Annamarie van der Merwe, Executive Chair, FluidRock Governance Group
There is a definite shift happening in the world order, says leading scenario planner and futurist Chantell Ilbury. But, she emphasises, “It’s not about the fact that it’s shifting, it’s what it’s going to shift to that’s very important.”
Ilbury was examining the topic of “Trump, South Africa and Your Business: Navigating Uncertainty with Scenario Planning” at a recent event that FluidRock co-hosted with auditors Nolands and JSE Private Placements.
It was a brilliant (if sometimes rather bleak) examination of how our world is changing, driven largely by factors beyond our control: disruption of the current order, and in a complex way, the decline of the US’s power globally, the rise of new powers (such as China, the BRICS+ bloc and a shift in voice to the Global South), fragmentation of existing power, technology, a swing away from the US dollar as our global currency, scepticism and uncertainty.
At the heart of it all, of course, is the “Trump Effect”: the impacts that US President Donald Trump is making globally with his words and deeds, and how this is helping to rewrite the world order.
In the South African context, she continued, “flags” to be aware of include crime and corruption (upon which Trump hammered in his recent White House meeting with President Cyril Ramaphosa), the quality of our infrastructure, entrepreneurship, our continued neutrality on the global stage, pockets of economic excellence (such as agriculture or mining), consumer affordability and our fragile-but-functioning government of national unity.
The implications of these flags for South African businesses are wide-ranging: power and water risk, ports efficiencies, labour costs and unrest, environmental concerns, skills shortages, exchange rate volatility, roads and rail issues, and service delivery (particularly in rural areas).
But with every risk, there is opportunity; strategically, argued Ilbury, it’s about finding new ways of seeing what is happening in the world, new ways of thinking about the issues and challenges, and new ways of doing, of executing.
“So not only awareness of the ecosystem and what’s changing, and the players that are coming in, but making sense of it,” she said, arguing that scenario planning is vital to understanding and successfully navigating this new world order.
Ilbury’s words set me to thinking about how this relates to my field of expertise: corporate governance. All too often, governance is seen purely as comprising a company’s board, charters, plans, committees and so on. But it’s so much more than policies and structures.
Even our world-class King IV Report on Corporate Governance (King IVTM), which provides the South African business sector with a gold-standard framework for governance, is clear about it: it is founded on effective and ethical leadership.
In other words, people. Leadership is about having the right people in the boardroom and corporate corridors, with the appropriate skills, insights and commitment to lead and manage the business in a sustainable and proper manner, and who trust and communicate well with each other. As Ilbury put it, people who can see, think and do.
Let’s use an analogy: a company is like a ship, with the board as the bridge watch and management in the engine room. For the ship to operate successfully and safely navigate its journey, these two groups must work together and communicate effectively. But when ominous clouds gather on the horizon, what happens then?
Together, steered ultimately by the bridge watch, they need to see, think and do according to the situation. The bridge needs to consider the options and, in consultation with the engine room, decide on a course of action: press on or change direction? For this engagement process to work in the interests of the ship, a healthy dose of trust and respect is essential.
If, in the absence of trust, the bridge watch deserts its post to make its own assessment of the status of the engines, who is then on the bridge to keep a watchful eye on the horizon and immediate exterior of the ship to monitor the risk ahead? By the same token, the engine room crew must trust the bridge’s observations, and feed back salient information about the vessel’s power and ability.
In my advisory capacity for FluidRock, I am often surprised at how many companies see their non-executive directors, the “bridge watch”, as nothing more than a statutory prerequisite and don’t capitalise on the vital oversight role they must play, nor the expertise they can provide. It is essential, among other things, that non-executive directors are provided with adequate information for them to not only fulfil their statutory duties but to add real and tangible value as they man the bridge. If not, the ship runs the risk of hitting the proverbial iceberg.
So much depends not on procedures and policies, but on the quality of the people carrying them out. In the context of a company, it is vital to build a board with diverse, capable people who all bring particular skills to the table. There should be no free rides: everyone, both the executive and non-executive directors, must add value in the long-term interest of the business and all its stakeholders.
This is how a company will successfully navigate uncertainty – which is, of course, the only certainty we can bank on.
As our keynote speaker at the 2024 FluidRock Conference, the famous Brand Pretorius, noted, we’re living in a world that seems more uncertain than ever, or in his own words: “We’re living in a VUCA world on steroids,” referring to the business management acronym for volatility, uncertainty, complexity and ambiguity.
VUCA articulates the challenges companies must face, and assists them to anticipate key issues, understand consequences, appreciate how variables interrelate, prepare for myriad scenarios and identify opportunities.
This is no overstatement. More than ever, companies that wish to succeed in our nascent, highly uncertain new world order need great governance: not only the framework articulated in King IVTM but the leaders who can anticipate which way the world is going, and who will grasp the risks and take the opportunities.
They must be, as Chantell Ilbury put it, leaders who can see, think and do.
ENDS
