Written By: Geoff Williams, President & CEO, 3Ci Global Solutions
In 2018, corporate boards will increasingly be called upon to respond to how acts of abnormality such as extreme weather, earthquakes, terrorism and this latest phenomenon ‘fake news’ on social media disrupt their companies’ business plan models. 3Ci Global Solutions judge ‘fake news’ attacks will become more commonly used by certain competitors into driving consumers away from certain brands and services. Equally, to draw customers away from traditional companies, forcing those companies to cut costs and lose market relevance. Political parties, such as the Scottish National Party (SNP) and the UK Liberals, et al which are classed as staunch ‘Remainers’ within the Brexit transition period of the UK Government negotiations to leave the European Union are prime examples of these new ‘fake news’ disruptors aimed specifically to undermine business models confidence to politically advance their own political ambitions.
Businesses who become victims typically overlook the trajectory of many disruptors, and focus on ensuring their tangible assets are further protected instead of focusing initially on perfecting their business plan models and analyzing how these disruptors will damage their intangible assets rather than buying ‘more insurance’ to cover the cost of replacing vehicles, plant and buildings, etc. Flawed crisis management governance can lead to such oversight by making it hard for management to identify and respond to warning signs. The 2017-2018 NACD Public Company Governance Survey cites “business model disruption” as the factor that board members most often predict will have the greatest effect on their companies in 2018 with only 13% of their members thinking ‘Global Security Threats’ will affect their business planning. Equally surprising is they also place only 6% climate change affecting their goals and objectives.
The good news is that a prudently ‘crisis prepared’ composed and positioned board of directors can be a highly effective partner with management in confronting all aspects of disruptive threats.
Basic Strategic Management Considerations:
In many respects, leadership responsibility for dealing with ‘business plan model’ disruption is an extension of the shared leadership approach historically applied to tasks such as strategic planning and risk management. These tasks incorporate prominent roles for both the board, which can encourage the development of a strong, strategic crisis or risk management plan and oversee management’s implementation of it, and a clear crisis/security/fire/business continuity/disaster management structure, which develops the specific crisis or as it is more commonly referred to as the ‘Emergency Plan’. The effectiveness of both of these tasks relies upon on an integrated perspective on the long term crisis strategy and risk management, as the case may be at every level of the organization.
An effective response to innovation-based business disruption relies on a similar approach, i.e. the board encourages management to identify business acts of abnormality, disruption threats and to develop responsive crisis management strategies, which then monitors the evolution of such strategies. Management, on the other hand, informs the board as to the nature and source of disruption threats, implements its responsive section of the emergency plan, and supports the board’s ability to monitor the success of that plan.
Ultimately, responsibility for dealing with business crises and disruption is grounded in the board’s fundamental obligation to ensure that the company maintains its long-term value business plan and serves its principal constituents. As current developments demonstrate, business disruption can seriously threaten sustainability by undermining the financial model on which corporate operations are based. For that reason, the impact business disruption can have upon its business plan model places duties on board members, management, and heir workforce. These can be exceptionally diverse, affecting elements of governance ranging from information flow from ‘shop-floor’ to the board, to director engagement, to refreshing the board with new crisis management specialist members, to board composition, to the crisis decision-making process and, ultimately, to the nature of the board’s relationship with management, workers, customers and shareholders.
Specific Implications for Governance:
An emergency plan to deal with disruption should first focus on three related goals: first, a change to a boardroom attitude that more readily acknowledges the threat posed by the full spectrum of disruption. Second, an emergency management structure that clearly identifies roles and responsibilities for each level of the organization combined with an information system designed to provide the board and key committees with necessary information related to business disruption. And third, policies, procedures, and governance structure changes designed to support the ability of workers, managers and directors and other board or committee members to maintain engagement with efficiently crisis managing business disruption issues. The aim is to position the board as an informed and attentive partner with executives in identifying and responding to crisis business disruption threats. In simple terms, create crisis management ‘Guardians’ for each level of the company or organization.
This is the “we get it” concept—increase board awareness of all aspects of threats including technological disruption and the potential threat they all pose to the company and its specific industry sector.
The ‘Six Sigma’ inspired, Ci6 EMERGENCY MANAGEMENT ENGINEERING Methodology and Tool Box Sets is the only such ‘crisis disaster, business continuity system which includes noting, such awareness necessarily including a willingness to pay continuous, focused attention to the shifting sources and paths of disruption. This includes a means to more closely monitor management’s familiarity with customer needs, the maintaining of business continuity and sustainability awareness of natural and human induced technological and changes that could affect the company’s business plan model, and the rapid ability to identify and implement responsive strategies. This shift in attitude also prompts directors to evaluate and view their new crisis prepared business resilience within their competitive environment, establish organizational goals, and as noted in more detail below, structure themselves and their activities as a board to be more nimble and decisive. The shift also encourages directors to monitor a broader set of external factors and how those factors may affect their ability to compete during major disruptions such as a major earthquake or workforce pandemic illness outbreak. The factors identified can also be socioeconomic, technological, transactional, and identify new competitive trends in business as a whole (as well as those in their specific industry).
Ci6 Information Reporting Systems:
Require top ‘GOLD GUARDIAN’ executives to work with ‘SILVER GUARDIAN’ managers to identify those types of business disruptive events which correlate to affect their roles and responsibilities. Equally, the same SILVER GUARDIAN managers need to do the same exercise with their lower tier ‘BRONZE GUARDIAN’ supervisors and workers. Issues that need to be addressed include such processes as ‘what should be brought to the board’s attention? e.g., media articles, judicial decisions, government legislation or regulation, expert advice, educational presentations, participation in external seminars, news developments, corporate filings, management reports, whistle-blower and “hotline” reporting, the context in which it is provided e.g., full original text or abbreviated or edited by management to facilitate board review and comprehension and the frequency with which it should be announced.
Today’s rapidly changing business environment presents a formidable challenge to businesses of all sizes and their specific locations. Corporate directors need an emergency management support system such as Ci6 as they seek to advise management, workforces, customers and shareholders and fulfil their own governance oversight responsibilities. Directors need a point of ‘crisis/emergency management’ reference as they assess the efficacy of their own crisis management governance practices and determine whether they are fit for purpose.
Ci6 comprehensively provides that assurance!
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