We should always be cautious in saying we are living through periods of unprecedented change. At this time of year one is very conscious that in the 20th century there were two world wars but there can be little doubt that historians will look back on 2016 as a year of major political change in the Western World that was not generally foreseen and the full political and economic outcomes of which will not be known for some time yet.
So, what are the implications for boards of listed companies and other significant businesses?
Undoubtedly risk management needs to be high on the boardroom agenda but we also need to broaden our traditional approach to the issue and to pay equal attention to intrapreneurship and innovation and focus on developing a winning corporate culture.
Most emphasis has been placed until now on a structured approach to identifying, assessing and managing or mitigating risks. This remains important but when the only constant is change, with a lot of uncertainty attached with regards to both timing and outcome, having a highly capable motivated and agile workforce that responds smartly to situations, in both senses of the word, as they emerge with a focus on opportunities as well as the threats is the best way forward. This will also help us to be successful in a world where the increasing eastwards focus is likely to continue as markets in Asia continue to grow apace and where greater transparency is the new normal as social media leads to far more information being available on a business with much of it beyond the control of its leadership. Whilst businesses are rightly coming under pressure to get rid of glass ceilings they are having to live in a world in which their buildings have glass walls with what is happening within soon becoming known outside and sometimes in a potentially lethal way when there are cyber security breaches.
Succeeding in a world of complex change where reputations that have taken decades to build can be cast aside in minutes, we believe is best achieved by a holistic approach focused on building long-term sustainable success for the benefit of all stakeholders and wider society rather than any residual tendency to yield to short-term shareholder value maximisation. Boards should set out an inspiring purpose for their business along with a clear set of values, actively engage with their main stakeholders, treat them fairly and, most importantly, check that their corporate culture is as they think it is, not leave it to chance. They should also ensure that they have the necessary innovation capability to achieve the necessary incremental and transformational change and, above all, set the right ‘tone from the top’ with a commitment by board members to act as role models in the business.
Easy? No, but undoubtedly the best way to unlock the full potential of their teams, much of which often goes untapped, and to build an enduring relationship with their customers. And to ensure business is seen as a valuable part of society and not as apart from it, a risk too big to allow to leave unaddressed.