Canada did feel the effect of recession, but its recovery has been strong and, in contrast with other economies, has brought jobs with it (as of January 2011, Canada had recovered all the jobs lost during the recession). So while businesses in Canada have certainly faced an increase in complexity over the past two years, most Canadian businesspeople expect the pace to slow in the near future.
With 56 percent of respondents reporting a net increase in the complexity they currently face, only one in 10 expect this level to increase over the next two years. This is a clear contrast with Canada's largest trading partner and neighbor, the United States, where more than one in three respondents expect complexity to increase in the same time frame.
|
Country % |
|
Causes of complexity |
Global |
Canada |
US |
|
Regulation |
71 |
79 |
71 |
|
Information management |
63 |
74 |
63 |
|
Government oversight |
60 |
73 |
60 |
|
Speed of innovation |
59 |
67 |
59 |
|
Tax policy |
57 |
38 |
57 |
|
Operating in more countries |
55 |
30 |
55 |
|
Doing mergers/acquisitions |
50 |
36 |
50 |
While Canadians and Americans agree about the reasons for this increased complexity (27 percent of Canadians cite increased controls and market regulations; 22 percent considered the economic environment as the biggest contributor), Canadians were more likely than either the US or the global average to cite the current regulatory framework as their most significant current cause of complexity.
Looking ahead, Canadians voiced even stronger concerns about the potential for regulation to increase complexity, with 84 percent (more than any other country) citing regulation as a cause of greater complexity within the next two years. The Canadian political system is complex, consisting of an active federal government combined with a series of strong provincial authorities, so there are many layers of regulation to contend with. However, strong regulation of Canadian banks has been credited with keeping them largely out of the bad loans business which has caused such difficulties elsewhere in the world, thus contributing to the strength of the Canadian recovery.
Nevertheless, given their experience of regulation, it should come as no surprise that 95 percent of Canadian respondents agreed that governments needed to work together to make the global regulatory environment less complex.
Canadians believe they are more likely than most to be impacted by complexity related to technology and IT issues. Almost three quarters of respondents cited increased complexity stemming from information management (only Brazilians were more concerned in this area), and more than two thirds implicated the increased speed of innovation for a more complex business environment (versus 59 percent globally).
At the same time, when asked about possible actions that may reduce complexity, Canadian respondents were more likely to focus on IT solutions than their global counterparts. Almost 90 percent claim to have improved information management in order to better manage complexity in the past, and more than three quarters of respondents expect to leverage information management in the future.
Seven in 10 Canadian businesspeople said they believed new opportunities would open up for their company as a result of increased business complexity, with a clear focus on internal opportunities rather than external. Responses were split between opportunities to focus on existing business strategy (81 percent) and the need to create new and better strategies (80 percent). Coming in a close third was the need to make their companies more efficient (77 percent).
Canadians also seemed to be relatively unconcerned about the complexity of operating and expanding into new markets. When asked if operating in more countries has caused increased complexity, 30 percent said yes, versus a global average of 55 percent. Only 34 percent of Canadian respondents cited operations in new markets as the potential source of future complexity, versus 46 percent amongst their global peers.
This might appear inward-looking, but it seems to be borne more of a rising confidence in Canada's existing business strengths. There are more and more opportunities appearing within Canada as the economy powers out of recession. At the same time, the country's established position as a supplier of raw materials and commodities to the world puts it in a strong position both to reap the benefits of recovery in other countries such as China, and to profit from the high prices that raw materials now command.
Overall, Canadian businesspeople seem to be taking a cautious approach to dealing with increased complexity by focusing on running their existing businesses more efficiently. Notwithstanding their high regulatory burden, Canadian business people appear to be among the most confident in our survey in their ability to deal with increased complexity in future.
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