Operating in the new paradigm
HLB Survey of Business Leaders 2026 - North America outlook
North America has emerged from a year of pronounced political and economic changes. A shift towards more conservative policy settings in the United States, spanning tariffs, tax cuts and tighter immigration enforcement, is reshaping expectations across financial markets.
Some long-standing trade relationships are coming under strain, while new alliances are beginning to take shape. Uncertainty has intensified, yet businesses are adapting quickly. Risk perceptions are now concentrated along three clear axes: fiscal policy, technology and trade. Concern over trade flow disruption increased by 18 percentage points year on year, reflecting the impact of a more interventionist trade stance
One year into President Trump’s tariff programme, its effects are becoming clearer. The US Commerce Department data show the trade deficit narrowing to $29.4 billion in November, the lowest level since mid-2009. Tariff revenues climbed sharply through most of the year, rising from $7.25 billion in February 2025 to a peak of $31.35 billion in October, before falling by more than 10% in November. This suggests that tariffs are beginning to reorder global trade flows, rather than merely raising short-term revenues.
In Canada, a 50% tariff on aluminium accelerated diversification among mining companies. European buyers now account for 18% of aluminium purchases from producers in Quebec, up from just 0.2% in 2025. Strong global demand has kept prices elevated, helping to offset weaker production volumes and limiting job losses in the sector.
Despite these pressures, North American economies have proved resilient. In the US, strong equity markets have continued to support consumption. This strength has persisted despite slower real income growth as employment gains moderated. GDP is estimated to have expanded by 2.1% in 2025, with growth expected to ease slightly to 2.0% in 2026.
Inflation remains a constraint. Consumer prices rose by 2.7% in December 2025, continuing to pressure household budgets. Interest rate cuts remain under discussion, but most analysts see limited scope for action in the first half of 2026.
Canada’s outlook is steadier. GDP growth of around 1.6% is expected in 2026, supported by resilient consumption, improving labour market conditions, fiscal stimulus and a relatively competitive trade position. Inflation is forecast to remain contained in the mid-2% range.
At the global level, the tariff shock has proved smaller than initially announced, but it remains economically meaningful. The International Monetary Fund expects global economic growth to slow to 3.1% in 2026, citing trade frictions as a key factor. A touch more confident, 58% of our sample expect the rate of global economic growth to increase this year, continuing an upward trend since 2023.
At the same time, several countervailing forces have softened the impact. Lower interest rates, a weaker dollar, widespread exemptions and firms finding ways to adapt to tariff regimes have helped sustain trade flows. Reflecting this adjustment, the UN trade agency UNCTAD forecasts that global trade grew by 7% last year, reaching more than $35 trillion.
of leaders say they are very confident in their ability to grow revenues over the next 12 months
Business sentiment mirrors this balance between disruption and resilience. Confidence at the firm level is stronger still, with leaders very confident in the ability to grow revenues.
Profitability data reinforce this confidence. North American companies recorded the largest increase in profit margins among all regions. The share reporting margin growth of 5% or more rose by 11 percentage points year on year to 39%, compared with a cumulative increase of 7 percentage points elsewhere.
In a year marked by disruption, North American businesses have not only adjusted but, in many cases, strengthened their financial position, setting a distinctive tone for 2026.
Three priorities for business leaders in 2026
In a year marked by disruption, North American businesses have not only adjusted but, in many cases, strengthened their financial position, setting a distinctive tone for 2026.
Switching from fixed roadmaps to adaptive execution
To sustain momentum through 2026, North American leaders are placing greater emphasis on speed, particularly in how they plan and execute. Shorter planning horizons are now the norm rather than the exception. Forty-two per cent of leaders operate with planning cycles of six to 24 months, while a further 18% report operating on an ongoing, rolling basis. This approach is a clear departure from global peers. In comparison, European leaders are roughly half as likely to plan without a fixed cycle, while leaders in Latin America are 1.3 times less likely to do so.
This shift reflects the accelerating pace of change across technology, financial services and regulation. For many leaders, the idea of a stable planning horizon has become increasingly difficult to sustain, as operating conditions evolve too quickly for static roadmaps. As a result, strategy is increasingly treated as iterative rather than fixed.
Canadian e-commerce company Shopify provides a case in point. Between 2019 and 2022, the company pursued a long-term strategy to build its own logistics and fulfilment network, investing heavily through acquisitions such as 6 River Systems and Deliverr. The strategy was designed to unfold over several years and to position Shopify as a direct competitor to Amazon’s infrastructure-led model. By late 2022, shifting macroeconomic conditions and internal performance data pointed to rising costs and growing misalignment with Shopify’s core strengths.
Rather than adhering to a multi-year roadmap shaped during the pandemic boom, Shopify’s leadership pivoted within months. In May 2023, the company announced it would divest most of its logistics operations, selling them to Flexport, and refocus on profitability and its core software platform. Crucially, this was not a reactive retreat, but a recalibration grounded in evidence. By the fourth quarter of 2023, revenue had increased by 24%, while gross profit rose by 33%, underscoring the value of disciplined adaptation over rigid persistence.
This year, North American leaders appear increasingly aware that speed must be balanced with judgment. Many firms are pairing adaptive planning with more comprehensive long-term frameworks and centralised oversight. Compared with global peers, North American leaders are more likely to favour consensus-driven decision-making and to rely on scenario and options analysis to guide strategic choices.
Technology is playing a central role in enabling this shift. Nearly a third of North American leaders already use artificial intelligence to support forecasting and strategic planning, around 1.5 times the global average. Looking ahead, three-quarters plan to increase investment in automated and AI-driven decision-making tools over the next twelve months.
Taken together, these patterns suggest that speed in North America is no longer treated as a tactical advantage alone. It is being built into planning cycles, decision frameworks and governance structures.
Becoming digital by design
Continuous improvement
of leaders are prioritising improving their operating effectiveness
As decision-making accelerates, North American companies are working to tune up their operating models. Speed in the boardroom is increasingly matched by sharper execution across the organisation. As well as the prioritisation of improving operating effectiveness, commitment to new technology adoption is equally strong. This emphasis reflects a long-standing regional advantage. North American firms historically move more quickly through technology diffusion cycles, supported by a large venture capital ecosystem that rewards high-risk, high-reward innovation.
More permissive regulatory approaches to consumer data and AI deployment, relative to other regions, further accelerate commercialisation. More than a third of North American companies already deploy AI across back-office functions, such as workflow automation and document processing, with just under a third deploying for customer-facing activities, including analytics and customer service operations. Importantly, adoption is no longer confined to technology firms or digital natives.
In the third quarter of 2025, Estée Lauder reported a 300-basis-point improvement in gross margin, driven by AI-enabled manufacturing optimisation. They have created an AI Innovation Lab, developed through partnerships with Microsoft and Zero100. AI enables more precise demand forecasting, inventory optimisation and productivity improvements across the company’s complex global supply chain.
Similar dynamics are visible in Canada. Bell Canada Enterprises has attributed a 34% year-on-year increase in revenue to AI-powered solutions launched over recent years. These include Bell Cyber, a security-as-a-service offering for threat detection and prevention, and Bell AI Fabric, a national network of AI-focused data centres.
In 2026, leaders plan to continue strengthening their digital capabilities. Improving weaknesses in digital and AI capabilities is now the top priority, particularly among profit accelerators, those reporting a year on year profit margin increase of five percent or more. Forty-two percent of profit accelerator leaders are focused on this area, compared with 34% of the broader cohort, which continues to pursue more diffuse improvements across people, processes and technology.
For many of these firms, broader transformation reflects a different starting point. Organisations with lower digital maturity are still addressing foundational gaps in skills, processes and legacy systems. In these cases, broad-based change is seen as necessary groundwork before more targeted digital investments can deliver returns.
In contrast, profit accelerators are allocating additional spending towards two areas: advanced analytics and cybersecurity solutions. Over 80% aim to increase investment in advanced analytics tools, including business intelligence platforms, automated and AI-powered decision-support systems, and market and competitive intelligence. At the same time, spending on cyber and data protection is rising sharply.
Cybersecurity has remained a top-five risk for North American leaders for three consecutive years. As digital footprints expand and algorithms increasingly control both data and physical processes, exposure grows. Greater reliance on partners and third-party platforms further amplifies risk. While 77% of CISOs identify third-party risk as a major concern, only 21% report having tested crisis-response plans in place. Recent breaches underline the stakes. In July 2025, Allianz Life Insurance suffered the loss of 1.5 million US customer records following a targeted attack on a third-party CRM provider.
Regulatory pressure is also increasing. Federal frameworks such as the Cybersecurity Maturity Model Certification 2.0 and evolving guidance from the National Institute of Standards and Technology are tightening compliance requirements and raising expectations around governance and resilience.
For North American leaders, the implication is clear. Digitisation and cyber protection cannot advance on separate tracks. The most resilient organisations are pairing AI adoption with workforce training, clearer accountability and stronger cyber discipline. As operations become more digital and more automated, safeguarding performance will be critical to acquiring and maintaining customer trust.
Building data-informed customer experiences
Domestic demand has played a central role in sustaining stronger-than-expected growth across North America through 2025. In Canada, retail sales rose by 1.2% in November, defying broader economic headwinds. In the United States, consumer spending expanded at an annual rate of 3.5%, the strongest performance since late 2024. These trends have provided an important buffer as global trade conditions and investment sentiment fluctuated.
AI use cases
of North American leaders are currently using AI for customer analytics
of North American leaders are currently using AI for customer analytics. This compares favourably to other top AI use cases displayed by the region:
38% – process automation
37% – document processing
33% – customer services
Looking ahead, however, the outlook is more nuanced. In Canada, mortgage renewals will affect a large share of homeowners in 2026, while labour market conditions remain unsettled. In the United States, consumer sentiment is softening as households contend with higher living costs, a shift also noted by survey respondents. Beyond price sensitivity, leaders are also seeing rising expectations for personalised experiences and a renewed appreciation for human interaction. These signals are shaping strategic priorities.
More than half plan to focus more sharply on customers as a source of revenue growth in the year ahead. In particular, three quarters are prioritising improvements in customer analytics, segmentation and personalisation, alongside other customer focus methods for the year ahead (see chart below)
Under its True North strategy, Canadian Tire has placed loyalty and data at the centre of its growth agenda. Their Triangle Rewards programme, in particular, is being expanded through richer first-party data, AI-enabled personalisation and a broader ecosystem of brand partners. The initiative also underpins a new retail-focused banking strategy designed to deepen engagement with Triangle Mastercard holders.
To date, the programme’s impact has been measurable. Membership has grown from 10 million to 11.7 million. More importantly, loyalty-driven sales have outpaced non-loyalty growth, with loyalty members increasing their spend in the third quarter of 2025.
This performance reinforces a wider pattern seen across the region. Among survey respondents, 42% of profit accelerators already use AI for customer analytics, compared with 37% of the rest.
Apart from tech investments, many companies are also investing more in closer, more direct connections with customers through structured feedback programmes and renewed emphasis on employee training. This matters as physical retail regains momentum. During Black Friday 2025, offline sales in the US rose by 21% year on year, signalling a rebound in in-store engagement.
As algorithm-driven experiences become more uniform, consumers are increasingly seeking authenticity and human connection in brand interactions. For many leaders, the response is to make digital and physical channels work as one.
Sally Beauty Holdings illustrates this approach. Through 2025, the company invested in a major brand refresh, store remodelling and expanded services to create a more immersive customer experience. Early results from refreshed stores show customers spending more time in-store, higher cross-category baskets and stronger average transaction values than across the wider estate.
In fiscal 2025, the company reported consolidated net sales of $3.7 billion, including global e-commerce sales that grew by 9% to $397 million and represented 11% of total revenue. Gross margin remained robust at 52%, supporting GAAP operating earnings of $328 million and an operating margin of 8.9%. Core strategic initiatives contributed an estimated 260 basis points of sales growth over the year.
In a more selective market, data sharpens insight, but loyalty is still earned by people. Companies that combine data-driven insight with genuine human connection are better positioned to defend loyalty, protect margins and sustain growth.
How profit accelerators* stand out in North America
In North America, leaders with the highest levels of year on year profit margin increases stand apart less through bold departures than through sharper execution of familiar levers. Their edge lies in how they combine speed with structure, ambition with discipline, and digital depth with a stronger focus on risk and customer insight.
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Faster cycles, firmer decisions. Profit accelerators are 1.3 times more likely than their peers to operate with continuous planning cycles. This is not a sign of short-termism. Rather, these firms favour a dual-speed approach, pairing adaptive planning tools such as scenario and options analysis with comprehensive long-term plans. They are also more decisive, being 1.8 times more likely to use firm deadlines as a strategic planning technique, reflecting greater confidence in committing resources under uncertainty.
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Growth ambition without sacrificing execution. Anchored by stronger confidence in global growth prospects, profit accelerators are 1.6 times more likely to plan new product launches in 2026. At the same time, they are no less focused than their peers on improving operational performance and adopting new technologies. The difference lies in constraints. Fewer reported weaknesses in talent, cost management and workforce effectiveness give them more room to pursue growth and efficiency in parallel.
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Broader and deeper use of AI. Profit accelerators are further along the AI maturity curve. More than 30% use AI across ten business processes, twice the share of other firms. Usage is especially pronounced in customer analytics, research and development, and process automation, supporting faster execution and the ability to manage multiple priorities simultaneously.
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Sharper cyber risk awareness. Greater digital dependence brings heightened exposure. Profit accelerators are more concerned about cybersecurity than the broader cohort and are 1.4 times more likely to increase investment in cyber and data security this year. For these firms, security is increasingly treated as a prerequisite for scale and trust, not a defensive afterthought.
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A more data-driven approach to customer focus. Customer-centricity is widespread across North America, but profit accelerators pursue it with greater analytical intensity. They are 1.2 times more likely to use AI for customer analytics and 1.4 times more likely to deploy it in customer service. Beyond frontline tools, they are also investing more heavily in business intelligence, data visualisation and advanced decision-support systems, reflecting a belief that loyalty and margin protection depend on insight, not just experience design.
*Profit accelerators are those who reported increased profit margins by five per cent or more over the past 12 months.
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