Canadian organizations are investing in artificial intelligence, automation and digital transformation, but many are struggling to turn those investments into meaningful productivity gains, according to a new report from BDO Canada.
The report, based on a survey of 520 Canadian business leaders, says future productivity improvements will depend less on the amount organizations spend on technology and more on how effectively leaders redesign the way work is done.
Technology investment outpacing transformation
BDO Canada's Productivity Paradox 2026: How leadership will determine Canada's future productivity gains found that 45 per cent of Canadian organizations are experimenting with AI without achieving meaningful returns on investment, while just 18 per cent are actively embedding AI into workflows and operations.
The report also found that economic uncertainty is making some organizations more cautious about major investments. Nearly one-third, or 29 per cent, said they are delaying major investments as leaders contend with rising costs, revenue volatility, workforce pressures, regulatory complexity and other business risks.
"Canadian businesses recognize the need to improve productivity and are investing in the technologies that can help them do it. Investing in technology alone, however, will not deliver the gains Canada needs," said Jeff Chapman, managing partner, Advisory, BDO Canada. "The bigger challenge is turning that investment into meaningful change. In an increasingly competitive and uncertain environment, leaders need to make deliberate choices about how their businesses operate, invest, and adapt."
The report says technology can make individual tasks more efficient, but those improvements do not necessarily translate into higher productivity across an organization. It points to legacy operating models, including layered approvals, fragmented ownership, siloed functions and slow decision-making, as factors that can limit the benefits of new technology and create operational friction.
BDO says businesses should shift their focus from technology adoption toward redesigning their operating models, with greater emphasis on measurable business outcomes. The report also says some organizations are waiting for clearer returns or more stable economic conditions before committing to significant transformation.
At the same time, it suggests the current period of uncertainty can be used to simplify processes, modernize decision-making and develop operating models that are more adaptable.
Focus shifts to how work gets done
The report outlines several priorities for leaders seeking measurable productivity improvements, including identifying workflows where friction is highest, redesigning processes from first principles and reallocating resources toward higher-value activities.
It also calls for improved access to data and operational intelligence, along with greater adaptability across organizations. The report examines these issues in manufacturing and distribution, financial services, real estate and construction, and private equity, where businesses face different pressures but share a need to move beyond isolated technology projects toward broader operational changes.
"Canada's productivity challenge is ultimately a leadership challenge. There is no single technology investment that will solve it. The organizations that move ahead will be those whose leaders are prepared to rethink how work gets done, build greater adaptability into their businesses and make difficult decisions in the face of uncertainty," said Chapman.
Turning awareness into action
Productivity has become a higher priority for Canadian businesses as economic uncertainty, workforce pressures, rising costs, regulatory complexity and the adoption of AI reshape the competitive environment, the report says.
BDO says the primary challenge is no longer awareness, with most organizations understanding the importance of modernization and the risks associated with standing still. Instead, the challenge is turning that understanding into organizational change quickly enough to produce an advantage.
The report concludes that organizations positioned for the next era of productivity will not necessarily be those that make the largest technology investments. Instead, it says the focus will be on businesses that can redesign work effectively, empower their employees and adapt as conditions change.