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C-SUITE REPORT

“Peer-to-peer learning, as provided by the Winmark NED Network, is of huge value. It keeps you fully briefed on developments in corporate governance and enables shared learning, discussion and debate on current issues.” QUARTER ONE 2018

Vanda Murray, Chairman, Fenner PLC, and Senior Independent Director, Bunzl PLC


EDITORS

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

Fabio Couto, C-Suite Solutions Manager, Winmark fabio.couto@winmarkglobal.com


CO NTE NTS

Includes insights from: Bank of America Merrill Lynch, Facebook,

AFFORDABLE HOUSING NETWORK: FIRE SAFETY AFTER GRENFELL C-SUITE MEETINGS THE CHAIR’S VIEWPOINT THE C-SUITE AND 2018

3 4 5 6 –7

Fenner, IBM, Innocent Drinks, Kraft Heinz, Manchester Metropolitan University, The Crown Estate, Wates Group

THE C-SUITE REPORT NON-EXECUTIVE DIRECTORS & THE BOARD • Driving Efficiency for Better Governance CHIEF EXECUTIVE OFFICER & DIVISIONAL CEOS

8–9

10–11

• Talent Strategy 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

• Investing For the Long Run

and other leading organisations CHIEF LEGAL OFFICER & CHIEF RISK & COMPLIANCE OFFICER

14–15

• Risk in Emerging Markets CHIEF MARKETING OFFICER & SALES DIRECTOR

16–17

• Uncertainty and Failure as Sources of Creativity 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

• AI, Machine Learning and Deep Learning CHIEF PEOPLE OFFICER & LEARNING DIRECTOR

20 –21

• Employer Branding and Employee Engagement 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

• Revamping Operations for a Better Customer Experience

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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:

ANGELA MORTIMER

DWF

PENFIDA

BAKER MCKENZIE

EVERSHEDS SUTHERLAND

PUNTER SOUTHALL

CANON CAPSTICKS CARILLION ADVICE SERVICES CHARTERED INSTITUTE OF PERSONNEL AND DEVELOPMENT CHARTERED INSTITUTE O F TA X AT I O N CHARTERED INSURANCE INSTITUTE CIO CONNECT C LY D E & C O

INSTITUTE OF PRACTITIONERS IN ADVERTISING INVESTEC ASSET MANAGEMENT KEMPEN

REDINGTON ROTH E SAY LI FE RSM RUSSAM GMS SACKERS SILICON VALLEY BANK

MARKET RESEARCH SOCIETY

SOVEREIGN BUSINESS I N T E G R AT I O N G R O U P

MHA MACINTYRE HUDSON

TA X AU TO M AT I O N

MILLER HEIMAN

THE GOVERNANCE INSTITUTE

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

COPYRIGHT © 2018 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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A FFO RDA B LE H O US I N G N ET WO RK: FIRE SAFETY AFTER GRENFELL With special thanks to Gary Hay, Consultant, Capsticks LLP; Greg Campbell, Partner, Campbell Tickell; Lee Cartwright, Head of Housing, Mazars; and Jan Taranczuk, Housing Practitioner, Jan Taranczuk Associates.

S A F E T Y, C O M P LI A N C E A N D ACC O U N TA B I LI T Y

In the aftermath of the Grenfell tragedy, the entire housing sector is presented with the need for a thorough review of its practices, including a whole range of immediate and longterm tasks to ensure that similar incidents do not happen again. Members of the Winmark Affordable Housing Network, senior executives in the UK’s leading housing associations, are at the forefront of the discussions that are reshaping the sector. The lack of regulatory engagement with local authorities is likely to change following the fire. Previously, the Homes and Communities Agency saw its role only as providing proportionate regulation, with minimal direct interference in the sector. Associations should prepare to work more proactively with regulatory bodies, and boards need to ensure that their associations are robust enough to tackle future challenges – including health and safety, which must be integrated into business plans and stress testing. Associations should also review and identify risk areas in their compliance data. Missing, erroneous or inconsistent data can affect the assessment of compliance and have a seriously adverse impact on the wellbeing of tenants. Boards can develop central assurance frameworks – covering financial viability, development and sales, health and safety, care and support, and operations – and in this way can develop a comprehensive overview of organisations’ performance and compliance. THE TENANT VOICE

Since the demise of the Tenant Services Authority, there has been little government and regulatory focus on resident engagement. Partly because of funding cuts to tenant bodies, the extent of such engagement has tended to diminish in recent years. However, it is now likely to play a more prominent role in the sector, owing to the strength of public feeling in the wake of the Grenfell fire and the consequent increased scrutiny this has brought. Although it is difficult for associations to filter tenants’ concerns and complaints, it is essential for associations to have systems in place to facilitate the tenant voice. H E A LT H A N D S A F E T Y A W A R E N E S S

There is a strong correlation between fire risk and the level of health and safety awareness among tenants. Smoking indoors, for example, is a source of risk that is hard to manage. Housing associations have the difficult task of raising risk awareness among their tenant populations, and there are multiple factors to consider. It is hard for associations to decide whether they should be actively telling tenants how they should live their lives. Associations should work to minimise the perception of confrontation, while seeking to make residents more risk-aware. W H AT N E X T ?

Although the government is desperate to increase housing supply, the current agenda is overwhelmingly focused on Brexit. With lower than expected tax take and ongoing economic uncertainty, the outlook for new social housing funding is not an optimistic one. To navigate through a continuing crisis, associations need to maximise joint working, and share best practice and resources to deliver improved service.

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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 in the first quarter: Sir Martin Donnelly KCB CMG, former Permanent Secretary of the Department for International Trade, will speak at the Winmark all-network event on the domestic and international challenges and opportunities facing business in 2018, and the economic drivers influencing these.

Rose St Louis, Chair of Zurich’s Women’s Innovation Network, will join the CEO Network to present the insurer’s programme to tackle the gender pay gap and support the development of women, disabled and LGBT employees.

The perennial tension between global and local compliance will be discussed at a Chief Legal Officer Network meeting, where Bjarne Tellmann, General Counsel at Pearson, will look at the challenges of running a disparate global legal department.

Members of the Non-executive Director and CEO Networks will go behind the scenes at Arsenal FC’s Emirates Stadium, hosted by Arsenal’s board, which will discuss the strategic management of its operations.

The Pension Chair Network will host Charlotte Clark, Director of Private Pensions and Stewardship at DWP, who will join a panel session providing exclusive insight into the recent white paper on defined benefit sustainability.

John Healey MP, Shadow Secretary of State for Housing, will join the Winmark Affordable Housing Network to discuss policy priorities with members, senior leaders of housing associations from across the UK.

Telefonica/O2 went through a two-year sales transformation, the Practice Accelerator Programme, which tripled its business pipeline and increased the team’s capability by 22%. Jay Sriskanthan, Senior Learning and Development Manager, will speak to the Sales Director Network about how change can help sales teams to thrive and deliver more to organisations.

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TH E CH A I R ’ S V I E WP O I NT Different perspectives seem to point to opposite directions for business leaders. This report highlights the importance of streamlined operations and efficiency for improved governance, discusses automation as a source of increased productivity and touches on eliminating waste in operations management. At the same time, it points to people as a key driver of competitive advantage, suggests that CFOs should be less focused on cutting costs and emphasises the importance of learning that creative failure can be a source of future innovation. Chairs, boards and CEOs are under pressure and must show results in an ever-transforming environment, but how can they reconcile what seem to be completely divergent understandings on the best way to run their businesses?

As leaders, we must build our companies’ own paths. Every organisation is unique, and so should be each combination of strategic choices.

SUZANNE MCCARTHY C H A I R M A N , J O I NT AU D IT PA N E L FO R TH E M AYO R ’ S O FFI C E O F P O LI C I N G A N D C R I M E A N D TH E M E TR O P O LITA N P O LI C E S E RV I C E , D E PAU L U K , TH E S O U TH WA R K A N D L A M B E TH I NTEG R ATE D H E A LTH PA RTN E R S H I P A N D VO P U LU S LTD

The answer lies in a key skill for running any organisation: achieving balance. Leadership is about finding equilibrium. It is the role of leaders to bring together the best of different approaches, to make the right decisions when faced with different contexts. Leaders have a duty to keep an eye out for trends and innovative solutions, to learn from our peers and stay on top of every market move. But effective leadership is about finding the right balance for your own organisation. Driving efficiency in operations and being costconscious does not necessarily go against a long-term view of the business, or the goal of creating value for multiple stakeholders. As leaders, we must build our companies’ own paths. Every organisation is unique, and so should be each combination of strategic choices. Chairs are faced with multiple conflicting perspectives from their executive teams, shareholders, regulators and the public. From our bird’s-eye point of view, we should be able to evaluate every possible approach, accommodate the interests of multiple stakeholders and guide organisations through healthy, sustainable growth. Committed to our institutions’ values and to the highest ethical standards and thinking creatively, it is possible to build organisations that are profitable, create wealth, engage with their people and communities, and make a difference. Leadership is a constant exercise of finding the right balance.

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TH E C-SU ITE ‌ and its most pressing challenges for 2018 W E A S K E D A LL M E M B E R S O F O U R C-S U IT E N E T WO R K S W H AT W E R E TH E B I G G E S T C H A LLE N G E S TH E Y W I LL FAC E I N 2 0 1 8 . T H E S E W E R E TH E I R R E S P O N S E S .

INTERNAL

EXTERNAL

1. Driving growth through streamlined operations 2. Optimisation through technology 3. Managing talent and employee retention

1. The business impacts of Brexit 2. Changing regulatory landscape 3. Global and regional economic uncertainty

INTERNAL

EXTERNAL

1. Driving and leading through change 2. Talent management and employee retention 3. Driving growth

1. Global and regional economic uncertainty 2. Technological disruption and cybersecurity 3. The business impacts of Brexit

THE

OPERATIONS

PEOPLE

TECHNOLOGY

INTERNAL

EXTERNAL

1. Driving and managing people through change 2. Talent availability, acquisition and retention 3. Training and developing leaders

1. The business impacts of Brexit 2. Changing regulatory landscape 3. Global and regional economic uncertainty

INTERNAL

EXTERNAL

1. Delivering on the transformation agenda 2. Building digital capability 3. Systems’ stability across value chains

1. New disruptive business models 2. Sophisticated cyber attacks 3. Talent availability, acquisition and retention

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INTERNAL

EXTERNAL

1. Improving governance 2. Driving growth 3. Stakeholder engagement

1. The business impacts of Brexit 2. Changing regulatory landscape 3. Technological disruption and new business models

BOARD

INTERNAL

EXTERNAL

1. Changing client expectations 2. Availability and effective use of resources 3. Talent availability, acquisition and retention

1. Global and regional economic uncertainty 2. Changing regulatory landscape 3. Increasing market competition

INTERNAL

EXTERNAL

1. Availability and effective use of resources 2. Talent management and employee retention 3. Optimising legal processes through digital capacity

1. Global and regional economic uncertainty 2. Changing regulatory landscape 3. Technological disruption

COMMERCIAL

LEGAL & RISK

FINANCE

INTERNAL

EXTERNAL

1. Driving growth 2. Delivering on the change agenda 3. Effective use of technology and data analytics

1. Global and regional economic uncertainty 2. The business impacts of Brexit 3. Changing regulatory landscape

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DRIV IN G E FFI CIE N C Y FO R B ET TE R G OVE RNAN CE NON-EXECUTIVE DIRECTORS & THE BOARD W I T H S P EC I A L T H A N K S TO R O B B O OT H , 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, T H E C R OW N E S TAT E ; J E N N Y K N OT T, C EO, N E X O P T I M I S AT I O N ; A N D VA N DA M U R R AY O B E , C H A I R M A N , FE N N E R P LC , A N D S E N I O R I N D E P E N D E N T D I R EC TO R , B U N Z L P LC .

OPTIMISING GOVERNANCE STRUCTURES

Public scrutiny of corporate governance and how organisations are managed has increased dramatically in recent years. To prevent a negative reputational impact and a consequent reduction in ability to generate value, businesses must ensure that enhanced governance mechanisms are in place. In addition to boosting their governance policies and systems to become more transparent and responsive, organisations are also working to improve efficiency as a strategy to achieve regulatory compliance and address pressure from stakeholders. Companies have always sought to optimise their processes and streamline operations, with the aim of reducing costs and generating value, but they are starting to notice that efficiency actually drives enhanced governance. The Crown Estate has evolved out of hundreds of years of managing Crown land, and currently manages more than ÂŁ50bn worth of commercial property, as well as forestry, the whole of the UK seabed and various historical sites. In 2016 it completely reworked its corporate governance to better safeguard against potential risks to business integrity that could impact adversely on its ability to generate revenue and build trust. These risks came from its layers of unstructured governance, a sprawling management, slow decision-making and lack of transparency. To address these issues, leadership and operational efficiency were established through a process of clarification, streamlining, and increasing agility. The Crown Estate is a unique organisation, but its experience shows that inefficiencies can stand in the way of compliance and showcases methods that businesses can use to optimise governance.

ROB BOOTH

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

CLARIFYING BOUNDARIES

Clarity over functional boundaries is paramount to good governance. Uncertainty over what each function is responsible for, and where it sits within the hierarchy, filters down into people’s behaviours and can create confusion. This may lead to serious governance issues such as blind spots, loss of integrity, lack of due care and absence of professional management, preventing organisations from translating their visions and capabilities into value, compliance and goodwill. Organisations need to ensure that their structures are as clear as possible throughout all levels of management. The Crown Estate previously had six to eight layers of hierarchy, which led to bureaucracy and slow decision-making. The hierarchy was reduced and divided into three levels: board, committee and management group. Each assumed separate responsibilities, with clearly defined boundaries.

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..TH E B OA R D receives strategy reports from the executive committee and is responsible for setting strategic directions. CO M M IT TE E S are responsible for delivering on strategy and making decisions based on business plan reports from management groups. Committees are divided into executive, investment and operation wings, with the CEO overseeing all of these. M A N AG E M E NT G R O U P S work on specific areas and inform the committees of business requirements.

..

..

By simplifying the hierarchy and setting out clear boundaries, none of the functions oversteps into the responsibilities of the others. The relationship between each function becomes well-defined, increasing the efficiency of decision-making and implementation. Achieving efficiency through clarifying boundaries can drive better governance, as information flow and transparency is enhanced and bureaucracy minimised.


STREAMLINING AND EMPOWERING

Streamlining processes, although usually seen as a management tool, can also foster good governance. Common methods include redesigning business processes, reducing overlapping information flows and improving risk analysis. Streamlining helps businesses to avoid multiplying risks and delays across the whole organisation: with fewer layers and more efficient communication, owners of each function can identify governance risks and respond more quickly before these escalate into wider problems. Another aspect of enhancing efficiency is to empower people to make decisions according to their individual risk appetites, rather than needing to go through layers of confirmation and approval. If approval of a decision shuttles back and forth with no clear ownership, this may prevent a timely response to governance issues. A more efficient decision-making system may help organisations to take a more proactive approach to governance, as stakeholders do not have to wait for extended periods with no clear instructions. The Crown Estate’s decision to streamline its processes brought massive efficiency improvements in its governance process. One example of streamlining was to replace papers with management information (MI) at the board level. Succinct MI and relevant dashboards were used to inform the board of different backgrounds and contexts. Shifting away from traditional paper reports to the active use of forwardlooking MI helped the board to analyse trends and forecast the future much more easily. In addition, decision-makers were invited to a thematic review of the six main areas of risk they face, such as risk in people, markets, reputation and regulation. Each risk area was overlaid with a red-grey-green methodology, which can block, escalate, or greenlight each decision. This made it much faster for individual stakeholders to reach a decision within their own remit; each committee is delegated with power over its individual area. At the management group layer, individuals can get a precise idea of what their seniors have delegated, encouraging trust and consolidation between different layers.

S M AL LE R ME E TI NGS

CHAIR

STRATEGY

GOVERNANCE

GOOD DECISIONS

BALANCER

PROPOSER

CONTENT

DEVELOPING AGILITY

Businesses also need to develop agility in the face of increasing scrutiny over governance. Agility enables good governance but is also a product of it. Agile businesses are more able to make the big decisions when they want to take them, rather than being forced to take them at the last minute. This is all part of wider efficiency mechanisms that help organisations become lean and quicker to respond to governance risks. The Crown Estate’s new agility enabled it to improve its co-ordination of the decisionmaking process, which required fewer people than had previously been the case. This boosted the confidence of individual

NO CASTING VOTES ESCALATE TO SAFETY

stakeholders in their ability to assess and capability to take immediate action. One major change was to introduce much smaller meetings, attended by only three people: a chair, a proposer and a balancer. In this model, meetings became extremely focused and clarity was achieved much more easily. There are no casting votes in this model: when situations diverge from the usual unanimity, members can choose to escalate the issue to higher levels. This leads to quicker and better decisions, while opening up more time slots for meetings when needed. As a consequence, the organisation has been able to achieve more flexible and effective governance.

“Governance can be enhanced by streamlining processes and improving communications and decision-making, as well as managing risk. Boards clearly need to be increasingly agile and adapt quickly in response to changing shareholder, customer and corporate governance requirements.” VA N DA M U R R AY

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TALE NT STR ATEGY CHIEF EXECUTIVE OFFICER & DIVISIONAL CEOs W I T H T H A N K S TO JA M E S WAT E S , C H A I R M A N , WAT E S G R O U P ; A N D J O H N D E M B I T Z , C H A I R M A N , L E E B A R O N G R O U P, E N T E R P R I S E A R C H I T EC T S A N D W I N M A R K .

AC H I E V I N G C O M P E T I T I V E A DVA N TAG E

With pressure piling up on businesses, from low productivity to uncertain political climates, CEOs are faced with the challenge of finding a competitive edge that enables their businesses to grow while navigating an environment of risk and disruption. Financial discipline, streamlined operations and embracing innovation are some of the strategies deployed, but in a connected world with fierce competition, most traditional management solutions are easily replicable and cannot in themselves ensure that an organisation stays ahead of its rivals. To establish an exclusive source of competitive advantage, CEOs are starting to look at the power of people, understanding that a unique culture and talent set can generate value and ensure healthy growth. CEOs are looking at their workforces as their organisations’ competitive edge, and working with their HR departments to build the robust talent strategies that drive true competitive advantage. The task is a difficult one, as the marketplace for talent is highly competitive. Talent strategy is at the top of CEOs’ agendas, with the challenges including managing and engaging different generations of employees, transforming capabilities and skill sets, and taking measures to ensure availability of talent following Brexit.

To establish an exclusive source of competitive advantage, CEOs are starting to look at the power of people.

JA M E S WAT E S

C H A I R M A N , WATE S G R O U P

I N T E G R AT E D TA LE N T S T R AT E GY

Talent strategy should be developed from the perspective of building capability: connecting the organisation’s goals to the capabilities that will be necessary to achieve them, to the skills the workforce will need to have. Through vertical and horizontal integration, organisations can achieve a clearer strategy of talent recruitment, equipping them with the most important skills. V E R TI C A L I NTE G R ATI O N . Talent strategy must be fully integrated with the overall business strategy and leadership direction. It is no longer enough for organisations simply to have a good business plan. They also need to think about how their people are helping to shape the company and take it in the direction that has been agreed. It is the connection between people that drives competitive advantage, together with the organisation’s unique strategic choices. H O R I ZO NTA L I NTE G R ATI O N . It is also crucial to align talent strategy with a pool of people management initiatives: performance management, employee engagement, career progression, training and development. Recruiting the best people, with the right skills to project the organisation into the future, will not be successful without providing the conditions for those employees to thrive and progress within the organisation.

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BUILDING A WORKFORCE FOR THE FUTURE

PROMOTING SOCIAL VALUE AND EMBRACING DIVERSITY

Businesses increasingly face the challenge of dealing with highly differentiated and diverse workforces. Differing expectations towards work have never been so prominent. Although older members of the workforce tend to be comfortable with fixed working schedules and unity of opinion, their younger counterparts are more attracted towards flexibility and the freedom of experimenting with ideas. Organisations need to develop mechanisms to make these attitudes compatible with one other, attracting and retaining employees from across the spectrum to face the challenge of competing for the best talent. Flexible working can enhance overall productivity and the efficiency of the workforce, offsetting the negative impacts of high turnover and uncertain talent availability. Brexit, for instance, will dramatically shrink the UK’s talent pool – the construction industry alone adds 35,000 new workers each year, 12% of whom come from abroad. The key is for organisations to plan ahead and make the best use of analytics. Data is the basis for strategic workforce planning and the development of talent pipelines, but information on employee satisfaction, retention rates and career progression also helps companies to devise better work patterns and improve their assessment and reward mechanisms. Informed by data on employee and candidate behaviours and preferences, organisations can balance existing organisational norms with the expectations of the available talent pool. The millennial generation may have different expectations of flexibility and diversity in the work environment, and organisations may need to revise their policies to accommodate these.

Employees are increasingly concerned with the social and environmental impact of the organisations they work for. Aligning business strategy and talent strategy with corporate responsibility helps to create a sense of purpose across the organisation and motivates employees to contribute beyond pure commercial objectives. For Wates, producing social value could not be clearer: creating better construction environments, while driving employment. One of the key aspects of its talent strategy is engaging the youth demographic and explaining the social benefits that the sector brings. Traditional cultural prejudices affect young people’s career choices, tending to push them towards academic routes, even in cases where they may be more suited to a vocational approach. Recently, Wates has collaborated with other firms in the construction industry to visit schools in ‘promotion days’, where students are introduced to the cutting-edge developments in the industry. Businesses should lay aside competitive mind-sets in these scenarios, and recognise the power of sector unity in attracting talent and breaking prejudices. For Wates and the construction industry in general, one of the key reasons why it is so hard to attract the right talent is the ingrained stereotype of construction – ‘all brawn and no brain’. When bright potential recruits are turned away by the image of certain industries, this creates missed opportunities and stifles growth. Organisations that face similar difficulties should seize opportunities presented by a diverse workforce and increase their focus on incorporating diversity as part of their talent strategy throughout the value chain. Wates has embraced technology to complement manual labour as part of its effort to increase female employment. Innovation in business and diversifying tasks makes collaboration easier and can increase diversity in organisations.

Organisations should seize opportunities presented by a diverse workforce and increase their focus on incorporating diversity as part of their talent strategy throughout the value chain.

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INVE STIN G FO R TH E LON G RU N CHIEF FINANCIAL OFFICER & TAX DIRECTOR W I T H S P EC I A L T H A N K S TO JA M E S DAV E N P O R T, CO O A N D F I N A N C I A L D I R EC TO R , INNOCENT DRINKS.

T H E I M P O R TA N C E O F S H A R E D VALUE

RESPONSIBLE INVESTORS

Historically, it was understood that the main purpose of business was to generate profit and increase return to shareholders. With this mind-set, the primary role of CFOs was to deploy finance strategies to increase the generation of capital, while enforcing cost discipline across the business. With listed firms under the scrutiny of investors each quarter as they post results, finance leadership became increasingly focused on realising immediate profits, with everything else secondary to this.

In 2006 Harvard Business Review published its now-famous ‘Strategy and Society’ article, putting the spotlight on the concept of shared value: the opportunity for organisations to profit while providing a solution that benefits society. However, consumers, employees and regulators started to evolve their expectations regarding the role of corporations. Stakeholders began to judge companies by how they behave and by the impact they have in the world, rather than by their financial performance alone. In 2006 Harvard Business Review published its now-famous ‘Strategy and Society’ article, putting the spotlight on the concept of shared value: the opportunity for organisations to profit while providing a solution that benefits society. Responsible business practices are now essential, and the role of the CFO is changing accordingly. In addition to their previous focus on delivering optimal return to shareholders, CFOs now face the complex task of driving growth, while managing capital sustainably and enabling responsible business practices – which have become key concerns for investors as well.

In 2004 Norway’s Government Pension Fund Global, the world’s largest sovereign wealth fund, now worth US$1trn, launched its first ethics council to evaluate companies based on their environmental and humanitarian impact, filtering fund allocation based on the impact by the corporations it invests in. Today, the Global Sustainable Investment Alliance estimates that US$22.9trn in assets under management are allocated to ‘sustainable and responsible investment’. This excludes companies that are perceived as having a negative impact, and focuses on those with a measurable positive impact. Once perceived as corporate social responsibility (CSR) initiatives, or even as a costly distraction from core business, the fair management of people, natural resources and capital is becoming as important to investors as sound financial performance. CFOs must see the costs related to improving employee management practices, the preference for ethically certified suppliers and responsible – potentially less aggressive – customer engagement policies as the fundamental standards of doing business today. Although they may think that to do so goes against the principle of maximising profits, shareholders pay close attention to these behaviours.

THE TRIP LE BOTTOM LINE: THREE SPHERES OF SUSTAINABLE BUSINESS Environmental   

– Â?   Â?Â?

Social    



Economic–Social    � S O U R C E : S U S TA I N A B I L I T Y

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–Economic     

Economic    


INVESTING IN THE FUTURE

The current marketplace context, while requiring financial discipline, also puts pressure on organisations in the form of continuous transformations in technology, customer needs and workforce behaviour. Innovation has become a core capability for companies, requiring increased investment both in people and technology. Short-termism, although boosting immediate earnings, can seriously compromise companies’ ability to thrive in the future. In a world where products and services change at unprecedented pace, it has never been more important to develop robust programmes to attract and develop the best talent, to bring in appropriate technologies and build digital capability, and to explore markets for opportunities. Boards and the C-Suite are starting to recognise the need to lead with a focus on long-term viability and growth. CFOs play a crucial role in creating and cementing this mind-set. Financial planning and resource allocation across the business determine behaviour in the organisation today, encouraging ethical standards, responsible practices and innovation, and building the basis for success in the future. By taking a long-term approach, CFOs will champion projects that reinforce commitment both to sustainability and to exploring and seizing new opportunities, ensuring the investment that these initiatives require. Finance, in partnership with the operations, procurement and sustainability functions, is the engine of resilient, committed and forward-looking organisations.

C A S E STU DY: I N N O CE NT DRINKS

Founded by three friends with the goal of making ‘delicious, healthy drinks that help people live well and die old’, Innocent Drinks posted 23% annual growth in 2016, with sales exceeding £300m. The company made a profit of £8.5m, following a loss of £700,000 in 2015. Underlying this strong growth was investment in new products and packaging, in a drive to innovate to cater to modern customer tastes, as well as to reduce the environmental impact of its bottles.

JAMES DAVENPORT

CO O A N D FI N A N CI A L D I R EC TO R , I N N O CENT D R I N K S

Innocent’s sustainability programme is at the heart of its ‘tastes good, does good’ business strategy. It includes targets for water and energy use: the company works only with suppliers that meet international ethical standards, optimising product transportation and focusing heavily on innovation. Innocent donates 10% of its profits to charity. These practices, of course, strengthen customer engagement, delivering enormous brand value. “To be a brand that sustains our appeal and relevance to drinkers, over the long term, we have to do these things because they are what our drinkers would expect us to do,” says James Davenport, Innocent’s

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COO and finance director. Each of the company’s employees has sustainabilityrelated yearly objectives. With the full support of its shareholders, Innocent retains a constant focus on its long-term perspective. Making decisions and getting traction on projects therefore becomes straightforward: it is how the company does business. While building a sustainable organisation and delivering on its brand promise, Innocent’s sustainability strategy is delivering immediate, tangible value. As an example, the restructuring of its manufacturing and logistics network has reduced total truck mileage by one million miles this year.


RI S K IN E M E RG IN G M A RKETS CHIEF LEGAL OFFICER & CHIEF RISK & COMPLIANCE OFFICER W I T H S P EC I A L T H A N K S TO C H U N C H OW, A S S I S TA N T G E N E R A L CO U N S E L & D I R EC TO R , B A N K O F A M E R I C A M E R R I L L LY N C H ; A N D JA K E S T R AT TO N , S E N I O R M A N AG I N G D I R EC TO R , E U R O P E & A F R I C A , CO N T R O L R I S K S .

N AV I G AT I N G T H E C H A LLE N G E S

Emerging markets present large untapped markets of consumers, where the competitive landscape is much less saturated. Although a massive source of value, they are typically more challenging to navigate than developed markets. Unstable political situations and varying standards of the rule of law affect the ability of organisations to plan for the long term and ensure that capital risk is high. Although most governments in emerging markets no longer directly seize foreign investments, companies are still at risk of losing profit through selective regulation and insecure protection of property rights. Nevertheless, given the rising cost of production and falling profit margins domestically, businesses cannot afford to overlook the growth opportunities that emerging markets present. Combining foresight and efficient risk management, businesses may not only find substantial sources of revenue, but can also support their consolidation in the global market, as well as contributing to the development

of local economies. In this context, legal and risk leaders play an indispensable role by contributing their regulatory expertise, riskmanagement skills, ethics and acuity of judgment. THE THREE KEY RISKS

There are three common challenges in doing business in emergingmarket economies. U N FO R E S E E N A N D FR E Q U E NT C H A N G E S I N R E G U L ATI O N . All organisations want a stable legal framework in which to operate. Emerging markets are particularly volatile, and this can derail transactions or lead to last-minute changes to their structure. The interpretation of regulations can be changed frequently, with regulators either tightening or liberalising rules to maintain political stability and the profits of domestic businesses. Protectionist governments may also artificially devalue or unpeg currencies and restrict the transfer and convertibility of profits. LE GA L E N FO R C E A B I LIT Y . Enforcement of obligations can be difficult in some jurisdictions, especially in the event of the local government’s failure to honour guarantees. If a local administration does not recognise a foreign judgment, it may be necessary to obtain a judgment from a local court. This can make legal enforcement of contracts a very protracted process and, in some circumstances, a prohibitively costly one. CO N FI D E N TI A LIT Y A N D P U B LI C S E NTI M E N T . Despite the existence of non-disclosure agreements, local press, which are keen on exposing the ‘threat’ of foreign investment, often find ways to obtain confidential commercial information. Once this is released, public perceptions of a company can be seriously damaged and organisations often find it difficult to put forward an effective counter-narrative. Public sentiment may easily be shifted in favour of local bidders and businesses, even when foreign investments present better expertise and capabilities. If local competitors sue in their home country, the government may put pressure on the judiciary to find in their favour.

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MANAGING RISK

CHUN CHOW

A S S I S TA NT G EN ER A L CO U N S EL & D I R EC TO R , B A N K O F A M ER I C A M ER R I LL LY N C H

To help organisations successfully navigate risks in emerging markets, legal and risk leaders increasingly need to combine regulatory expertise with political awareness. In markets where the rule of law is not strictly upheld, it often takes more than just legal expertise to manage and overcome risk. As legal and risk leaders take on more strategic capacities within organisations (with regulation being among the main concerns for CEOs), expertise in political environments, legislation and strategic awareness can add competitive advantage to organisations starting up or managing existing operations in emerging economies. Common hedges against risk, such as insurance and financial instruments, may protect income from credit risks or sudden currency changes, but do not cover the increased political risk of operating in 1 4 W I N M A R K C-S U I T E Q 1 2 0 1 8


T H E EAS E O F D O I NG B US I NES S

Regulatory simplicity, protection of property rights and degree of legal protection. Greenest = easiest; reddest = most difficult. Source: World Bank, Doing Business 2017

less stable environments. Organisations need to have public affairs strategies for each of their markets, with a comprehensive map of public stakeholders – legislators, ministers and regulators – and a constant overview of development of issues in the public sphere. These may be related to taxes, for example, or regulation of their core activities and labour markets. Organisations must be strategically aware, responsive and able to apply political skills to counter perceived and actual risk. In countries with weaker legal systems, the network of relationships can greatly influence policy outcomes. On top of mapping stakeholders and the development of local issues of interest, it is also important to develop a network of local relationships in both the private and public sectors. These relationships must be built to the highest professional standard, take account of cultural sensitivities, and comply with governance principles both locally and at the company’s headquarters. Every effort should be made to ensure the safety and smooth functioning of local investment, but the reality is that in many cases the government still holds the final sway. Legal leaders need to make this clear

across the organisation: although the commercial side of the business is heavily involved in the deal, do not lose sight of the bigger picture. Leaders must advise that there is always a risk of capital loss when investing in emerging markets, and in these cases exit strategies should be in place.

In medium-to-high-risk countries, the judiciary is very vulnerable to political stress. BRIBERY AND CORRUPTION Bribery and corruption is an ever-present risk. It is difficult to get all business functions to be fully aware of best practices and their legal implications. Real-life examples and scenario training may be needed to achieve maximum impact. Training should be rolled out across the company, but those most exposed to risk should be identified and selected for specialist training. Digitised control mechanisms may also be used alongside compliance training. Suppliers can be put through a database which identifies and links them to politically exposed persons (PEPs) and adverse media coverage. This can easily single out ‘red-light’ suppliers; these can be investigated by special legal teams, but businesses may often find it easier to source from another supplier.

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U N CE RTA INT Y A N D FA ILU RE A S SOU RCE S O F CRE ATIV IT Y CHIEF MARKETING OFFICER & SALES DIRECTOR W I T H T H A N K S TO M AT T R I N G , H E A D O F B U S I N E S S D E V E LO P M E N T, FAC E B O O K ; K AT E H OW E , M A N AG I N G D I R EC TO R , GY R O ; A N D H A N A WO O L F, C U S TO M E R R E S E A R C H S T R AT EG I S T.

that professionals constantly establish new ways of thinking and communicating with customers. One of Facebook’s original values was to ‘move fast and break things’, a reflection of its early entrepreneurial spirit of experimentation. As it became a big corporation, it became an issue to have too many errors in coding and other initiatives – but Facebook did not want to lose the experimentation culture and changed its motto to ‘move fast with stable infra’. Across the entire company, once a certain solution is agreed upon, the team never hesitates to champion it and proceed boldly, even at the risk of not succeeding immediately. A prominent example was the first introduction of the revamped newsfeed, which generated considerable resistance and public outcry. Today, the newsfeed is the first port of call for millions around the world to connect with friends and receive news. It proved to be a crucial element of the platform, both in retaining users and in boosting advertising revenue. Organisations that discourage experimentation and that prefer to focus on the optimal use of resources risk missing out on future value.

SEIZING THE OPPORTUNITIES

Businesses’ only certainty in today’s world is uncertainty: growing concerns over productivity, a slow economy and disrupting technology all contribute to unforeseen volatility. Research shows that almost all businesses experienced significant change over the last few years, but only about one-third of their leaders claimed to have been ready for it. Uncertainty and volatility are perceived to increase risks and breed failure in organisations. For decades, companies have worked to streamline their processes, minimise mistakes and optimise their operations. In a drive for efficiency, mistakes are seen as costly disruptions, but the digital age is changing that perspective. Facing the need to innovate and maintain relevance in today’s world, companies now understand that uncertainty and failure are key drivers of creativity and outside-the-box thinking. More than anyone, marketing leaders understand the importance of fostering creativity in organisations, thinking unconventionally and adapting to different customer needs and behaviours. Instead of paralysis when confronted with volatility, marketing leaders are turning to uncertainty and the mistakes it ignites to foster innovation, through courage for experimentation and safe spaces for failure.

Instead of paralysis when confronted with volatility, marketing leaders are turning to uncertainty and the mistakes it ignites to foster innovation. S U CC E S S T H R O U G H E X P E R I M E N TAT I O N

At all levels of corporations, people avoid experimentation because of the fear of failure. The threat comes not only from the possibility of damaging the organisation, but from the risk of embarrassment and loss of status. Companies often unwittingly reinforce this natural tendency of avoiding experimentation when they promote a culture of ‘zero tolerance for failure’ or committing to an ‘error-free’ workplace. Although these policies are often well-intentioned to protect value, they can create a culture that is resistant to new ways of thinking. Organisations know that they need to manage costs carefully – people, research, prototyping and training are all required to test and refine unproven ideas. But it is important for businesses to proactively balance cost concerns and the threat of being left behind. When leaders embrace experimentation and explicitly state that mistakes are tolerated, refraining from punishing employees for errors, they are more likely to try out different ideas and test new concepts. Far from compartmentalising experimentation into separate R&D functions, innovation needs to become an ethos. Such a mind-set is crucial across functions, but especially in marketing, which, while increasingly data-driven, still has an important creativity component, requiring

One of Facebook’s original values was to ‘move fast and break things’, a reflection of its early entrepreneurial spirit of experimentation. As it became a big corporation, it became an issue to have too many errors in coding and other initiatives – but Facebook did not want to lose the experimentation culture and changed its motto to ‘move fast with stable infra’.

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C R E AT I V I T Y I N T H E D I G I TA L AGE

FO U R PRI N CI PLE S FO R D I G ITA L TH I N KI N G

Marketing functions are naturally inclined to be fluid and forward-thinking, and digital tools are increasingly enabling teams to connect quickly and innovate. Digital tools should be enablers of collaboration and creativity, helping to understand customers’ underlying interests, to help provide both the service and the type of engagement they need. They allow for experimentation, trial and error, and – when embraced adequately – they enable people to thrive. At Facebook, communication and ideation are promoted across the business through a mind-set of constant trial. The digital opportunity opened different channels for collaboration, and can create space for all employees to create new ideas. Facebook hosts regular breakaway ‘hackathons,’ with employees allowed to take time off and work on any idea they may have. One employee came up with the idea of logging the safety of users during major public safety incidents. She paired up with a programmer and quickly produced a working prototype. This soon evolved into the Safety Check feature, which has been deployed globally.

Technology should be used to solve problems

Technology is not an end in itself. Its role is to take care of operational problems and processes, so that humans can focus on what they do best: building meaningful relationships, thinking and being creative. Research and technology can help marketers drive performance through the following process: • listening to customers; • identifying opportunities; • shaping solutions; and • driving action.

Technology allows for collaboration without limits across time and space

It is immensely useful to be able to work together from different parts of the world, without limits or constraints. Leaders must ensure that online interactions are meaningful and enable professional development. They need to understand when it is time to go offline and talk face-to-face to their teams. Technology should be an enabler for collaboration and interaction, not an obstacle. It must be simple, fast and efficient, easy to connect and communicate.

Technology enables experimentation

Digital platforms have given marketing professionals the opportunity to experiment, to explore, and to make changes a lot more easily because the internet is not ‘carved in stone’. In this context, the cost of action is lower than the cost of waiting: when you wait to put something online, a competitor acts. Every opportunity for engagement has to be seized quickly, and there is always the opportunity to rethink, edit and step back. It is important, however, to find the right balance between being agile and being accurate.

Digital tools should be enablers of collaboration and creativity, helping to understand customers’ underlying interests.

The importance of people

Machines cannot be creative, so innovation relies on the great ideas of people. This emphasises the need for companies to look after their teams: to establish a welcoming culture, to have great infrastructure, to inspire employees. Although not every company can have a ‘cool’ office or an exciting start-up environment, nurturing people can begin from the perspective of each individual leader who builds relationships with their people, encourages their team, and creates an environment that allows for unconventional thinking and failure.

U N C E R TA I N T Y A N D FA I LU R E I N C O N S E R VAT I V E C O N T E X T S

Some industries are rigid, highly regulated or naturally less inclined to embrace innovation. Customer journeys in such contexts can be more complex, and the presence of longestablished and patiently developed client relationships can make the impact of digital change less obvious. However, innovation does not always have to be customer-facing. In any context, it can have the powerful benefit of helping organisations deal with complexity and uncertainty. Innovation works best when it is deeply ingrained in a company’s culture and combined with a ‘fail-fast’ mentality. Ideas with potential must be encouraged, but they can only create value when they can be tested and improved upon within a determined timescale of delivery.

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It may seem counter-intuitive, but conservative contexts are usually the ones to benefit the most from experimentation and innovation. This can reveal organisational blind spots and unlock previously unrealised value. However, innovation must be underpinned by being flexible, agile, and having a quick-to-market mind-set. Only by combining agility and time awareness, through rapid thought processes and implementation, can experimentation and innovation benefit organisations.

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AI , M ACH IN E LE A RN IN G AN D DE E P LE ARN IN G CHIEF INFORMATION OFFICER & CHIEF DIGITAL & DATA OFFICER W I T H S P EC I A L T H A N K S TO N I C K DAV I S , I B M C LO U D.

A TREND WORTH EXPLOITING

DIFFERENCES BETWEEN AI, ML AND DL

Artificial Intelligence (AI) comes with a promise of infinite business applications bringing unprecedented change across industries. Although not all sectors have seen a complete AIinduced transformation, many have felt the impact that it brings and are beginning to implement AI across business processes. Although AI is understood to cover everything from selfdriving cars to automated production processes, the term actually defines one specific field of cognitive computing. Two of its subsets with important business applications are Machine Learning (ML) and Deep Learning (DL). While full-blown implementation of AI may take years, ML has been taking off recently and shows the most growth potential. A good understanding of how AI, ML and DL are differentiated may help businesses start to think about the first steps in implementing automation tools and make the best decisions on what technology strategies to implement.

Although the terms AI, ML and DL are often used interchangeably, there are important distinctions between them. AI is how we make machines intelligent – the ‘science’ – while ML is the computing methods (algorithms) that make the machines smarter without specifically being programmed. All ML is AI, but not all AI is ML. Its relative simplicity in design and deployment makes it the fastest-growing part of AI and shows the most promise of widespread application. Finally, DL is a subset of ML and focuses even more narrowly on certain ML techniques, which require ‘thought’. A I has been around since 1956, when computer science students were designing machines that could win against humans at draughts. AI is when a machine simulates a human task, and does so by ‘learning’ the task as opposed to being hard-wired using programming techniques. AI tackles problems that one would associate with human thinking, such as reasoning, planning, learning, natural language processing and translation. It can solve specific and narrow tasks, such as answering car maintenance questions, or it can be general, performing a range of tasks. M L dates back to 1959, when IBM’s Arthur Samuel coined the term. It is a subset of AI, and uses historical data to recognise patterns to better predict the future. ML algorithms iteratively learn from data, allowing computers to find hidden insights and patterns without being explicitly programmed where to look. Applications of ML include speech recognition, object recognition and image recognition. D L is a subset of ML, based on artificial neural networks characterised by connections, layers and pathways of nodes (‘neurons’) for data to propagate. It is inspired by our understanding of the interconnections between neurons in our brains and is called ‘deep’ because several hundred layers can be involved.

Just as the internet was first developed in obscurity, AI and cognitive computing had a long history before it caught public and industrial attention. T H E AG E O F AU TO M AT I O N

AI, ML and DL have been around for a few decades, but have received widespread attention only in the past few years. For any technology to bring impact across industries, it must be mature enough to be scalable. Just as the internet was first developed in obscurity, AI and cognitive computing had a long history before it caught public and industrial attention. Three key enhancements in technology are enabling AI finally to take off. DATA . Structured and unstructured data, as well as its storage, has grown exponentially in the last decade, allowing information to become more accessible and durable. A LG O R ITH M S . The algorithms and models take advantage of both graphics processing units (GPUs) and ‘big data’ to train deep neural networks with large data sets, allowing AI to perform functions other than routine processing. CO M P U TI N G . Great advancements in computing capacity, along with the hardware becoming more widely available at a cheaper cost, are allowing more businesses to deploy cloud computing.

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Structured and unstructured data, as well as its storage, has grown exponentially in the last decade, allowing information to become more accessible and durable.

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The accuracy, speed and scalability of AI are hugely promising for businesses. The duration of processes can be shortened from days to milliseconds, and the number of people involved can be cut by 90%. A P P LI C AT I O N S O F A I

The accuracy, speed and scalability of AI are hugely promising for businesses. The duration of processes can be shortened from days to milliseconds, and the number of people involved can be cut by 90% while generating higher efficiency, with the potential to transform business performance. AI has already been deployed across a range of sectors, as the following examples indicate, and the benefits that it can bring are only starting to show.

Fluid

ML can help to develop expert personal shopping experiences, offering consumers natural dialogue-driven assistance to achieve the best possible purchase. An app developed for Fluid, an e-commerce business, draws data from underlying sources such as product information, customer loyalty data and sales histories to give users a highly unified, enhanced and personalised shopping experience.

Johnson & Johnson

Drug effectiveness studies are typically done manually. On average, it takes three people ten months to collect the data and prepare it for use before they are able to start asking questions about it. Johnson & Johnson is now able quickly to synthesise data, allowing researchers to move ahead of the process, to start asking questions and to determine drug effectiveness, rather than having to wait months just to research and collect data.

DBS Bank

Automation has helped DBS’s relationship managers advise their wealth-management clients by analysing large volumes of complex data, such as research reports, product information and customer profiles.

It is difficult to determine customers’ best financial options through collating all relevant information. Any deficiency in analysis can lead to selling the wrong product or even losing clients. Automation has helped DBS’s relationship managers advise their wealth-management clients by analysing large volumes of complex data, such as research reports, product information and customer profiles to identify connections to customers’ needs, offer better advice and identify the best options for each client.

MD Buyline

Efficient procurement reduces costs and allows businesses to make the right choices. By enabling informative comparison of product options, AI-enabled procurement can help to drive optimal purchasing decisions for providers. MD Buyline developed a procurement adviser to help provide rapid decision support. AI-driven data consolidation, comprehensive research and domain expertise will help to reduce procurement times and streamline processes.

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E M PLOYE R B R A N DIN G AN D E M PLOYE E E N GAG E M E NT CHIEF PEOPLE OFFICER & LEARNING DIRECTOR W I T H S P EC I A L T H A N K S TO DAV I D VA N D E R S A N D E N , E U R O P E A N H E A D O F P EO P L E E N GAG E M E N T & E M P LOY E R B R A N D I N G , T H E K R A F T H E I N Z CO M PA N Y.

BUILDING THE RIGHT WORKFORCE

People are the main drivers of an organisation’s strategy – running operations, engaging with customers and innovating – and, therefore, must be fully aligned with the organisation’s goals. Teams’ skills and capabilities, their behaviours, motivations and attitude towards work, will shape the organisation and determine whether it can realise the leadership’s vision. For leaders in HR, this means that every people management activity must be precisely aligned with corporations’ broader strategy. Through HR policies and practices, it is possible to build and maintain the appropriate workforce for each organisation. The construction of an employer brand and employee engagement are two of those key initiatives: they are fundamental tools in attracting and retaining the exact people that will help deliver on strategy. EMPLOYER BR ANDING

Perceptions of an organisation’s people practices and culture have a direct impact on the type and quality of talent it is able to attract. The employer brand should be shaped strategically to attract not only the right cultural fit, but also the type of employee the organisation sees as driving it towards its future. Connecting the candidates’ profiles and their professional aspirations with the company’s value proposition will ensure that new recruits are able and willing to go in the same direction as the organisation. Building an employer narrative and sending transparent messages externally and internally helps to attract the right people, while reminding current employees of their common purpose. Businesses should identify and celebrate their organisational difference, and communicate accordingly, shaping stakeholders’ perspective to establish the right connection with the desired pool of candidates. A smart, but honest, employer brand is a key tool in building a workforce that is aligned with business goals. EMPLOYEE ENGAGEMENT

The Silicon Valley tech industry has continuously established new paradigms for the work environment and employee engagement, and financial compensation is now only one factor people consider when applying for or staying at a job. However, businesses must take care not to simply follow a general trend, but must ensure that all HR initiatives are tied to the specific culture that works for their organisation. To successfully align people strategy with business needs, leaders must devise ways to increase employee engagement. Each HR initiative should be linked to behaviours that deliver on the organisation’s strategy. Companies looking to boost collaboration should build processes, internal programmes and incentives that make teams work together, while those looking for increased sales performance might encourage healthy friction and competition between teams. With the ‘people aspects’ of broader strategy clearly understood, they must then communicate. Clarity, transparency and objectivity are key, as they make teams feel involved in their organisation’s mission, and not simply in completing their own tasks.

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DAVID VAN DER SANDEN

EU R O PE A N H E A D O F P EO P LE EN GAG EM ENT & EM PLOY ER B R A N D I N G , TH E K R A F T H E I NZ CO M PA N Y


C A S E STU DY: KR A FT H E I N Z

In 2013, 3G Capital and Berkshire Hathaway partnered to acquire Heinz. The new controllers’ lean approach helped Heinz cut costs drastically, enabling it to acquire Kraft, another FMCG company (which was three times bigger than Heinz). The leadership attributes Kraft Heinz’s success to its cost-conscious, fast-paced ethos, with a sharp focus on efficiency and the delivery of goals. Kraft Heinz understands that its strategy translates into a culture of bold goals, hard work and cost discipline. With a high turnover rate following the merger, it became clear that it needed to attract staff with a stronger cultural fit, and communicate more transparently and efficiently with employees. The company revamped its people engagement strategy to establish a better alignment between its vision and strategy and its workforce. U N D E R S TA N D I N G D I F F E R E NTI ATI O N

Kraft Heinz started to think about its very specific (and sometimes controversial) culture, and how it translated to the type of professional it was looking to hire and retain. It began by asking its employees to describe what the culture meant to them. As a newly formed entity, Kraft Heinz had the opportunity to conceive its positioning from scratch. Instead of seeing its culture as a challenge in recruiting and retaining talent, it realised that its culture was what actually made the company different. The fast-paced environment, in which the valuing of over-performers and their unique career development became the key differentiator, meant that Kraft Heinz had to look for individuals dedicated to going the extra mile (or putting in the extra hour). The fact that this perspective drives away a considerable proportion of candidates nowadays is perceived as a benefit: thinking through its culture enabled Kraft Heinz to understand that it had specific targets in mind. REVAMPING EMPLOYER BR ANDING

“It’s a question of taste: not for everyone, amazing for the few.” With this bold tagline, Kraft Heinz revamped its recruitment process from communications through screening, interviews and hiring to focus on the established cultural fit. The vision of its people & performance function is never having to hire anyone externally, but to enable internal career progression for all of its people. All Kraft Heinz recruitment communications reflect the organisation’s positioning, starting with a pre-screening questionnaire that scores candidates on their cultural fit. It is looking for people who want to leave a legacy – for example someone who wants to be its next CEO. ENGAGEMENT

Looking for professionals who want not just a job but a life project, Kraft Heinz wanted its office environment to reinforce this idea. Employees are surrounded by branded messages of empowerment and ownership. Displays are installed across the office to send internal messages as the organisation tries to move away from excessive e-mails and become more strategic with communications. Sales and cost-saving targets, results and markets’ performances are constantly displayed. The people & performance team now communicates via a monthly update, using an app with lots of videos, creating an informal but fast-paced environment. With clarity over values, culture and expectations, and transparent and constant communications, employees are more engaged and feel more connected to the company. LOOKING AHEAD

Over the last year, Kraft Heinz has been revamping its employer branding and employee experience. It is now thinking about how that positioning will apply to its manufacturing sites, where the same principles of commitment to great performance should apply. It is still too early to establish if this strategy is having an impact on employee turnover, but the organisation has achieved a significantly better cultural fit from incoming employees, increasing satisfaction among existing teams and improving career development.

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Looking for professionals who want not just a job but a life project, Kraft Heinz wanted its office environment to reinforce this idea.


RE VA M PIN G O PE R ATI O N S FO R A B ET TE R CUSTO M E R E XPE RIE N CE CHIEF OPERATING OFFICER & SUPPLY & PROCUREMENT DIRECTOR W I T H S P EC I A L T H A N K S TO P R O F E S S O R K A R E N M O O R E , C H I E F O P E R AT I N G O F F I C E R , M A N C H E S T E R M E T R O P O L I TA N U N I V E R S I T Y.

A HOLISTIC APPROACH

Organisations are facing higher customer expectations and feel under pressure to revamp whole areas of business processes to engage with their stakeholders. Merely having a good product or service offering is not enough: it is increasingly important for businesses to deliver customer-centric solutions that encompass the whole customer journey. Leaders in operations are increasingly bringing their expertise to revamp operations in order to drive efficiency and integration and deliver better customer experience across organisations. Universities have begun to resemble corporations to an unprecedented extent. With financial viability at the top of many universities’ agendas, they increasingly feel the need to operate with a business mind-set. To succeed, universities have to work like corporations and must have smooth operational mechanisms that ensure optimal business performance. Manchester Metropolitan University, the fifth-largest university in the UK, has embarked on a three-year operational transformation and is already one year into the programme. It is paving the way for a more student-centric programme that leverages the benefits of technology to deliver a streamlined customer journey.

CUSTOMER CENTRICITY

PROFESSOR KAREN MOORE

CH I EF O PER ATI N G O FFI CER , M A N C H E S TER M E TR O P O LITA N U N I V ER S IT Y

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With competition increasing daily, some businesses find their unique competitive edge in delivering a highly customer-centric offering. One of the biggest challenges for businesses today is to transition from existing product models to those that deliver what customers want. To achieve this, organisations have to transform their operations to a more customer-centric model. This ensures that businesses allocate resources to the right area and deliver products and services closely aligned to the customer’s need. It is a highly rewarding process that can enhance business reputation, ensure future growth and build organisational resilience. At Manchester Metropolitan University, the need to be customer-centric lay at the heart of its operational transformation. The transformation focused on introducing shorter and simpler processes. In this model, student data is consolidated into one single place in a campus-wide system. Each student is seen through one single view of their time throughout the university (the ‘student journey’), from enquiry and application through to enrolment and graduation. This approach allows the university to centralise its data while offering a much more subtle and diversified product offering. By ensuring transparency and accuracy in relation to each student’s needs, it can provide more flexible choices to support non-traditional learning such as degree apprenticeships, and offer improved support for students, resulting in higher satisfaction and retention rates. Being customer-centric does not simply mean picking up the mantra of ‘the customer is king’. Instead, it means revising operations that centralise all customer information and constantly deriving value from this centralised system.


By focusing on integration, reducing waste and developing reproducibility, the university aims to drive efficiency and offer great customer experiences to its students. In a highly competitive market, operational revamps can bring a comprehensive understanding of existing business and help to develop a resilient and attractive business proposition.

R E V I S I N G O P E R AT I O N A L MODELS

When revamping operations, organisations must be extremely aware of the goals they want to achieve and direct all initiatives towards these goals. Some common goals include increased efficiency, clarity over strategy and enhanced decision-making. Organisations can look to several approaches that help achieve these goals, such as systems integration, reducing wastage and developing reproducible models. These approaches ensure that operational changes are robust enough to effect tangible change within the organisation and drive real results. Manchester Metropolitan University developed a clear vision for its revamped operations: to develop itself into a great student-centric university through the deployment of modern practices and services that meet the needs of current and future students. Apart from developing a customercentric offering, the university is focusing on three areas of operational revamp. S Y S TE M S I NTE G R ATI O N . The university is redesigning its whole student management system and will replace different standalone systems with one end-to-end system. Key student services, information services and finance are all integrated to create a seamless customer-facing service. This centralised service allows the university to leverage data to assess and cater to the needs of students. R E D U C I N G WA S TAG E . The new system consists of processes and procedures that simplify the student experience, which reduces wastage, cost and dissatisfaction. This delivers more efficient and consistent service provision to support academic delivery and reduce administrative overhead, driving cost reduction in both system costs and management time. D E V E LO P I N G R E P R O D U C I B LE M O D E L S . The operational revamp focused on standardisation and emphasised the need to be future-proof. Policies and analytics are designed to bring flexibility and transparency across different functions, and all data feeds into enterprise-wide ‘data warehouses’. The new system will be reproducible across areas such as curriculum set-up, timetabling, examinations and event management, reducing future deployment costs.

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IMPLEMENTING CHANGE

While organisations are increasingly recognising the value that efficient operations bring, it is often a challenge to translate vision into reality.

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

Q1 2018

While organisations are increasingly recognising the value that efficient operations bring, it is often a challenge to translate vision into reality. Businesses need a clear implementation strategy. To successfully implement a revamp, organisations can focus on devising phases, removing silo behaviour and embedding new mind-sets. For Manchester Metropolitan University, the whole operational change is divided into eight phases, numbered from 0 to 7. Each phase is associated with relevant executive approval (‘stage gates’) and each phase increases in complexity and breadth. For example, the initial phase includes deliverables such as understanding existing information systems processes, upgrading legacy software and approving future organisation design. In the later stages, deliverables will include building tailored applications, transitioning all data systems and providing change management support across the university. To complement each stage of operational change, silos need to be broken to facilitate better collaboration and clarity. At the university, this has meant that traditional thinking and management practices have to be discarded and new ways of decisionmaking need to be put in place. To ensure that this proceeds smoothly, staff training and reskilling is provided. Timescales and ownership for deliverables are established early on and tracked throughout the process. From the planning to the initial execution of its operational revamp, Manchester Metropolitan University has set itself a clear goal: delivering a world-class student-centric experience through enhanced operations. By driving better operations through increasing efficiency, integrating systems and developing consistency, organisations are able to create a more customer-centric offering and deliver real growth.


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Fabio Couto, C-Suite Solutions 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 Q1 2018  
Winmark C-Suite Report Q1 2018  

How streamlined processes and agility are helping build transparency. Perspective from the world’s leading organisations on the C-Suite Repo...

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