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C-SUITE REPORT

“A digital mind-set is key to business success – whether running a start-up or a multibillion-pound enterprise. Winmark and Silicon Valley Bank are building the knowledge and networks that are vital for digital transformation.” Phil Cox, Head of EMEA and President of the UK Branch, Silicon Valley Bank

QUARTER TWO 2018


EDITORS

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

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

Albert Lam, C-Suite Solutions Executive, Winmark albert.lam@winmarkglobal.com


CO NTE NTS

Includes insights from: Aviva, Cazenove Capital, Deliveroo,

GLOCAL GROWTH

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WINMARK ON YOUTUBE

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C-SUITE MEETINGS

4

THE CHAIR’S VIEWPOINT

5

THE C-SUITE AND LEADERS’ CHANGE AGENDAS

6 –7

DLA Piper, English National Opera,

THE C-SUITE REPORT

Financial Reporting Council,

NON-EXECUTIVE DIRECTORS & THE BOARD

Ipsos MORI,

• Global Forces Driving Business

O2/Telefónica, Royal Shakespeare Company,

CHIEF EXECUTIVE OFFICER & DIVISIONAL CEOS

8–9

10–11

• Business Lessons from Arts Organisations

Silicon Valley Bank, William Hill

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

and other leading organisations

• Finance and Sales: the Vital Partnership CHIEF LEGAL OFFICER & CHIEF RISK & COMPLIANCE OFFICER

12–13

14–15

• Proactive Risk Management CHIEF MARKETING OFFICER & SALES DIRECTOR

16–17

• Transforming Sales Functions 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

• Embracing Digital Transformation CHIEF PEOPLE OFFICER & LEARNING DIRECTOR

20 –21

• Executive Pay: Rewarding Top Talent 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

• Unlocking AI Opportunities

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22–23


WINMARK

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 BAKER MCKENZIE CANON CAPSTICKS 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 DWF

EVERSHEDS SUTHERLAND

PENFIDA REDINGTON

INSTITUTE OF PRACTITIONERS IN ADVERTISING INVESTEC ASSET MANAGEMENT KEMPEN

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

LANE CLARK & PEACOCK MARKET RESEARCH SOCIETY MHA MACINTYRE HUDSON

SOVEREIGN BUSINESS I N T E G R AT I O N G R O U P TA X AU TO M AT I O N THE GOVERNANCE INSTITUTE

MILLER HEIMAN 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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G LO C A L G ROW TH On 17th January, Winmark hosted members and friends at the iconic Charterhouse for a candid discussion on business, growth and the economic outlook in 2018, led by:

..Miriam González Durántez, Co-chair of

..Sir Martin Donnelly, former Permanent Secretary,

International Trade and Government Regulation Practice, Dechert LLP; Honorary President, Canning House, the UK’s leading forum on Latin American politics, economy and business; and former EU negotiator;

Department for International Trade and Department for Business, Innovation & Skills; and

..Caspar Rock, Chief Investment Officer, Cazenove Capital.

WI N M A R K O N YO UTU B E Follow us on http://tiny.cc/winmarkglobal for exclusive insights and highlights from Winmark’s C-Suite events.

CEO:

TDN:

ALL-NETWORK:

T H E S TAT E O F B R ITA I N

TA X T E C H N O LO GY PA N E L

GLOCAL GROWTH

H T T P : // T I N Y . C C /

H T T P : // T I N Y . C C /

H T T P : // T I N Y . C C /

S TAT E O F B R ITA I N

T D N TA X T E C H

GLOCALGROWTH

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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 peerlearning roundtables in the second quarter:

Jo Wakeman, Director of Large Business, HMRC, will brief members of the Tax Director Network on the outcome of the HMRC’s Business Risk Review consultation. Attendees will be able to provide input on the changes as well as address broader questions about the co-operative compliance model.

Members of the Chief People Officer Network will go on a study tour at Lego’s UK headquarters, hosted by Michael S Kehlet, VP Talent, to discuss its people transformation in support of the group’s strategy.

In the wake of Bell Pottinger’s collapse, Tom Mollo, former International Managing Director at Bell Pottinger, will share insights into the crisis with members of the NED Network.

Members of all networks will attend a study tour of the Battersea Dogs & Cats Home, one of only a few rescue centres that accepts ‘any breed of animal, at any age, including dogs or cats with serious medical and behavioural problems’.

Claire Debney, Director of Legal Strategy & Chief of Staff to the General Counsel at Shire, will join members of the Chief Legal Officer Network in discussing the best ways to win the war for talent. Attendees will also look at how to develop and engage high-performing lawyers.

Lynne Shamwana, CFO, Virgin Care, will lead a discussion with the Chief Financial Officer Network on talent management, at a time when automation is reshaping finance departments.

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TH E CH A I R ’ S V I E WP O I NT Looking back across the last 40 years of my business life, it sometimes feels that the only thing that hasn’t changed is that articles like this are always talking about how much things are changing! It’s not just a cliché, though, it really is the case that at any point in those 40 years, the pace of change for companies and individuals has been unprecedented. Having spent my executive life at IBM, and recently as chairman or NED of a number of growth technology or technology-enabled businesses, I’ve watched digital approaches transform the competitive balance of industries and the efficiency of companies. I’m sure we’re nowhere near the limits of that. However, many of the most profound changes are nothing directly to do with technology. Tomorrow’s businesses – and my children’s generation – will have to compete for wealth and value creation opportunities against a much more engaged and prepared global workforce than I ever had to. Growing companies reach a point where the very characteristics that have got them to their success start to inhibit them unless intelligently augmented by new capabilities that allow them to scale. Whatever the reason for the change, there are a few groups of attributes of a company and its people that will make a difference as to how likely it is to anticipate that change and react successfully.

BERNIE WALDRON N O N - E X EC U TI V E C H A I R M A N , N E X U S V E H I C LE R E NTA L , Q U E S TI O N M A R K , APSU

..Firstly, S TRU C TU R A L C H A R AC TE R I S TI C S . Large, centrally controlled organisations can often have advantages of scale, and speed of execution, but are more likely to be blindsided by change. Companies with a shortterm focus – perhaps because they are driven by public equity markets – will find it harder to transform. And companies that have had a near-death experience and have come through it are likely to be wiser this time around.

..Secondly, the LE A D E R S H I P S T Y LE of the company. CEOs and executive teams who maintain a healthy paranoia, who avoid interpreting the maxim ‘If it ain’t broke, don’t fix it’ too literally, who are keen to listen to outside views and who have a healthy respect for data as well as instinct are most likely to navigate their way through the minefield.

..Thirdly, the PE O PLE themselves. Most healthy organisations have an amalgam of loyal long-term employees who know what makes the place tick and people who have built up their experience elsewhere, with a mutual respect between the two groups. People need to be confident that constructive contrarianism will be valued, but also realise when it’s time to shut up and get on with it. Whatever the changes, the next 40 years should be exciting and interesting, and I’m looking forward to sticking around for as much of it as I can.

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Tomorrow’s businesses – and my children’s generation – will have to compete for wealth and value creation opportunities against a much more engaged and prepared global workforce than I ever had to.


TH E C-SU ITE … and what lies at the heart of leaders’ change agendas T H E S E A R E TH E K E Y TR A N S FO R M AT I O N S O U R M E M B E R S A R E D R I V I N G AT TH E I R O R G A N I S ATI O N S .

RISK

“Being only preoccupied with Europe carries risk. With uncertain regional growth prospects and the need to de-risk, we are increasingly encouraged by clients to look more into emerging markets in Asia.”

THE

UK Director, global bank

DATA A N D TE C H N O LO GY

“We are consolidating all our data and introducing automated analyses to establish more customer-centric operations.” COO, leading UK retail company

OPERATIONS

PEOPLE

TECHNOLOGY

FLEXIBILITY

“People want flexibility from their jobs. We’ve changed our mind-set to embrace freelancers, job shares and innovative arrangements, not only providing more people with opportunities, but establishing an environment that motivates beyond financial incentive.” HR Director, global mass media company

CYBERSECURITY

“Our challenge is to ensure that safe and resilient systems are in place not only at our own organisation, but across the entire value chain.” CIO, leading UK media company

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GOVERNANCE

“Shareholders have begun to embrace a responsible capitalism agenda, while the FRC’s review of the Corporate Governance Code is likely to expand stricter regulations from financial services across industries.” NED, FTSE 250 companies

DATA A N D I M PAC T

“We need to do more about distilling our work into hard metrics… ROI with direct impact on the business.” Marketing Director, global professional services firm

BOARD

COMMERCIAL

LEGAL & RISK

FINANCE

AU TO M ATI O N

“The workload is growing, but I can’t keep recruiting more and more people. Technology helps me to enable my people to focus on work which maximises their expertise… the more low-level work, I can package up and offshore or automate or put into systems which allow the business to do it for themselves.”

AU TO M ATI O N

General Counsel, global insurance company

“Our finance function has over 1,000 employees globally, but I expect the headcount to be reduced to about 100 in the next five years.” CFO, FTSE company

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G LO BA L FO RCE S DRIV IN G BUS IN E SS NON-EXECUTIVE DIRECTORS & THE BOARD W I T H S P EC I A L T H A N K S TO M I R I A M G O N Z Á L E Z D U R Á N T E Z , PA R T N E R , D EC H E R T L L P ; C A S PA R R O C K , C H I E F I N V E S T M E N T O F F I C E R , C A Z E N OV E C A P I TA L ; A N D B E N PAG E , C EO, I P S O S M O R I .

..G E N E R ATI O N S TR A I N S . The

THE YEAR AHEAD

GLOBAL CHALLENGES

Signs of economic strength and solid growth are being observed worldwide. The US has seen a robust economic recovery, and recent corporate tax reforms may help to drive consumer spending through wage increases. Growth forecasts for the EU have also risen and quantitative easing is helping to secure a strong recovery. The UK economy has shown signs of picking up, but it still faces many challenges. Brexit is giving rise to considerable uncertainty, but it will undoubtedly not happen without disruptions. Productivity gains – weak for nearly a decade – have begun to accelerate, but the pace is less than optimal, and there is still a strong need for greater efficiency and higher-skilled jobs in the UK economy. Since the financial crisis, a movement of workers into less efficient industries has impeded productivity growth. To reverse this, long-term investment in infrastructure is required, together with the upskilling of workers for the forthcoming waves of automation. In 2018 the UK will start to establish a new position in relation to Europe and the world. Although it is unlikely to find itself leading the pack, opportunities have opened up for the UK to develop new and stronger ties with different economies.

The seemingly strong recovery of the global economy is not immune to social and political challenges, with the potential to drive changes in behaviour, marketplaces and policy across the world.

..A C R I S I S O F TH E E LITE S . A long post-recession period of low growth and wage stagnation has left many people worldwide feeling left behind. This has heightened the rising tide of populism. However, the threat of right-wing authoritarian populism should not be exaggerated. In the UK, populism is still very restrained; there are still many countries that are much more turbulent and rife with tension.

perceived and actual gap between young and old is ever-widening. Although young people benefit from significantly better educational opportunities, communications and flexibility than used to be the case, they increasingly find it difficult to own their own homes, lack job security and do not always have access to good healthcare. In the UK, this translates into strong backing for the opposition Labour Party among those aged under 35, with its support as high as 62% among the under-24s.

..U N C E R TA I NT Y I S TH E N E W N O R M A L . People and businesses

are increasingly unsure what the future holds. Job security, sense of purpose, and clarity of direction are all less apparent today. Flexibility and opportunism will become the new watchwords.

..A G R OW I N G N OS TA LG I A FO R TR A D ITI O N . People are returning to

thinking that things were better in the past. In recent surveys, 70% of French and Americans took this view, and 56% in the UK would like the country to be ‘where it used to be’. However, it is notoriously difficult to pinpoint when exactly to go back to.

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“There is positive growth in the UK. However, it will feel like we are driving with the handbrake on compared to the rest of the world.” C ASPAR ROCK


Traditional British institutions and culture are more resilient than we think, and businesses need to continue innovating to weather the coming storms. MIRIAM GONZÁLEZ DURÁNTEZ

PA RTN ER , D EC H ERT LLP

THE UK POLITICAL OUTLOOK

BUILDING CONFIDENCE

Economic security, and the societal stability engendered by it, will be the top concern for the UK in the coming years. Issues relating to poverty and inequality, housing and lack of investment are at the top of the public agenda. For example, many people consider there to be a housing crisis and there is strong public support for increased housebuilding. Expenditure cuts are becoming increasingly less favoured by the electorate; a substantial majority think the government is spending too little on public services. The government is already showing signs of commitment to support housebuilding, and the economy may see an increase in investment, which may drive growth in the construction industry in particular. Brexit still divides – and there are few signs that the two sides are coming together. Even if a second referendum is held (which is highly unlikely), the outcome might still be the same. Hard Brexiteers have staunchly held to their positions, seeing post-referendum developments as a vindication of their decision. Brexit has revealed chasms between those for and against the current state of immigration, with no signs of reconciliation in the near future. Immigration and trade are the top concerns that people would like the government to prioritise in Brexit negotiations.

Despite a challenging outlook, there are still many things that hold the UK together as a nation. Public support for the monarchy remains high, and there is a sense of collectively finding a way through the country’s difficulties. The 2012 London Olympics served as a great model for national unity, and was something Britons could be proud of. Although overt patriotism has long been frowned upon, Britons actually want to be allowed to feel proud. Businesses must help create a sense of pride and offerings that everyone can be proud of. Although sections of the media will find ways to portray situations in the worst light possible, businesses need to find ways to push good news stories into the limelight. Traditional British institutions and culture are more resilient than we think, and businesses need to continue innovating to weather the coming storms.

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BUS IN E SS LE SSO N S FROM ARTS ORGA N ISATI O N S CHIEF EXECUTIVE OFFICER & DIVISIONAL CEOs 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 M A L LYO N , E X EC U T I V E D I R EC TO R , R OYA L S H A K E S P E A R E CO M PA N Y; A N D C R E S S I DA P O L LO C K , C EO, E N G L I S H N AT I O N A L O P E R A .

ARTS AND BUSINESS

FOCUSING ON THE ESSENTIALS

PAR ALLELS

Arts organisations have an extremely clear product focus: to deliver the best across all performances. Excellence is measured through metrics such as reviews and box-office sales, and employees have a high degree of ownership over the success of performances. As artists, just like all professionals in other sectors, they apply rigorous standards towards their own work, often striving to deliver above and beyond their targets. However, with cuts in public funding and reduced consumer spending on the C AT H E R I N E M A L LY O N arts, organisations are beginning to be E X EC U TI V E D I R EC TO R , R OYA L asked to produce the very best in certain S H A K E S PE A R E CO M PA N Y areas but settle for ‘good enough’ in others. Businesses across all sectors feel the same pressure, and have to make strategic choices, prioritising investment in areas that promise better growth. At the Royal Shakespeare Company (RSC), the leadership had to make decisions that impacted the administration as well as certain parts of its artistic operations. To manage limited resources and comply with responsible finance practices and efficient management standards, which are the same across all businesses, CEOs must make choices on what to prioritise now and what to leave for later. Employees may feel uneasy at some of these decisions, but it is important for leaders to demonstrate how the current focus is actually an opportunity for organisations to increase operational efficiency and savings that can drive further investment C A T H E R I N E M A L L Y O N in the future.

The pressures facing arts organisations are similar, if not identical, to those facing businesses. Amid a general climate of needing to do more with less, coupled with cuts in public funding, arts organisations increasingly need to ‘stand on their own feet’. Key concerns include changing operations to address budget pressures and technological disruptions, as well as diversifying their offerings to address a wider audience in an age of easily accessible entertainment. Transforming to stay relevant is a key focus for both arts organisations and businesses: with consumer preferences changing and revenue streams shifting quickly, businesses need to leverage new strategies to help grow market share and retain sustainability. Arts organisations are home to one of the broadest spectrums of stakeholders. This means that leaders in this sector have to make decisions that may not be popular across the board. To generate cohesion and push their organisations forward, arts leaders are highly aware of the power of creating enthusiasm and alignment between conflicting interests, as well as focusing on the essentials. Taking a closer look at arts organisations may reveal management principles that are highly relevant to CEOs in more mainstream commercial businesses.

“Arts organisations need to make sure that they spend everything wisely, and transformation is needed to achieve this. One of the challenges for the CEO is to clearly explain and demonstrate that change is needed.”

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EMPLOYEE ENGAGEMENT

HANDLING CONFLICTING

One common misunderstanding about the arts sector is that employees are too focused on the creative aspects, prioritising these over the less glamorous elements of the work. This could not be further from the truth: arts employees are often the most highly motivated and are prepared to put in much more than they are asked for. They are often driven by the satisfaction of achieving perfection in performances, something that cannot be achieved by financial incentives alone. The arts sector is a great example of outstanding levels of employee engagement, with a shared enthusiasm helping to create cohesion between team members, thereby driving excellence. Just as in the arts sector, businesses need to find ways to foster motivation throughout their organisations, other than through the pay package. This can be achieved through focusing on core product offerings, developing bold plans and creating a sense of purpose that all employees can strive for, buying into an organisation’s value proposition – whether this is putting on a show that resonates with audiences, or providing a service that has true impact for clients. A culture of enthusiasm across the workplace helps organisations to navigate through uncertain times. People strategies should be designed to foster such enthusiasm, for example, by putting in place mechanisms to ensure the recruitment of employees who have a genuine and enduring passion for the job.

INTERESTS

Arts organisations provide one of the clearest examples of how internal schisms can arise, with tensions naturally developing between metricsfocused management and a creative, innovative mind-set. In 2016, English National Opera (ENO) was faced with a permanent 30% cut in funding from Arts Council England. This led to a crisis, putting management and artists, who threatened industrial action, on opposite sides. In companies, the need to manage costs and to invest and innovate often puts different stakeholders in conflict, with the potential to trigger a crisis. Open communication is the key to managing multiple interests and to engage with stakeholders who might not be happy with a given course of action. ENO brought in new management, held more face-to-face meetings and opted to be completely open about the implications of the crisis, emphasising unity and ‘surviving the storm together’. The industrial action was called off at the last minute, and ENO’s leadership maintained an open dialogue style to boldly restructure the organisation’s

entire offering. Given that there were difficult personnel changes, the ability of management to communicate honestly proved to be one of the key ways of steering ENO out of crisis and regaining a healthy financial position. To align conflicting interest groups, it is important for businesses to take their internal communications seriously. Often, difficult but candid conversations are the best way to maintain employee trust and can help tide organisations over crises and avoid undue polarisation. In the cultural sector, as in business, employee unity must be sustained by a culture of transparency and honesty. CEOs must be open about the organisation’s challenges and weaknesses, and be ready to communicate them to employees. By doing so, employees feel that their work is valued and their performance will be driven by a greater sense of purpose.

Key Lessons from the Arts FO C U S I N G O N T H E E S S E N T I A L S

.. Resources are not infinite. .. CEOs must prioritise areas that promise better growth. .. Demonstrate how focus today can drive future investment. E M P LOY E E E N GAG E M E N T

.. A sense of purpose incentivises employees beyond financial compensation. .. Employees buy into their organisation’s value proposition. .. Establish mechanisms and a narrative that build passion for the

Just as in the arts sector, businesses need to find ways to foster motivation throughout their organisations, other than through the pay package.

company’s work. H A N D L I N G CO N F L I C T I N G I N T E R E S T S

.. CEOs must reconcile conflicting interests from multiple stakeholder groups. .. Open, consistent communication is the key. .. Honesty drives engagement, even with unhappy stakeholders.

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FIN A N CE AN D SA LE S: TH E VITAL PARTN E RS H IP CHIEF FINANCIAL OFFICER & TAX DIRECTOR W I T H S P EC I A L T H A N K S TO P H I L I P G R E E N , C FO, D E L I V E R O O.

THE CHALLENGES OF

C O M P LE M E N TA RY R O LE S

C O LL A B O R AT I O N

Finance and sales professionals often have very different personalities: finance staff tend to be introverted, highly technical and analytical. Salespeople are extroverts, relying on their instincts and on the power of relationships. Such distinct profiles inevitably cause friction. Professionals from both functions find it challenging to communicate and work together. Salespeople tend to talk more, while their finance colleagues listen quietly, without always explaining their technical perspective on the issue at hand. There can be no collaboration without dialogue. At the leadership level, it is important to recognise the distinct, but complementary, roles of the sales director and the CFO.

The relationship between the finance and sales functions is one of the most crucial in a business. In close alignment, the two teams can more accurately forecast revenue, enabling the business to plan effectively, but can also combine their expertise to help it grow and become more profitable. Nevertheless, the two functions often find it challenging to work together. Salespeople, who are in close contact with customers’ perspective, their changing needs and the competition, perceive finance professionals to be overly processoriented, rigid and meticulous. Their finance colleagues tend to think the sales team works without sufficient structure and lacks technical understanding of the business. At the highest level, the relationship between the sales director and the CFO is often characterised by tensions. But leaders who understand each other’s mind-sets and are able to communicate effectively can establish a partnership through which they together identify and create opportunities for the business to grow. Sales and finance ultimately share the same goal – the success of the company.

..TH E S A LE S D I R E C TO R ’ S goal is to drive revenue through customer acquisition/retention and new products, and profit through pricing, credit management, sales efficiency and the right product mix.

..TH E C FO ’ S ultimate responsibility is to protect investors’ money through profitability, requiring forecast accuracy and the most efficient allocation of resources across the business.

In close alignment, finance and sales teams can more accurately forecast revenue, enabling the business to plan effectively, but can also combine their expertise to help it grow and become more profitable. 12

Understanding each other’s priorities helps constructive communication and builds trust. The leaders of both functions must be aware of each other’s objectives and their different ways of working. On a practical level, sales directors and CFOs benefit from establishing closer engagement. Catching up more frequently and socialising, moving on from formal sales forecast meetings to regular two-way dialogue helps to reorient their interaction away from simply ticking off boxes on checklists towards exploring ways in which the company can generate value.

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SALES FOREC A ST PITFALLS

CLOSING THE GAP

Considerable time and energy from both finance and sales is wasted trying to achieve accuracy when forecasting revenue. There is a constant, onerous effort to reach an exact number, a ‘false precision’. Trying to achieve this is time-consuming and of little benefit – it is simply not possible to predict incoming revenue precisely. Working with a range is not only more realistic, but also sufficient, as it allows finance to plan for different scenarios. Another point of discussion when forecasting sales, especially when the entire sales force is involved, is whether forecasts should be realistic or optimistic. A realistic perspective can give a more accurate overview of how sales will perform, although ambitious sales executives may have more positive expectations for their own pipelines. There is no right or wrong approach. Different organisations and CFOs may have an appetite for more optimistic numbers, or less optimistic ones. However, in either case, it is crucial that the approach to forecasting is consistent across the business. For effective financial planning, as well as to secure fairness in the compensation of the sales team, every salesperson should be reporting on their leads with the same level of scepticism or optimism.

To overcome friction and establish a constructive relationship between CFOs, sales directors and their functions, leaders should be aware of the differences in professionals’ personalities, expertise and motivations. Some key areas can have a big impact in bringing the two functions together.

..S A LE S M U S T U N D E R S TA N D TH E E CO N O M I C S O F TH E B U S I N E SS . Sales leaders and teams need an

understanding of finance principles: how the business makes money, the profitability of different products and the impact that incremental revenue will have on the resources available for investment. From the highest level, finance must engage with sales colleagues and help them learn more about the economics of the business, through both formal meetings and informal conversations.

..TA RG E T S E T TI N G . There is not enough focus on incentive schemes and the behaviours they encourage. If, for example, salespeople consider their targets unrealistic, they may put less effort into their work. Sales and finance leaders must be clear over the results they want to achieve and set targets that drive the right behaviours. A good startingpoint is setting team targets instead of individual targets, to encourage a collective spirit and collaboration.

..M E A S U R I N G E FFE C TI V E N E SS . Sales directors must improve how they measure the effectiveness of their functions. What really drives results? What is the impact of different activities on pipelines and conversions? Although this may seem obvious, the sales team needs an excellent understanding of what truly has an impact. Clarity over drivers of improved performance in sales functions leads to more accurate forecasts, and recent improvements in data and technology have allowed sales directors to go much further in understanding the effectiveness of their teams.

Revenue forecasts that aim to be precise, turn out precisely wrong.

PHILIP GREEN

C FO, D ELI V ER O O

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PROAC TIVE RI S K M A N AG E M E NT CHIEF LEGAL OFFICER & CHIEF RISK & COMPLIANCE OFFICER W I T H S P EC I A L T H A N K S TO K I R S T Y CO O P E R , H E A D O F O F F I C E O F T H E C H A I R M A N , G R O U P 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, AV I VA ; A N D A N N E M C A R T H U R , 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, F I N A N C I A L R E P O R T I N G CO U N C I L .

Board

.. The risk function I D E NTI FI E S , M E A S U R E S , M O N ITO R S A N D R E P O RT S O N risk.

.. R I S K M A N AG E M E NT TO O L S include methodologies, models, risk appetite framework, stress and scenario testing.

Governance

Board committees Management Management committees

Risk management tools

Core business processes

Risk management and decision-making

Policy framework

.. G OV E R N A N C E , the responsibility of the board and the executive committee, is at the top of all risk management efforts across the company.

Delegated authority

R ISK MANAGEMENT FRAMEWORK

Risk culture

As CLOs start to play an increasingly strategic role in organisations, they are moving away from transactional work. Instead, risk management is rising to the top of their agenda. Managing risk has become a crucial business capability that heavily benefits from counsels’ expertise and judgment. To remain commercially viable and competitive, organisations must be willing to take risks. In an evolving risk landscape, risk appetite fluctuates constantly and organisations must maintain a clear framework to identify, assess and monitor risks. These are managed through an array of processes across the company, from the choice of business strategy at board level, to the organisation’s values and cultures influencing employees’ actions and day-to-day decisions.

RISK MANAGEMENT FRAMEWORK

A CLEAR FRAMEWORK

Standards

Identify and measure risk Monitor and manage risk Risk reporting and transparency

Risk methodology and guidance

Risk models

Risk appetite framework

Stress and scenario testing

Organisation and roles

Incentives and reward

Skills and capability

Communications and training

.. Initiatives are underpinned by a R I S K C U LTU R E : roles, skills and capabilities, incentives and rewards, and communications, which influence how people will approach risk throughout the organisation. At the highest level, the board and the executive committee will determine the organisation’s strategic priorities – where it may be willing to take on more risk – and its risk appetite. The risk function translates these into overarching risk policies, covering financial risk, operational risk, etc. Finally, those policies are translated into business standards across units and functions: non-negotiable controls on how business is done day-to-day. These standards are used to track and monitor risk. With a framework established, most organisations rely on a ‘three lines of defence’ model, aiming to identify threats and protect the business.

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R E G U L ATO RY R I S K

Organisations are facing increasing regulation, and there are no signs that the trend will cool off. In the political and public spheres, there is a growing appetite for increasing regulation and scrutiny over companies. In this environment, it is more important than ever to assess and monitor regulatory risk. In many cases, a gap exists between parliamentary/public expectations concerning increased regulation and what this can actually achieve. There is an opportunity for companies to engage constructively with regulators (whose stakeholders include the entities they are responsible for regulating). Organisations can use their voice proactively to mitigate regulatory risk. Two important tools can help organisations to mitigate regulatory risk in the current context of scepticism towards corporations.

..D R I V I N G B E H AV I O U R FR O M TH E B OT TO M . Individuals are subject to

regulation, through codes of conduct or professional standards. These can be leveraged to drive compliance at organisation level.

..E N CO U R AG I N G

THR EE LINES OF DEFENCE 1ST LINE THE BUSINESS

2ND LINE THE RISK FUNCTION

3RD LINE INTERNAL AUDIT

Business functions own and manage the risks the organisation faces

Defines the framework for managing risk and controls, monitors challenges and advises the 1st line

Independently assesses the design of the operational risk and control framework and its operation on the 1st and 2nd lines

THE ROLE OF LEGAL

Legal risk is a fundamental pillar of an organisation’s risk landscape. Legal departments have long tried to move away from being the ‘no function’ to become a business enabler. The nature of their expertise puts them in a position of guidance and control. General counsels and the legal function ‘own’ the establishment of business standards and the monitoring of legal risk across the business, and tend to be heavily involved in the management of regulatory risk, but they also have an important role in helping to assess, monitor and mitigate overall risk. Based on that perspective, should the legal department be part of the ‘first line of defence’, embedded in the business, facilitating its work and supporting decision-making from the bottom, or is it more appropriately positioned in the ‘second line’, acting as the conscience of the company, controlling the business and challenging its decisions? There is no universally applicable answer to this question. The tension between trying to facilitate the company’s objectives while also seeking to protect the business from unacceptable risk is a perennial problem. The decision depends on the circumstances of every situation and requires sound judgment and courage to ensure that the function’s expertise is being deployed where it most effectively helps the business manage risk and comply with regulation.

W H I S TLE B LOW I N G . Embed a

whistleblowing culture within the organisation and encourage, listen to and investigate claims. Proactivity is crucial for regulatory risk mitigation.

In an evolving risk landscape, risk appetite fluctuates constantly and organisations must maintain a clear framework to identify, assess and monitor risks.

KIRSTY COOPER

H E A D O F O FFI CE O F TH E CH A I R M A N , G R O U P G EN ER A L CO U N S EL A N D CO M PA N Y S EC R E TA RY, AV I VA 15

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TR AN S FO RM IN G SA LE S FU N C TI O NS CHIEF MARKETING OFFICER & SALES DIRECTOR W I T H S P EC I A L T H A N K S TO JAY S R I S K A N T H A N , O2 P R AC T I C E ACC E L E R ATO R P R O G R A M M E D I R EC TO R , T E L E FÓ N I C A U K .

SHIFTING THE FOCUS

Faced with customers who are increasingly well-informed and with the pressure of rising sales targets to deliver exceptional growth, sales leaders have to build new capabilities and transform their teams. From the first introductory meeting, salespeople are required to understand prospects’ strategies and show how they can add value. They have had to change their approach: they must be less technical and more strategic, insightful and engaging. The required new skill-set calls for a revamp of the development and management of these professionals. Training is no longer limited to sales academies which focus only on metrics, but is increasingly focused on soft skills, personal development, team building and employee engagement. Forward-looking organisations, focused on building new capabilities in sales teams, are observing an improvement in traditional metrics, such as pipeline growth. Also apparent is a less tangible impact of their investment in development: by taking a new approach to sales teams, it is possible to establish a closer alignment between business strategy and employee behaviour. Transitioning B2B sales for mobile into ICT products and solutions, O2 has gone through a sales transformation programme involving more than 200 professionals. The aim of the programme was not just to develop skills. Much more significantly, sales professionals were engaged and inspired to reframe their mind-sets and take active ownership of their part of the business.

JAY S RI S K A NTH A N

O2 P R AC TI CE ACCELER ATO R P R O G R A M M E D I R EC TO R , TELEFÓ N I C A U K

The five-step programme adopted a ‘hands-on’ approach, which empowered employees to create business plans that were directly connected with the growth of the business and develop their capabilities for leadership and account planning. There was an emphasis on developing account management, business planning and presentation skills. These vital skills do not necessarily have to be taught from the top down. A more effective approach was delivery through agile and entertaining sessions that incorporated interactive theatre and drama.

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

Although any sales programme’s main objective is pipeline growth, it should be designed and implemented as a leadership programme. This makes it more holistic and more closely aligned with overall business strategy. The marketplace is changing rapidly and development needs to be constant. Today, sales leaders need to develop employees’ capability to address the ‘client’s client’, or the ‘need behind the need’ to deliver better products and develop long-lasting partnerships. This is one of the reasons why O2’s transformation programme focused heavily on leadership, foresight, and capacity to deliver.

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C R E AT I N G E N G AG E M E N T

SAL ES T EA M T RA N SFO R M ATIO N PRO CESS

Consultation

What is the problem we are trying to solve?

Q1 Delivery

Reframing mind-set and visible leadership support

Q2 Delivery

Q3 Delivery

Q4 Delivery

Do, share, reflect and learn

Do, share, reflect and learn

Do, share, reflect and learn

Practise business plan

Practise business plan with teams

Assessment day

“Without engagement, it is hard to achieve development. Employees may become compliant, but momentum will slow down over time. To truly win ‘hearts and minds’, leaders must be able to engage and inspire.” JAY S R I S K A NTH A N

The participation of C-Suite executives in sales transformation was crucial for its success. The sales team was divided into small working groups and had to pitch before top-level executives, with successful pitches put into action. Having activities with tangible results helped to attract senior leadership buy-in, and also allowed employees to see their efforts turn into real business prospects. Being in front of senior executives and bearing responsibility for their own projects proved an uncomfortable experience for some employees, but that is the point of development: transformation can start only when people feel challenged and pushed out of their comfort zones.

At O2, trainers encouraged professionals to see their accounts in a different way and turned a job responsibility into their own multimillionpound business.

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To drive pipeline increase through development, it is crucial to create employee engagement and a sense of ownership. For development programmes to create engagement, leaders must be able to reframe mind-sets and ‘win hearts and minds’. At O2, trainers encouraged professionals to see their accounts in a different way and turned a job responsibility into their own multimillionpound business. Once this mind-set is in place, employees felt empowered to develop their accounts with greater confidence and ambition. A changed mind-set is not enough, however. Colleagues are constantly encouraged to take a capability growth perspective and link this to future career progression. Leaders must inspire sales professionals to think about where they want to take their ‘business’ three years from now and plan for the sort of capabilities they will need. From the start, sales professionals at O2 saw how their learning turned into business value and were eager to continue learning to boost their capabilities. Creating ownership and encouraging a long-term vision enable sales teams to break out of short-term thinking patterns and clearly see the connection between their work and wider business growth. Transformation is as much about skilling employees as changing their mindsets. In some organisations, employees already have a 20% weighting of their performance assessment based on their development in corporate citizenship, presentation and leadership skills. Employees have to be encouraged and helped to break through their perceptions of what good work means, taking on roles and challenges they have not previously imagined.


E M B R ACIN G DI G ITA L TR ANS FO RM ATI O N CHIEF INFORMATION OFFICER & CHIEF DIGITAL & DATA OFFICER W I T H S P EC I A L T H A N K S TO T H E I N N OVAT I O N VA LU E I N S T I T U T E ; S I M O N K I N G , G R O U P C I O & E M E A O P E R AT I O N S D I R EC TO R , T H E I M AG I N AT I O N G R O U P ; A N D P H I L COX , H E A D O F E M E A A N D P R E S I D E N T O F T H E U K B R A N C H , S I L I CO N VA L L E Y B A N K .

WHY CHANGE?

The impact of digital systems and tools on our lives and social interactions has transformed almost all products and services in the economy and, consequently, how we do business. The so-called digital transformation is a constant topic of discussion in conferences, online forums and the business media – everyone talks about it. But, as is often the case with such broad issues, much of the buzz focuses on trends, forecasts and abstract implications, with very little discussion of the practical steps leaders should be following to guide their organisations through these times of unprecedented change. With constant disruption, no one wants to be left behind, and so it is easy for leaders to want to adopt the next piece of technology innovation. That approach is costly and inefficient. The first question executive teams should be asking is why: why do we need to transform in the first place? Embracing the digital transformation is more than simply incorporating new ways of doing things. Instead, it requires an understanding of the impact the digital economy has on the business model. In our current ‘internet of value’ age (when value is exchanged online and everything that is economic to automate will be automated), leaders should be systematically thinking about how constant innovation and changing customer expectations will impact their core delivery.

STRATEGIC AP P ROACH TO DIGITAL TRANSFOR M AT I ON Innovation radar

The question

WHY

WHERE

WHAT

do we need to transform?

in the business do the required changes sit?

new technologies are part of the change and can drive the business forward?

Will establish

BUSINESS GOALS

Examples

Changing customer needs: new products or services

Research and development

Product/service prototype based on online value exchange

Rising customer expectations: improve engagement

Marketing, sales, customer service

Implement new CRM systems, embed use of data analytics

Cheaper/better ways of doing things: revamp operations

Operations across the business

Increase automation, experiment with AI

Cyber risk: enhance security

IT, risk, culture

New security systems, digital risk assessment, staff training

KEY AREAS OF FOCUS/INVESTMENT

PROJECT OUTLINE

“There is always an opportunity to learn from shadow IT. What are teams using to supplement work systems? What technology are they using in their private lives?” SIMON KING

H OW TO D R I V E T R A N S FO R M AT I O N

How does this process occur? CIOs have a crucial role in driving transformation and helping to build a digital mind-set across their companies. They must be alert not only to developments in technological innovation, but also to changes in marketplaces, social patterns and the regulatory environment. CIOs can help align technology to the reality of the business. They will guide strategic conversations at the highest level on how innovation will impact the organisation’s ecosystem, at the same time that digital tools will enable the organisation to navigate the future. 18

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.. making the case for extra investment; .. starting to experiment with what is possible;

.. scaling what works and rapidly ditching what does not; and

.. incorporating what works into the core business.

DIG ITAL IDENTITIES

Scale of digitisation

High (Breadth or reach of digital transformation)

After understanding why it’s important to change, the leadership should map where in the organisation these transformations sit. They may be focused on a specific department, such as R&D, or they may span the entire organisation, as is the case with enhanced cybersecurity and risk mind-set. The technology itself (the ‘what ’ in the equation) does not become relevant until this point, when not only CIOs, but also leaders across functions will bring their perspectives on innovation to drive the organisation forward. Once a project has been outlined, it is time to experiment and be open to possibilities. Transformation leaders must ensure that the board understands the importance of letting go of knowing exactly what the destination will be – the focus is on the direction of travel, the why. Changes are happening fast. In legal services, smart contracts are increasingly used to automatically verify the counterparts to an agreement, and this is impacting legal firms and in-house legal teams. In finance, fintech is increasingly transforming banks and finance teams. Organisations will need to formulate a clear transformation strategy in order to navigate uncertainty. Missing the boat for digital transformation means losing the opportunity to survive in the next decade. Leaders must push for transformation now by:

GLOBALISED

OPTIMISED

Low intensity, with broad breadth

High intensity, with broad breadth

Localised – organisations with a focused but low-maturity digital offering. Specialised – organisations with a dedicated digital programme, but focused on a particular area. Globalised – multiple digital programmes across the business, but of limited capability.

LOCALISED

SPECIALISED

Low intensity, with narrow breadth

High intensity, with narrow breadth

Optimised – a high-capability digital organisation with digital functions across multiple departments.

Low Low

Scope of digitisation

High

(Intensity of digitisation across the business)

Source: https://ivi.ie/digital-readiness/

A S S E S S I N G D I G I TA L R E A D I N E S S

To help to understand an organisation’s digital profile and the factors driving transformation, the Innovation Value Institute outlines two dimensions of transformation: the scope, or the intensity of change efforts, and the scale, or the reach of the digital transformation across the company. The model helps to identify where an organisation sits on the digital journey, providing a direction for future development. ‘Optimised’ organisations are tapping into the many opportunities the digital transformation brings to increase productivity, reduce costs and create selfservice solutions and improve services in general.

“The need for digital transformation is not something that any business can ignore. At Silicon Valley Bank, our clients are digital natives – they have the right tech in place from day one. That puts pressure on incumbents to keep up with the pace of change. Lifting the bonnet and really understanding the areas that need to be digitised is key. It’s up to business leaders to foster a growth mind-set and a culture of change. Then it’s about putting as much manpower and resource behind the transformation as possible. Time is of the essence but mistakes made in haste can be very expensive to fix – so a clear plan is essential.” PHIL COX

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E XECUTIVE PAY: RE WA RDIN G TOP TALE NT CHIEF PEOPLE OFFICER & LEARNING DIRECTOR W I T H S P EC I A L T H A N K S TO I M E L DA WA L S H , N O N - E X EC U T I V E D I R EC TO R A N D C H A I R O F T H E R E M U N E R AT I O N CO M M I T T E E , W I L L I A M H I L L , M I TC H E L L S & B U T L E R S , A N D FI R S T G R O U P ; A N D LO U I S E FI S H E R , C H A I R O F T H E B OA R D, C I P D.

MANAGING THE CHALLENGES

The need to innovate, manage unprecedented risk and create superior value means that organisations need the ability to attract and retain the best talent, and reward them appropriately. However, multiple stakeholders differ in their perceptions of what constitutes fair pay. Remuneration committees (RemCos) and HR directors face the twin challenges of incentivising the leadership, while simultaneously addressing rising social pressure on excessive pay to executives. Although the responsibility for decisions on executive pay lies with the board, advised by the RemCo, it is the role of HR to inform NEDs on people and performance, and to help make the best use of resources to build a strong executive team. WORKING WITH THE REMCO

With increasing regulation, the role of the RemCo is expected to expand. The focus will widen from determining remuneration for the top leadership and will encompass the task of connecting pay throughout the organisation, from top to bottom, reflecting performance. Under pressure from multiple sides, the RemCo will have to be increasingly resilient, inquisitive and analytical. As they are not involved in the daily running of the organisation, NEDs have asymmetric knowledge when engaging with the executive team to set targets, put together packages and plan ahead. CPOs must engage with the RemCo to explain the people drivers of organisation performance and support their decision-making. Best practice can help HR leaders and NEDs reconcile the interests of multiple stakeholders and establish pay strategies that can help organisations to grow.

..C L A R IT Y. Have a very straightforward understanding of how the reward frameworks and targets you propose support the business model, and communicate that clearly. Even when adopting a position that may be unpopular among shareholders, being transparent builds goodwill.

..S H A R E H O LD E R LE T TE R . Investors have to read large numbers of these. Be objective. Start with a short narrative on why you are rewarding in that way, and follow with a table with the numbers.

..D E FE N D YO U R S TR ATE GY. If a company is experiencing difficulties, it is perfectly appropriate to establish an incentive plan, and if upper-level targets are hit and the share price reacts accordingly, to reward the executives who led the turnaround.

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“HR directors must help the RemCo understand what are the right metrics driving performance to support their decisionmaking.� IMELDA WALSH


..S H A R E H O LD E R AC TI V I S M . Activist shareholders will have significant investment in a company, will devote considerable resources to analysing it and establishing their own vision for it, and will demand a lot of board time. They put additional pressure on the RemCo, which is already reconciling the perspectives of the executive leadership and regulators, as well as trying to establish a fair pay agenda. Interestingly, activists are not necessarily concerned with traditional governance standards, but in some cases purely with their own metrics of performance. R E S P O N S I B LE C A P I TA LI S M

Over the last decade, and especially in the last few years, social pressure has built up for businesses to be active players in the fight against inequality. There is growing scrutiny over excessive pay and, although pay freezes were previously considered the most austere scenario, some companies are now actively considering pay reductions. With a generational change in the composition of boards, this agenda is likely to gain strength. Some of the trends that are currently being observed in boardrooms are outlined below.

IMELDA WALSH

N O N - E X EC U TI V E D I R EC TO R A N D CH A I R O F TH E R EM U N ER ATI O N

..R E G U L ATI O N . The Financial Reporting Council’s review of the

CO M M IT TEE , W I LLI A M H I LL ,

Corporate Governance Code is expected to establish clearer guidelines for remuneration, as regulation is currently less straightforward than that applied to financial services by the Financial Conduct Authority and the Prudential Regulation Authority. This is more likely to bring clarity for organisations, rather than simply additional burdensome regulation.

M ITCH ELL S & B U TLER S , A N D FI R S T GROUP

..TH E R I S E O F PAY R ATI O S . New corporate governance laws will oblige public companies to publish their pay ratios. Although this may not reduce inequality directly, it will at least trigger an important public discussion on fairness.

..E M PLOY E E E N GAG E M E NT. Transparent communication is key. If the company educates staff properly on its pay policies, they will understand that the responsibility of an executive role means more money and a different pay scheme. An organisation needs clarity over its reward framework, and honesty about it. Pay is important, but great leadership and consistent communication play important roles.

..PL A N A H E A D . A company might not be able to increase lower-level salaries substantially to ensure a significant reduction in pay inequality, but it can establish aspirations and plan to improve how it rewards these employees.

..E M PLOY E E R E PR E S E NTATI O N . Whether companies are discussing the possibility of a direct representative of the workforce on the board, or a designated NED to bring employees’ perspective, or the establishment of an employee council, HR directors are responsible for conveying the perspective of the staff to NEDs.

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There is growing scrutiny over excessive pay and, although pay freezes were previously considered the most austere scenario, some companies are now actively considering pay reductions.


U N LO CKIN G A I O PPO RTU N ITIE S CHIEF OPERATING OFFICER & SUPPLY & PROCUREMENT DIRECTOR W I T H S P EC I A L T H A N K S TO LO R D C L E M E N T-J O N E S C B E , PA R T N E R , D L A P I P E R ; E M M A K E N D R E W, A R T I F I C I A L I N T E L L I G E N C E L E A D, ACC E N T U R E T EC H N O LO GY U K & I R E L A N D ; A N D M A R K O ’ CO N O R , PA R T N E R , D L A P I P E R .

S E I Z I N G T H E I N I T I AT I V E

DRIVING IMPACT IN

Agile and disruptive competitors are challenging industry incumbents and leaving whole industries transformed. With diverse products to choose from, customer expectations are changing rapidly and demanding new types of products and services. Although leaders have often looked to process optimisation, revising operating models and cost reduction to deliver more value, these methods are increasingly taking a back seat with the rise of AI and automation. To deliver sustainable growth and secure market share, operations leaders must act rapidly and incorporate digital tools that offer intelligence and insight. Successfully deploying data analytics, AI and automation will enable businesses greatly to increase their operational capabilities, widen product streams and maintain relevance.

..TA K E TH E B I G - PI C TU R E V I E W.

To ensure that AI increases efficiency and delivers value, functions must recognise that a digital mind-set will become the new normal.

O P E R AT I O N S

Leaders know that support at board level will determine whether their technology roadmap will take off or remain stuck in experimental stages. To secure support, they must have clarity on how automation brings return on investment and the timescale for payback. Apart from getting investment to deliver transformation and implement automation, operations leaders must also take a big-picture view of how digital transformation in their functions can serve as a beacon for wide-scale digital implementation across the business. Once processes are streamlined and automation begins to deliver value, leaders need to plan how these tools can be scaled across the organisation for wider benefit. For example, the technologies underpinning proprietary workflows that automate decision-making for procurement may be adapted and integrated for the benefit of other departments, such as marketing and finance.

..E S TA B LI S H A D I G ITA L M I N D -S E T. Automation and digital transformation is not ‘just another programme’ run by IT, but should be an initiative cutting through the whole organisation. AI will change operations as disruptively as the internet, and is rapidly turning from a nice-to-have into a must-have.

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To ensure that AI increases efficiency and delivers value, functions must recognise that a digital mind-set will become the new normal. Although a reduction in routine work and an increase in productivity should be welcomed by employees, there may still be cultural resistance to a widescale transformation. Operations leaders must oversee the cultural transformation in their functions and create engagement and a renewed sense of purpose, creating buy-in for digital transformation.

..U P S K I LL TH E WO R K FO RC E . When automation takes over a significant portion of work, it raises the question of how best to deploy the workforce. However, the idea of robots taking over every aspect of life cannot be further from reality. ‘Hard’ AI, which can replicate the full spectrum of human cognition and behaviour in all sorts of tasks, is decades away from realisation; it is ‘soft’ AI, which can perform specific tasks intelligently, that will be the focus for businesses. Far from representing a complete substitution of the current workforce, this opens up the possibility for employees to upskill digital literacy and develop high-level analysis and relation-building skills.


I N N OVAT I O N A N D T R E N D S IN AI

..D E C I S I O N S U PP O RT. AI is increasingly capable of providing analytical and decision-making support. For example, the predictive capabilities of AI can accumulate pools of past trends and develop operations models that assist managers in deciding procurement and job scheduling, for example by predicting inventory shortages in real time by analysing the flow of customer orders. AI systems can alert operations teams as to where problems might occur in the value chain and analyse data to make smart decisions.

..I N C R E A S I N G A D D E D VA LU E . Over time, AI will become a core system utility, to be pulled up on demand (like WiFi, gas and electricity), and a business necessity. By automating routine decisions, AI can free up personnel and workforce resources. Essentially, automation allocates internal ‘outsourcing’ work to machines, which enables employees to focus on value-adding projects and develop highly personalised solutions for customers. Employees will also be empowered to solve more strategic problems once automation gains scale, which means that the function will need to incorporate more flexible approaches towards project management and help increase the entrepreneurial drive of all employees.

LO R D C LE M E N T-J O N E S C B E

PA RTN ER , D L A PI PER

..DATA- D R I V E N O PE R ATI O N S . Operations leaders

Companies in all sectors have benefited from intelligent data systems, but AI boosts these gains in a hitherto unforeseen manner, enabling both the smallest start-ups and industry incumbents to rapidly scale and take advantage of customised solutions to drive customer satisfaction.

know the importance of data and see it as the lifeblood of the function. With the help of AI, both structured and unstructured data can be aggregated and analysed on a mass scale. This can reveal previously unknown customer preferences and locate efficiencies and savings in the supply chain. Companies in all sectors have benefited from intelligent data systems, but AI boosts these gains in a hitherto unforeseen manner, enabling both the smallest start-ups and industry incumbents to rapidly scale and take advantage of customised solutions to drive customer satisfaction. Operations leaders need to develop data strategies in tandem with wider organisational goals and begin to deploy AI to turn data into insights and even automated actions.

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