“Businesses that embrace calculated risks often see the greatest rewards,” says KPMG’s Global Tech Report 2024.
The report found that 78% of Canadian executives worry about the risks of investing in emerging technologies. This widespread fear of overspending on innovation isn’t just about budgets. It’s about confidence.
What happens when a lack of confidence leads to hesitation?
Canada’s innovation paradox is a prime example of this hesitation. Statistics Canada reports that many businesses are developing new products and processes, but the economic payoffs often fall short. Leaders are left wondering if the risks of investing in technology are worth it. Addressing this fear is critical for fostering a culture of calculated risk-taking and long-term growth.
Why the fear exists
Economic pressures and uncertainty make the fear of overspending understandable. According to Statistics Canada’s “Research to Insights” report, 40.6% of businesses point to low returns or long payback periods as reasons for avoiding advanced technologies. For organizations with tight budgets, these concerns are real.
Cultural factors also contribute. Canadian businesses often lean toward cautious, step-by-step innovation rather than bold, transformative changes. While caution can protect against big failures, it can also mean missing out on market-changing opportunities.
How leadership can address the fear
Overcoming the fear of overspending requires clear strategies from leaders. Here are some practical steps:
- Reframe risk as opportunity: Leaders need to shift their mindset. Risk shouldn’t only be seen as a threat. It can also be a pathway to growth. KPMG’s report shows that businesses using artificial intelligence (AI) have seen a 93% boost in profitability. Sharing these success stories can help build confidence.
- Focus on long-term value: When pitching technology investments, focus on the benefits beyond the initial cost. For example, digital tools can improve efficiency and enhance customer experiences, which often pay off significantly over time.
- Invest in skills and workforce development: Statistics Canada highlights “labour composition (skills upgrading)” as key to productivity growth. By training employees to use new technologies effectively, leaders can reduce uncertainty and make investments more impactful.
- Collaborate with partners: Public-private partnerships can lower financial risks. Programs like those from the federal government provide funding and support for businesses adopting new technologies, easing the burden on individual companies.
The broader implications
Tackling the fear of overspending isn’t just about helping individual businesses. It’s about Canada’s economic future. Labour productivity in Canada grows at 0.8% annually, compared to 1.9% in the United States, according to Statistics Canada. Overcoming risk aversion and making strategic investments could close this gap.
Leaders who embrace calculated risks can position their organizations and the country as global innovation leaders. Improving capital intensity, workforce skills, and multifactor productivity are essential for both business success and economic growth.
To move Canada forward, leaders need to replace fear-driven decision-making with action. By focusing on long-term value, reframing risks, and investing in their teams, they can create environments where innovation thrives. The goal isn’t to avoid risk. The goal is to manage risk wisely and turn fear into progress.
As Statistics Canada’s research notes, “Innovation and advanced technology adoption are critical to expanding output and increasing productivity.”
Leaders who take these steps can not only overcome the fear of overspending but also help Canada achieve its potential as an innovation powerhouse.
