Businesses use tech, new markets to drive growth

Canada’s middle-market businesses are focusing on new technology, expanding to different markets and attracting skilled talent, finds EY’s inaugural Growth Barometer, which surveys businesses around the world with revenues of US$1 million to US$3 billion. In fact, leaders view technology as both a challenge and a risk, but are focused on harnessing its potential to grow.

“Canada’s middle market is a prominent driver of our country’s innovation and economic growth,” say Francois Tellier, EY Canada’s growth markets leader, in a release. “Despite challenges from technology disruption, demographic changes and geopolitical uncertainty, EY’s survey finds business confidence is high. In fact, one-in-five respondents anticipate exceeding World Bank global GDP growth forecasts of 2.7%.”

Technology: threat and opportunity

One-fifth of Canada’s middle market cites technology disruption as the greatest challenge. But they also recognize its potential, voting it the number one contributor to their growth strategy, finds the survey. Further, 35% say technology is also the key to improving productivity.

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“It’s no secret technological disruption is gathering pace,” says Tellier. “We’re seeing this especially in Canada, where cities like Toronto and Montreal are gaining momentum on establishing themselves as AI hubs. Companies may feel technology disruption is pushing them behind in areas such as digital and e-commerce, but they’re recognizing the need to dedicate more time and resources to them.”

Expanding into new territories

According to the survey, 29% of Canada’s middle-market businesses rank expansion into new geographical markets as their top growth priority. This is a reflection of the 37% of Canadian respondents that rank globalization as the number one megatrend impacting their businesses – compared to only one-quarter of global respondents.

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“This isn’t an unusual growth strategy for Canadian businesses,” says Tellier. “Our country is spread thinly across six times zones, and this lack of concentration forces companies to become global, faster – especially compared to the U.S. where it’s easier to grow regionally.”

Similarly, Canadian respondents rank expanding into adjacent business activities as their second top growth strategy. While this reflects a willingness to diversify, it also demonstrates the dynamism of the market as new technologies begin to blur traditional sector boundaries and form sub-sectors, such as fintech and agri-tech.

Building innovation

When it comes to delivering on its strategy, Canada’s middle market understands the critical importance of attracting the right type of people; 30% of businesses seek to harness the specialist skills of their people to drive their innovation agenda.

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However, finding people with the right skills to address the digital world is becoming a greater challenge. This demonstrates the strong link between technology and talent – you can’t have one without the other, suggests Tellier.

“With new technology comes the need to develop the right talent,” he says. “Fortunately, the middle market has shown resilience and flexibility, and is well positioned to exploit the changing market. While technology disruption and skilled talent shortages can be barriers, they’re not roadblocks for growth. Companies need to capitalize on technology to drive productivity and innovation, while investing in their people in order to successfully enter new markets.”