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The first challenge is the slow pace of AI adoption by Canadian businesses.

As a country, we rank among the world leaders in AI research and capacity. But at a time when companies around the globe are embracing AI as an essential competitive tool, many Canadian businesses are hesitating. We simply aren’t implementing AI with the same urgency as other leading economies.

Today, the global AI adoption rate for business is 34 per cent. In Canada, it’s 26 per cent. Only 13 per cent of our companies are allocating more than 30% of their R&D spending to AI. That puts us well behind countries like France, Germany, and the United States.

In fact, Canada has fallen from fourth to eighth place in the Tortoise Global AI Index, which tracks a range of factors like innovation, investment, and implementation.

In a fast-paced sector, Canada is moving in slow motion. Small-and medium-sized businesses, in particular, are holding off. That’s troubling for our country and its future productivity – but also for businesses themselves.

The last great wave of disruption showed us how technology can remake the competitive landscape. AI is an even stronger transformative force.

Sitting back and waiting ensures your business ends up a laggard instead of a leader. This is an even greater risk in a volatile moment when Canadian businesses now need to outperform their American counterparts to attract capital.

Solomon seems to recognize the scope of the challenge. In a recent speech, he lamented that Canada has become a sort of AI “farm team.” We produce world-leading research but other countries often take the lead in commercializing it. They reap the benefits.

Our collective hesitation to adopt AI may have cultural roots. Canadians can be risk averse. We know some business leaders are also concerned about AI safety.

But Canada has world-leading research and expertise in the responsible development and implementation of AI. Companies across sectors – from Thomson Reuters to TELUS to Canadian Tire – are demonstrating that AI isn’t an industry-specific tool but rather a fundamental business capability. And Canadian banks have been successfully, and safely, implementing AI solutions for more than a decade, proving that even the most security-conscious sectors can navigate AI adoption.

In this crucial moment, boards and shareholders should be demanding AI investment and responsible implementation. Companies should be seizing the opportunity to leverage the knowledge of Canada’s national AI institutes — Vector, MILA, and Amii — to jump start their AI adoption.

And CEOs should come to grips with the fact that their company’s five-year survival depends on successful AI integration and use. It would also be useful if Canadian governments demonstrated leadership in procurement by prioritizing AI-enabled Canadian companies like the federal government has done with Cohere.

Canada’s second AI challenge is the growing need for compute infrastructure. Training AI models requires an enormous amount of processors, memory, storage: these form the backbone that enables AI to learn and improve over time. Countries that lack AI compute power will struggle to retain leading AI talent and sovereignty over their data.

The federal government has stepped up with targeted investments to expand Canada’s compute capabilities and protect our ability to attract top talent. But more can and must be done.

Specifically, Canada’s provincial governments should contribute to Canada’s compute capacity since all Canadians will benefit from AI-driven economic growth. And governments must regard compute infrastructure not as a one-time investment but as essential national infrastructure that needs to be maintained and upgraded – with predictable, reliable funding – to ensure ongoing competitiveness.

Over the past decade, Canada has led the way in AI development and innovation. But the hard truth is that we’re falling short on adoption and compute power.

Only with decisive action from business and government leaders will Canada be able to translate its research advantage into long-term gains in productivity, competitiveness, and growth.