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A large majority of Canadian businesses are sluggish when it comes to the adoption of Generative Artificial Intelligence (Gen AI), according to the results of a recent report by the Canadian Chamber of Commerce’s Business Data Lab (BDL).

The 38-page report details how a multitude of barriers, along with a lack of trust in the new technology, could impede the adoption levels needed to improve Canada’s economic growth.

Locally, the report shows that 11% of businesses in Kitchener-Waterloo and Cambridge are "using", or "planning to use" Gen AI, compared to 18% in Toronto or 15% in Ottawa. 

The report, Prompting Productivity: Generative AI Adoption by Canadian Businesses, underscores how Gen AI (referring to Large Language Models bases and the practical applications built on top of them) can help tackle one of the most significant economic challenges facing Canadian prosperity and standard of life — low productivity — while also exploring what is holding Canadian businesses back from adopting AI technologies.

The results detailed in the report, compiled from a survey of 13,327 businesses in January and February of this year, shows that larger businesses are nearly twice as likely to adopt Gen AI compared to smaller businesses. Overall, the data shows that one in seven businesses (roughly 14%) – mostly larger businesses and industries with highly educated workers – are Gen AI adopters. 

Patrick Gill, BDL's Senior Director of Operations and Partnerships, and the report's lead author, says he's surprised more small businesses haven't been embracing this new technology. 

“I’ve never run into a small business owner who wasn’t run off their feet and wearing multiple hats or wish they could replicate themselves,” he says. “But that’s the nice thing about this tool. With little or at no cost a small business owner or team can leverage this to fill in some of their existing skills gaps.”

According to the report, the top three industries adopting AI includes information & culture (31%), professional services (28%), and finance and insurance (23%). The two lowest to adopt are agriculture, forestry, and fishing (8%) and construction (7%).

Building trust an issue

Patrick says historically, larger businesses usually face more barriers adopting new technologies due to the fact their operations are more complicated and often have technology ‘stacked’ on top of each other.

“Smaller businesses usually face less of a challenge,” he says. “Their biggest challenge has usually been ‘Do I have the money right now to invest in a new technology?.”

Besides potential costs, trust is also a key issue.

“Public trust and the perception of AI will definitely play a crucial role in the adoption of the technology going forward,” says Patrick, noting a survey released last year indicated that Canada was the third most pessimistic country in the world and that only 38% of Canadians view AI in a positive light, slightly ahead of those in the U.S. and France.

Patrick says the Business Data Lab report also indicates that people are nervous about what the adoption of Gen AI will mean for their jobs and notes most agree change will come in the way they conduct their jobs, versus losing them outright.

“Right now, the technology is predominantly being used to augment workers’ abilities and not to replace them entirely,” he says, adding many are looking at Gen AI as a tool that can accelerate production and improve quality and services in effort to reduce costs. “That’s incredibly important during this time of a high-cost operating environment.”

From a global perspective as interest in Gen AI continues to grow, the report indicates that Canadian businesses need to move fast to gain a competitive advantage over global competitors. Low productivity and business investment puts Canadians’ prosperity and living standards at risk and its GDP per capita is now significantly below the U.S. and the OECD (Organisation for Economic Co-operation and Development) average.

Businesses must ‘innovate or die’

“Gen AI is a generational opportunity to boost Canadian productivity at a time when our performance is steadily headed in the wrong direction. The time to prompt productivity and act is now. Canadian businesses must innovate or die, and that means embracing Gen AI,” says Patrick. “While adoption has begun in every industry, it’s likely not fast enough for Canada to be competitive on the global stage, especially since three in four Canadian businesses still haven’t tried Gen AI yet.”

Based on two adoption scenarios (“fast” and “slow”), the Canadian Chamber of Commerce’s BDL projects that Gen AI adoption by Canadian businesses will reach a tipping point of 50% in the next three to six years.  This may seem fast but is probably not fast enough to keep pace with global leaders. Businesses in the U.S., China and several European countries are investing heavily in AI, likely outpacing Canadian investment.

“Those who move first basically set the standards and capture the largest market share,” says Patrick. “And everyone else is perennially playing catch up.”

He hopes the findings in the BDL report may gently ‘nudge’ businesses into more experimentation when it comes to adopting Gen AI. 

“There are so many low costs and no cost options available, so experiment and give it a try,” says Patrick, explaining how AI can assist with creating emails, marketing, and promotional content, and well as new visuals. “Use and test it and eventually you’ll find a way.”

Click here to the read the report.

Key findings from the report

• Roughly 1 in 7 Canadian businesses (14%) are early Gen AI adopters. They are found within every Canadian industry and region, but are more likely to be exporters, larger businesses, industries with highly educated workers or emerging enterprises.
• Larger businesses are nearly twice as likely to use Gen AI than small businesses.
• 18% of Ontario businesses are ‘already using’ or ‘plan to use’ Gen AI (Toronto rate was 18%, while KW-Cambridge was 11%).
• On its current trajectory, Gen AI adoption by Canadian businesses could reach a tipping in the next 3 to 6 years — likely too slow to keep pace with global competitors.
• Depending on the rate of adoption, Gen AI could grow Canada’s productivity between 1% and 6% over the next decade.
• The factor of “trust” will be important for future adoption, with public interest and acceptance of AI likely being positively correlated with countries’ business adoption rates. Global IPSOS surveys reveal that Canadians are less knowledgeable and more nervous about AI than citizens of most other countries.
• Most businesses using Gen AI are predominately looking to accelerate content creation (69%) and automate work without job cuts (46%).
• Interestingly, replacing workers is not the primary driver of adoption, with only 1 in 8 businesses (13%) that use Gen AI cite its value for replacing employees. 
• Roughly 3 in 10 businesses cite hiring skilled employees and access to finance as top challenges to adopting new technologies.
• Almost 3 in 4 Canadian businesses (73%) have not even considered using Gen AI yet.
• Public interest and perception of the technology are likely additional major barriers to adoption by businesses. 
• It is recommended that Canadian businesses move fast to adopt Gen AI to gain a competitive advantage over global competitors. This means starting with small-scale pilot projects to validate the feasibility and impact of Gen AI before gradually expand to larger initiatives based on successful proofs of concept, all while training and preparing employees for its adoption.
• For its part, government can support Gen AI adoption by upskilling workers, setting adoption targets, tapping the private sector, and among other actions, ensuring regulation is proportionate and risk based.

Recommendations for business

Innovate or die: Canadian businesses need to move fast to gain a competitive advantage over global competitors. With Gen AI so accessible and applicable for every type of business, there is little excuse for Canadian businesses to sit on the sidelines. 

Pilot projects that measure uplift: Start with small pilot projects to validate the feasibility and impact of Gen AI. Compare metrics (e.g., efficiency, costs savings and revenue generation) before and after its implementation.

Change management and employee training: Prepare employees for the adoption of Gen AI. Provide training sessions, workshops, and resources to help them understand the technology and develop new workflows. 

Strategic alignment: Align Gen AI adoption with overall strategic goals. Identify where Gen AI can enhance existing processes, improve customer experience, or drive innovation. 

Data infrastructure and governance: Invest in robust data infrastructure and governance practices. High-quality data is essential for training Gen AI models. Ensure data privacy, security, and compliance. 

Talent acquisition and retention: Attract and retain talent skilled in Gen AI. Recruit data scientists, machine learning engineers and domain experts who can develop and deploy Gen AI solutions. 

Investment in cloud infrastructure: Leverage cloud platforms for scalable computing power. Cloud services facilitate model training, deployment, and maintenance, allowing businesses to experiment and iterate efficiently. 

Leverage public resources: Move faster by basing policies on the federal government’s Guide on the use of Gen AI or tapping available funding, such as the NRC’s (National Research Council of Canada) IRAP AI Assist Program.