ABIS 15th Annual Colloquium 2016 - ABIS Global · ABIS - The Academy of ... ABIS 15th Annual Colloquium 2016 27 October 2016, Brussels ... the future growth path of the economies

ABIS - The Academy of Business in Society

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ABIS 15th Annual Colloquium 2016 27 October 2016, Brussels

CONTEXT-SETTING FOR THE CORPORATE INNOVATION SESSIONS

SYNOPSIS The 1st block of interactive sessions in the conference (11:30 – 12:45 CET) are closely linked to three of ABIS’ 2016 initiatives which underpin our renewed focus on education, leadership and talent development for sustainable business. In this document, we offer a “teaser” for each session which provides a short synopsis of the initiatives in question, so that participants have a sense of their wider ambitions and goals – which in turn will allow for a more informed decision about which session to attend on October 27!

SESSION A: THE FUTURE ROLE OF BOARDS

1/ Introduction This session builds on two high-level round tables organized by Mazars and ABIS in September 2016, exploring different dimensions of the central theme. Our first dialogue focused primarily on the macro trends and future challenges facing business and the resultant implications for Boards of Directors, especially those of listed companies. Participants included senior representatives of the business community, investors, professional bodies, think tanks, regulatory agencies and business schools. The second dialogue was similarly broad-based but engaged a number of leading UK and European business schools and universities to drive an in-depth debate about the implications for research, graduate degree and executive education programmes. 2 Strategic challenges facing business in the coming years The following “headline” topics emerged from our first round table dialogue as fundamental to the future role and impact of boards as stewards of long term sustainable value creation for the firm: 2.1 Adapting to technological change Business is at the dawn of a profound transformation with new digitally-driven competitors disrupting, and potentially taking significant market shares in a wide number of sectors. A range of well-known cases – from Airbnb, Amazon and Uber, to Facebook, Google and Apple – highlight the impact which radical innovation can have in conventional industries.

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For many established incumbents, it will be crucial for their leadership to understand and seize the positive opportunities offered by digitalisation and technology (including greater transparency), while also responding effectively to the threats posed by it (including potentially negative societal impacts). Former industry leaders such as Blackberry and Nokia have seen their once-bright lights significantly dimmed by failing to keep up with innovation trends. In this regard, the culture of risk aversion prevalent in many boards will need to be replaced by a more technologically literate, entrepreneurial one as a key to sustaining long-term growth and profitability in many sectors. 2.2 Responding to climate change and societal challenges Issues related to global warming and natural resource depletion, as well as trends in public health and social exclusion, have been known about for a number of years. However, international agreement on managing planetary and societal boundaries has started to move forward, both through the ratification of the UN climate accord and the launch of the UN Sustainable Development Goals. The implementation of large-scale action in response to the COP21 Paris agreement, and managing the risks from global warming, will have an significant effect on a number of industries including the oil and gas industries and their renewable counterparts, energy companies, car manufacturers, industries that are heavy users of fuel and, very importantly, the insurance industry. By extension, the stresses currently experienced by various social systems around the world – health, welfare, pensions, education, and more – present a wide range of opportunities for business to innovate in core products and services, but also in its engagement with governments in pursuit of more sustainable solutions. 2.3 The globalisation of business with a shift to the East and the South Many businesses have increased their global reach in recent years through mergers and acquisitions and organic growth into new territories or significantly growing their presence in existing ones. Most are, however, still recognisable by their corporate culture and their senior management and board composition as being essentially anchored in one country. If globalisation continues apace, this could start to change, though some recent political developments are starting to show resistance to such trends. What seems more certain, however, is that in the twenty-first century the world is shifting eastwards, and to a lesser extent, southwards, in terms of population growth and the share of world GDP and this is also leading to political change in the world. Such trends seem likely to increase but longer term uncertainties remain around, for example, China’s future economic and political systems, environmental stewardship in the context of industrial developments together with population health and demographic developments in many emerging and developing markets. 2.4 Changing societal and regulatory approaches to business Recent political developments have shown a substantially negative view of business within many Western electorates – possibly as a secondary reaction to the financial crisis and a belief that the financial sector has not transformed itself sufficiently in the years since 2009. There is also growing pressure for protectionism in some countries, resistance to immigration and to foreign workers as well as a concern about the growing inequality in corporate pay and the widening gap between that in the boardroom for executive directors compared with that of its lowest paid employees. New technologies and social media have empowered consumers and citizens to look more deeply into corporate activities, leading to unparalleled demands for transparency on issues such as tax, human rights,




lobbying and diversity. Leading institutional investors, for example those linked to major pension funds, are also taking greater interest in the attitude of businesses they invest in towards all their main stakeholders and wider society. Meanwhile, social and environmental track records of companies are rapidly becoming a central factor for “millennials” in their choice of future employer, and a defining principle in the “war for talent”. 3/ The future implications for boards in the new global business reality 3.1 Anticipating and preparing for uncertain futures The business challenges discussed above raise far-reaching issues for boards which are likely to be beyond their ‘comfort zone’ and current competences in many instances. Whilst some of the trends are fairly predictable others are subject to substantial uncertainty which is amplified by the complex and interconnected nature of these issues in the overall business environment. There is a clear need for boards to become more adept and agile in navigating this complexity, supported by scenarios about the long-term development and competitive positioning of the firm and informed by robust external analysis and guidance. In parallel, boards must become more comfortable with addressing ‘unpalatable truths’ and asking difficult questions about the future trajectory of the company. Lastly, boards will have to determine how to balance long-term value creation with short-term volatility and an unprecedented rate of disruption to the established way of doing business. 3.2 Increasing the board’s understanding of, and comfort in dealing with, technology issues Many boards are uncomfortable in dealing with technology issues which have a number of aspects relating to designing goods and services, delivering them and dealing, for example, with cyber security issues. This is partly a generational issue, with the average age of board members, and in particular of non-executive directors, generally being greater than their workforce as a whole, and thus the issue arises of how boards can best get to grips with them. In some cases, the answer will be to significantly increase the technology expertise on the board. A view is emerging, however, that this is not the only way forward and that in other instances the best way ahead may be to establish a baseline of general competences among NEDs and to find new ways of bringing the necessary technological knowledge and insights into boardrooms. 3.3 Coping effectively with geopolitical turmoil Today’s global business environment is shaped by high levels of geopolitical risk and uncertainty. The “known unknowns” form a long list: the UK’s anticipated exit from the European Union, the rise of protectionist pressures in the United States, the future growth path of the economies in China, Russia and Japan, the outcome of institutional crises in Brazil and Venezuela, OPEC’s future responses to the slump in oil prices, and more. Taken together, boards require a deep understanding of the political dimensions in their key markets, and also need to consider how their business engages with regulators and policy-makers in shaping more sustainable parameters to the operating environment. 3.4 Embracing fundamental changes to the business model Each of the principal business challenges identified could have major effects on the predominant business models in a number of industries, whether through the emergence of new competitors, external pressures such as climate change, or a loss of market share for failing to address the trend towards a more responsible approach to business. Inevitably this will raise difficult questions for boards which will have




to be willing, and able, to oversee and guide fundamental change within their businesses if they are to be sustainable in the longer term. Successful change will require the board to develop a clear view of the purpose and values of the business; the development of a long-term strategy; engaging effectively with, and treating fairly, all its key stakeholders (employees, customers, suppliers, investors and providers of bank finance); having a fair taxation policy; ensuring a strong innovative capability in the business; and being very conscious of its reputation and licence to operate. 3.5 Diversifying the composition and working practices of boards All of the above suggests that Boards will need to become more diverse in their composition with greater regard to diversity across a number of dimensions including gender, ethnicity and the skills base. Equally important is the need for intellectual diversity within boards and the ability of directors to raise difficult questions that challenge the status quo. There may also be a change in the functional roles represented on boards with e.g. the finance role broadening into a measurement one. In some cases, new roles linked to technology, stakeholder engagement (including government affairs), or stewardship of corporate culture may emerge more prominently. More major companies may also have specialist committees dealing with ethics and issues related to their undertaking business in a responsible fashion. To ensure stronger links between the board and key stakeholders, there may be a move to the stakeholders being more directly involved in the appointment of board directors, as investors currently are in Sweden and employees in Germany (and possibly in the UK in future). Moreover, in addition to changes in composition and structure, there are likely to be significant changes in their working practices arising from the impact of technology both on their own deliberations and on how the business is run and from the pressure for greater accountability to stakeholders and wider society. Last, but not least, the round table dialogues raised major questions about the chair’s role within the board, and our understanding of what constitutes exemplary practice (building consensus and shared vision, empowering critical voices, working effectively with top management, etc). It seems that there is little research currently available on this topic, and limited high-level training programmes. Given the critical importance of the chair’s position within board dynamics and structures, this is a potentially important area to address. 4/ The readiness of business schools to help address the future needs of Boards: key questions to consider going forward 4.1 Analysis of future macro and business trends and implications for boards Against the backdrop of the points raised above, are business schools capable of providing the kind of independent, expert guidance on current and future trends that can more effectively frame inputs to board-level decision processes? Are faculty sufficiently aware of the role and function of the board within the wider context of corporate sustainability? 4.2 Education of future executive board members What are the implications for the business education of future executive board members? Will the curriculum/disciplines within business schools need to be broadened? How can this be achieved whilst




keeping the courses manageable? Will there need to be more of a lifelong learning approach with opportunities to build on earlier studies? Will there be a need for more part-time/blended courses? Will the way in which programmes are taught need to change as well as the content, ie development of the desired approach as well as building knowledge in particular areas? Are there opportunities for developing professional qualification and/or degree programmes for board members? 4.3 Opportunities for working with boards to develop new research and learning approaches Are there sufficient opportunities for leading academics to work with the boards of large companies? Is the interest there within the business school world to do so (beyond the commercial incentives of selling executive development programmes)? Does this create new impetus for more and better interdisciplinary / action research into effective board stewardship and long term value creation? How might this opportunity best be pursued? Are there current models of effective collaboration and partnership between industry and academia that could be replicated and scaled up? 4.4 Implications for faculty To respond effectively, will faculty composition need to change? Will there be a need for faculty members with experience of new disciplines? Which ones? Will more faculty members need to have an inter-disciplinary approach? Will there be a need for more faculty with significant business experience? How might this be achieved- part time, towards end of business career, more movement generally between business and academe? Will faculty need to undertake more of their work within business as students learn proportionately more in situ?

SESSION B: BUILDING LEADERSHIP FOR LONG-TERM BUSINESS PERFORMANCE 1/ Introduction Achieving the UN Sustainable Development Goals and the targets of the COP21 Paris Agreement are fully compatible with business performance. To thrive in the 21st century, companies will need to identify and empower individuals throughout the firm capable of anticipating and responding to disruption and context shifts, identifying transformative business opportunities, crafting new organisational cultures, and developing processes that build organisational resilience and sustainable long-term competitiveness. Building Leaders for Long-Term Business Performance, a new research initiative led by CISL and ABIS, is designed to engage and connect a select group of multinational companies with a strategic interest in transforming their current leadership development approaches with these long-term ambitions in mind. 2/ Rationale Today’s business decisions are made in a world that is more volatile, complex and uncertain than ever before. Digitalisation and new technologies are disrupting established industries at an unprecedented rate, with some estimates suggesting that 75% of S&P 500 companies will be out of the index by 2027. A wide range of current and anticipated challenges, such as access to resources, geopolitical instability, the




potential impact of a new age of automation on the labour market, and climate change, are forcing large companies into a deep rethink of ‘business as usual’. The ‘creative destruction’ of existing business models will likely be key to corporate reinvention and future creation of long-term shared value. These internal debates are also taking place against the backdrop of the 2015 United Nations Sustainable Development Goals — a comprehensive blueprint to deliver social equity and environmental security — and the COP21 Paris accord, backed by 196 nation states. These commitments are important, not least because they are global in scope, but also that they come with a timeline and framework: action is required by 2030, and the targeted outcomes are clearly defined.

Businesses have an important role to play in realising these aims. Already, many forward-thinking companies are exploring ways to respond. Several companies are adopting strategic goals that align organisational strategy with sustainable outcomes, investing in new business models that mitigate emerging social and environmental risks, or delivering products that enable customers and stakeholders to live more sustainably.

Yet, for all this good work, many companies have not embedded the sustainable business agenda into leadership and talent development systems across the firm. There are few available cases of companies defining the mindsets, skills and values that will turn their current and future leaders from “good into great” in the years ahead.

Even less is understood about the most effective processes to identify and develop these leadership characteristics throughout an organisation. As a consequence, critical questions need to be addressed regarding the profiles of future corporate decision-makers capable of pivoting their organisations in response to the new context and driving sustainable, profitable growth. 3/ Central Questions and Themes to be Addressed Through this new initiative, Building Leaders for Long-Term Business Performance, we seek to deepen our understanding of the types of leadership development required to thrive in the new context, as well as the critical differentiators in terms of leadership qualities, skills and mindsets in various sectors. For some, this may focus on radical business model innovation; for others, on new approaches to capital allocation and investment decisions that “retilt” the business in a more sustainable direction. Regardless, two central questions underpin our “quest” for better knowledge regarding effective leadership for long-term business performance:

1) How does a firm define the type of leadership profiles (qualities, skills, mindsets, etc) that it believes it will require in the years to come, based on the nature of its industry, macro trends, competitive positioning scenarios, and more?

2) How can these profiles be better identified and developed within the firm, taking into account geographic, cultural and / or generational differences?

These headline objectives will be supported by in-depth analysis of current leadership and talent management approaches employed by individual companies, as well as cross-company assessment and pooled knowledge of key success factors (such as learning models and tailoring to geographic context).




Building Leaders for Long-Term Business Performance provides a unique opportunity for organisations to access leading thinking and peer insights around this vital theme, with CISL and ABIS using their expertise to provide a safe, secure forum for organisations to exchange ideas, debate key issues and share experiential learning with other firms. CISL and ABIS have designed the Building Leaders initiative with two distinct phases. PHASE I will focus on diagnosing the current approaches to aligning strategy, sustainability and leadership development. For each participating company, we will conduct a series of semi-structured interviews with three groups of participants: individuals in leadership development or HR roles (to understand how leaders are currently developed—both through formal training as well as on the job activities), the sustainability team (to understand the key social, environmental and economic issues affecting the company’s strategy) and senior decision-makers (to understand their views about the current leadership development approach and what they anticipate they will need in the future). PHASE II will examine how to apply insights developed through Phase I through a wider range of leadership development programmes. This could include a review of the existing leadership development curriculum or the development of new modules or approaches for specific organisations. During this second phase we will work in collaboration with existing education and training providers wherever appropriate.

SESSION C: Anticipating Sustainability Skills and Talent Futures

1/ Introduction On December 3, 2015, the inaugural ABIS Global Talent Forum for Sustainable Business took place at Unilever’s Four Acres Leadership Development Centre, hosted by Doug Baillie, then Chief HR Officer at Unilever and Chair of the ABIS Strategic Advisory Board. A second meeting was convened in September of this year, supported by Gary Kildare, Vice President HR for IBM Europe, and a third (larger scale) Forum is now being planned for Q1 2017. The Forum has brought together senior HRM, Talent and Leadership executives from a range of industry champions – such as IBM, Johnson & Johnson, GlaxoSmithKline, Solvay, Aker Solutions and others – as well as acknowledged sustainability thought leaders like Accenture, PricewaterhouseCoopers and McKinsey. More specifically, it has opened an ambitious set of new dialogues and reflection about the future talent and leadership profiles required to lead sustainable business transformation in a rapidly changing global context. 2/ Rationale The global challenges facing business are increasingly well-known (as outlined in the “teasers” for Sessions A & B), and are driving new frameworks for long-term thinking and planning for leading companies. In parallel, an important series of discussions have emerged about what the long-term implications of




sustainability issues mean for the development of corporate leadership for a sustainable world. The millennial generation currently in business education, or in the early stages of their corporate leadership careers, are the ones who will increasingly be required to define new licences to operate grounded in social purpose and business models that deliver sustainable, profitable growth. Global sustainability champions recognise that they will need new profiles from their talent pipelines to navigate successfully through an era of unprecedented volatility and change. However, they have significant challenges in finding, recruiting and developing the people that they seek. It is therefore in the collective interest of business to engage with leading business schools and management programmes, to communicate long-term talent requirements with a more unified voice. The ultimate objective should be to inspire a deeper working relationship with business schools, so that all companies benefit over time from graduate talent pools aligned with the global sustainability challenges we face. These issues go straight to the heart of ABIS’ founding mission, and the belief that a more coherent consensus in industry around future skills and talent for sustainability can inspire a profound difference in how young leaders are shaped and developed – inside companies, but more importantly during their formative years in business education. A more effective critical dialogue and collaboration between the two worlds is seen as vital to align business school curricula to the longer-term needs of business. If we succeed, it will unquestionably deliver long-term benefits to industry, business schools and society alike. 3/ Evolution in 2016 The 1st Global Talent Forum was grounded in three main objectives and desired outcomes:

1. To create an inclusive, shared perspective around current talent development challenges and future needs;

2. To discuss issues about the talent profiles companies recruit today, and how to engage business schools to develop the leaders required for the future business reality.

3. To define an agenda and collaborative approaches for transforming these dialogues into action in 2017, in order to catalyse and inspire positive / long term change.

Broad agreement was reached on the need for greater clarity and consistency of message around the talent profiles which will lead sustainable business transformation in a rapidly changing global context. Participants recognized that this has not been done effectively to date, either within companies or at the interface with business schools and universities. It was also agreed that future meetings of the Forum should focus primarily on two connected themes:

To develop and test a more holistic framework of the critical skills, values, mindsets & qualities that the next generation of corporate sustainability leaders will need to have by 2025;

To identify the critical differentiating skills that will be most critical to future sustainable business success – either cross-cutting or specific to given sectors, industries or markets.




As a starting point for its second round of reflections, the Forum took the Cambridge Institute for Sustainability Leadership’s framework of individual leadership qualities – see below:

Discussions in September highlighted three important dimensions to steer the ongoing group work around the objectives outlined above. First, that there is little reason to dispute or drop any of the leadership qualities identified, given the complexity of issues that companies are facing and how they see their organisations and management processes evolving in the years to come. Second, it is nonetheless valuable to understand how companies align these qualities with strategy, business model, purpose and / or the business case for sustainability inside the firm, and why they consider them to be material for future talent profiles and requirements. Third, leading companies will need to distinguish a select number of qualities that – given the nature of core business, and their understanding / anticipation of future trends and scenarios for their sector and company positioning – will differentiate great leadership from merely good or effective leadership. The related challenge will then be to understand how to identify and develop those at an earlier stage, and perhaps most importantly, how to formulate these into a set of coherent messages for business schools and universities to inspire new thinking about curriculum design, pedagogic methods, learning experiences and talent development in business education.

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TRAITS

•Systemic/holistic thinker

•Enquiring/open minded

•Self aware/empathetic

•Visionary/courageous

•Caring/morally driven

SKILLS

•Manage change & compelxity

•Exercise judgement

•Challange and innovate

•Communicate vision

•Putting long term thinking into practice

STYLES

•Inclusive

•Visionary

•Creative

•Altruistic

•Radical

KNOWLEDGE

•Global challenges and dilemmas

•Interdisciplinary connections

•Change dynamics/options

•Organisational influences

•Diverse stakeholder views

CISL: Individual SD Leadership Qualities


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ABIS 15th Annual Colloquium 2016 - ABIS Global · ABIS - The Academy of ... ABIS 15th Annual Colloquium 2016 27 October 2016, Brussels ... the future growth path of the economies