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C-SUITE REPORT

“Learning from the experiences of other organisations is invaluable. The Chief People Officer Network enabled me to change our internal discussions on diversity. We have completely refreshed our approach, and we are being recognised for it.�

QUARTER FOUR 2017

Tania Heap, Group People Director, Mott MacDonald


FO U R Y E A RS AG O, the Winmark CPO Network and the experience of other members enabled Tania Heap to change internal discussions and grow passion for equality, diversity and inclusion at Mott MacDonald. The company refreshed its approach completely, increasing attraction and retention rates of diverse groups of professionals. Over the past year, Mott MacDonald has won three awards for its diversity work: NCE Diversity Champion of the Year, Construction Investing in Talent Award for Best Diversity and Inclusion Initiative, and the Herald and GenAnalytics Diversity Star Performer Award.

EDITORS

John Jeffcock, Chief Executive, Winmark john.jeffcock@winmarkglobal.com

Fabio Couto, Content Manager, Winmark fabio.couto@winmarkglobal.com


CO NTE NTS

Includes insights from: Atos, Bank of Ireland,

THOUGHT LEADERSHIP FROM WINMARK C-SUITE MEETINGS THE CHAIR’S VIEWPOINT THE C-SUITE AND THE GDPR

3 4 5 6 –7

BT, De La Rue, John Lewis, Metropolitan Police, Mott MacDonald, PA Consulting, Palace of Westminster,

THE C-SUITE REPORT NON-EXECUTIVE DIRECTORS & THE BOARD • Aligning Culture and Strategy CHIEF EXECUTIVE OFFICER & DIVISIONAL CEOS

8–9

10–11

• Sport’s Lessons on Running a Business C H I E F F I N A N C I A L O F F I C E R & TA X D I R E C TO R

12–13

• Lean Corporate Functions

Sainsbury’s, Steer Davies Gleave,

CHIEF LEGAL OFFICER & CHIEF RISK & COMPLIANCE OFFICER

14–15

• Legal’s Key Role in Managing Risk and Shaping Strategy

Team GB and other leading organisations

CHIEF MARKETING OFFICER & SALES DIRECTOR

16–17

• The Business of Marketing: Delivering and Demonstrating Value C H I E F I N FO R M ATI O N O F F I C E R & C H I E F D I G ITA L & DATA O F F I C E R

18–19

• Leveraging the Power of Blockchain CHIEF PEOPLE OFFICER & LEARNING DIRECTOR

20 –21

• Diversity: The Competitive Edge C H I E F O P E R ATI N G O F F I C E R & S U P P LY & P R O C U R E M E N T D I R E C T O R

22–23

• Environment Initiatives that Drive Efficiency and Savings WINMARK 20TH ANNIVERSARY

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W I N M A R K gives business leaders the knowledge and connections to achieve greater impact.

Our professional member networks enable C-Suite executives to learn from their peers and engage in the discussions that are transforming their business environment. Our widely acclaimed management research provides leaders with intelligence and perspective, and our education academies update, develop and empower executives across industries and functions. The C - S U I T E R E P O R T gives the board of directors, the chief executive and senior leaders a panoramic view of business, mapping the latest trends across functions, addressing key challenges from the perspective of the world’s most innovative organisations and enabling the C-Suite to stay ahead.

PA RTN E RS With special thanks to the following organisations who partner Winmark Networks, Research & Academies:

BAKER MCKENZIE

DWF

PUNTER SOUTHALL

CANON EUROPE

EVERSHEDS SUTHERLAND

REDINGTON

CAPSTICKS CARILLION ADVICE SERVICES

INSTITUTE OF PRACTITIONERS IN ADVERTISING

CHARTERED INSTITUTE OF PERSONNEL AND DEVELOPMENT

INVESTEC ASSET MANAGEMENT

CHARTERED INSTITUTE O F TA X AT I O N CHARTERED INSURANCE INSTITUTE CIO CONNECT C LY D E & C O

MARKET RESEARCH SOCIETY MHA MACINTYRE HUDSON OMOBONO

ROTH E SAY LI FE RSM RUSSELL INVESTMENTS SACKERS SOVEREIGN BUSINESS I N T E G R AT I O N G R O U P THE GOVERNANCE INSTITUTE TA X AU TO M AT I O N WHITE & CASE

P A C O N S U LT I N G G R O U P PENFIDA

COPYRIGHT © 2017 WINMARK LIMITED All rights reserved. The information in this Report is confidential to Winmark Members, Clients and Partners. It is intended solely for them or the addressee. The views expressed in this Report are summaries of meeting notes from network meetings, and are therefore out of their original context. It is strongly recommended that before taking action on any of the enclosed you consult the Winmark network lead. Any opinions or advice contained in this Report are subject to the terms and conditions expressed in Winmark Terms & Conditions. Access to this Report by anyone else is unauthorised. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without written permission.

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TH O U G HT LE A D E RS H I P FRO M WI N M A RK THE LOOKING GLASS

Winmark and Clyde & Co investigated trends and developments that impact senior legal leaders, both in-house and in private practice, for the 2017 edition of the annual Looking Glass report: Looking Glass – Adapting to the new risk landscape. Both boards and general counsels see legal and regulatory developments as the largest driver of change in the GC role. This is followed closely by cost pressures and different demands from internal clients, which reflect the volatility in the external environment. High-profile corporate scandals, together with new legislation such as the Markets in Financial Instruments Directive (MiFID) and the General Data Protection Regulation (GDPR), have moved legal and compliance issues higher up the business agenda, particularly in highly regulated areas where businesses face substantial risks. Meanwhile, access to talent has improved. A generational shift, with younger lawyers more likely to value flexibility and work-life balance, is resulting in more talented lawyers wanting to move out of the traditional law firm environment into in-house teams. These developments create positive momentum for in-house lawyers to play a more central role in their organisations. The department is starting to be seen less as a resource and more as a part of the leadership.

FACTORS DRIVING CHANGE IN THE GC ROLE GC P E R S P ECTI V E

FO R M O R E I N FO R M ATI O N , P L E A S E V I S I T: C LY D E C O . C O M /L O O K I N G - G L A S S - R E P O R T

B OA R D P E R S P ECTI V E

Specific legal and regulatory developments

72%

56%

Cost pressures that require improved efficiency

69%

39%

Changing demands from internal clients

62%

39%

Specific commercial risks

53%

39%

Internal business model innovation

47%

22%

Ability to leverage new technologies to redesign

45%

33%

Ability to work anywhere/any time

35%

6%

Changing legal career paths

23%

6%

Ability to unbundle and outsource legal services

23%

28%

Innovation by external legal suppliers

16%

11%

6%

0%

F O R M O R E O N T H O U G H T L E A D E R S H I P, P L E A S E V I S I T: WINMARKGLOBAL.COM

Demographic changes

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C-SU ITE M E ETI N GS Some of the pioneering organisations and leading executives who work with the Winmark C-Suite networks, bringing their perspectives and leadership to our peer-learning roundtables this autumn: The CEO Network’s ‘What I wish I knew when I was a CEO’ meeting will present a candid conversation with Mike Roney, former CEO of Bunzl; Roger Parry, former CEO of Clear Channel Communications and YouGov’s chairman; and Leonard Fertig, former CEO of Motive Television.

Anne Milton MP, Minister for Skills and Apprenticeships, and Minister for Women, will host members of the Chief People Officer Network at her office to discuss the apprenticeship levy and the engagement between the public and private sectors.

Google is opening its Digital Garage in London for members of the Winmark C-Suite networks, and will share its perspective on key elements for companies in the digital age, including digital security and protection and social media strategy.

With proposals on the horizon for a new social housing regulator, Julian Ashby, chair of the Regulation Committee of the Homes and Communities Agency, will join the Winmark Affordable Housing Network to discuss the challenges and opportunities of the sector.

A study tour at the Rolls-Royce Civil Aerospace plant in Derby with members of the Chief Legal Officer Network’s Centre for Operational Excellence, covering process improvement, technology and culture change in legal departments.

An interactive discussion on how Tesla is disrupting the automotive sector. Attendees will learn about Tesla’s innovative DNA, tour its largest showroom in Europe and drive around in its S and X models.

Rosemary Martin, Group General Counsel and Company Secretary at Vodafone, will join the Chief Legal Office Network and share her experiences and learning from working with Vodafone’s and Reuters’ boards.

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TH E CH A I R ’ S V I E WP O I NT A challenging customer environment, technological disruption and economic uncertainty are all putting pressure on leaders to adapt their business models to create value. These drivers accentuate the need for businesses to focus on productivity and profitability, pushing boards and executive committees to identify every way in which they can improve efficiency, optimise the use of resources, drive innovation and explore alternative strategic directions. This report examines the key trends that follow from today’s unprecedented uncertainty. It is the responsibility of company chairmen and boards to ensure that their organisations are imaginatively reinventing themselves to address the most fundamental changes in today’s world, to remain relevant and to grow.

..THINK ABOUT CULTURE. People are, of course, an organisation’s most valuable asset and the biggest drivers of success or failure. Regrettably, only the best business leaders have the emotional intelligence to understand the opportunity that creating a culture can offer. Effective leaders understand that a well-defined and shared set of visions and values can drive colleagues to deliver their organisation’s strategy.

..UNDERSTAND THE STRATEGIC VALUE OF EACH FUNCTION. The complex environment in which modern businesses operate requires an open mind for strategic planning. Effective CEOs and boards do not design the future ambition of their organisations in isolation. Instead, they bring to the table the contributions of their entire C-Suite and those of all their colleagues, including the most junior (who are often the most familiar with the latest trends). Strategies conceived with the input of multifunctional and diverse expertise are more closely connected to the reality of the environment in which the business operates and are therefore more likely to succeed.

..COLLABORATE. Functions and business units cannot be allowed to operate in silos. Effective C-Suite leaders understand the linkages between silos and facilitate collaboration, multifunctional projects and team working, and reward behaviour that encourages the business to work towards the vision.

..LOOK AHEAD. Effective leaders understand that business is transforming at a rapid pace. They ensure that their organisations identify the forces that will impact them, evaluate alternative business approaches to addressing them and ensure that their customer offering is innovative, best in class and provides competitive defence against whatever their rivals have to offer.

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BOB WIGLEY C H A I R M A N , U K FI N A N C E , S EC U R E B R OA D C A S T, V E S TA P R O P E R T Y A N D V I C TO R I A B EC K H A M


TH E C-SU ITE … and how it is looking at the challenges of the GDPR W IT H S P E C I A L TH A N K S TO S T E V E W R I G H T, G R O U P DATA P R I VAC Y & I N FO R M ATI O N S E C U R IT Y O F F I C E R ; A N D S A N D R O S A N D R I , DATA P R I VAC Y O F F I C E R , J O H N LE W I S PA R TN E R S H I P.

Most businesses are highly data-driven, and any disruption can be time-consuming and costly. COOs must think about the potential impact on the business of new data policies and the implementation of new systems, ensuring a smooth transition and optimal use of data as an enabler of operations. • Contracts with suppliers are also subject to the new regulation. Chief procurement officers must review these, ensuring that they comply with the new framework. • Engage the entire supply chain and ensure that partners are also meeting GDPR requirements, avoiding potential compliance issues. • Storing and processing data in a centralised, simplified way may lead to opportunities for increased efficiency in the business.

THE

OPERATIONS

PEOPLE

TECHNOLOGY

HR teams will have to revise how they store and manage all of their data – on candidates, employees and ex-employees – but their most critical role is to help build a mind-set that is aware of data privacy across the organisation. • The GDPR determines that organisations are allowed to collect data only for a specific, relevant purpose, and to retain it only for as long as is necessary. Map and revise all the data that you currently collect and store, assessing its relevance and compliance with privacy rights. • Implement new processes for collecting, storing and deleting data, according to the new regulatory framework. • Support the cultural transformation that the GDPR requires. The entire organisation must see data security and information privacy as a priority. Help to develop awareness programmes and training to promote the required mind-sets.

The CIO and chief data officer should lead organisations’ information security efforts, working with the CEO and the CLO, influencing new data privacy strategies and supporting working groups to address the GDPR across the organisation. • Support the mapping and classification of databases. • Outline, enforce and update information security policies. • Lead the development and implementation of new data management and storage systems, focused on security and protection, and map the privacy implications of potential breaches.

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CEOs and the board must understand how the new regulatory framework impacts their business models. Organisations that manage data as part of their core activities, such as financial and professional services and e-commerce, face particularly sensitive challenges. • Include GDPR-related issues in your risk assessment as reputational damage in these areas can imperil the viability of the business. • Understand and influence the development of new data privacy and information security strategies by CLOs, CIOs and chief data officers. • Make the strategic decisions that may be required to comply with the regulation, especially those related to the management or commercialisation of data as a revenue-generating activity. Data experts see this as the area where organisations are most likely to face issues. Cases of non-compliance can lead to irreparable reputational damage, on top of prosecution and fines. Marketing teams must work closely with data privacy teams to ensure compliance.

BOARD

COMMERCIAL

LEGAL & RISK

FINANCE

CFOs must help to assess data-sensitive initiatives and the consequent risk/reward to the business. Non-compliance can lead to fines of up to 4% of turnover or €20m, whichever is higher. Businesses that monetise data face an even greater challenge. • Tax functions hold significant personal data, and must revise how they store and process it. • Look into potential cost savings in simplifying the storage and management of data to comply with regulations, with finance departments working in synergy with IT. • Plan for increasing investments in technology, data protection and insurance.

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• Map and refine each database in the marketing and commercial functions, based on consent given by customers to be contacted. • With the GDPR in place, customers’ expectations as to how their data is handled will rise. Although some marketing practices may not breach the regulation, they may still be considered inappropriate by those targeted. The GDPR should be seen as an opportunity for organisations to establish a better relationship with customers. • Smaller databases will result in smaller pools of leads for sales teams, who will have to rethink their approaches to how they build their pipelines.

A key function in preparing businesses for the GDPR, legal & risk must not only be on top of preparation for the May 2018 enforcement deadline, but also work continuously in ensuring compliance across the organisation. • Shape the organisation’s overall data strategy from conception to implementation, outlining privacy policies. • Map the risks associated with the regulatory changes. • Adapt all contracts and privacy disclaimers – customers, employees, suppliers, partners – to the new framework.


ALI G N IN G CU LTU RE A N D STR ATEGY NON-EXECUTIVE DIRECTORS & THE BOARD W I T H S P EC I A L T H A N K S TO A M Y B U R K E , H R D I R EC TO R , B A N K O F I R E L A N D (U K ) P LC ; A N D A N G I E R I S L E Y, G R O U P H R D I R EC TO R , S A I N S B U RY ’ S , A N D N O N - E X EC U T I V E D I R EC TO R , S E R CO.

A POWERFUL SYNERGY

Even though executives and academics have been discussing organisational culture and its impact on business since the 1970s, leaders today still struggle to grasp its true meaning and implications. Company culture – or the values, habits and behaviours that establish the social environment of an organisation – guides workplace practices and relationships without being formally outlined. Its drivers, manifestations and consequences are so complex that it is hard to make it tangible. Nevertheless, it has the power to drive companies forward and realise their vision, or to prevent the success of their strategy. Alignment with culture is paramount for the successful implementation of any strategy. Culture determines the workforce’s drivers and motivations, impacting organisations’ customer-facing channels, their capabilities, agility and ability to innovate. It must provide employees with the appropriate mind-set to move forward in an established strategic direction. The Bank of Ireland in the UK, faced with marketplace pressures, including the consequences of the 2009 financial crisis and the rise in

credit licences issued, had to rethink its value proposition. The leadership decided to focus on the partnership model and expand its portfolio to become a leading multiline partnership bank. This wideranging repositioning has meant that cultural change has had to take place among employees, business partners and customers, transforming how the bank operates, both internally and externally.

Part of the challenge in addressing culture is that business leaders struggle with what seems like a complex concept with no tangible or measurable features. But there are methods to map and understand culture.

ANGIE RISLEY

N O N - E X EC U TI V E D I R EC TO R , S ER CO, A N D G R O U P H R D I R EC TO R , S A I N S B U RY ’ S

A S S E S S I N G C U LT U R E

AMY BURKE

H R D I R EC TO R , B A N K O F I R EL A N D (UK)

Part of the challenge in addressing culture is that business leaders struggle with what seems like a complex concept with no tangible or measurable features. But there are methods to map and understand culture, and all the answers are to be found in the business. Cultural drivers manifest themselves in the way employees think and work. HR executives can lead thorough assessments of culture through feedback, people data and observable signs, and provide NEDs with an insightful analysis on how the organisation functions. Although an organisation’s stated values and purposes outline what it aspires to be, these may not reflect the reality of employees’ beliefs and behaviours. The Bank of Ireland used a number of research methods to look into its 8 W I N M A R K C-S U I T E Q 4 2 0 1 7

culture, including examining existing data, carrying out a company-wide survey, and comprehensively reviewing the company’s entire history to identify key moments and assess their relevance to its current situation. It understood that, in large organisations, culture is not homogeneous and cannot be treated as a universal ethos. Looking at its UK operations, it was able to identify different sub-cultures. These can reflect different geographies, business units or employee demographics, and they must be mapped as part of a thorough analysis of a company’s culture.


C H A N G I N G C U LT U R E

Any process of culture change must start with the establishment of clear goals. Many organisations are unsure of what they want to achieve when transforming their culture. The leadership must understand where the organisation aims to be, and then determine which type of culture needs to be in place to take it there. Every strategy will translate into cultural drivers: the desired workforce beliefs and behaviours that influence performance and outcome. The Bank of Ireland’s goal was to become the partnership bank by providing accessible financial services directly and through trusted UK brands. It then outlined how the company’s culture would impact its trajectory towards that goal and began work to align them accordingly. E N GAG I N G TH E LE A D E R S H I P. Both executive and non-executive directors must understand the importance of culture to the business, and how much influence it can have as a driver of value. Engagement from the board sends a strong message to the entire workforce.

THE FIVE ELEMENTS OF CULTURE CAREER Do employees see a future in the organisation? - Look closely at the organisation’s structured career plans. Do they satisfy employees’ expectations? - Understand how performance is assessed, managed and rewarded. - Are there talent management or coaching programmes?

AUTONOMY Does the team feel empowered? - Assess how comfortable employees feel in making decisions related to their role. - Examine whether line managers encourage or punish mistakes and unconventional thinking. - Determine how many layers of approval ideas need to go through, and how long it takes to make decisions.

PURPOSE Is the organisation’s purpose embedded in the team, influencing their work day-to-day? - Map whether employees know the organisation’s purpose or mission statement. - Ask employees if they understand how their job supports that purpose. - Understand how line managers reinforce that purpose.

ENGAGEMENT

Is there a feeling of belonging? - Survey employees on whether they feel well-informed about what is going on in the company. - Look into HR data: turnover rates and motivations, the success of COLLABORATION engagement initiatives, How well does the team work together? complaints. - Identify silo behaviour. - Assess whether internal - Map cross-function or cross-business unit communication channels projects and initiatives. are working - Search for policies or incentives that efficiently. promote collaboration.

E S TA B LI S H I N G C U LT U R A L D R I V E R S .

Organisations need to look at their business strategy and map the necessary cultural drivers. By assessing current company culture, directors will achieve greater clarity of thought as to what exactly needs to change. S E T TI N G G OA L S . It is important to set realistic goals for cultural change, and these should be aligned with the business strategy. Draw up a shortlist of things to focus on to put the business closer to achieving its strategic aims over the next few years. These can be related, for example, to increased collaboration across functions, employee engagement and its correlation with bottom-line performance, or the adherence of determined values and behaviours. Once they have been set, goals should remain the same for the period stated, so that organisations can move forward with confidence. I M P LE M E NTATI O N . Goals need to be translated into actionable items that can be tracked, managed and reviewed. Directors, including NEDs, must ensure that cultural change leaves no area of the business untouched, and should work to ensure that culture is embedded in identifiable day-today processes.

A LIVING PRACTICE

Assessing and managing culture cannot be treated or seen as an ‘initiative’, a project that is treated or perceived as coming to an end or gradually fading away. Culture is part of an organisation’s fabric, and it must be observed and influenced by the leadership continuously to truly harness the potential of a good strategy. The Bank of Ireland never referred to its transformation as a ‘culture programme’, but as ‘how we will operate from now on’. It is an ongoing understanding and shaping of the organisation, a dialogue with the leadership. Managers started to be assessed based on the Bank’s values to ensure a continued influence of employees’ engagement with culture. This allowed all stakeholders to see the cultural changes as tangible and instantly actionable. Colleagues were asked to become ambassadors of change, and offices were rebranded to bring consistency to the work environment. This

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allowed cultural change to be embedded in daily operations and ensured continuity. A successful cultural change is one that prolongs momentum and ensures new behaviours and processes that are lasting and consistent. It is also a huge factor in driving performance and delivering value. This means that it has to be constantly balanced with business strategy, and take account of wider context and marketplace factors. Successfully balanced culture and strategy can grow an organisation, create differentiation and deliver greater value. To achieve the maximum benefits, executive directors and NEDs need to work together in addressing and shaping organisational culture.


S PO RT’ S LE SSO N S O N RU N N IN G A BUS IN E SS CHIEF EXECUTIVE OFFICER & DIVISIONAL CEOs W I T H S P EC I A L T H A N K S TO P E T E R K E N YO N , FO R M E R C EO, M A N C H E S T E R U N I T E D FO OT B A L L C LU B A N D C H E L S E A FO OT B A L L C LU B ; A N D B I L L S W E E N E Y, C EO, T E A M G B .

E N G AG E M E N T W I T H S TA K E H O LD E R S

Sports organisations are becoming increasingly similar to businesses. Financial viability is a primary concern, and even prominent national sports bodies, such as the Great Britain and Northern Ireland Olympic team (Team GB), receive no government or lottery funding – they are completely dependent upon commercial sponsorship and fundraising income. This makes them as exposed to the wider market and economic environments as corporations, requiring rigorous management and sound financial policies. Accountability is an important focus for both types of organisations, and the engagement of multiple stakeholders is crucial for them to thrive. They must always put the customer (or fan) at the heart of their operations. Sports clubs need to maintain a passionate fan-base, as this leads to attractive sponsorship deals, while companies are aware of the importance of a customer-centred approach for commercial success. Sports organisations understand that they must be able to transform and adapt quickly in today’s fast-paced world to maintain relevance and competitiveness. A closer look at how they are run can reveal management principles that are highly valuable for corporations.

Sports organisations understand that they must be able to transform and adapt quickly in today’s fast-paced world to maintain relevance and competitiveness.

BILL SWEENEY

CEO, TE A M G B

TEAM SPIRIT

The collective is always greater than the sum of individuals. Sports organisations thrive when collective spirit is high and recognised among team players. The British Olympic Association chose to unite all Olympic sports teams as part of Team GB. Individual teams compete not only for their own achievement, but for the glory of Team GB as a whole. The ethos is that no single player is bigger than the team. This helps to create cohesion and constantly reminds players to give it all for the greater good. Similarly, organisations work best when there is a common understanding that individual talent is a means to achieve collective results. Individual accomplishment must be recognised, but it is a component in the continued success of the business as a whole. Collaboration is crucial for business to innovate and grow today. It leads to better solutions to business problems and more effective decision-making. It also creates a sense of shared ownership and accomplishment. Business leaders must work to break silo

behaviour, and implement systems and reward mechanisms that drive co-operation, fostering a sense of collaborative spirit in which employees take pride in contributing to wider organisational achievement. Just as in sport, businesses need to manage and retain (but sometimes let go of) high performers who are thoroughly confident in their ability to achieve aggressive goals. Sports teams are filled with this type of individual. Although high performers may weigh heavier in an organisation than their average counterparts, they can also bring tension, negative influence and instability. As a consequence, they must be managed carefully to channel their potential to deliver positive results for the company, without harming the collective spirit. When a high performer’s attitude to work and to others brings distress to work relationships and to a collaborative culture, businesses should not be afraid to let them go.

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S T R AT E GY M E A N S C H O I C E

THE POWER OF PURPOSE

Leaders in both sports and businesses are constantly faced with choices. With limited resources and the need for a clear direction, trading off – or choosing what not to do – is essential to effective corporate strategy. With this in mind, organisations can focus their efforts towards an outlined goal. UK Sport, a governmental organisation that funds national sporting bodies competing in the Olympics and Paralympics, determined that British teams would be entirely focused on medal return, and that investment would be placed accordingly. This meant that changes had to be made in underperforming areas to focus effort on incentive and driving results. As an example, only 20% of the swimming team achieved their personal bests in the 2012 London Olympics. Team GB modified its selection criteria for the 2016 Rio Olympics to include only those who had a real prospect of getting through to the finals. In 2016 the proportion of Team GB swimmers achieving personal bests rose to 69% and their medal haul doubled from three to six. In sports and in business, effective strategic choices depend on a deep understanding of the organisation itself. CEOs must have complete clarity as to their businesses’ strengths, capabilities and weaknesses, which must be assessed constantly to guide informed decisions. With an outlined strategy, leaders must ensure that the entire organisation, its people and structures are focused on the delivery of its goals. Commitment to strategy and its implementation when allocating resources, developing processes and running the business is crucial for businesses to operate efficiently and thrive.

Business leaders are increasingly aware of the importance of responsible operating practices and of thinking about the value organisations deliver to society. Although ‘purpose’ is becoming a buzzword, there is no doubt that companies with this type of understanding establish stronger ties with their customers, employees and regulators. Even investors are becoming more interested in companies that think about creating shared value across stakeholder groups. Sports organisations are purpose-driven by nature. Although football clubs can be highly profitable organisations, they are historically built around passion, of which profitability is a consequence. Their incredible power to entertain and engage millions of supporters relies on their focus on football itself, on playing and winning. That is their reason to exist, and it is why clubs have a relationship with their fans that profit-oriented brands can only dream of. Businesses can benefit immensely from understanding how their products or services play a role in society and have a positive footprint, and by communicating accordingly. In 2015 Team GB and the Aldi supermarket chain established a partnership centred on achieving excellence through active lifestyles. With the mission of providing customers with high-quality products at the best price and a network of stores around the UK, Aldi’s goal was to promote healthy eating and strengthen its presence in the country. The Team GBAldi partnership reached out to 400,000 schoolchildren, involving triathlon medallists and bringing a deeper awareness to local communities of the benefits of an active lifestyle and the importance of fresh and healthy food. Aldi established a commitment to sourcing British products, in step with the national spirit that underpinned Team GB. The partnership reinforced Team GB’s and Aldi’s commitment to having a positive impact, aside from boosting public perception. The campaign will continue in the run-up to the 2020 Tokyo Olympics.

Sports organisations are purpose-driven by nature. Although football clubs can be highly profitable organisations, they are historically built around passion, of which profitability is a consequence.

Key Lessons from Sports TEAM SPIRIT

.. The collective is more than the sum of individuals. .. Collaboration is key to success. .. Monitor, manage and, if necessary, let go of high performers.

..

S T R AT EGY M E A N S C H O I C E

.. Leaders must determine which direction to follow, and which not to follow. .. Making appropriate choices requires a deep understanding of the organisation. .. Sports and businesses need a clear focus on a well-outlined strategy.

..

T H E P OW E R O F P U R P O S E

.. Creating shared value is high on the agenda of business leaders. .. Organisations must have clarity over their purpose. .. Communication strategies help to strengthen relationships with stakeholders.

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LE AN CO RPO R ATE FU N C TI O NS CHIEF FINANCIAL OFFICER & TAX DIRECTOR W I T H S P EC I A L T H A N K S TO C AT H E R I N E C L A R K , F I N A N C E D I R EC TO R , S T E E R DAV I E S G L E AV E .

efficient use of time, arguably the most precious commodity in finance teams, without sacrificing quality. Adopting lean applications in finance and tax departments saves time, allowing better understanding of the growing compliance requirements, the capacity to implement the changes required and the ability to improve the support they can provide to the business. Lean allows heads of finance and tax to optimise the compliance cycle, delivering at lower costs, with less risk, to a higher quality – and on time.

OPTIMISING RESOURCES

Finance and tax functions are transforming to face the pressures from tight budgets and the push to do more with less. The majority of CFOs at a recent Winmark CFO dinner reported that they expect to reduce the cost of their functions by 10–15%, with some foreseeing cuts as high as 40%. Technology and automation can improve performance and help to reduce costs across all C-Suite functions, while the manufacturing principles of ‘lean’ are being used in a corporate context to optimise processes and operate more efficiently.

Types of Waste in Corporate Functions

“We are all under pressure to keep costs down, make efficiency improvements and be strong partners providing valuable and relevant insight to our clients in our businesses.”

.. .. .. .. ..

Unnecessary activity Duplication and repetitive tasks Excess (overdoing things) Waiting time (dependencies) Lack of clarity (precision in instructions/ objectives prevents waste) .. Inaccuracies (in instructions/ specifications or in results) .. Errors

C AT H E R I N E C L A R K

CFOs and tax directors are reshaping their functions and bringing in data and AI to handle high-volume services, while optimising their use of resources through lean methodology, cutting waste, saving time and driving value for customers. Applying lean methodology to corporate services is about

Lean methodology is built on a continuous cycle, which identifies value in terms of customer needs, then models the processes and actions required to deliver value, and then adjusts the pace of the process to the rate of customer demand before refining the cycle for the next time, focusing on areas that can be continuously improved.

CORPORATE FUNCTIONS’ TRANSFORMATION YESTERDAY

TOMORROW

CXO

DIRECT REPORTS + OPERATIONS DIRECTOR

DIRECT REPORTS BUSINESS PARTNERS PROJECT MANAGERS INFORMATION ANALYSTS OPERATIONS MANAGER

CXO

10–40% COST REDUCTION TECHNICAL LEADERS

LEAN DATA-DRIVEN, REAL-TIME TRANSPARENT SYSTEMS

PROCESS-DRIVEN ADMINISTRATION & CLERICAL SHARED SERVICE CENTRES HIGH VOLUME/LOW VALUE (OFFSHORE) FROM MANUAL OFFSHORE TO AUTOMATED IN THE CLOUD

C AT H E R I N E C L A R K

FI N A N C E D I R EC TO R , S TEER DAV I E S G LE AV E 1 2 W I N M A R K C-S U I T E Q 4 2 0 1 7

ANALYSTS & NEW INITIATIVES MANAGERS

BUSINESS PARTNERS


CUSTOMER FOCUS

Lean considers value from the customer perspective. Who are the customers and what are their requirements in terms of the specifications of a service, timeliness and frequency? The customers for finance and tax units are diverse – from the business units to other group functions, and to executive management and stakeholders more generally in the company. All processes focus on driving value optimally for each of these customers. Services efficiently delivered according to lean principles should ensure the right output is delivered at the right time to the right quality, while minimising waste and reducing risk. It is not necessarily a case of delivering the highest quality at the fastest speed.

THE LEAN CYCLE

IDENTIFY VALUE

MAP THE VALUE STREAM

SEEK PERFECTION

E LI M I N AT I N G WA S T E

When considering all the component parts that make up the flow of a service to delivery to the customer, lean focuses on the elimination of waste, defined as any steps in existing processes that consume resources without creating value.

ESTABLISH ‘PULL’

CREATE FLOW

AG R E E I N G S T R AT E G I C O B J E C T I V E S

C O M M U N I C AT I N G DATA

Agreeing principles or strategic purpose is a fundamental pillar of a successful lean implementation. It reduces the scope for debate and minimises ambiguity. Obviating the need for discussion removes a prime source of ‘waste’.

Communication is vital in a lean structure. Data will be produced quicker – however, communication to stakeholders must be delivered clearly and concisely, at the right time, to maximise its relevance and proactively influence business decisions. Too much real-time data output can generate unnecessary, short-term reactions.

FINDING THE RIGHT PEOPLE

It is important to have the right people with the right skills in the finance/tax teams to efficiently and comprehensively scope out the set-up required to enable the creation of multiple outputs for multiple stakeholders from one data entry point. It is highly valuable to have people who have an integrated view of both finance and tax as they understand the often complex interaction between the two. This is likely to require investment but it will benefit a business in the long term. C O LL A B O R AT I O N A N D T E A M - B U I LD I N G

Refining the efficient flow is best achieved through a collaborative exercise involving the team. Experts in lean methodology are best deployed as facilitators only; it is the team that best understands the effects of changes to processes and can highlight the problems and potential improvements in a cause and effect chart. Brainstorming exercises using ‘Post-it’ notes are a common method of visualising the outputs, processes and dependencies. E S T A B L I S H I N G ‘ P U L L’

With improved flow, ‘time to customer’ is improved. This makes it much easier to deliver services efficiently, on time and to the appropriate quality. This may involve limiting the amount of work in progress, rather than ‘pushing’ processes to perceived maximum capacity. The goal is to level-load the team throughout the year and ensure a systematic, standardised process. Throughput should be consistent enough to ensure less waste, but should also be sufficiently flexible in design or frequency to address changing business conditions, performance and changes in statutory financial or tax reporting.

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MEASURING LEAN

Ongoing tracking of improvements against agreed measurable criteria is an important part of lean methodology. These include targets on standardisation of processes, error proofing, and visual display of the degree to which processes are flowing efficiently to highlight errors and bottlenecks/blockages. The organisation measures each site across the company by each KPI, twice yearly, on a ten-point rating scale for each criterion. Underperformers are encouraged to spend time with high scorers to learn best practice. C U LT U R A L T R A N S F O R M AT I O N

A truly effective lean implementation involves a fundamental cultural transformation in organisations. Lean is a mind-set that continually seeks to question processes to improve them. Lean is not just good project management. It is a good discipline for continually questioning how organisations undertake processes. In isolation, any function can eliminate some waste, although the impact will be limited where it is piecemeal or isolated. Teams in large, complex organisations interact with multiple internal customers, which have their own expectations, as well as with internal suppliers on whom they are reliant as part of the value chain. The lean approach is much more effective, as it leads to buyin across suppliers. As with other cultural transformations, success requires commitment from the top of the organisation, with consensus across senior management from the early stages. Along with leadership commitment, lean implementation also requires investment; embedding cultural and process change is complex and results are not immediate. Lean is a long-term cultural commitment with significant potential benefits in the form of material and sustained efficiencies.

W I N M A R K C-S U I T E

Q4 2017


LEGA L’ S KE Y RO LE IN M ANAG IN G RI S K A N D S H A PIN G STR ATEGY CHIEF LEGAL OFFICER & CHIEF RISK & COMPLIANCE OFFICER W I T H S P EC I A L T H A N K S TO M A R K S T R OYA N , PA R T N E R AT M A N C H E S T E R S Q UA R E PA R T N E R S; A N D E D P E P P I AT T, G E N E R A L CO U N S E L A N D CO M PA N Y S EC R E TA RY, D E L A R U E .

R E G U L AT I O N , T H E C H I E F CONCERN FOR BUSINESS

LE G A L- O R I E N T E D S T R AT E GY

General counsels have historically advised on the strategic implications of legal affairs, and have overseen how an organisation’s strategy is reflected in its legal department. Today, CLOs are being brought to the table to help to shape and drive strategy in the first place. Not only is risk at the heart of the strategic agenda, but the associated wisdom built into the experience of a CLO is of striking value for organisations as they look ahead. With pressure from multiple groups of stakeholders increasing, governance is rising to the top of business leaders’ agendas. Impeccable ethical standards are more critical than ever when running a business. Under the close watch of investors, regulators and the media, companies’ reputations are constantly at stake. Legal teams are expanding from a position of simply informing strategic decisions on regulatory matters, to helping to design corporate strategies that address the pressures organisations face. To establish themselves as drivers of strategies, CLOs must: R E P O R T D I R E C TLY TO TH E C E O , to have a direct and trusted line to power; CO NTR O L TH E LE GA L TE A M ’ S B U D G E T , encompassing pay, bonuses and external spend, in order to establish and drive strategic priorities in the team; E S TA B LI S H A C LE A R O P E R ATI N G M O D E L , with metrics connected to the goals of the business, building a department that outperforms the competition; and H AV E B R OA D ACC E S S TO G OV E R N A N C E CO M M IT TE E S , being one of the best-informed leaders in the C-Suite.

Regulation is at the top of business leaders’ agendas. Regulatory change was listed as the number one concern across the C-Suite in Winmark’s latest member survey, ahead of Brexit, the economic outlook, and technology and automation. CLOs and their legal departments are becoming one of the most valuable resources for CEOs and the board. Regulation has the potential to have an enormous impact on business. It brings outstanding challenges and opportunities, making CLOs’ perspective vital for effective decision-making. Unprecedented uncertainty has turned risk management into a core strategic capability, and CLOs’ regulatory expertise, risk management skills and ability to judge the relevance and significance of different scenarios puts them in a unique position to advise CEOs and boards.

.. .. .. ..

TH E RO LE O F TH E CH I E F LEGA L O FFI CE R Positioning

Role positioning

Core skills/competencies

Core tasks

Corporate leadership

Business leader and legal counsel (think like a CEO)

Diversity of thinking (in boardroom) and constructive challenge Networking with directors (across global footprint) Good legal advice and judgement Influencing skills

Independent thought Company director and secretariat (UK and international subsidiary boards) Staying on top of key legal knowledge at corporate, sector, product (innovation and liability) and supply-chain levels

Strategic direction and operating model

Strategy consultant

Business design and wireframing Legal strategy Financial analysis Commercial acumen

Environmental/horizon scanning Legal compliance (international) Corporate alignment Find and deliver optimal economic model Optimise linkages with procurement, IP, HR etc

Reporting, stakeholders and customers

Trusted business adviser and partner

Business outcome-focused Governance Managing conflict Data analytics, privacy and security Filtering, identifying and communicating salient issues

Governance review Policy creation and execution Budget and financial management Legal head in times of crisis Educating the business

1 4 W I N M A R K C-S U I T E Q 4 2 0 1 7


TH E E VO LUTI O N O F TH E LEGA L FU N C TI O N Role

In-house Lawyer ➜ General Counsel ➜ Chief Legal Officer Commercial Counsel (X) Legal Function Leader (C) Business Leader (O)

Description

The old world ‘no’ function

The current status quo for the majority of functions

A world-class function

Strategic direction and operating model

No clear vision of the future or operating model and very limited proactive intervention

Established purpose but not yet clarity around a three-year vision and model

Established purpose, clear three-year vision and supporting operating model

Immediate priorities addressed but these do not sit in a broader strategic framework

A plan of how to achieve the three-year vision implemented with clear roles and responsibilities

Risks and mitigation actions identified and worked through

Business as usual risks addressed, systematic review of ‘black swan’ risks

Metrics: limited to external spend and comparative costs

Metrics: limited function metrics (inward) and difficulties justifying value

Metrics: full metrics, that add value to other functions, e.g. sales contract times

Stakeholders and customers: a reactive function, with high risk exposure. Limited influence at board level

Stakeholders and customers: an intervention function, respected by the business. Business account management

E D P E P P I AT T

G EN ER A L CO U N S EL A N D CO M PA N Y S EC R E TA RY, D E L A R U E

BUSINESS LEADERS

CLOs cannot establish their presence at the table and help their organisations navigate today’s uncertain environment simply by leading their legal functions. Instead, they must be business leaders, with a sharp commercial mind and an understanding of every part of the business. This position of organisational leadership puts focus on soft skills that become as important as the technical background:

..S O U N D J U D G E M E NT, I NTE G R IT Y A N D

S E LF- B E LI E F, asking the right questions

and being trusted with decision-making at organisation level;

..S TR O N G I NTE R P E R S O N A L A N D

CO N FLI C T M A N AG E M E NT S K I LL S , as a senior corporate negotiator; and G R E AT A NTE N N A E , knowing where to look and identifying risks before they become issues.

..

Reporting, stakeholders and customers

Stakeholders and customers: a business enabler function and internal benchmark. Stakeholder management and business engagement plans and managers

WORLD-CLASS LEGAL FUNCTIONS

The entire legal function must be business-savvy, in line with the priorities of the business and prepared to address the rapid transformations of today’s marketplaces. Legal teams must be commercially minded, make smart use of technology and operate with agility in the digital world. New in-house legal roles are increasing in order to ensure that functions are delivering trusted strategic value: H E A D O F LE GA L O P E R ATI O N S , overseeing the function’s overall delivery and value creation, managing processes, technology and workflow; I N FO R M ATI O N A N A LY S T, leading on analytics and reporting, tracking costs and KPIs; and P R OJ E C T CO U N S E L , working closely with procurement and other contracting parts of the business, and staying with the project from beginning to end.

.. .. ..

“The role of the general counsel has changed beyond recognition in the past 20 years. It used to be enough to be the best lawyer in the business and well-respected within the profession. That is now just a hygiene factor – the GC now needs demonstrably to contribute to the broader strategy and success of the business, acting as a business leader and moving well outside his or her functional tramlines if they are to retain their seat at the top table.” E D P E P P I AT T

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W I N M A R K C-S U I T E

Q4 2017


TH E BUS IN E SS O F M A RKETIN G : DE LIV E RIN G A N D DE M ONSTR ATIN G VALU E CHIEF MARKETING OFFICER & SALES DIRECTOR W I T H S P EC I A L T H A N K S TO C AT H E R I N E H OWA R D, M A R K E T I N G D I R EC TO R , ATO S U K & I R E L A N D.

THE VISIBILITY PROBLEM

It is not uncommon for senior leadership and the board to see marketing as a cost centre, rather than a profit centre. Although data analytics have transformed the impact measurement of marketing programmes and KPIs are becoming more sophisticated, brandbuilding efforts are still long-term and of intangible value, and customers’ decisions are complex, particularly in B2B. Clear, objective cases on how marketing investment is returning to the business as revenue are difficult to build. With the business world still very much driven by identifiably measurable indicators, CEOs and CFOs struggle to grasp the true value of marketing. Marketing heightens brand awareness and helps to drive recognition, sales, and ultimately revenue. However, business leaders may not always directly recognise that value creation: the function often works to shape how targets perceive the products and services, building long-term engagement with customers and clients, an investment (and return) that is hard to measure. Marketers do not always ‘speak the language’ of the business; historically, the function was considered a creative activity. To establish marketing as a value driver, it is important that it is aligned with business, in a two-way relationship: its potential must be recognised by organisations’ leadership, while marketing leaders must be able to demonstrate its value in business terms. Mutual engagement ensures better use of resources, improves customer relations and drives value creation.

C AT H E R I N E H OWA R D

M A R K E TI N G D I R EC TO R , ATO S U K & I R EL A N D

Atos UK & Ireland is a digital transformation consultancy with annual revenue of £1.3bn. Upon her appointment, marketing director Catherine Howard had the challenge of rethinking the purpose and the activities of the marketing team to engage constructively with the business and demonstrate the value of the function. The newly structured team sought to drive new business through demand generation, supporting the growth of the business with target sectors, and securing new customers. By addressing these areas, it was able to demonstrate tangible business value, and also improved the perception of marketing in the business from ‘reactive, not visible and having little budget’ to ‘proactive, approachable and professional’ within a 12-month period.

Rethinking Marketing .. UNDERSTAND THE BUSINESS , its position in the marketplace, its strategic priorities and where it is focusing for growth. Engaging with board members provides valuable information on the organisation, and also builds relationships that help to demonstrate value and engage the leadership.

.. PUT MARKETING IN FULL ALIGNMENT, ensuring that not only the marketing strategies, but every project/campaign, support service or team capability is linked to the business and its growth. Prioritise initiatives that drive more value and eliminate those that do not.

.. DEMONSTRATE THE VALUE DELIVERED, not in terms of output, but of outcomes, in a language that is recognised by stakeholders and in line with the company’s overall strategy.

1 6 W I N M A R K C-S U I T E Q 4 2 0 1 7


D E M O N S T R AT I N G VA LU E

BRINGING MARKETING CLOSER TO THE BUSINESS

Marketing leaders must ensure that they have clarity over how marketing will support the company’s strategy. They must be fully aligned with the business and the team must be commercially savvy, understanding the function’s delivery in relation to growth and revenue. Through customer acquisition and retention, and increasing brand awareness, marketing functions can establish themselves as clear contributors to organisations’ success. Catherine Howard spent time with each board member to understand how they saw the role of marketing within the business and to identify their strategic priorities. This helped to shape the structure and strategies that are connected to the needs of the business, and created contact points for continuous exchange on growth targets and value creation. Atos’ main generators of value were then translated into marketing strategies and capabilities, which became the focus of the entire function. The marketing team was restructured to deliver on those strategies, with roles and competencies being redesigned to improve engagement with internal clients, and to focus on activities that had been identified as true drivers of value. Its objectives were outlined to reflect broader business goals, and the team worked together to build detailed plans to deliver on its new proposition. Team integration helped bring about a transformation from a loose collective with individual pursuits to a collaborative operation that is constantly in touch with the needs of the wider organisation. To address the perception that marketing only drives intangible values, marketers must set measurable targets. At Atos, a ‘sales mentality’ was encouraged, which meant that the marketing team had to develop core metrics that can be shown to improve the bottom line of the business. Results are measured in quantifiable ways that can be analysed and improved upon, aligning the department with the overall pursuits of the company.

Atos’ marketing team was initially limited in terms of perception and board investment. To demonstrate value, marketers need not only to align delivery to the strategic goals of the organisation, but to master the language of the business and be commercially minded. Marketing leaders need deliverable and clear metrics to communicate success in a way that the leadership can engage with, which is often more analytical and numbers-driven. Marketing must increase its focus on delivering measurable outcomes, with KPIs that connect directly to business metrics, such as revenue, growth or profitability. The Atos marketing team set measurable targets that covered current and future pipeline, brand recognition, and client generation, as follows: deliver a pre-determined percentage increase in the Atos brand in relation to questions asked through the annual brand perception survey; drive a stated financial value of unqualified sales pipeline through marketing; support a specified sum of existing pipeline through marketing; deliver an agreed value of closed orders that originated through marketing; and enable a specified number of clients to be client advocates for Atos.

.. .. .. .. ..

The marketing team became a data-driven function, holding weekly KPI check-ups to discuss progress, share achievements and maintain motivation. When marketing objectives are supported by data and reflect a clear understanding of the business, the function can engage with the board, building common understanding. The potential of delivering measurable value helped to reinforce the idea that marketing is vital to future growth. Directors are given a clear picture of the value that marketing drives, allowing them to make informed decisions on investment. This creates a virtuous cycle where marketing is understood and supported by the board financially, in turn letting marketing do an even better job. The outcome of Atos’ marketing overhaul is impressive. The constant demonstration of current and future value that marketing brings quickly led Atos’ management to recognise the team as a fundamental asset to the organisation. This resulted in a 50% budget increase for the department (against a historic backdrop of budget reductions). Board confidence, combined with effective alignment, helped to create a motivated and positive team. The marketing team was able to beat its ambitious targets, generating over £1.1bn of new sales and supporting £2.5bn of pipeline. Its campaign, event and bid activities have helped to position Atos as a Tier 1 digital services leader.

The team was able to demonstrate tangible business value and also improved the perception of marketing in the business from ‘reactive, not visible and having little budget’ to ‘proactive, approachable and professional’ within a 12-month period.

17

W I N M A R K C-S U I T E

Q4 2017


LE VE R AG IN G TH E POWE R OF B LO CKCH AIN CHIEF INFORMATION OFFICER & CHIEF DIGITAL & DATA OFFICER W I T H S P EC I A L T H A N K S TO K E V I N O ’ S H AU G H N E S S Y, D I G I TA L T R A N S FO R M AT I O N L E A D E R , PA CO N S U LT I N G .

A T R A N S FO R M AT I V E I N N OVAT I O N

Some technological innovations, when they achieve scale, fundamentally change the way business is done. Since 2014, blockchain has gained increased attention as the next technology that could reshape business, with the potential for commerce, trade and industry to create and capture value that was previously unthinkable. Most famous for being the infrastructure for bitcoin and other virtual currencies, blockchain is a form of decentralised database that stores a permanent and secure ledger of any form of digital value and transaction data. This new system of recording and storing data could allow businesses to conduct transactions, exchange assets and build trust much more securely and costeffectively. Blockchain has the potential to serve as a system of record for transactions across entities, radically transforming the entire global economy. Organisations are only starting to tap into the benefits of the technology, which may end up changing how companies across industries do business.

This new system of recording and storing data could allow businesses to conduct transactions, exchange assets and build trust much more securely and cost-effectively.

HOW BLOCKCHAIN WORKS

The fundamental question that blockchain addresses is how to leverage technology to secure transactions without a regulating medium. Currently, organisations require a third party to mediate transactions and transfer asset ownership, which is time-consuming and prone to error. Blockchain addresses this problem by creating a universal protocol for validating data, where blocks of data are continuously added to a digital chain of other blocks. This structure has three main features. Distributed

A distributed, peer-to-peer database that is owned and shared by every participant in a given system. It provides instant access to organisational data anywhere and at any time.

Decentralised

A collective system, where all participants contribute to its integrity. There is no central point of failure and it is therefore resistant to outages.

Secure

Each added block contains the information from previous blocks, and no block can be changed without altering all subsequent blocks. This makes blockchain permanent, extremely secure and tamper-proof.

These features make blockchain suitable for the recording of events, asset management, transaction processing and provenance documentation. A typical blockchain process consists of the four steps set out below.

HOW BLOCKCHAIN WORKS

BLOCKCHAIN LEVERAGES COMPLEX CRYPTOGRAPHY TO CREATE A BLOCK OF DATA

BLOCK DATA POPULATES A DISTRIBUTED, PEER-TO-PEER DATABASE, SHARED BY EVERY PARTICIPANT IN A GIVEN SYSTEM

Source: PA Consulting

1 8 W I N M A R K C-S U I T E Q 4 2 0 1 7

THROUGH CRYPTOGRAPHY AND DISTRIBUTED NETWORKS, BLOCKCHAIN CREATES TRUST IN TRANSACTIONS AND SOURCES OF TRUTH

WHEN DATA OR TRANSACTIONS ARE VALIDATED, THEY ARE LINKED WITH OTHER TRANSACTIONS, CREATING A TAMPER-PROOF RECORD


Blockchain guarantees the identity of involved parties, the validity of transactions, and the integrity of data. The applications of blockchain – for example, those outlined below – are very promising. S M A R T CO NTR AC T S Automated contracts that self-execute terms agreed in a digital

contract. Smart contracts base themselves on blockchain and can help organisations exchange money, property, shares, or anything of value. It is a transparent, conflict-free method of transaction that avoids the services of intermediaries. D E C E N TR A LI S E D AU TO N O M O U S O R GA N I S ATI O N S

DAOs are digital organisations that operate according to rules based on smart contracts saved on a blockchain. DAOs can be characterised as a combination of investment structures, partnerships and venture capital funds. Automation in DAOs requires much less human intervention, and can allow economic and financial collaboration globally through the internet.

C RY P TO C U R R E N C Y A digital medium of exchange, created and stored on the blockchain.

It uses encryption to control the creation of money units and verify fund transfers. It is completely decentralised, with no server or central authority. The market capitalisation of bitcoin, for example, has exceeded US$73bn. I M P LI C AT I O N S FO R B U S I N E S S

Blockchain’s efficiency, safety and permanence presents a huge potential that can unlock value for different organisations. When stocks take only seconds to transfer, or when the costs of intermediaries can be saved, or when trust is based on each party’s reputation and digital identity, these changes could transform the global economy. Blockchain is expected to bring dramatic changes to many industries in the coming decades. Financial services

Decentralised financial services may use blockchain to remove intermediation. This helps to hedge against risk and opens up possibilities for varying financial products. Banks such as Metro Bank and Barclays have been working on blockchain to make their operations more secure and efficient. IBM predicts that 15% of banks will be using blockchain by the end of 2017.

Professional services

Accounting, auditing and legal services may be hard hit by the rise of blockchain, and need to start looking for ways to offer new value and services. Change is likely to come at a slow pace, but these industries should look into becoming more datacentric in order to harness the potential of blockchain.

Insurance

The insurance industry is built on trust management. Blockchain can be used to manage trust and verify insurance terms, as well as the identity of the insured person or entity. Smart contracts and the removal of intermediaries mean that cost and complexity can be reduced. AXA has recently unveiled a flight-delay insurance product based on smart contracts.

Supply-chain management

Transactions are recorded permanently on a blockchain, with the added benefits of security and transparency. This drastically reduces time delay and human error. Blockchain can be used to verify the authenticity of commodities all the way back to their origins.

Energy provision

By decentralising energy provision, blockchain can allow users to buy energy directly from the producers without going through intermediaries. Peer-to-peer energy provision also allows users to exchange unused credits, which may reduce wastage and improve provision management.

Retail

Decentralised blockchain retail services can connect buyers and sellers without the need of intermediaries such as payment services. This allows for cheaper and direct exchange based on trust and reputation verified through smart contracts.

Healthcare

Privacy can be selectively enforced on the blockchain, allowing anonymity and protection of sensitive information. Service providers can securely save data such as medical records, and instantly share it with authorised personnel. This improves data security and may increase accuracy and speed of diagnosis.

The promise and applications of blockchain are starting to gain traction across industries. A fundamental restructuring of the economy may still be decades away, as technology adoption requires a broad level of co-ordination between businesses, government and society. However, organisations must react with foresight, placing themselves ahead of the game and increasing their resilience. They should prepare for future challenges by investing in research and development. This paves the way for a graceful retirement of legacy systems and allows established firms to be well-oriented in the new landscapes that blockchain opens up.

19

W I N M A R K C-S U I T E

Q4 2017


DIVE RS IT Y: TH E CO M PETITIVE E DG E CHIEF PEOPLE OFFICER & LEARNING DIRECTOR W I T H S P EC I A L T H A N K S TO C L A R E DAV I E S , D I R EC TO R O F H R , M E T R O P O L I TA N P O L I C E S E RV I C E ; TA N I A H E A P, G R O U P P EO P L E D I R EC TO R , M OT T M AC D O N A L D ; A N D W E N DY C A R T W R I G H T, H R L E A D, PA L AC E O F W E S T M I N S T E R R E S TO R AT I O N A N D R E N E WA L PROGRAMME.

UNLOCKING POTENTIAL

Organisations are starting to look at diversity beyond the perspective of corporate social responsibility (CSR), and are tapping into its value as a strategic driver of performance. With marketplaces disrupted by rapidly changing technology, and with companies operating in increasingly competitive landscapes, diversity has become one of the latest competitive edges. But how can companies unlock that strategic potential? What are the necessary structures and processes through which organisations can build diverse teams and enable them to overachieve? Inclusion plays a key role. Allowing individuals to be themselves and express their perspectives, as radical as it may sound, is crucial for organisations willing to use diversity as a strategic driver. Together, diversity and inclusion drive improved organisational performance through four mechanisms: they make for a culture that attracts and retains talent; they build teams that are more aware and make better decisions; they reduce risk; and they act as a catalyst for innovation. Talent

Drawing from a broader pool gives companies access to more skills and competencies, helping to bring in talent even at the most junior levels. An inclusive environment will allow professionals to develop and thrive within the organisation.

Decision-making

Groups with diverse backgrounds have been found to process facts better, collectively offsetting their individual biases. Homogeneous groups, which avoid contesting the positions taken by dissenters, are more susceptible to mistakes. The multiple perspectives of a diverse team also promote a better understanding of an organisation’s customers.

Risk

Multiple perspectives are able to identify and manage risk more efficiently. A workforce from different backgrounds has been exposed to a wider range of potential issues, making their organisations more resilient.

Innovation

Diverse, inclusive environments encourage outside-the-box thinking, allowing companies to build new products, solutions and ways of doing things.

D I V E R S I T Y S T R AT E GY

Some companies have placed diversity within their strategy units, others have developed independent diversity teams. In any case, people management is at the heart of diversity strategies. All HR professionals and processes must be driven by diversity and inclusion principles – recruitment, rewards, performance management and career development. E S TA B LI S H I N G TA R G E T S . Outlining the organisations’ aspirations for the percentage of different groups, from entry level to leadership, sets the goals for initiatives in recruitment, talent management and leadership development. Role models and mentors are of high importance, inspiring and guiding diverse talent as they grow in their careers. OV E R CO M I N G B A R R I E R S . Some industries find it especially challenging to recruit women or other groups, as roles are perceived to be masculine or inappropriate. Companies must help to educate children and young people from school age, eroding preconceptions and influencing how the next generation of professionals views its potential career opportunities.

..

..

..FLE X I B LE WO R K A R R A N G E M E NT S A N D C A R E E R PATH S .

..C A R E E R D E V E LO P M E NT. Mentorship schemes can have a powerful impact on the progression of minority groups, driving performance and satisfaction. P R O M OTI O N S . HR professionals must push managers to overcome their biases and always contemplate diverse groups for promotions. Career progression policies may unconsciously favour specific groups, and should be revised to support unbiased meritocracy and the development of a diverse range of employees. D E V E LO P I N G M A N AG E R S . Line managers are critical to employees’ experience within an organisation. Training managers on the power of diversity and inclusion, on the importance of encouraging conflicting perspectives and new ideas, and also on how to eliminate their biases, can have an enormous impact on culture. M A K I N G U S E O F A N A LY TI C S . Employee satisfaction surveys, exit interviews, appraisals, direct feedback and other sources of data can reflect the extent to which employees feel comfortable about being authentic, proposing new ideas and confronting the status quo.

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Flexible hours and work arrangements have an enormous impact on the retention of female talent. Offering different career paths can be effective in catering to diverse professionals, with diverse aspirations. 2 0 W I N M A R K C-S U I T E Q 4 2 0 1 7


C A S E S T U DY: T H E M E T R O P O LI TA N P O LI C E

Four years ago, London’s Metropolitan Police faced the challenges of operating in a transforming environment: a growing population, a rising number of immigrants and tourists, increasing demand for different ways of interaction, and a changing crime landscape. It needed to adapt its workforce and create a service that could stay updated: a workforce that more strongly reflected the capital’s diversity and benefits from the skills, creativity and understanding this brings. The challenge was transforming the organisation to attract and retain a police force that could effectively provide the service the population needs. RECRUITMENT

After five years without recruiting externally, the Met had to bring in 5,000 new police officers over two years. Its aim was for 40% of those to be from ethnic minority backgrounds, and 50% to be women. To achieve these targets, the team went through each element of the recruitment process, assessing every interaction with candidates, and reviewing initiatives, processes and policies to avoid driving away potential recruits. The team looked into what was deterring ethnic minority and female candidates, and mapped the barriers to building a more diverse pool of candidates. It then developed targeted attraction initiatives and specific marketing channels and community outreach programmes, to overcome preconceptions people might have about police work. The entire recruitment process was reviewed, adopting a friendly, engaged approach to candidates, with the aim of building their confidence and working closely with those with potential.

CL ARE DAVIES

D I R EC TO R O F H R , M E TR O P O LITA N P O LI CE S ERV I CE

RETENTION AND PROGRESSION

IMPACT

The Met redesigned its promotion process to include multiple ways of selecting officers. It started with the development of a new leadership framework, which clearly established the behaviours it values and which should be assessed in determining candidates for promotion. It began to use independent assessors and introduced new training for its own assessors, with a focus on addressing unconscious bias, and a strong positive action provision. HR also revamped performance management, enhancing the identification of talent from women and minority groups, which the traditional processes had placed at a disadvantage in this respect. The new process enables more productive dialogue about staff development and opportunities to progress. These initiatives are supported by new and more complete data from a new staff survey and exit surveys, which are giving insight on trends and behaviours across staff groups, rank and protected characteristics. Managers are held accountable for the results of their teams, sharing responsibility for the development of a positive culture.

The Met’s recruitment of ethnic minorities increased from 16% in 2014/15 to over 28% in 2015/16. This enabled it to reach a total of 4,000 BME officers in mid-2016. BME personnel are now represented in every rank up to and including assistant commissioner. The proportion of female recruits has remained at 29–30% of the total, but women make up 53% of the recruits of Police Now, the Met’s graduate leadership programme. An impressive 91% of staff report good working relationships with colleagues.

After five years without recruiting externally, the Met had to bring in 5,000 new police officers over two years. Its aim was for 40% of those to be from ethnic minority backgrounds, and 50% to be women.

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E NV IRO N M E NT IN ITIATIVE S THAT DRIV E E FFI CIE N C Y A N D SAVIN GS CHIEF OPERATING OFFICER & SUPPLY & PROCUREMENT DIRECTOR W I T H S P EC I A L T H A N K S TO GA B R I E L L E G I N É R , H E A D O F S U S TA I N A B L E B U S I N E S S P O L I C Y, B T.

BUILDING RESILIENCE INTO THE BUSINESS MODEL

To address the global drive in cutting carbon emissions and combating climate change, organisations are finding ways to revamp their operations to make them more sustainable, implementing practices of sustainable operations management (SOM), aiming to generate less waste, cut carbon emissions, increase fuel efficiency, and source renewable energy. Sustainable models not only help to protect the environment, but also drive operational efficiency and cost savings. They have become a key strategic component in supply chain and operations management, and help to meet the demands of customers who want to engage with sustainable businesses. Effective management of energy use, for instance, helps to address fluctuating costs and provides energy security, building resilience in a resource-limited economy.

GABRIELLE GINÉR

H E A D O F S U S TA I N A B LE B U S I N E S S P O LI C Y, BT

Sustainable models not only help to protect the environment, but also drive operational efficiency and cost savings. T R A N S FO R M I N G O P E R AT I O N S AT B T

The largest provider of fixed-line, mobile and broadband services in the UK, BT has addressed the impact of its own business on the planet, and engaged its value chain – from its suppliers to end-customers – to reduce the environmental impact of its activities. BT started to look at sustainability as a principle to be championed across its business relationships. TA R G E T S FO R C H A N G E

BT has set a bold target of cutting its carbon emissions intensity by 87% by 2030 from a 2016/17 baseline. As the majority of these emissions originate from its supply chain, through the Carbon Disclosure Project 2 2 W I N M A R K C-S U I T E Q 4 2 0 1 7

(CDP), BT is helping its suppliers look into reducing their emissions, which account for over 67% of BT’s overall footprint. Following on from its 2012 commitment to buy renewable electricity in the UK, the company aims to purchase 100% renewable energy across its global operations (where markets allow) by 2020. BT is a founder member of the RE100 renewables group. BT, which consumes around 1% of the UK’s national grid energy supply, has been purchasing renewable energy in the UK since 2012. Showing the carbon content in electricity stimulates demand for lowcarbon energy and encourages other energy companies to invest in renewable infrastructure, driving down national carbon emissions. Joining global initiatives that encourage use of renewable energy and share best practice, as well as signing up for renewable energy supply, may help organisations to gain a solid grounding in transforming their operations sustainably, boosting efficiency and cutting costs.


RE100 is a global, collaborative initiative of influential businesses committed to using 100% renewable electricity. This will accelerate the transformation of the global energy market and aid the transition towards a net-zero economy.

IMPACT

BT has reduced its operational emissions by 40% and supply-chain emissions by 5% since 2013. In addition, BT has cut its worldwide operational greenhouse-gas emissions from 1,628 kilotons in 1997 to 342 kilotons in 2016, a reduction of almost 80% over a 19-year period. Reductions in operational emissions throughout product delivery and supply-chain management have driven real savings. BT reduced its costs by almost £18m in a year by getting rid of outdated parts of its network and installing newer, more energy-efficient servers. Carbon-saving products and services are now contributing £5.3bn in revenue, 22% of BT’s total revenue.

RE100 showcases business action, while working with others to address barriers. Companies gain a better understanding of the advantages of going 100% renewable, and benefit from peer-to-peer learning and technical guidance, as well as greater public recognition of their ambitions and achievements as they work towards their goals. Source: RE100

SECURING VALUE

For many organisations, operations and supply chains account for the largest component of their greenhouse-gas emissions. By cutting emissions, businesses are contributing in a huge way to mitigating the harmful effects of climate change, and also tapping into unrealised value that can be leveraged through more efficient operations. These processes may include:

BT’s own operations make up 6.7% of its end-to-end carbon emissions. For example, BT has the UK’s second-largest commercial fleet, with over 33,000 vehicles. BT has identified a number of key areas for energy consumption reduction to minimise the environmental impact of its operations:

..controlling office energy use; ..monitoring fuel usage in vehicles; ..encouraging drivers to adopt more efficient driving techniques; ..cutting down on business travel; For many organisations, ..designing products to be as recyclable as operations and supply possible; and ..encouraging employees to become ‘energy chains account for the champions’ to save energy and live more sustainably.

BT is also helping employees and customers to think about their individual impact on the environment. It has partnered with green energy company Good Energy, offering up to £130 discount on carbon-neutral home energy to domestic customers who are moving home. Through its carbon-abating products and services, BT is also helping its business customers to use energy more efficiently, thereby reducing costs.

largest component of their greenhouse-gas emissions. By cutting emissions, businesses are contributing in a huge way to mitigating the harmful effects of climate change.

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..reporting emissions to the CDP; ..purchasing electricity from 100% renewable sources; ..encouraging their suppliers to do likewise; ..setting and meeting operational carbonreduction targets; ..efficient procurement that involves less waste; and ..evolving the business model to increase the value added per unit of procurement and reduce the carbon intensity of the industries that organisations procure from. These processes require continual improvement of environmental management systems, maintenance of compliance with applicable legal requirements, and regular internal and external audits to ensure effective control. Efficient and sustainable operational practices help organisations to develop resilience against energy price rises, and deliver real value. They also show leadership on climate change and boost public and investor confidence, facilitating long-term investments.


WIN M ARK 20TH A N N IV E RSA RY O N E H U N D R E D M E M B E R S , PA R T N E R S A N D F R I E N D S J O I N E D U S AT T H E S H A R D T O C E L E B R AT E W I N M A R K ’ S 2 0 T H A N N I V E R S A RY.

To join some of the most forward-thinking business leaders as a member of our C-Suite networks, contact Winmark on +44 (0)20 7605 8000 or hello@winmarkglobal.com

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EDITORS John Jeffcock, Chief Executive, Winmark john.jeffcock@winmarkglobal.com

Fabio Couto, Content Manager, Winmark fabio.couto@winmarkglobal.com Winmark Global 7 Berghem Mews Blythe Road London W14 0HN United Kingdom


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Winmark C-Suite Report Q4 2017  
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