2020 was indubitably a seminal year. Its lasting imprint will be felt for decades to come, having brought to the fore and accelerated, structural trends that were gathering pace over the past 5 years. Consequently, it’s brought on a Civilizational Moment, where open borders are closed and backlash to the freewheeling, loose nature of globalisation solidified not just in political nationalism, but in a deep-seated need for a return to structure, roots and smaller nuclei of communities. And technology, which was meant to connect and open up the world, has in fact, exacerbated and amplified these trends.
Three strategic themes that will be hotly debated in board rooms and investment committees this year are:
1) What pivotal role will tech companies (and all others transforming) play as guardians, and beneficiaries, of public goods that have been extensively plundered and social capital that has been depleted?
a) Technology is now our new home, where we live, learn, work and maintain relationships. It is no longer a tool, but is – in reality – the very environment that permeates every aspect of how our civilisation is being reimagined and reengineered
b) Considering their critical importance, how do we balance the capitalist growth and profit imperative, with the need to restock and nurture ‘free’ public goods, essential to creating a sustainably enduring, stable environment and the ensuing social license to operate?
Solutions: New hybrid business models, partnerships and structures are emerging that are neither the prevailing hard-nosed, profit-first entities at one extreme, nor the philanthropic/volunteer efforts at the other. There are robust alternatives developing and one such structure we’ve proposed is that a portion of profits is set aside as a societal reinvestment trust-fund
2) Top down vs. bottom up governance: How do companies build rich, responsive governance practices and structures, that crowd source feedback and innovations, ultimately leading to agile and responsive governance?
a) The intelligence of a few grey heads is unlikely to continually and successfully compete with the wisdom of the crowd. This is particularly acute during moments of fast transition and high complexity, that require sensitive attunement to what is brewing on the ground
b) The practices of governance could bifurcate along lines of process-driven compliance versus dynamic, strategic planning, which draw on different skills and situational needs. Does a historic, highly-structured, top-down arrangement accommodate the fast-moving, always on, diverse world of today? As companies innovate their products and business models, are their static boards holding them back, or are they a valuable asset?
Solutions: New governance models that promote resilience and malleability need to develop in a digital environment. We have highlighted experimental new forms emerging such as rotational, shadow and specialised boards, with more to come
3) Transparency and unforgiving judgement: We are in the midst of rebuilding a new form of civilization. This requires massive and on-going experimentation. Yet the radically transparent, digital world we live in allows little room for error, without vilification. What are the unintended consequences?
a) On one end of the spectrum, it could lead to attachment to legacy thinking, assets and processes, while promoting undue risk aversion, considering the price of making a misstep. This alternative could also potentially lead to pretence, best exemplified through ‘green washing’ so as to take the least risk, while appearing to appease expectations
b) The other side of the spectrum could demonstrate an opaque, lack of accountability exemplar, where catastrophic mistakes are acceptable, quickly covered up and cronyism prevails. Equally, it could create an unfettered space where leaders can cynically make repeated mistakes and “ask for forgiveness, not permission.”
Solutions: Understandably, there are many shades of grey between a. and b. Two overarching principles can guide most investors and boards. The first is to ensure there is unbiased, documented learning from mistakes. The second is to explicitly acknowledge and promote this experimental culture, set acceptable limits to avoid catastrophic outliers and suspend knee-jerk judgement in recognition that one of the best ways of learning, is indeed to err. A lack of mistakes should raise a flag for leaders and their investors
Companies, and particularly tech firms, are at the heart – the ropes in the fabric – of our emerging digital civilization. To date, tech firms have been wholeheartedly backed by investors and their products adopted by society. Yet this past year has simultaneously underscored our dependence on them, both as investors and society, and highlighted vulnerabilities that accompany such unquestioning dependence. Concurrently, regulators and tax authorities are belatedly realising their own oversights. The moment for an unfettered land grab is coming to an end, and it is prudent to step back and ask a critical question we’ve sleepwalked through to date: what is the future we want for our civilisation, and what role should technology providing corporates play in enabling it? What are the solutions to encouraging a balanced system that doesn’t provoke another backlash?
At Creating Future Us, we are tracking, documenting and exploring new forms of corporate responsibility and governance in a Digital Age. We would be delighted to hear your thoughts, examples you’d like to share, or if you have an interest in a particular set of solutions.