Considerations of Data use for Global Investors

We address many of the major challenges facing businesses and their stakeholders in the coming Digital Age, raising awareness of the threats and opportunities technology presents across the key pillars of society. Societal structures developed to enable the Industrial Age are failing to adequately address the seismic shifts of an exponentially advancing Digital Age. In today’s globalized world, corporate lifespans are rapidly shortening, the value of traditional human labor is depreciating, and coordinated political movements can reshape national governments in mere weeks.

 

EXECUTIVE SUMMARY 

Corporate governance has existed for centuries, but truly came of age after World War II[1]. Since then, many of the developments in corporate governance have been driven by corporate scandals and the accompanying legislation. While this ‘bandaid’ approach has worked for the past 60 years, it is creaking under the weight of new and different demands, emerging from the advent of the Digital Age, and resulting shifts in the corporate landscape.

 

The step changes demanded in almost every facet of business in the Digital Age are straining this current board structure further. Six drivers are fuelling an increasingly urgent need to rethink governance and board structure:

 

Real-time Responsiveness – in a time when many critical events can occur in minutes and go viral, the current pre-set board meeting structure and agendas leave boards continually playing catch up

 

Intangibles – in a Digital Age where intangibles increasingly dominate balance sheets, companies’ offensive and defensive strategies have to reflect heightened sensitivity to particularly volatile valuations

 

Radical Transparency – businesses are less able to shield their activities, developments and communications from unwanted scrutiny in an age of whistle-blowers, leaks and hacks. Digital Age boards will need a highly nuanced and more pragmatic approach to what sits behind the confidentiality wall

 

Multi-stakeholder – accountability to an increasing number of influential parties, some of which can have a disproportionately outsized effect on company operations and valuations in given scenarios

 

Exceptional Complexity & Uncertainty – the Digital Age, with its increasingly influential complex algorithms, multi-vectoral tipping points and knock on effects is ratcheting up complexity exponentially, and the lack of visibility on trajectory and speed of change is generating enormous uncertainty

 

Concentration – the Digital Age rise of Winner-Takes-All business models creates a host of challenges for the governance of both dominant firms and those in their ecosystem

 

Future-fit boards, investors, leaders and stakeholders will need to innovate and design new structures that can synthesise these drivers. Five key areas of initial focus are:

 

Composition– that considers functional, cognitive and psychological diversity

 

Structure – developing more agile governance structures and practices

 

Priority –agendas focusing less on repetitive, business as usual, items 

 

Greater symbiosis – establishing more rapid-response feedback loops with stakeholders

 

Education – continual education for informed, relevant input

 

Investors, especially those participating in private markets, have a significant role to play. The growing trend in Environmental, Social and Governance (‘ESG’) investing requires an adjustment to what we call ‘Digital Age ESG’: that is, ESG objectives that take into account the Digital Age and its challenges to all three pillars.

 

We invite you to join us in tracking, aggregating and highlighting the best toolkit for Digital Age ESG.