The world is changing and unless companies change their ‘purpose’ to something other than executive remuneration and stockholder returns, they will lose their licence to operate from the stakeholders that actually matter, writes JESSICA YELLIN, founder of It’s a Shovel.
South Africa is well behind the curve, but the good news (or bad, depending on where you sit on the issue!) is that the money is moving into ESG (Environmental, Social, Governance) and the recent Steinhoff disaster has proved to the local market that pesky governance and compliance issues are important!
So, like it or not, it’s time to get with the programme. Here are my top ten things every SA CEO needs to know this year:
1. Leaders with a sense of purpose are more successful
For your company to embrace #ReputationWithPurpose and reap the benefits, you need Purpose! And it’s not just good for the company, it’s good for you too.
New research has shown that actually having a sense of purpose, not a specific set of characteristics, is the key to successful leadership. However, according to a report in HBR, less than 20% of leaders know what their individual purpose is and even less can actually spell it out.
“The process of articulating your purpose and finding the courage to live it—what we call purpose to impact—is the single most important developmental task you can undertake as a leader.”
Finding your purpose and / or properly interrogating that your stated purpose is ‘real’ is a process, but before you rush off to your closest quack coach consider this: if you’re clever enough to be ‘at’ or ‘close to’ the top of the pile, you’re probably clever enough to figure it out yourself! It just needs time, brutally honest introspection, curiosity and an open mind.
2. Hurry up and find your purpose because the CEO Activism trend isn’t going away
South African CEOs have since 1994 become conspicuously silent beyond a couple lame attempts via Business Leadership SA. And as they say, silence implies consent so no wonder that memes like #whitemonopolycapital get as much traction as they do!
Internationally, the Activist CEOs are not only shaping policy but also driving revenues for their businesses because, surprise surprise, consumers respect leaders and by extension their organisations, for being brave, taking a stand and making change happen!
In his piece, The New Politics of Business, Doug Randall, CEO of The Protagonist, sums it up best: “The days of businesses operating in a silo are over. Consumers have grown to expect that the brands they interact with participate in conversations happening in the world at large. Brands are powerful, and they can significantly influence the narratives they engage with. Getting involved in controversial narratives makes brands, and the communities around them, stronger. It’s just imperative you understand how those narratives may impact your organization, for better or for worse and be prepared to answer for them.”
It’s time to find your voice and weigh in on the many, many, many issues that confront our country… but of course this implies that you have to be doing something too!
3. All of the above is the Millennials’ fault, but best you learn to love them because they going to make or break you!
So much has been written about the Millennials that I’m not going to bore you with the demographics or even the psychographics. Their impact is now in the numbers! According to The Reputation Institute, Millennials now represent 27% of global spending power (and increasing daily!), 15% of them define themselves as Activists (#ahem) and 85% of them use their phone more than 40x per day (although I bet your usage is similar!).
Even more relevant here is that reputation is more important to them than previous generations! Top reputation ranking companies score 2.5bps higher amongst Millennials.
Translate this into bottom line: 1 bps = 2.6% increase in market cap… you do the maths on your own business… Ka Ching, Ka Ching!
4. Sustainability is now an economic issue and not just a bunch of greenies
How much research do you need to see to prove the point that sustainable companies deliver better financial results? Well, my friends at Arabesque Asset Management have done the hard work for you and commissioned the University of Oxford to review 200 pieces of academic literature on the topic. Their report From Stockholder to Stakeholder makes for fascinating reading, but I know you don’t have the time, so here are the highlights:
a. Sustainability is one of the most significant trends in financial markets for decades.
b. 90% of the studies on the cost of capital show that sound sustainability standards lower the cost of capital of companies.
c. 88% of the research shows that solid ESG practices result in better operational performance of firms.
d. 80% of the studies show that stock price performance of companies is positively influenced by good sustainability practices.
e. Based on the economic impact, it is in the best interest of investors and corporate managers to incorporate sustainability considerations into their decision-making processes.
f. Active ownership allows investors to influence corporate behaviour and benefit from improvements in sustainable business practices.
g. The future of sustainable investing is likely to be active ownership by multiple stakeholder groups including investors and consumers.
Still not convinced? Well then I suggest you cash out those stock options and go far, far away!
5. A poster in the toilet cubicles is not going to turn your business into a sustainability-driven, purpose-led success story.
Once upon a time, internal communications consisted of your PA putting together a weekly company newsletter full of clip art and comic sans. Most companies have moved past this, but still the internal comms function is generally the “Cinderella” of the Communications Team with the sexier corporate communications and marketing sisters getting the glory and budgets.
But there is now too much at stake. Make sure your internal communications professionals fully understand your business and objectives; can pick up and respond to the nuances within the business; and can deliver sound, strategic and creative internal communications that is able to shape the culture you need to get ahead.
I suggest you point them to this fantastic resource: Disrupting the Function of IC
6. Sadly, however, great internal comms isn’t good enough either! You need HR and IC to work together to deliver Employee Engagement 2.0
Employee Engagement… the Holy Grail! How much kak have you read on the topic? How many surveys have you done? How many ‘ interventions’ have you wasted money on?
Everything you’ve seen or heard to date is a load of bull.
There’s a simple formula*: Employees must feel “in flow” in their jobs + they must have a deliberate career path + they must feel attached to at least one other person in the organisation + they must feel like a mentor / ambassador + you need to have active, functional social networks through which relevant, honest, timely communication must flow.
Only when you have personally fulfilled, connected employees can they function together to deliver the ‘employee engagement’ that you dream of. Because you really do need it, especially if you are going to be steering a new course!
* I developed this with a former colleague who is way cleverer than me and you’re welcome to chat to her if you need some help in this space.
7. Has anybody actually read King Code IV?
No, it’s not a new Dan Brown novel.
Yes, it applies to you too!
Nothing like a good corporate scandal to wake everyone up! We should actually be thanking Mr Jooste. Well, maybe I’ll consider it if my Pension Fund recovers.
Point is, there were blatant lapses in governance at Steinhoff for years and no one raised an eyebrow because they were all too busy counting the cash! Well, the chickens have now come home to roost and going forward, best you are able to recite King IV in your sleep. I can’t tell you how many listed companies’ websites still reference King III… hello!!! And as for unlisted companies… whatever!!!
I’m sure you have read it, but just in case you need a refresher, here you go: http://c.ymcdn.com/sites/www.iodsa.co.za/resource/resmgr/king_iv/King_IV_Report/IoDSA_King_IV_Report_-_WebVe.pdf
8. A big, fat corporate burp is sometimes exactly what is required
To my horror when I shared my #ReputationWithPurpose deck with someone recently he said it looks like “corporate indigestion”. Eventually I got over myself, but he makes a valid point. It is a lot to swallow… but consider it an Eno’s: fizzes in your nose going down but makes everything better by releasing a big, fat burp!
In fact, it’s nowhere near as bad as Eno’s. You don’t need to implement the whole lot at once, it’s designed as a process. Baby steps will get you there.
But it will probably result in the expulsion of hot air. Maybe that means you need to change some people in your organisation? More than likely you will need to change the culture. And you will certainly need to get rid of waste. All of these are good things. Don’t be scared!
9. You need to learn to manage your shareholders
I’ve read the most interesting articles recently on Agency Theory and the implications it has for corporate governance. Once again the Harvard Business Review explains it way better than I ever could so please take out half an hour to read the whole article.
The basic premise is that the traditional agency theory model is flawed. Shareholders do not ‘own’ the company and therefore shouldn’t direct what the company does. It argues for a company centric approach in which the executive team and Board are responsible for creating value for all stakeholders. The only problem with this view is that is depends on competent and ethical executives and we have seen clearly that this is not always in place.
I believe we are moving into a time of increased shareholder activism which sounds like a good thing but isn’t always. Fund managers are not always right and they also have bonus targets to meet.
So I guess the only adult thing to do is to engage actively with your shareholders, within the bounds of the applicable regulations, and if they don’t get your #ReputationWithPurpose vision then do as Howard Schultz of Starbucks recently did and tell you shareholders to invest elsewhere .
10. If it’s not fun anymore, quit
Sustainability and #ReputationWithPurpose refers to you too… your life needs to be sustainable and it must have purpose (as per point 1). If what you are doing isn’t delivering this, then either change it or leave. I did, and I’ve not looked back!
AppDate: Reserve Bank to choose fintech winner
This week, SEAN BACHER highlights the Global Fintech Hackcelerator, Fortnite’s skin for the Samsung Galaxy Note 10, Standard Bank and iiDENTIFii’s partnership, WRAPP and Zulzi’s latest expansion.
SARB to choose Global Fintech Hackcelerator winner
The South African Reserve Bank will host a Fintech Demo Day on 29 October 2019 to select two winners from 12 innovative and sustainable fintech solutions shortlisted for the Global Fintech Hackcelerator @ Southern Africa.
In August, SARB joined forces with KPMG Matchi to run the 2019 Global Fintech Hackcelerator @ Southern Africa, an acceleration programme that creates a platform for fintech firms to demonstrate their innovative solutions to complex financial challenges in the Southern African region. Fintech firms from all over the world were invited to submit an application in response to problem statements constructed in collaboration with SARB.
The regional hackcelerator received 95 entries from interested fintech firms located across the globe. The 12 shortlisted respondents will showcase their solutions at the Fintech Demo Day at the end of this month in Johannesburg.
Each Global Fintech Hackcelerator @ Southern Africa 2019 winner will receive the following:
- A stipend towards travel expenses to attend the 2019 Singapore Fintech Festival
- An opportunity to pitch their solution live during the Hackcelerator Demo Day at the 2019 Singapore Fintech Festival and engage with industry experts
- Funding to develop a contextualised proof of concept, to be deployed within a year from the demo day
- An opportunity to work with high-value corporates to contextualise a solution to their needs, while obtaining market entry into the Singapore and Asia-Pacific region.
The top three winners at the Singapore Fintech Festival will each receive a cash prize.
For more information on the Global Fintech Hackcelerator click here.
Click here to read about a Fortnite exclusive for Samsung Galaxy Note 10 users, and Standard Bank’s new way of identifying its customers.
PC market grows again
Worldwide shipments of traditional PCs, comprised of desktops, notebooks, and workstations, reached 70.4 million units in the third quarter of 2019 (3Q19), according to preliminary results from the International Data Corporation (IDC) Worldwide Quarterly Personal Computing Device Tracker. Demand in the commercial segment combined with trade tensions between the United States and China to drive the market forward, resulting in a second consecutive quarter of growth with shipments increasing by 3% over the third quarter of 2018.
Jitesh Ubrani, research manager for IDC’s Mobile Device Trackers, says: “With higher tariffs on the horizon PC makers once again began to push additional inventory during the quarter though the process was a bit more difficult as many faced supply constraints from Intel, leaving AMD with more room to grow. The trade tensions are also leading to changes in the supply chain as most notebook manufacturers are now prepared to move production to other countries in Asia, such as Taiwan and Vietnam.”
“Commercial demand should accelerate as enterprises work through the remainder of their Windows 10 migration,” says Linn Huang, research vice president, Devices & Displays. “The number of months until the end of service (EOS) date of Windows 7 can be counted on one hand. With January 14, 2020 drawing nigh, the commercial market should be able to digest the extra inventory over the next several quarters. Supply constraints may loom in subsequent quarters, so excess may not be a bad position for channel inventory through the remainder of the year.”
Traditional PC shipments in Asia/Pacific (excluding Japan) posted a year-over-year decline but the market performed above expectations. Back-to-school demand drove the consumer market in China, while online sales and preparations for the Diwali festive season supported consumer shipments in India, as two of the largest countries in the region surpassed the previous forecast. Meanwhile, the commercial market in China recorded a decline in line with expectations, impacted by macroeconomic pressures.
Coming in slightly above forecast, the Canadian traditional PC market delivered its 13th consecutive quarter of growth. The market is becoming increasingly solidified as the top 5 vendors now capture more than 85% of all shipments.
In Europe, Middle East and Africa (EMEA), the traditional PC market achieved stable growth in 3Q19 with both desktops and notebooks performing relatively well. A strong pipeline of deals ahead of the ongoing Windows 10 transition continued to translate into commercial strength, offsetting the softness in the consumer market and the overall negative impact of the component shortage.
In Japan, both the commercial and consumer markets largely outperformed forecast, driven by Windows 10 migration and the consumption tax increase respectively. Commercial shipments established a new third quarter record beating the mark set in 2013 when Windows XP EOS created similar momentum in the commercial PC market.
The traditional PC market in Latin America was very much in line with previous expectations of a 4.1% year-over-year decline. During this period desktop shipments were better than expected mainly due to the large enterprise segment and verticals such as banking, retail, and manufacturing. Notebook shipments also declined during the quarter due to a weak consumer market and delays in some education deals.
The United States saw low single-digit growth in the third quarter with both desktop and notebooks seeing continued year-over-year growth. Inventory pull-in continued to be supported by Windows 7 EOS and continued tensions in the trade war. As most List 4 tariffs have been delayed until the end of the year, inventory pull-in overall was slightly weaker compared to the previous quarter. According to a recent survey among IT decision makers in the USA, more than 60% of businesses have transitioned their Windows-deployed PCs from Windows 7 to Windows 10. Another 13% plan to do so by the Windows EOS date in January 2020.