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Governance: waking up to sustainability in a digitally-enabled world PDF Print E-mail
Written by David Brunnen   
Tuesday, 30 October 2012 08:35

Those of us who have main board experience know only too well the limitations of the non-executive role.  We may not be there to manage operations but our responsibilities are extensive.  Now, with the emergence of much greater digital capabilities, there is huge scope for the role to be far more effective in dealing with wider issues.

For decades governors and NXDs have been served routine financial reports, reviews of policies, assurances of legal conformance, requests to approve board structures and remuneration, assessments of risk and occasional insights into the performance of senior managers.

All too often it seems that this role has been reduced to shallow box-ticking and, according to Professor Coulson-Thomas, it is time to ask whether corporate governance has been a placebo or distraction.  These thoughts were triggered by the Institute of Directors of India’s London Global Convention.  The convention, held recently in London, combined the 12th International Conference on Corporate Governance and the 3rd Global Summit on Sustainability.

Prof. Colin Coulson-ThomasThere is, says Coulson-Thomas, no shortage of evidence of governance failures – even in supposedly well-regulated sectors.  Current corporate governance has not prevented a succession of failures and scandals and massive Government intervention.  Bailouts and measures such as ‘quantitative easing’ have been needed to prevent the collapse of financial and economic systems.  For Coulson-Thomas “‘old governance’ has not worked and cannot work so long as a proportion of directors continue to make wrong calls, some boards take stupid decisions and ‘walking overheads’ in head offices destroy shareholder value.”

This concern is hardly surprising at a time when many major corporations are being urged to take a more-proactive stance on sustainability issues.  Our reports earlier this year from the UN Rio+20 conference showed much evidence of corporate engagement – but sustainability campaigners also expressed deep-felt distrust of corporate motivations and a lack of political will to tackle serious societal and environmental issues.

Sustainability is undoubtedly a major issue for governments everywhere and one where both public and private organisations and citizens can and should play a part.  From a global perspective the arguments have raged for years with little more to show than a pile of discarded or broken promises.  But we now have an entirely new context – the digital enablement of almost everything – and it is within this increasingly ‘digital economy’ that corporate and public governance needs to be reinterpreted.

The professor explained: “Hitherto corporate governance has been much concerned with board structures and the formulation of codes of practice.  Yet such measures cannot prevent directors from taking poor decisions, attempting to cover their tracks and not always acting in the best interests of a company.”

Coulson-Thomas pointed out that, “‘Old Governance’ has involved command and control systems and top-down leadership.  Much effort has been devoted to restructuring organisations and multiple corporate initiatives to address various challenges.  Some boards have sought to change corporate cultures while others engage in talent wars.  Business schools have also put a priority on strategy formulation and jumped on change, knowledge and talent management bandwagons.”

But now, thanks to the increasing maturity of digital enablement, many of the routine tasks of fact checking and conformance ‘box-ticking have been simplified.  The surge in data availability means that Board members are increasingly no longer required to act as intermediaries for other stakeholders in the quest for knowing what is going on.  The admirable Open Data trend pioneered by governments – giving wider and unconstrained access to data outputs from publicly funded activities – is set to be matched by greater corporate accountability and visibility.  Even where organisations (or their regulators) are not yet ready for ‘Open Corporate Data’ at least the Board members should be better served with more immediate and granular information to show what is going on within the organisations for which they carry a duty of care.

This surge in data visibility and the massive strength of people power through social media changes the governance role in several ways.  Old routines are being eliminated and this should free up the governance agenda to consider really significant issues such as sustainability and performance support.

Some enthusiasts for existing practice point to surveys that reveal an association between elements of corporate governance such as particular board structures and financial performance.  However, Coulson-Thomas believes “establishing cause and effect is more difficult.  The association may simply be due to good boards trying to get most things right, whether that is in the mix and relevance of products and pricing or observing codes of practice.”

However, the Professor observes that, “Even its supporters and apologists acknowledge there are missing elements.  We need to address such realities as uncertainty, insecurity and a lack of business confidence in key markets.  Many ‘traditional’ approaches have also proved inflexible and costly, while priorities can change during their implementation.”

In his search for alternatives he finds: “Accumulated evidence is compelling and consistent.  Many widely adopted responses to a changing business environment are general, expensive, time consuming and disruptive.  Boards are overlooking quick, focused and cost effective options that ensure compliance and deliver large returns on investment and multiple benefits including higher performance, faster responses, lower support costs, increased understanding, greater engagement and reduced stress and risk.”

His latest reports show ‘performance support’ can deliver multiple benefits by making it easier for people to excel at difficult jobs by emulating the approaches of more successful peers.  It can support mobile activities, relocation and outsourcing.  Built-in controls can enable people to innovate and develop bespoke responses and ensure compliance with legal, regulatory and corporate requirements.  Users can be freed from dependency upon particular locations, and when customers are enabled to help themselves unnecessary activities can wither away.

The Digital Economy - changing the way we all do business

This new governance focus is enabled by the great benefits of digitalization - the reduction of everyday hassle and the use of new tools for easier data analysis – particularly the facilities for handling ‘Big Data’ that were once the preserve of expensively remunerated data analysts – across public and private sectors.

For Coulson-Thomas, “‘New Governance’ includes such missing elements and focuses on the behaviours of directors and boards.  ‘Bottom-up’ ‘new leadership’ embraces helping and supporting.  There is more emphasis upon implementing strategy, integrating learning and working, innovation and quicker adaptation.  Affordable 24/7 support enables customers, staff and business partners to excel at critical activities.”

He believes the ‘new governance’ and ‘new leadership’ focus on implementation and better support is relevant to sustainability: “They can make it easier for people to behave in a sustainable ways and avoid damaging and unsustainable activities.  Using affordable technology such as mobile phones and tablets performance support (with integrated systems and an Open attitude) can enable sustainable behaviour and choices across global communities.”

Increasingly relationships with employees, customers and other stakeholders need to be mutually beneficial if they are to last.  Companies in various sectors have used sales support tools to engage and communicate with prospects, increase revenues and reduce costs while at the same time enabling quicker and bespoke responses to individual customer requirements.

Coulson-Thomas finds: “With appropriate support interactions with customers and prospects can be an opportunity to increase their understanding of the consequences of consumption decisions and help them make less damaging and more sustainable choices. Performance tools can also support collaboration across supply chains.”

As well as benefitting companies and the environment he has found “performance support offers clear advantages for individuals, whether employees or customers, such as reducing stress and satisfaction by making it easier for people to undertake difficult activities and increase their understanding, confidence and competence.”

In the context of a digitally enabled economy, critical issues such as sustainability and innovation are far more likely to be addressed by directors and leaders freed of the limitations of ‘last generation’ supervision.

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Notes:

Prof. Colin Coulson-Thomas, vision holder of successful transformation programmes, director, adviser and author of over 40 books and reports has held corporate and public sector board appointments. The world’s first professor of corporate transformation is now a part-time academic at the University of Greenwich.  His search for alternatives has involved ‘issue’ surveys of some 2,000 organisations and ‘critical success factor’ surveys of over 2,000 companies and over 500 professional firms.  It has included working with over 100 boards, reviews of the processes and practices of over 100 companies, European Community funded support of the owners of 50 businesses, and evaluations of over 20 adoptions of better options.  He can be contacted via www.coulson-thomas.com.

Talent Management 2 and Transforming Public Services by Colin Coulson-Thomas which set out some of the changing priorities of new leadership, some 20 reports setting out critical success factors for key corporate activities and his book Winning Companies; Winning People which summarises what high performers do differently can be obtained from www.policypublications.com.

The Institute of Directors of India’s London Global Convention 2012 incorporated the 12th International Conference on Corporate Governance and the 3rd Global Summit on Sustainability.  The convention started with a business meet and dinner at the Royal Overseas League and after two days of presentations and discussions at Lords cricket ground concluded with a study visit to the University of Greenwich and other locations on the Maritime Greenwich UNESCO World Heritage Site.

Last Updated on Tuesday, 30 October 2012 08:57
 

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