Canada ranks among the least AI literate nations globally, according to KPMG, despite AI’s ability to reduce business operating costs and increase employees productivity.Dado Ruvic/Reuters
John Turley-Ewart is a contributing columnist for The Globe and Mail, a regulatory compliance consultant and a Canadian banking historian.
Many Canadian businesses never miss an opportunity to miss an opportunity. That is the emerging consensus as artificial intelligence adoption advances with pace in the U.S., the E.U. and Asia while most Canadian businesses dawdle. A course correction is needed.
Just as business leaders are now calling on Canada to be an energy superpower, the same urgency is needed for Canada to be an AI superpower.
AI’s applicability runs across the business spectrum, from large corporations to small- and medium-sized enterprises, or SMEs. The productivity gains are particularly evident for SMEs that deploy AI to manage repetitive tasks and support operations.
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The Business Development Bank of Canada’s recent impact assessment demonstrated that, “A staggering 97% of SMEs using AI reported tangible benefits from using AI, including increased efficiency, reduced costs, higher sales, improved customer service, and better management of sales, production, or inventory.”
AI can reduce operating costs and increase the productivity of existing employees. And yet, for most Canadian businesses, AI is apparently a mystery yet to be solved. The same seems to be true of Canadians more generally.
KPMG reported that “Canada ranks among the least AI literate nations globally.”
Evan Solomon, Canada’s Minister of Artificial Intelligence and Digital Innovation, suggested to BNN Bloomberg that business leaders are “not sure how it will address the bottom line.”
RBC points to a lack of “imagination” and laments that “only 12% of Canadian firms have integrated AI into their production or services, placing Canada among the lowest in AI adoption in the OECD.”
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Sheldon Fernandez, an AI strategist and former CEO of DarwinAI, a Canadian AI start-up that was bought by Apple in 2024, has direct experience promoting productivity-improving AI tools to Canadian businesses.
His story is telling: “The corporate clients we engage are just very risk averse. It was much easier to engage in an experimental project with our companies and partners in the United States and Europe and even Asia than here in Canada,” he said on RBC’s Disruptors podcast. That “very risk adverse” Canadian business culture is the problem. Mr. Fernandez believes it is “limiting the aggressive adoption of AI transformation in this country.”
We have seen this play out before. Opportunity knocks, and businesses won’t answer the door. In the mid-2000s, federal government policies initiated in the late 1990s led to balanced budgets and new business tax advantages compared to other jurisdictions. Despite these advantages, economist Don Drummond noted on the Let’s Talk Economics podcast that Canadian businesses were more inclined to rely on a cheap Canadian dollar than productivity investments.
When those advantages slipped away under the Liberal government of Justin Trudeau, businesses began to notice and demands for change in Ottawa were voiced, culminating in an open letter supporting the Conservatives in the April 28 federal election signed by more than 30 business leaders.
“Productivity has stalled. Economic growth has slowed. Our GDP per capita is shrinking,” they said.
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Yet, the slow adoption of AI raises questions about Canadian businesses. What are they doing to invest in their own success? The inability of so many to effectively manage AI integration that will enable them to help themselves and improve productivity, economic growth and GDP per capita points to a culture of complacency.
Canada’s aging digital infrastructure is a monument to that complacency. “Canada trails every other G7 nation in AI computing infrastructure, possessing only one-eighth to one-tenth of the available compute performance per capita compared to countries like the U.S.,” according to RBC. AI is the high-speed train that needs high speed tracks and engines. Canadian AI is running on 1960s era rails built for plodding diesel engines.
What makes business AI-adoption rates so puzzling, as Minister Solomon hinted at in a recent interview, is that Canada is known for its “pioneering frontier AI research.” It is home to the “Godfather of AI,” and Nobel Laureate in Physics, University of Toronto’s Geoffrey Hinton. The country also has AI research organizations that do world-leading work: The Montreal Institute for Learning Algorithms, the Vector Institute in Toronto, as well as the Alberta Machine Intelligence Institute.
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That Canada is blessed with such rich AI research and innovation, and yet 88 per cent of our businesses have not even started to integrate AI into their operating models, speaks to a troubling lack of curiosity.
We face a future where an inquisitive person writes a prompt in their AI tool of choice asking: Why didn’t Canadian businesses adopt AI sooner and prosper?
If we don’t change course the answer will be: “Risk aversion.” Most Canadian businesses lacked the courage to innovate.