The Panama Papers scandal reminds us how volatile the overall business environment is. What’s more, things that would have not attracted much attention a few years ago, now generate a deluge of news. And look how in UK alone, how it has triggered the Great Revelation of Tax Returns from politicians …in just a week! Not to mention resignations of ministers in other countries. The external environment changes and you need to get good at spotting developments, and then finding the possibilities in them.
So, what are the “panama papers” equivalents in your own business environment? How often do you scan your own external context for possible disruptions, and then plan for them, or find ways to avoid them overall, or to find some Yes We Can ideas (thank you Obama)? Who has responsibility for this scanning in your organisation, or is it shared by everyone?
Some organisations might put Panama Paper type events under the Corporate Social Responsibility umbrella, and have policies about CSR. Others might say this is just plain common sense. “We don’t need policy. Do what’s right, and you won’t get into trouble….” Easy to say, but when trading across national borders, or even across different sectors within a country, where different hidden rules, or expected behaviours occur, what’s right in one context is not right in another. An example is the practices for business expenses. What is acceptable in a large corporate might not be acceptable in a heavily cash-strapped, cut to the bone public service.
The learning here for organisations is that you need to get under the cultural skin of your partners, suppliers and buyers. Find out what really motivates them, what they care about. It won’t be long before all large (maybe not that large) company directors are forced by public demand to be more open about their own finances. Will the public want to know how directors earn or invest their cash, beyond the perhaps publicly available information on their salaries?
The Panama Papers this raises interesting questions about whether an organisation’s “off shore free” status in broad terms (honest, clean, open) may be a differentiator, and something that external stakeholders look for. Some while ago, the Coop Bank rose in popularity because of the ethos of the Coop, but then it transpired that some their practices were found wanting by the UK’s Financial Services Authority in 2013. This was not an “offshore” event (as far as I can tell), but to most of the public, any kind of “financial” issue is all lumped together – it is perceptions that drive actions. In your organisation, are there some practices which are a bit iffy, but maybe the culture suppresses news about them for a while, and then it all leaks out…eventually?
But times for the Coop have changed dramatically, and last week, it was announced “Co-op boss Richard Pennycook has agreed to take a 60% cut in his pay package“, where Allan Leighton, Co-op chairman, said: “The move by Richard to reduce his pay shows the Co-op difference in action, as we champion a better way to do business for our members and their communities.” Isn’t this a great example of being in tune with stakeholder expectations.
So, what can leaders do about all these risks and potential scandals that might engulf them? There are 3 things to start doing to get more in tune with scanning for ideas in the external environment:
- Create a culture of it being safe, even rewarding, to challenge the prevailing wisdom. This needs to start with leading by example. Is there an equivalent bold move you can make to publishing your own tax return? Ie Just doing it. No grand policies, just action you know will shift the thinking, and creatively shake things up. Some people may get upset, but you so long as you act with good intentions and integrity, and are politically astute, you will be respected.
- Recruit people who are willing to take risks, and to challenge the senior management. This means senior management must signal that they want to be challenged to think differently. This probably means your selection and interview practices need to change. Most CVs will not reveal that “I got into hot water trying to improve X, but at least I tried”. Do you want people only with solid technical skills, or also people with a bit of a radical spirit? Hang on a minute…isn’t being a creative type a solid technical skill anyway?! Take a look Values Based Recruitment in the UK’s National Health Service.
- Learn from other organisations. If a week goes by, and no one in any team meeting has brought in some new ideas from outside, this may be a sign that the organisation is too inward looking. Managers need to develop the ability to learn from different sectors. For example, if you are a transport manager, look for how healthcare managers solve problems and manage risks. If you are in the retail industry, what ideas about improving customer care can you spot developing in the airline industry as seen by airlinetrends.com? Are there ideas from other organisations that you can adapt and build on the 10% that’s useful, even if the 90% may not be relevant?
I am looking forward to the next instalment of the Panama Papers!