% leaders also looking to grasp within our borders 18% new opportunities thrown up Digital, by convergence and technology Growth into an adjacent business 21% digitization. and analytics activity/sector or subsector 20% ► The 2017 Canadian Free EY 7 Drivers of Growth 17% Increasing market share Operations Trade Agreement that has 11% removed trading barriers between the country’s 13% M&A acquisition opportunities 18% provinces and territories is Customer also facilitating local growth 12% and mobility. Digitalization/Technology investment 6% Funding ► Among high-growth and finance 11% entrepreneurs globally Entry into a new overseas market 23% (growing at 15%+) entry into Transactions new overseas market is the and Divestment opportunities (sale of 2% top-ranked strategy (by 27% alliances whole or part of the business) 4% of respondents). Risk Which of the following growth strategies is a strategic priority for your company? Are you targeting any new markets in the next 12 months? Page 9 Does the speed of change blur or sharpen your focus? Does the speed of change blur or sharpen your focus?
Disruptive forces ► Canada’s C -suite joins peers People, Canada Rest of world behaviors across the Americas and the and culture UK in highlighting the impact 33% Industry convergence of industry convergence on Digital, 23% business, 5% ahead of technology demographic shifts which and analytics 28% dominates this ranking in the Demographic shifts 33% rest of the world. EY 7 Drivers of Growth Operations 14% ► New technologies, changing Digitalization 14% consumer behaviour and shortened supply chains are Customer creating new ecosystems that 11% Climate change 10% threaten traditional sector boundaries. Funding 8% Shifts in working patterns (including and finance ► Unlike the broader cohort, gig economy) 16% high-growth entrepreneurs Transactions see digitization as having the 6% and Urbanization (people moving to cities) biggest impact on their 4% alliances business (32% rank it first) Risk Which of these disruptive forces is having the biggest impact on your business? How are you creating new opportunities thrown up by convergence? Page 10 Does the speed of change blur or sharpen your focus? Does the speed of change blur or sharpen your focus?
AI adoption Canada Rest of world People, ► In a massive swing, reflected behaviors across the world, Canada’s and culture middle-market C-suite is 6% Yes, we are already adopting AI for embracing AI. some of our business processes 6% Digital, technology ► 92% of companies will have and analytics adopted AI by 2023, while just 42% Yes, in the next 2 years 12 months ago 74% of 68% EY 7 Drivers of Growth Operations Canadian CEOs said they would never adopt RPA. 44% Yes, in the next 5 years 22% ► Canada’s ‘Made in Canada Customer Silicon Valley’ tech hubs are testament to the country’s 3% Yes, in the next 10 years ambition to be a leader in AI 1% Funding and digital technologies. and finance 5% ► 22% of high-growth Never 3% entrepreneurs have already Transactions and adopted AI, compared to 6% alliances of all respondents. Risk Will AI be adopted by your company? Are you tapping into additional revenue streams and performance improvements possibilities that are now possible with AI? Page 11 Does the speed of change blur or sharpen your focus? Does the speed of change blur or sharpen your focus?
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