Harnessing the power of austerity to create opportunity and growth - http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/harnessing-the-power-of-austerity-to-create-opportunity-and-growth/

http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/harnessing-the-power-of-austerity-to-create-opportunity-and-growth/

Harnessing the power of austerity to create opportunity and growth: managing change effectively for survival and prosperity.

 

From Robert J Toogood, Senior Partner – Chaordic Solutions:

We are constantly bombarded with negative messages about challenges ahead of us; messages that seem to continuously refer to terms like austerity, recession, revenue, growth, innovation, confidence, complexity, and chaos … to name but a few!

European leaders continue to warned of difficult years ahead.  However, it doesn’t have to be all doom and gloom.

Whilst the inevitable chaos caused by economic uncertainty has a tendency to push organisations into retreat, this is not always the case.  Did you know that iconic companies like:

Disney, CNN, MTV, Hyatt, Burger King, FedEx, Microsoft, Apple, Gillette, AT&T, Texas Instruments, 20^th Century Fox, IBM, Merck, Hersheys, IHOP, Eli Lilly, Coors, Bristol-Meyers, Sun, Amgen, The Jim Henderson Company, LexiNexis, Autodesk, Adobe, Symantec, Electronic Arts, Fortune, GE, and Hewlett-Packard

were all founded during periods of economic recession and instability.

One definition of chaos suggests it is the uncertainty sparked by uncharted territory, economic recession, and bubbles of opportunity.  We seem to phase in and out of this chaotic state … a state of randomness and disorder.  The ebb and flow happens in an almost natural way, almost mimicking what occurs in the natural world.  This system of natural governance that blends the characteristics of chaos and order is known as the chaordic state.

The good news is that we can use the significant power of these chaordic forces to help with generating revenue and growth, so important for our future economic survival.  One such way could be to embark upon a business transformation programme, another might be to merge with or acquire another company.  All of these require change … something that we have to accept is a permanent feature of the world in which we all live.

So what is business transformation – well, it’s all about aligning people, process and technology to achieve some previously agreed significant change.  These three areas also feature as being important when considering a more coordinated approach to the associated areas of governance, risk management and compliance within an organisation.

Our real-life experience shows the importance of making sure your desired significant change is relevant and appropriate ie is your business strategy “fit-for-purpose” and correctly aligned with what is going on in at the operational level?  It could be that in order to achieve your strategic objectives you need to merge with and/or acquire another company … or it could be that organic growth is what is needed.

The conclusions from an Economist Intelligence Unit report on business transformation highlighted that the ability to manage change effectively is a great competitive advantage.  It goes on to make the point that external crises such as what we are experiencing at present help to drive change in organisation and provide a “burning platform” for change, but emphasises the importance of the people-related challenges.

Several years ago, a white paper from our own consultancy promoted the benefits of using a ten-step approach for generating prosperity from the deteriorating economic conditions at that time.  It is encouraging to see that Kepner-Tregoe has been recommending a similar approach in their paper about coping with uncertainty in the business environment.  The key message from both approaches is the importance of developing a clear business strategy and then maintaining strategic directions and integrity when times get tough.

We can help you take advantage of well-proven, tools and techniques to help you survive and prosper from the continuing economic uncertainty … .book a free, introductory consultation call to discuss your immediate challenges on a non-obligation and confidential basis – simply call us on +44 (0)1983 617241 to set something up.

More … http://www.chaordicsolutions.co.uk/services.html

Failure follows project approach to innovation - http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/failure-follows-project-approach-to-innovation/

http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/failure-follows-project-approach-to-innovation/

Failure follows project approach to innovation: cannot force it to happen, can only shape environment to facilitate.

 

Extract from Forbes Leadership website – PJ Chan:

Innovation is a big corporate buzzword, and it’s one of the hottest topics on this blog. That’s because it’s one of the biggest mysteries to business leaders. A new study from Accenture, “Why Low Risk Innovation Is Costly,” revealed that fewer than one in five chief executives believes their company’s strategic investments in innovation are paying off. Because of the high percentage of failure, nearly half of the executives surveyed said their companies were less likely to risk implementing breakthrough ideas.

While some companies are wildly successful with their innovation attempts, we also know that at least 70 percent of change efforts fail and, by definition, innovation ranks as the biggest change effort out there. The question is: What are these unsuccessful CEOs and their people doing wrong with their strategic investment in innovation?

Innovation only happens in the right environment, one where everyone is not only allowed to innovate, but they are actively encouraged to speak up and bring new ideas to the table. This may sound like common sense, but it is far from common practice.

How do you create an innovative environment? While I can’t prescribe how to make your organization innovate, these tips can help you breed a culture that contains innovation in its DNA.

Continues: http://www.forbes.com/sites/johnkotter/2013/06/07/6-tips-for-building-innovation-into-your-company-dna/

Author: PJ Chan is a senior engagement leader at Kotter International, a firm that helps leaders accelerate strategy implementation in their organizations.

2013 Forbes.com LLC™   All Rights Reserved

 

Companies and regulators in emerging markets must improve corporate governance - http://www.chaordicsolutions.co.uk/blog/from-our-governance-consultants/companies-and-regulators-in-emerging-markets-must-improve-corporate-governance/

http://www.chaordicsolutions.co.uk/blog/from-our-governance-consultants/companies-and-regulators-in-emerging-markets-must-improve-corporate-governance/

Companies and regulators in emerging markets must improve corporate governance: collaboration key to success.

 

Extract from Global Corporate Governance Forum website:

Key Corporate Governance Issues in Emerging Markets: Theory and Practical Execution – June 11-12, 2012. Leipzig, Germany

The HHL Center for Corporate Governance, in collaboration with the Global Corporate Governance Forum, brought together senior representatives from academia, development institutions, companies and investors to provide a future-oriented assessment of the governance situations in three important regions of the world – Africa, Asia and Southern Europe.

While the conditions in the countries representing the three regions – Nigeria, Indonesia, and Croatia, respectively – are quite different, there were be many over-arching topics that are relevant to all regions.

Each regional session started with a presentation on the key issues and challenges for corporate governance reform in the selected country, followed by an assessment on how this experience reflects the regional trends and conditions. A panel discussion on how to advance corporate governance in the region concluded each session.

Important sessions of the conference focused on two key governance issues:

- The performance value of ‘good governance’ in emerging markets, based on the latest academic research and practical insights from large international investors.

- Corruption and practical ways of dealing with this major governance problem.

Full conference report (pdf)

For more detailed information, please visit the conference website. 

Background: 

The Handelshochschule Leipzig was founded 1898 and is Germany’s oldest university for business administration studies. In 2010, the Center for Corporate Governance was established at the HHL. Apart from research and educational projects, the Center promotes professional exchange between research and practice. Its research activities are focused on the relevance of good governance for performance, diversity and the development of governance in emerging countries.

 http://www.hhl.de/ccg

More … http://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/global+corporate+governance+forum/events/hhl_conference

Improving knowledge worker productivity by 10-15% - http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/improving-knowledge-worker-productivity-by-10-15/

http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/improving-knowledge-worker-productivity-by-10-15/

Improving knowledge worker productivity by 10-15%: power of collaborative process and knowledge management.

 

Extract from Management Innovation eXchange – Mårten Keijser:

How we improved the productivity of knowledge and interaction workers by 10-15% through the introduction of a collaborative process & knowledge management solution. In other words, a documentation of the values attributed to enabling and empowering employees to be in charge of a greater part of their work situation.

It is also a summary of insights regarding how to handle the issues of control and information security, things that a major enterprise would never give up despite overwhelming benefits of a more open culture.

Easily shared insights

Influencing a conservative industry giant is quite a different challenge compared to for example shaping a new startup, but the values attributed to progressive management philosophies can be just as real.  If I were to list the three most important things required to achieve what we did it would be (in ranking order):

1. You need a sponsor from high up in the hiearchy that believes in the project and the solution you try to accomplish.

2. Involve users and stakeholders very early and listen to their feedback, It is valuable and also, if you try and change how people work they must see the value of the change and this is much easier if they feel that they are included early in the process.

3. Rely on people that are smarter than you when you develop the solution, it just gets so much better.

More … http://www.managementexchange.com/story/making-office-knowledge-open-sourceich-case-study

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 License.

Audit faces increasing pressures - http://www.chaordicsolutions.co.uk/blog/from-our-compliance-consultants/audit-faces-increasing-pressures/

http://www.chaordicsolutions.co.uk/blog/from-our-compliance-consultants/audit-faces-increasing-pressures/

Audit faces increasing pressures: opportunities to anticipate and address challenges to increase trust and stability.

 

Extract from Protiviti - Joel Kramer, MIS Training Institute:

New regulations, technologies and risks are upon us. The business environment is continuously changing, but changes these days may be happening faster than ever before. Internal audit’s responsibilities have been growing just as fast, and they are expected to keep growing as new challenges emerge.

With this in mind, we asked participants in two separate panel discussions I moderated at a MIS SuperStrategies conference what they think will be the greatest challenges internal audit leaders will face over the next three to five years. We also asked how such challenges could be effectively addressed. The participants were internal audit executives from the Metropolitan Transit Authority of New York, U.S. House of Representatives, Vanguard Group, Protiviti Inc., Clear Channel Communications, Metropolitan Atlanta Rapid Transit Authority, Talbots Inc., Georgia-Pacific LLC, and Coca-Cola Co.

Participants stressed that they have noticed the rate of change in the profession is so rapid that some risks (and their impacts) have substantially changed in the recent past. They also noted, almost universally, that chief audit executives (CAEs) are being asked to do more audits and address more risks without commensurate increases in resources.

More … http://www.knowledgeleader.com/KnowledgeLeader/Content.nsf/Web+Content/HIInternalAuditRatchetsupforaDemandingFuture!OpenDocument

(c) Copyright Protiviti Inc. 2013. EOE All Rights Reserved

New decision-making tool wins excellence prize - http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/new-decision-making-tool-wins-excellence-prize/

http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/new-decision-making-tool-wins-excellence-prize/

New decision-making tool wins excellence prize: gives decision makers true insight into multi-criteria problems.

 

Extract from University of Portsmouth Press Release:

A new decision-making tool designed by researchers at the University of Portsmouth has been praised as outstanding for its potential contribution to business.  Dr Alessio Ishizaka, Dr Philippe Nemery and colleagues won the Outstanding Paper Award for the Literati Network Awards for Excellence 2013.

Their research on sorting methods, used by decision makers in all sectors including finance, the environment, marketing and medical diagnosis, has the potential to help improve the results of complex decisions.

Their research is published in the latest edition of the Journal of Modelling Management.

Dr Ishizaka is an expert in decision analysis and Dr Nemery is a mathematician.

In their study, they examined 20 small and medium sized businesses in France to assess the quality of their decisions and the success of each business.  They found existing decision-making tools, widely used by businesses, give results which are too broad to be meaningful and, as a result, are unable to help a decision maker make radical improvements.

Instead, the researchers developed and tested a finer detailed and visually graphic model, which they say will make it much easier for businesses learn and grow.

Dr Ishizaka said: “Companies prosper or fail as a direct result of decisions taken by managers or stakeholders, so it’s vital the way they make decisions is examined.

“Several decision-making tools exist but they provide raw, quantitative data rather than richer qualitative results which give decision makers true insight into multi-criteria problems.”

The new model allows decision makers to compare different actions and outcomes on a visual scale.  When the model was tested it gave a huge degree of detail about each companies’ strengths and weaknesses, which no previous models had been able to do.

Dr Ishizaka said: “This new model allows us to understand each company compared to its competitors. We could see, for example, that a company was good at project management but weak at human resource management, while a second was good at knowledge management but poor at product development, giving a much fuller measure of each companies’ capabilities.

“Existing models give flatter results, for example, ranking companies from best to worst, even if all the companies are performing poorly, and with no detail on which aspects were needing attention and which were being managed well.

“In our case study we could see immediately, once analysis was done, that even the best-ranked company still had room for improvement. That sort of detailed information is of significant help to anyone whose job is to make the best decisions, whether they are in finance, medicine or any other sector.”

The French co-authors of the research have since been awarded a grant of nearly 500,000 Euros from the French trade union, Union des Industries et Métiers de la Métallurgie, to develop the tool online to allow all businesses to use the tool to evaluate themselves. Dr Ishizaka will be supervising the development of the website and analysing the collected data.

More … http://www.smart-picker.com/

Europe has potential to become world innovation leader again - http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/europe-has-potential-to-become-world-innovation-leader-again/

http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/europe-has-potential-to-become-world-innovation-leader-again/

Europe has potential to become world innovation leader again: but proactive policies needed to create right culture.

 

Extract from Booz & Company Press Release:

Brussels, June 6, 2013 – The 2013 State of the European Union Survey Reveals an Urgent Call to Action for E.U. Leaders

Business leaders are more pessimistic and more urgently demanding change—but, despite this, remain optimistic about the European Union’s long-term prospects for prosperity and global prominence. This is a core message of the 2013 State of the European Union (E.U.) Survey released today by Booz & Company, INSEAD, and the European Executive Council (EEC).

‘Overall, the mood is one of impatience with a strong call to action: Business is demanding that the E.U. take bold steps to promote economic, political, and social policies that directly address growth. There should be no sacred cows. The question is, will European leaders have the courage to act?’ says Per-Ola Karlsson, senior partner at global management consultancy Booz & Company.

The survey report, ‘Growing Europe: The Competitiveness Imperative’, reveals that corporate leaders are more pessimistic about Europe than they were last year (61 per cent compared to 52 per cent). And 88 per cent believe the E.U. urgently needs to implement policies to bridge the European competitiveness gap and raise productivity. However, the good news is that 72 per cent of corporate leaders do believe the E.U. is capable of achieving positive change, and looking ahead to 2030, they say the E.U. will remain one of the top global powers.

‘Business leaders want to move the debate beyond whether budget austerity or growth stimulation will revitalise Europe. Nine out of 10 respondents call for targeted actions to improve productivity and competitiveness’, says Javier Gimeno, academic director, INSEAD European Competitiveness Initiative.

Even with a potential U.K. referendum looming on the political horizon, business leaders do not believe the E.U. will lose member countries. However, they clearly believe tough decisions need to be made.

The report analyses the responses of 1,500 executives both in and outside Europe who were asked about the economic, social, and political aspects of the European Union. The report will be presented today at the third annual State of the European Union conference in Brussels.

Corporate leaders strongly believe the business sector will drive growth and advocate that, this being the case, their voices must be heard by policymakers.

However, this does not mean applying a ‘one size fits all’ solution across the continent. ‘The E.U. can act as an orchestrator: Countries don’t have to sing in unison but the E.U. should entice them to sing in harmony’, says Bruno Lanvin, executive director, INSEAD European Competitiveness Initiative. ‘Business leaders do not reject the European social model, but favour incentives to work—more flexibility in working hours, pensions, and wages—to help boost growth and reduce unemployment. The data shows that in countries where the economy is stronger, business leaders are open to adjusting the European social model if it helps solve the high unemployment and low productivity that is holding Europe back’.

Key findings include:

Economy

1. Eighty-two per cent of corporate leaders see a gap between Europe’s competitiveness and that of other regions, and 49 per cent believe this gap will increase in the next 10 years.

2. Restoring Europe’s productivity is the key economic priority of 88 per cent of respondents; the majority believe that growth will be spurred by small and medium-sized businesses, not multinationals or state-owned enterprises.

3. Eighty-eight per cent believe the E.U. could do more to represent business on a global stage, for example negotiating stronger trade links, but it will have to overcome the perception by non-European business leaders that Europe is a fragmented collection of markets rather than a single block.

Society

1. Fifty-nine per cent of business leaders remain committed to the core principles of the European social model and favour increased alignment on minimal standards for health, education, and welfare.

2. The policies for growth require a rethink of social models, where applicable. For instance, 91 per cent of respondents say the best way to balance budgets and improve productivity is by increasing the economic incentives to work.

3. Youth unemployment is a key concern; over 70 per cent of business leaders are looking for tax incentives to hire more young people and investments and subsidies to help in retraining the current workforce.

Technology and Innovation

1. Six out of 10 respondents believe the lack of innovation culture is a key obstacle to economic growth and development in Europe. To boost innovation, business leaders favour public–private collaboration and tax incentives for private investment in R&D, given the E.U.’s shrinking budgets.

2. Eight out of 10 business leaders are most concerned about the innovation threat from China and are less worried than in previous years about similar competition from India, Japan, and the United States.

Download the full report here: http://booz.co/15I8gqC

Access Per-Ola Karlsson’s video: http://booz.co/15I8gqC

For more information about the report partners, please visit:
INSEAD: www.insead.edu/home/
Booz & Company: www.booz.com
The European Executive Council: http://www.dza.fr/2.aspx?sr=1
The State of the European Union Conference: www.stateoftheeu.eu/

About Booz & Company
Booz & Company (booz.com) is a leading global management consulting firm focused on serving and shaping the senior agenda of the world’s leading institutions. Drawing on the talents and insights of more than 3,000 people in 58 offices around the world, we help our clients achieve essential advantage by working with them to identify and build the differentiating capabilities they need to outperform.

Copyright 2013 Booz & Company Inc. All rights reserved.

More … http://www.booz.com/global/home/what-we-think/reports-white-papers/article-display/revitalising-european-dream-2013?

 

Using mix of formal and informal factors to advance company strategy - http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/using-mix-of-formal-and-informal-factors-to-advance-company-strategy/

http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/using-mix-of-formal-and-informal-factors-to-advance-company-strategy/

Using mix of formal and informal factors to advance company strategy: using organisational change for advantage.

 

Extract from strategy+business – Ashok Divakaran, Gary L. Neilson, and Jaya Pandrangi:

Drawing on Booz & Company’s long-standing work on organizational DNA, here’s how to design a mix of formal and informal factors to advance your company’s strategy. Click the link to also read the perspective of two Walgreens executives on their experience with organizational change.

©2013 Booz & Company Inc. All rights reserved.

More … http://www.strategy-business.com/article/00194?

Increasing corporate governance opportunities in developing arab world - http://www.chaordicsolutions.co.uk/blog/from-our-governance-consultants/increasing-corporate-governance-opportunities-in-developing-arab-world/

http://www.chaordicsolutions.co.uk/blog/from-our-governance-consultants/increasing-corporate-governance-opportunities-in-developing-arab-world/

Increasing corporate governance opportunities in developing Arab world: contributing to better strategic decision making.

 

Extract from Insead Knowledge - Jane Williams:

As they shift towards more market-based economies, Arab companies can no longer afford to neglect demands for greater accountability and transparency in the boardroom.

© 2012 INSEAD Knowledge

More … http://knowledge.insead.edu/csr/corporate-governance/corporate-governance-in-a-developing-world-2481

Our recent research has identified key GRC implementation barriers - http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/our-recent-research-has-identified-key-grc-implementation-barriers/

http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/our-recent-research-has-identified-key-grc-implementation-barriers/

Our recent research has identified key GRC implementation barriers: also best practice guidance on how to address them.

 

From Robert J Toogood, Senior Partner – Chaordic Solutions:

We live in exciting but unchartered and dangerous times.

For these reasons, it is vitally important we learn how to more effectively manage the dynamic and complex interrelationships between the areas of governance, risk and compliance.

Unfortunately, the current global economic climate is partly due to a significant number of corporate failures which have challenged the foundations of the global economic system.  These failings could be argued as evidence of an ineffective approach to managing governance, risk management and compliance activities within the modern-day corporation.

An integrated approach to managing this complexity makes sound sense and in isolation, on paper, can be easily justified.  However, the barriers to effective implementation are many and need to be better understood.  The realities of the new world in which we all now live and work are such that we can no longer accommodate inefficiencies in our critical functions and processes.

So the time has come for us to look at our organisations and society in general in a different, much more holistic, and sustainable way.  An integrated approach to managing governance, risk management and compliance provides us with a way of achieving this … provided we learn from the past and provide the correct environment for our efforts to succeed.

Recent research conducted by Chaordic Solutions has identified some of the implementation barriers and offers best practice guidance on how to address them.  If you would like to discuss how the findings from this research might help you with some of your current challenges, then contact Robert J Toogood at on +44 (0)1983 617241 or at robert_toogood@chaordicsolutions.com to schedule some time … on a strictly confidential and non-obligation basis

More … www.robertjtoogood.com … this site is best viewed from a laptop or desktop as it is not currently optimised for mobile viewing.

Chaordic Solutions is a trading name of Project Systems Support © Copyright 2013. All Rights Reserved

How organisations are changing their approach to risk management - http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/how-organisations-are-changing-their-approach-to-risk-management/

http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/how-organisations-are-changing-their-approach-to-risk-management/

How organisations are changing their approach to risk management: importance of strong C-suite leadership.

 

Recording of Webinar on 15 May 2013 produced in collaboration between the Harvard Business Review Analytic Services, Zurich, FERMA, and PRIMO

Listen to a panel of industry experts discuss real life experiences on leadership attitudes and strategic risk management implementation. Topics covered include:

- Risk governance and risk committee
- Strategic and operational goals versus risk management and risk culture
- Working with the board on risk issues
- Embedding a company risk culture

The findings from the 2013 Leadership and Risk Management Survey are also discussed.

© 2013 Zurich Financial Services

More … http://www.zurichcorporateforum.com/archive-videos/2013/05/17/leading-risk-culture-change-webinar

Promoting more natural leadership, dramatically expanding capacity - http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/promoting-more-natural-leadership-dramatically-expanding-capacity/

http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/promoting-more-natural-leadership-dramatically-expanding-capacity/

Promoting more natural leadership, dramatically expanding capacity: individuals learning to lead without authority.

 

Extract from Management Innovation eXchange – Gary Hamel:

We live in a world where never before has leadership been so necessary but where so often leaders seem to come up short. Our sense is that this is not really a problem of individuals; this is a problem of organizational structures—those traditional pyramidal structures that demand too much of too few and not enough of everyone else.

So here we are in a world of amazing complexity and complex organizations that just require too much from those few people up top. They don’t have the intellectual diversity, the bandwidth, the time to really make all these critical decisions. There’s a reason that, so often in organizations, change is belated, it is infrequent, it is convulsive.

Because, typically, in those traditional structures, by the time a small team at the top realizes there’s a need for fundamental change, by the time a problem is big enough or an opportunity clear enough that it prompts action, that it breaks through all the levels, commands the attention of these extraordinarily busy people up top—it’s too late. So if we want to build truly adaptable organizations, we have to syndicate the work of leadership more broadly.

I think the dilemma is that as complex as our organizations have grown, as fast as the environment is changing, there are just not enough extraordinary leaders to go around. Look at what we expect from a leader today. We expect somebody to be confident and yet humble. We expect them to be very strong in themselves but open to being influenced. We expect them to be amazingly prescient, with great foresight, but to be practical as well, to be extremely bold and also prudent.

How many people like that are out there? I haven’t met very many. Right? People who have the innovation instincts of Steve Jobs, the political skills of Lee Kuan Yew, and the emotional intelligence of Desmond Tutu? That’s a pretty small set. And yet we’ve built organizations where you almost need that caliber of person for them to run well if you locate so much of the decision-making authority in the top of the organization.

MIX co-founder Gary Hamel in conversation with McKinsey Publishing’s Simon London on the Leaders Everywhere Challenge.

How do we overcome the formal hierarchy and promote more natural leadership? How do we dramatically expand the leadership capacity of our organizations? And how do individuals learn to lead without authority? Do you have a bold idea or a story that tackles one of these questions? Join the Leaders Everywhere Challenge and earn a chance to win this year’s HBR/McKinsey M-Prize for Management Innovation (deadline June 17^th).

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 License.

More … http://www.managementexchange.com/blog/syndicating-work-leadership

Risk management and culture not perceived to help achieve core strategic objectives - http://www.chaordicsolutions.co.uk/blog/from-our-risk-management-consultants/risk-management-and-culture-not-perceived-to-help-achieve-core-strategic-objectives/

http://www.chaordicsolutions.co.uk/blog/from-our-risk-management-consultants/risk-management-and-culture-not-perceived-to-help-achieve-core-strategic-objectives/

Risk management and culture not perceived to help achieve core strategic objectives: just as compliance exercise.

 

Extract from Chartered Insurance Institute – Policy and Public Affairs:

This Thinkpiece looks at some preliminary findings from a CII member survey, drawing some conclusions regarding cultures and attitudes towards corporate risk management in the insurance sector. It is part of a wider study on risk culture in insurance.

Risk culture has emerged as something of a hot topic since the banking crisis, resulting in major regulatory initiatives across financial services, such as Solvency II in insurance.

It would seem that, for the insurance sector especially, risk culture and risk management has become a major compliance activity. But is this where corporate risk management should reside?

The CII joined several other organisations in supporting a major research project by the London School of Economics and the University of Plymouth to better understand the drivers and practices of risk culture in the insurance sector.

- Much attention has been paid to problems of culture within financial organisations, and to “risk culture” in particular. Both financial institutions and their regulators remain unsure about what risk culture is, or how to manage it effectively.

- This article summarises the preliminary findings of a major London School of Economics/University of Plymouth research project into risk culture, part-funded by the CII. It aims to understand what financial organisations are actually doing about risk culture and why, as well as the practical challenges they are facing and how these might be overcome.

- Preliminary practitioner interviews suggest the presence of work streams and change programmes around the risk culture theme, but little consensus about what this means or how best to manage it. There was a strong focus on improving risk information infrastructure and reporting.

- CII member survey research points to three broad trends: most firms have a risk culture programme under way; these programmes are largely driven by regulatory initiatives such as Solvency II; there is limited evidence of drivers that are not related to compliance, such as error reduction, external disclosure and quality improvement. Overall, firms appear to be becoming more conservative. Risk management/culture programmes are intensifying this trend.

- Survey results suggest that in terms of drivers, risk management is viewed as a hygiene activity to deal with negative outcomes, or to handle what is required by regulators. It is not seen as a means of creating potentially profitable opportunities; this is regarded as a secondary concern.

Overall, the survey of CII members suggests that risk culture change programmes and risk management practices are both directed at regulation. Risk management is primarily viewed as a compliance exercise, rather than something to help firms achieve core strategic objectives.

Copyright ©2013 The Chartered Insurance Institute

More … http://www.cii.co.uk/knowledge/policy-and-public-affairs/articles/thinkpiece-95-understanding-corporate-risk-culture-in-insurance/25914

 

Many CEOs see culture as their highest priority - http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/many-ceos-see-culture-as-their-highest-priority/

http://www.chaordicsolutions.co.uk/blog/from-our-business-transformation-consultants/many-ceos-see-culture-as-their-highest-priority/

Many CEOs see culture as their highest priority: the primary vehicle for establishing their legacy.

 

Extract from strategy+business – Jon Katzenbach and DeAnne Aguirre:

It is striking to see how many Increasing nbr of CEOs see their most important responsibility as being the leader of the company’s culture. According to Ginni Rometty, CEO of IBM, “Culture is your company’s number one asset.” Her counterpart at Microsoft, Steve Ballmer, has said, “Everything I do is a reinforcement or not of what we want to have happen culturally.” In another typical remark from the C-suite, Starbucks Corporation CEO Howard Schultz has written that “so much of what Starbucks achieved was because of [its employees] and the culture they fostered.”

Researchers such as former Harvard Business School professors John Kotter and James Heskett have also found consistent correlation between robust, engaged cultures and high-performance business results (as described in their book, Corporate Culture and Performance [Free Press, 1992]). But most business leaders don’t need that evidence; they’ve seen plenty of correlation in their own workplace every day.

More … http://www.strategy-business.com/article/00179?gko=6912e

©2013 Booz & Company Inc. All rights reserved.

 

Risk-awareness can be hindered by tension between business and risk officers - http://www.chaordicsolutions.co.uk/blog/from-our-risk-management-consultants/risk-awareness-can-be-hindered-by-tension-between-business-and-risk-officers/

http://www.chaordicsolutions.co.uk/blog/from-our-risk-management-consultants/risk-awareness-can-be-hindered-by-tension-between-business-and-risk-officers/

Risk-awareness can be hindered by tension between business and risk officers: but senior risk committees can help.

 

Extract from Economist Intelligence Unit Press Release:

A survey of institutional investors conducted by the Economist Intelligence Unit reveals a disconnect between business and risk functions at many institutions. Whereas a majority (52%) of non-risk staff thinks the risk function exists primarily to fulfill regulatory obligations, only 30% of risk professionals think this. Moreover, less than two-thirds of all respondents (61%) think that their organisations’ business managers have a clear understanding of the role of risk managers, and just 16% strongly agree that they do. Those in the risk function are less confident that this is the case—just 56% agree (and only 12% strongly agree).

These are among the key findings of a new report published today: Closing the communication gap: How institutional investors are building risk-aware cultures. The report, commissioned by State Street, is based on a survey of 297 institutional investors. It examines the quality of information that the business receives from the risk function, how effectively the risk function communicates with other areas of the business, whether the risk function is well understood, how well managers and staff are incentivised to achieve risk objectives, and how these characteristics compare globally.

Other findings of the research include:

Reputational risk ranks alongside market risk as a key concern. Institutional investors now rank risks to their reputation alongside risk arising from market volatility as their highest priority, with 56% of respondents identifying it among the top-three risks facing their organisations. This is ahead of investment risk (46%), regulatory risk (34%) and counterparty risk (24%). This finding reflects the response of investment organisations to the financial crisis and a series of scandals since that have blighted the public perception of the financial services sector.

Few think the quality of internal risk information – especially in Asia – is very good. Only 30% of survey respondents overall rate the information they receive from internal sources about risks that relate to their job as very good, a figure that falls to just 20% in Asia. A larger proportion of employees at institutions headquartered in North America, 36%, rate the quality of the risk information they receive as very good. This presumably reflects the increased demands of regulators and investors, as lessons are learned in the wake of the financial crisis—and also the level of investment in risk-management technology designed to enhance and integrate risk reporting.

Risk committees provide the bedrock for more cohesive risk frameworks. While correlation cannot prove causation, the survey suggests that the presence of a senior risk committee or a governance body that brings together senior risk, compliance and audit people is the foundation of better risk-awareness throughout the enterprise. Some 83% of respondents at firms with risk committees say managing risk is the highest priority for their organisation, compared with just 64% of those without a risk committee. Additionally, 87% of institutions with a senior risk committee rank internal information on major risks as good or very good, compared to just 63% of those without such a committee. Two-thirds of respondents at institutions with a senior risk committee think that business managers have a clear understanding of the role of risk managers, compared to 47% in those without such a committee. Finally, 68% of those with a risk committee agree that “the risk function helps produce better investment outcomes” compared to 51% of those without such a committee.

Regular dialogue between the front office and the risk function is associated with better investment outcomes. Those institutions that think their risk function produces better investment outcomes are also those where there is more likely to be regular dialogue between the risk function and the front office about the selection of assets and other investment matters (including counterparty risk). Some 84% of those that agree that the risk function helps produce better investment outcomes say such dialogue occurs regularly (and 35% strongly agree), while this is true of only 49% of those that do not think the risk function produces better investment outcomes (7% strongly agree).

Risk objectives are not always incentivised at senior levels. While at 88% of all investment organisations provide executive board members with some sort of risk target, at less than half (46%) are they financially rewarded for meeting them. Incentives for other functions vary, but in all cases targets are more likely to be applied than incentives. Investment professionals in North America are more likely to be incentivised than elsewhere, with 76% financially rewarded for meeting risk targets or objectives compared with 61% in Europe. Additionally, those institutions that associate risk with better investment outcomes are more likely to reward any function for meeting its risk objective or target.

The findings are based on a survey conducted in the first quarter of 2013 of 297 employees of investment institutions.

52% of respondents are either executive board members or C-level executives and 30% are vice-presidents, senior vice-presidents or department heads.

29% of respondents are portfolio managers, 21% are risk professionals, 18% are from operations and general management and 13% are from sales and product development.

48% of respondents are from asset managers, 35% are from asset owners (including insurers, pension funds and sovereign wealth funds) and 18% are from intermediaries.

39% of respondents come from investment institutions headquartered in the Asia-Pacific region, 33% are from Europe, 19% are from North America and 9% are from other regions.

© 2011 The Economist Intelligence Unit Limited. All rights reserved.

More … http://www.managementthinking.eiu.com/closing-communication-gap.html