MAKING A

MODEL FOR Nick Read, Vodafone

Group CFO, on the
THE FUTURE power of a dynamic
business model

DECEMBER 2017 THE BUSINESS MODEL ISSUE

 THE BUSINESS MODEL ISSUE
Integrated business solutions

CONTENTS

THE INFORMATION
4 PRESIDENT’S MESSAGE
CIMA president David Stanford
on lessons about change from
Canada
10 I WORKED ON...
A social enterprise project
in Vietnam
12 LED BY FINANCE
The challenge of funding the
UK’s water supply network
16 OPINION
Rethinking accountability in
modern organisations
18 INSIDER VIEW: POLAND
Doing business in Central
Europe’s largest economy
20 Q&A: HELEN GIBSON
Life at the UK government’s
Cabinet Office
24 61
36 HEALTH CHECKS
How population-based
models are transforming
healthcare funding
40 WORLD VIEW
The business models with
sustainability at their heart
44 VALUE MACHINES
How artificial intelligence and
machine learning are driving
DEEP DIVE new ways of business thinking
24 FEATURE INTERVIEW 46 OPINION
Vodafone Group CFO IIRC CEO Richard Howitt on the
Nick Read on agility in the value of integrated reporting
telecoms sector
48 SHOP FRONT
30 NEW THINKING Examining award-winning IN PRACTICE
Developing a dynamic business business model reform in the 54 Q&A
model in the digital age retail industry Bob Beedham, the chair of
CIMA’s Professional Standards
Committee, on professionalism
and ethics

57 BETTER TOGETHER

20
The benefits that strategic
alliances have in the
automotive industry

61 TECH NOTES
How to foster an environment
of creative ideas

64 INSTITUTE NEWS
The latest news and views

48
from the Association

66 THE VIEW FROM THE CEO

Public Sector Commercial Sector Housing Sector With the CEO – management
accounting, Andrew Harding

CIMA is the Chartered Institute External affairs content manager Samantha Goodman

Leading transformational change through innovative

of Management Accountants Oliver Rowe kelly.baynes@seven.co.uk
The Helicon, 1 South Place, 020 7775 5578
London EC2M 2RB Financial Management Commercial director Rupert Lane
www.cimaglobal.com is published for CIMA by Business director Emma Martin

software solutions 020 8849 2251 Seven, 3-7 Herbal Hill, Chief executive Sean King
London EC1R 5EJ Chairman Tim Trotter
President www.seven.co.uk
David Stanford, FCMA, CGMA 020 7775 7775
Deputy president
To find out how our solutions can transform your organisation, contact us at Steve Swientozielskyj, FCMA, CGMA
Vice-president Editor-in-chief, finance Jon Watkins
Amal Ratnayake, FCMA, CGMA Editor Chris Hooper
ibs.marketing@capita.co.uk or visit www.capita-ibs.co.uk Chief executive Commissioning editor Lawrie Holmes Subscriptions
COVER: NICK WILSON

Andrew Harding, FCMA, CGMA
Executive vice-president –
Communications, PR & Brand
Janice Maiman, CAE
Vice-president – Professional Media,
Academic & Student Engagement
Joanne E. Fiore
Publisher Kim Nilsen
Managing editor Rocky S. Rosen
Associate publisher Karin DeMarco
Art director Andrew Wells
Head of pictures Eithne Staunton
Production manager Elizabeth Knipe
Deputy production manager
Chris Gardner
Group account director
Stefanie Hinten-Reed
Head of commercial delivery
Marie-Claire Frederick
Advertising Kelly Baynes,
DECEMBER 2017
3
The contents of this publication are
subject to worldwide copyright protection
and reproduction in whole or in part,
whether mechanical or electronic, is
expressly forbidden without the prior
written consent of CIMA/Seven.
© Seven. All rights reserved.
Origination by F1 Colour.
Printed in the UK.
fm@c-cms.com 01580 883844
£45 (UK), £54 (Europe), £72 (rest of
world).
Back issues: £7.50 (UK), £10 (rest of
world) including postage, subject to
availability.
All payments should be in sterling drawn
on a UK bank.
www.cimaglobal.com
 THE BUSINESS MODEL ISSUE
Integrated business solutions

CONTENTS

THE INFORMATION
4 PRESIDENT’S MESSAGE
CIMA president David Stanford
on lessons about change from
Canada
10 I WORKED ON...
A social enterprise project
in Vietnam
12 LED BY FINANCE
The challenge of funding the
UK’s water supply network
16 OPINION
Rethinking accountability in
modern organisations
18 INSIDER VIEW: POLAND
Doing business in Central
Europe’s largest economy
20 Q&A: HELEN GIBSON
Life at the UK government’s
Cabinet Office
24 61
36 HEALTH CHECKS
How population-based
models are transforming
healthcare funding
40 WORLD VIEW
The business models with
sustainability at their heart
44 VALUE MACHINES
How artificial intelligence and
machine learning are driving
DEEP DIVE new ways of business thinking
24 FEATURE INTERVIEW 46 OPINION
Vodafone Group CFO IIRC CEO Richard Howitt on the
Nick Read on agility in the value of integrated reporting
telecoms sector
48 SHOP FRONT
30 NEW THINKING Examining award-winning IN PRACTICE
Developing a dynamic business business model reform in the 54 Q&A
model in the digital age retail industry Bob Beedham, the chair of
CIMA’s Professional Standards
Committee, on professionalism
and ethics

57 BETTER TOGETHER

20
The benefits that strategic
alliances have in the
automotive industry

61 TECH NOTES
How to foster an environment
of creative ideas

64 INSTITUTE NEWS
The latest news and views

48
from the Association

66 THE VIEW FROM THE CEO

Public Sector Commercial Sector Housing Sector With the CEO – management
accounting, Andrew Harding

CIMA is the Chartered Institute External affairs content manager Samantha Goodman

Leading transformational change through innovative

of Management Accountants Oliver Rowe kelly.baynes@seven.co.uk
The Helicon, 1 South Place, 020 7775 5578
London EC2M 2RB Financial Management Commercial director Rupert Lane
www.cimaglobal.com is published for CIMA by Business director Emma Martin

software solutions 020 8849 2251 Seven, 3-7 Herbal Hill, Chief executive Sean King
London EC1R 5EJ Chairman Tim Trotter
President www.seven.co.uk
David Stanford, FCMA, CGMA 020 7775 7775
Deputy president
To find out how our solutions can transform your organisation, contact us at Steve Swientozielskyj, FCMA, CGMA
Vice-president Editor-in-chief, finance Jon Watkins
Amal Ratnayake, FCMA, CGMA Editor Chris Hooper
ibs.marketing@capita.co.uk or visit www.capita-ibs.co.uk Chief executive Commissioning editor Lawrie Holmes Subscriptions
COVER: NICK WILSON

Andrew Harding, FCMA, CGMA
Executive vice-president –
Communications, PR & Brand
Janice Maiman, CAE
Vice-president – Professional Media,
Academic & Student Engagement
Joanne E. Fiore
Publisher Kim Nilsen
Managing editor Rocky S. Rosen
Associate publisher Karin DeMarco
Art director Andrew Wells
Head of pictures Eithne Staunton
Production manager Elizabeth Knipe
Deputy production manager
Chris Gardner
Group account director
Stefanie Hinten-Reed
Head of commercial delivery
Marie-Claire Frederick
Advertising Kelly Baynes,
DECEMBER 2017
3
The contents of this publication are
subject to worldwide copyright protection
and reproduction in whole or in part,
whether mechanical or electronic, is
expressly forbidden without the prior
written consent of CIMA/Seven.
© Seven. All rights reserved.
Origination by F1 Colour.
Printed in the UK.
fm@c-cms.com 01580 883844
£45 (UK), £54 (Europe), £72 (rest of
world).
Back issues: £7.50 (UK), £10 (rest of
world) including postage, subject to
availability.
All payments should be in sterling drawn
on a UK bank.
www.cimaglobal.com
 THE VIEW FROM THE PRESIDENT
Adapt to Today’s
DAVID STANFORD, FCMA, CGMA Growing FP&A Challenges
with a Modern Tool Set
Excel is great, but you need more to meet today’s
fast paced and competitive environment. Adaptive
Insights allows you to be more strategic, while
automating your planning, reporting, consolidation
and analytics with powerful and easy to use

I
n October I returned to these are the skills our mem- applications that operate like Excel, but on steroids.
Canada for three confer- bers are seeking to build. Of
ences, all based on themes those members who are plan-
very relevant to our members ning to learn new skills over
working in businesses today.
In Ottawa, I spoke at a
the next 12 months to
enhance their career progres-
www.adaptiveinsights.co.uk
conference on integrated sion, 38% want to increase
thinking and effective deci- their strategy skills, 31% want

Lessons in change
C

sion-making, and was able to increase skills around

to point out the significant driving performance, and M

opportunity for those com- 27% want to improve their

from Canada
Y

panies that work effectively negotiating, decision-mak- CM

with big data to steal a com- ing, and influencing skills.

petitive edge on their rivals. As technological innova- MY

This group of companies tion continues to accelerate, CY

are well described as “inte- these skills will be even more

CMY
grated thinkers”. Examples from Canada include Cana- important than in the past.
dian Tire and Shopify, which has constantly adapted by By contrast, of the 88% of students looking to learn K

using data to adjust its online e-commerce platform to
meet customer demands, thereby demonstrating agile
decision-making.
Across the globe, conglomerate GE and consumer
goods giant Unilever are further good examples. Unile-
ver’s approach to reporting was recognised recently in
the UK in the PWC Building Public Trust Awards for Cor-
career skills over the next 12 months, their top learning
need is accounting information systems skills (47%),
while strategy skills (42%) and business planning skills
(41%) also feature in the top three.
The final Canadian event I spoke at – in Toronto –
was a conference on disruption and how to storm-proof
your future. A recent survey of Fortune 500 executives

porate Reporting, where its commitment to sustainabil-
ity was seen as moving beyond its customers’ expectations
in some areas.
In the unpredictable and disrupted world in which
we now live, one factor that remains constant within
business is rapid change itself. This phenomenon drove
the theme of the event I spoke at in Calgary: “Adapting
to Unwanted Change”. I spoke about how CIMA and our
new Association are putting management accountants
into the driving seat to take advantage of the opportuni-
ties that change brings.
The ability to challenge, to ask the right questions,
and to communicate to drive better decision-making are
key parts of our skillset. The skills that robots can’t
perform – leadership, communication, and strategic KEEP IN TOUCH
# 1
identified a number of skillsets that are needed for indi-
viduals to provide strategic leadership in the face of new
business threats. They included the ability when neces-
sary to “fail fast and shift gears quickly” and also the abil-
ity to develop a culture committed to mitigating risk.
This is essential in a world where the volume and com-
plexity of risks are increasing and only around 30% of IN CUSTOMER
organisations have complete enterprise risk manage-
ment processes in place.
SATISFACTION
CIMA itself has storm-proofed its own future by form-
ing the Association with the AICPA. As we approach the
first full year of the Association, it is clear that our global
influence is growing – people and organisations increas-
ingly want to talk to and listen to us.
It continues to be a privilege to advocate on behalf • 90% Faster Planning
NICK WILSON

thinking – are all part of the CGMA competency frame- Follow me of you – our members and students – and I wish you all
work. on Twitter: a very happy Christmas and end of year moving forward • 50% Quicker Consolidation
The Association’s 2017 salary survey confirms that @CIMA_President into a prosperous 2018. ■ • 75% Lower Cost
DECEMBER 2017
4
 THE VIEW FROM THE PRESIDENT
Adapt to Today’s
DAVID STANFORD, FCMA, CGMA Growing FP&A Challenges
with a Modern Tool Set
Excel is great, but you need more to meet today’s
fast paced and competitive environment. Adaptive
Insights allows you to be more strategic, while
automating your planning, reporting, consolidation
and analytics with powerful and easy to use

I
n October I returned to these are the skills our mem- applications that operate like Excel, but on steroids.
Canada for three confer- bers are seeking to build. Of
ences, all based on themes those members who are plan-
very relevant to our members ning to learn new skills over
working in businesses today.
In Ottawa, I spoke at a
the next 12 months to
enhance their career progres-
www.adaptiveinsights.co.uk
conference on integrated sion, 38% want to increase
thinking and effective deci- their strategy skills, 31% want

Lessons in change
C

sion-making, and was able to increase skills around

to point out the significant driving performance, and M

opportunity for those com- 27% want to improve their

from Canada
Y

panies that work effectively negotiating, decision-mak- CM

with big data to steal a com- ing, and influencing skills.

petitive edge on their rivals. As technological innova- MY

This group of companies tion continues to accelerate, CY

are well described as “inte- these skills will be even more

CMY
grated thinkers”. Examples from Canada include Cana- important than in the past.
dian Tire and Shopify, which has constantly adapted by By contrast, of the 88% of students looking to learn K

using data to adjust its online e-commerce platform to
meet customer demands, thereby demonstrating agile
decision-making.
Across the globe, conglomerate GE and consumer
goods giant Unilever are further good examples. Unile-
ver’s approach to reporting was recognised recently in
the UK in the PWC Building Public Trust Awards for Cor-
career skills over the next 12 months, their top learning
need is accounting information systems skills (47%),
while strategy skills (42%) and business planning skills
(41%) also feature in the top three.
The final Canadian event I spoke at – in Toronto –
was a conference on disruption and how to storm-proof
your future. A recent survey of Fortune 500 executives

porate Reporting, where its commitment to sustainabil-
ity was seen as moving beyond its customers’ expectations
in some areas.
In the unpredictable and disrupted world in which
we now live, one factor that remains constant within
business is rapid change itself. This phenomenon drove
the theme of the event I spoke at in Calgary: “Adapting
to Unwanted Change”. I spoke about how CIMA and our
new Association are putting management accountants
into the driving seat to take advantage of the opportuni-
ties that change brings.
The ability to challenge, to ask the right questions,
and to communicate to drive better decision-making are
key parts of our skillset. The skills that robots can’t
perform – leadership, communication, and strategic KEEP IN TOUCH
# 1
identified a number of skillsets that are needed for indi-
viduals to provide strategic leadership in the face of new
business threats. They included the ability when neces-
sary to “fail fast and shift gears quickly” and also the abil-
ity to develop a culture committed to mitigating risk.
This is essential in a world where the volume and com-
plexity of risks are increasing and only around 30% of IN CUSTOMER
organisations have complete enterprise risk manage-
ment processes in place.
SATISFACTION
CIMA itself has storm-proofed its own future by form-
ing the Association with the AICPA. As we approach the
first full year of the Association, it is clear that our global
influence is growing – people and organisations increas-
ingly want to talk to and listen to us.
It continues to be a privilege to advocate on behalf • 90% Faster Planning
NICK WILSON

thinking – are all part of the CGMA competency frame- Follow me of you – our members and students – and I wish you all
work. on Twitter: a very happy Christmas and end of year moving forward • 50% Quicker Consolidation
The Association’s 2017 salary survey confirms that @CIMA_President into a prosperous 2018. ■ • 75% Lower Cost
DECEMBER 2017
4
 THE
1
INFORMATION
I WORKED ON... A SOCIAL ENTERPRISE PROJECT IN
VIETNAM; INSIDE A UK WATER INFRASTRUCTURE
NETWORK’S FINANCE DEPARTMENT;
OPINION – RETHINKING ACCOUNTABILITY;
INSIDER VIEW – POLAND; Q&A WITH HELEN GIBSON,
DEPUTY FINANCE DIRECTOR AT THE UK
GOVERNMENT’S CABINET OFFICE
 THE
1
INFORMATION
I WORKED ON... A SOCIAL ENTERPRISE PROJECT IN
VIETNAM; INSIDE A UK WATER INFRASTRUCTURE
NETWORK’S FINANCE DEPARTMENT;
OPINION – RETHINKING ACCOUNTABILITY;
INSIDER VIEW – POLAND; Q&A WITH HELEN GIBSON,
DEPUTY FINANCE DIRECTOR AT THE UK
GOVERNMENT’S CABINET OFFICE

I N F O
R O
REPUTATION SEEN AS
KEY TO RESILIENCE
A global survey of business leaders has
revealed they value their organisation’s
reputation above all else, including even
financial performance, when considering
elements of resilience.
The Organizational Resilience Index,
which was conducted by the British
Standards Institute (BSI), surveyed more
than 1,200 business leaders from across
the globe and found that protecting
their firm’s reputation topped the list
of important components of resilient
businesses.
Howard Kerr, BSI’s chief executive,
explained: “In today’s volatile and
uncertain world… it is encouraging that
business leaders understand that success
is measured by more than market share,
with trust and reputation clearly seen as
critical to long-term success.”
WHICH RESILIENCE FACTORS
ARE MOST IMPORTANT TO
BUSINESS LEADERS?
1 Reputational risk
2 Financial aspects
3 Leadership
4 Vision and purpose
5 Information
and knowledge
management
Source:
BSI Organizational Resilience Index
2017.
THE INFORMATION / ROUNDUP
U N D U
New coalition to champion
equal pay for women
Unequal pay, one of the most persistent
barriers to women’s success at work
and to economic growth, will be actively
challenged by a newly formed global
partnership.
Created by the International Labour
Organization (ILO), UN Women, and the
Organisation for Economic Co-operation
and Development (OECD), the Equal Pay
International Coalition (EPIC) aims to
support governments, employers, and
workers to make equal pay between
women and men for work of equal value
a reality.
Starting with peer-to-peer policy
exchanges, knowledge sharing, peer-
reviewed research, and robust data and
statistics, EPIC will also contribute to
DECEMBER 2017
8 9
THE INFORMATION / ROUNDUP
54
The number of countries
in which the Accounting for
INTEGRATED
REPORTING
“It helps to ensure that the report tells the story of a
€23
BILLION
The amount spent by
P
International Development business that is more than the sum of its parts, and that Vodafone acquiring large
charity has projects. One has a clear strategy and the right operating model to cable companies or
of which, in Vietnam, is grow profits in a sustainable way.” Anthony Clarke, deputy building next-generation
featured here. company secretary at retailer Marks & Spencer fixed networks.
Full story: Page 10 Full story: Page 48 Full interview: Pages 24-29
HELP FOR BUSINESSES
TO ACHIEVE
SUSTAINABILITY AGENDA
The International Integrated Reporting
Council (IIRC) and ICAS (the professional
accountancy body) have jointly published
a new report aimed at supporting
businesses looking to help achieve
the United Nations’ Sustainable
Development Goals (SDGs).
Authored by Professor Carol
Adams, of Durham University Business LONDON STILL WORLD’S
NUMBER ONE FINANCIAL CENTRE
School in the UK, and published by the
IIRC and ICAS, in partnership with the
Green Economy Coalition, the report
demonstrates how a commitment to Despite uncertainty over the post-Brexit New York is second with 756 points,
economic and political landscape, London and Hong Kong (744) has usurped
integrated reporting can inform and
support a business’s commitment to the is still ranked as the world’s top financial Singapore to take third place in the latest
SDGs. centre. ranking.
Integrated reporting enables
organisations to consider how they
The Z/Yen Global Financial Centres
Index, which is published every six
Paris and Dublin, the two cities that
have positioned themselves to host
strengthening advocacy on equal pay.
create value through the perspective
of their strategy and business model.
months, scores cities out of a total 1,000
points and lists the UK capital as number
financial services firms looking to relocate
from post-Brexit Britain, are positioned
Guy Ryder, the ILO director-general, It also encourages them to consider one with 780 points. 26th and 30th, respectively.
said: “One of the most visible, tangible, their stewardship of the relationships
and pervasive manifestations of and resources they use and affect, and CENTRE CURRENT RANK RATING CHANGE IN RANK
discrimination is that women across the understand the trade-offs they make. London, United Kingdom 1 780 -
globe are still being paid less than men for Russell Picot, chair of the HSBC UK
work of equal value.” Pension Scheme Trustee Board and of
New York, United States 2 756 -
OECD Secretary-General Angel Gurría the advisory group for the report, said: Hong Kong, China 3 744 +1
said: “Gender inequality has many roots, “In using this report, businesses have Singapore 4 742 -1
including flawed policies, discriminatory a tool to communicate – in a language Tokyo, Japan 5 725 -
laws and regulations, misplaced investors will understand – how their
economic incentives, workplace practices, commitment to the SDGs is creating Shanghai, China 6 711 +7
and social norms and institutions. value for society and the business alike. Toronto, Canada 7 710 +3
“It is in our power to make an I urge businesses that are serious Sydney, Australia 8 707 -
immediate improvement in the quality of about sustainable development to use
IMAGES
GE TT TT YY IMAGES
Zurich, Switzerland 9 704 +2
life of hundreds of millions of women and this step-by-step process, thereby
their families if we succeed in delivering embedding the SDGs into the heart of Beijing, China 10 703 +6
equal pay for men and women.” their strategy and business model.” Source: Z/Yen Global Financial Centres Index.
GE
DECEMBER 2017

I N F O
R O
REPUTATION SEEN AS
KEY TO RESILIENCE
A global survey of business leaders has
revealed they value their organisation’s
reputation above all else, including even
financial performance, when considering
elements of resilience.
The Organizational Resilience Index,
which was conducted by the British
Standards Institute (BSI), surveyed more
than 1,200 business leaders from across
the globe and found that protecting
their firm’s reputation topped the list
of important components of resilient
businesses.
Howard Kerr, BSI’s chief executive,
explained: “In today’s volatile and
uncertain world… it is encouraging that
business leaders understand that success
is measured by more than market share,
with trust and reputation clearly seen as
critical to long-term success.”
WHICH RESILIENCE FACTORS
ARE MOST IMPORTANT TO
BUSINESS LEADERS?
1 Reputational risk
2 Financial aspects
3 Leadership
4 Vision and purpose
5 Information
and knowledge
management
Source:
BSI Organizational Resilience Index
2017.
THE INFORMATION / ROUNDUP
U N D U
New coalition to champion
equal pay for women
Unequal pay, one of the most persistent
barriers to women’s success at work
and to economic growth, will be actively
challenged by a newly formed global
partnership.
Created by the International Labour
Organization (ILO), UN Women, and the
Organisation for Economic Co-operation
and Development (OECD), the Equal Pay
International Coalition (EPIC) aims to
support governments, employers, and
workers to make equal pay between
women and men for work of equal value
a reality.
Starting with peer-to-peer policy
exchanges, knowledge sharing, peer-
reviewed research, and robust data and
statistics, EPIC will also contribute to
DECEMBER 2017
8 9
THE INFORMATION / ROUNDUP
54
The number of countries
in which the Accounting for
INTEGRATED
REPORTING
“It helps to ensure that the report tells the story of a
€23
BILLION
The amount spent by
P
International Development business that is more than the sum of its parts, and that Vodafone acquiring large
charity has projects. One has a clear strategy and the right operating model to cable companies or
of which, in Vietnam, is grow profits in a sustainable way.” Anthony Clarke, deputy building next-generation
featured here. company secretary at retailer Marks & Spencer fixed networks.
Full story: Page 10 Full story: Page 48 Full interview: Pages 24-29
HELP FOR BUSINESSES
TO ACHIEVE
SUSTAINABILITY AGENDA
The International Integrated Reporting
Council (IIRC) and ICAS (the professional
accountancy body) have jointly published
a new report aimed at supporting
businesses looking to help achieve
the United Nations’ Sustainable
Development Goals (SDGs).
Authored by Professor Carol
Adams, of Durham University Business LONDON STILL WORLD’S
NUMBER ONE FINANCIAL CENTRE
School in the UK, and published by the
IIRC and ICAS, in partnership with the
Green Economy Coalition, the report
demonstrates how a commitment to Despite uncertainty over the post-Brexit New York is second with 756 points,
economic and political landscape, London and Hong Kong (744) has usurped
integrated reporting can inform and
support a business’s commitment to the is still ranked as the world’s top financial Singapore to take third place in the latest
SDGs. centre. ranking.
Integrated reporting enables
organisations to consider how they
The Z/Yen Global Financial Centres
Index, which is published every six
Paris and Dublin, the two cities that
have positioned themselves to host
strengthening advocacy on equal pay.
create value through the perspective
of their strategy and business model.
months, scores cities out of a total 1,000
points and lists the UK capital as number
financial services firms looking to relocate
from post-Brexit Britain, are positioned
Guy Ryder, the ILO director-general, It also encourages them to consider one with 780 points. 26th and 30th, respectively.
said: “One of the most visible, tangible, their stewardship of the relationships
and pervasive manifestations of and resources they use and affect, and CENTRE CURRENT RANK RATING CHANGE IN RANK
discrimination is that women across the understand the trade-offs they make. London, United Kingdom 1 780 -
globe are still being paid less than men for Russell Picot, chair of the HSBC UK
work of equal value.” Pension Scheme Trustee Board and of
New York, United States 2 756 -
OECD Secretary-General Angel Gurría the advisory group for the report, said: Hong Kong, China 3 744 +1
said: “Gender inequality has many roots, “In using this report, businesses have Singapore 4 742 -1
including flawed policies, discriminatory a tool to communicate – in a language Tokyo, Japan 5 725 -
laws and regulations, misplaced investors will understand – how their
economic incentives, workplace practices, commitment to the SDGs is creating Shanghai, China 6 711 +7
and social norms and institutions. value for society and the business alike. Toronto, Canada 7 710 +3
“It is in our power to make an I urge businesses that are serious Sydney, Australia 8 707 -
immediate improvement in the quality of about sustainable development to use
IMAGES
GE TT TT YY IMAGES
Zurich, Switzerland 9 704 +2
life of hundreds of millions of women and this step-by-step process, thereby
their families if we succeed in delivering embedding the SDGs into the heart of Beijing, China 10 703 +6
equal pay for men and women.” their strategy and business model.” Source: Z/Yen Global Financial Centres Index.
GE
DECEMBER 2017
 THE INFORMATION / I WORKED ON
I ACCOUNTING FOR
WORKED
ON...
A SOCIAL ENTERPRISE FOR
DISADVANTAGED YOUTHS
IN HANOI
“IT IS ALSO OF GREAT
I
have worked in finance
since graduating from
VALUE TO SPEND university in 2008, and for
TIME IN A DIFFERENT
a long time I had been
looking at undertaking a
PART OF THE WORLD project where I could give
something back. I think this
AND EXPERIENCE A partly came from my
recognising how much I had
DIFFERENT WORK benefited from living,
studying, and working in the
CULTURE.” UK after I arrived here from
my native Bangladesh.
I currently work for the
National Grid, the UK’s
Name: Sultana Begum, electrical power
ACMA, CGMA transmission network, and I
Organisation: VIP Bikes enquired about volunteering
Location: Hanoi, Vietnam with Accounting for
Job: Accounting support International Development
Start date: December 2016 (AfID) a couple of years ago
End date: January 2017 after I became CIMA
CIMA qualified: 2014 qualified in 2014, but various
Home role: Interconnector things cropped up – as they
customer and regulatory always do – and it was only
manager at National Grid more recently that I got back
GE T T Y IMAGES
in contact with AfID.
I decided on Vietnam’s
VIP Bikes, which is based in
DECEMBER 2017
10
THE INFORMATION / I WORKED ON
the country’s capital, Hanoi.
The project is a social
enterprise started by a
children’s foundation called
Blue Dragon nearly a decade
ago, and involves a
motorcycle shop, a
motorcycle rental service,
and a mechanics shop that
specialises in motorcycle
repairs and servicing.
The shop provides
support and training to
disadvantaged Vietnamese
children, teaching them
mechanical skills to help get
them off the streets and give
them a skill to build a future
for themselves.
But there is also a
business side to VIP Bikes,
which capitalises on
motorcycles being the
preferred mode of
transportation in Hanoi. The
shop offers servicing, repairs,
and rentals to paying
customers, with all the
proceeds going to Blue
DECEMBER 2017
11
Dragon, which then uses that
money to fund its various
charitable projects, including
helping victims of human
trafficking and numerous
wildlife causes.
My starting task with VIP
Bikes was to bring the
accounts up to date, as they
had not been managed for
quite a while. I also revised
and costed up the services
that VIP Bikes provided in its
shop, over and above the
rental service, to reflect the
changes in costs incurred
from parts and the staff
employed, etc. I then
recommended a price point
that reflected the changes, to
ensure a profit could be
made without losing the
customer base VIP already
had. I also put together a
payment plan so VIP could
pay back some of the debts it
had built up in its foundation
years.
Working with VIP Bikes
INTERNATIONAL
DEVELOPMENT
BY THE NUMBERS:
VOLUNTEER ACCOUNTANTS:
1,315
PRO BONO HOURS IN 2016:
47,790
NONPROFIT PARTNERS
SUPPORTED TO DATE:
423
COUNTRIES VISITED:
54
A city on the rise: Hanoi,
the capital of Vietnam, is
home to more than
7 million people.
was a wonderful experience,
and I realise I’ve been quite
fortunate to have had that
opportunity and in the
support I have had to date. I
am acutely aware that not
everyone gets that support or
opportunity.
Helping someone from a
disadvantaged background to
prepare for their future was
the most rewarding part of it
all, and also seeing the work
that Blue Dragon and VIP
Bikes do and the impact it’s
had on many lives since its
inception.
I learnt a lot from having
to research the project and
being confronted by very
different conditions. It is also
of great value to spend time
in a different part of the
world and experience a
different work culture – it
has made me a better
management accountant and
will aid my own career
development. n
 THE INFORMATION / I WORKED ON
I ACCOUNTING FOR
WORKED
ON...
A SOCIAL ENTERPRISE FOR
DISADVANTAGED YOUTHS
IN HANOI
“IT IS ALSO OF GREAT
I
have worked in finance
since graduating from
VALUE TO SPEND university in 2008, and for
TIME IN A DIFFERENT
a long time I had been
looking at undertaking a
PART OF THE WORLD project where I could give
something back. I think this
AND EXPERIENCE A partly came from my
recognising how much I had
DIFFERENT WORK benefited from living,
studying, and working in the
CULTURE.” UK after I arrived here from
my native Bangladesh.
I currently work for the
National Grid, the UK’s
Name: Sultana Begum, electrical power
ACMA, CGMA transmission network, and I
Organisation: VIP Bikes enquired about volunteering
Location: Hanoi, Vietnam with Accounting for
Job: Accounting support International Development
Start date: December 2016 (AfID) a couple of years ago
End date: January 2017 after I became CIMA
CIMA qualified: 2014 qualified in 2014, but various
Home role: Interconnector things cropped up – as they
customer and regulatory always do – and it was only
manager at National Grid more recently that I got back
GE T T Y IMAGES
in contact with AfID.
I decided on Vietnam’s
VIP Bikes, which is based in
DECEMBER 2017
10
THE INFORMATION / I WORKED ON
the country’s capital, Hanoi.
The project is a social
enterprise started by a
children’s foundation called
Blue Dragon nearly a decade
ago, and involves a
motorcycle shop, a
motorcycle rental service,
and a mechanics shop that
specialises in motorcycle
repairs and servicing.
The shop provides
support and training to
disadvantaged Vietnamese
children, teaching them
mechanical skills to help get
them off the streets and give
them a skill to build a future
for themselves.
But there is also a
business side to VIP Bikes,
which capitalises on
motorcycles being the
preferred mode of
transportation in Hanoi. The
shop offers servicing, repairs,
and rentals to paying
customers, with all the
proceeds going to Blue
DECEMBER 2017
11
Dragon, which then uses that
money to fund its various
charitable projects, including
helping victims of human
trafficking and numerous
wildlife causes.
My starting task with VIP
Bikes was to bring the
accounts up to date, as they
had not been managed for
quite a while. I also revised
and costed up the services
that VIP Bikes provided in its
shop, over and above the
rental service, to reflect the
changes in costs incurred
from parts and the staff
employed, etc. I then
recommended a price point
that reflected the changes, to
ensure a profit could be
made without losing the
customer base VIP already
had. I also put together a
payment plan so VIP could
pay back some of the debts it
had built up in its foundation
years.
Working with VIP Bikes
INTERNATIONAL
DEVELOPMENT
BY THE NUMBERS:
VOLUNTEER ACCOUNTANTS:
1,315
PRO BONO HOURS IN 2016:
47,790
NONPROFIT PARTNERS
SUPPORTED TO DATE:
423
COUNTRIES VISITED:
54
A city on the rise: Hanoi,
the capital of Vietnam, is
home to more than
7 million people.
was a wonderful experience,
and I realise I’ve been quite
fortunate to have had that
opportunity and in the
support I have had to date. I
am acutely aware that not
everyone gets that support or
opportunity.
Helping someone from a
disadvantaged background to
prepare for their future was
the most rewarding part of it
all, and also seeing the work
that Blue Dragon and VIP
Bikes do and the impact it’s
had on many lives since its
inception.
I learnt a lot from having
to research the project and
being confronted by very
different conditions. It is also
of great value to spend time
in a different part of the
world and experience a
different work culture – it
has made me a better
management accountant and
will aid my own career
development. n
 THE INFORMATION / LED BY FINANCE THE INFORMATION / LED BY FINANCE

LED
F I N A N C E THE Richard Hoult, FCMA, CGMA, the CFO of Thames
Water Infrastructure Alliance, on how setting KPIs has

WATER
helped the organisation enhance its vast water supply

BY network for 9 million customers.

CYCLE
QWhat
Infrastructure Alliance A December 2015 – an
is the Thames Water I joined the TWIA in its leakage target in 2016-
2017 for the first time in ten
(TWIA), and how does the organisation that had a years, which has also led to
finance function bind it number of major challenges. a hunger for data and a need
together? At that time, it wasn’t hitting to understand why and how

A The TWIA includes

construction firms Kier,
Clancy Docwra, Morrison
Utility Services, J Murphy &
Sons, and Thames Water, and
is the largest alliance to
deliver water-related
infrastructure in the UK’s
water industry.
A key responsibility
of the finance function is
building and maintaining
relationships at executive
level across these five
organisations.
This is because the
TWIA agreement includes
a significant pain/gain
mechanism which could
result in profits or losses
for the joint venture
organisations.
As the TWIA and its
partners operate an “open
book” and operate to an
“actual cost” contract, the
TWIA finance and joint
venture finance teams’
responsibilities cover the
validation, control, and
review of up to 50,000
transactions per month from
all of the businesses, how
they are recorded in the joint
ventures and, ultimately,
Thames Water’s books.
targets, there was a lack of
governance and control, and a
lack of clear accountabilities.
These performance
challenges, coupled with
a lack of accurate and
insightful reporting, led
to the newly appointed
TWIA CEO (appointed in
October 2016), giving a clear
message to me: “I need to
know how my business is
performing. I need KPIs
I can trust and I want
everything summarised onto
a monthly ‘performance
on a page’.” The key areas
that both the TWIA CEO
and the TWIA board were
interested in were leakage
management, customer
service performance, and
financial performance. And
reporting of all of these
activities at a regional level.
QHow does that reflect
wider developments
across the group?
A A number of
management/executive
changes took place at Thames
Water in 2017. These, in a
number of cases, have been
made to provide more focus on
operational delivery within the
wholesale businesses –
having a set of (the right)
KPIs can support getting
leakage back on track.
QWhat process are you
undertaking to implement
KPIs? What teams are you
working with?
A The process was
managed by an
experienced programme
manager who has worked with
me on transformation projects
in the past, and had four parts:
● Targets and outcomes
agreed (this included input
from the wholesale water
strategy, planning, and
assurance team to ensure
agreement of the leakage
targets).
● Primary drivers identified
(eg, the manpower
required to plan and
deliver leakage repair
jobs).
● Primary KPIs agreed
by the TWIA leadership
team. A total of 12 KPIs
were agreed covering the
following areas: service
delivery, commercial
success, people, and
removing harm.
● Service delivery KPIs by
region – to drive ownership
and accountability at

QWhy

was a decision taken
to implement key perfor-
mance indicators (KPIs)? What
areas does this relate to?
leakage performance and
customer service performance
being the key focus areas.
Thames Water missed
ROBERT WILSON
the right level (general
managers for each region
were required to achieve
their targets).

DECEMBER 2017 DECEMBER 2017

12 13
 THE INFORMATION / LED BY FINANCE THE INFORMATION / LED BY FINANCE

LED
F I N A N C E THE Richard Hoult, FCMA, CGMA, the CFO of Thames
Water Infrastructure Alliance, on how setting KPIs has

WATER
helped the organisation enhance its vast water supply

BY network for 9 million customers.

CYCLE
QWhat
Infrastructure Alliance A December 2015 – an
is the Thames Water I joined the TWIA in its leakage target in 2016-
2017 for the first time in ten
(TWIA), and how does the organisation that had a years, which has also led to
finance function bind it number of major challenges. a hunger for data and a need
together? At that time, it wasn’t hitting to understand why and how

A The TWIA includes

construction firms Kier,
Clancy Docwra, Morrison
Utility Services, J Murphy &
Sons, and Thames Water, and
is the largest alliance to
deliver water-related
infrastructure in the UK’s
water industry.
A key responsibility
of the finance function is
building and maintaining
relationships at executive
level across these five
organisations.
This is because the
TWIA agreement includes
a significant pain/gain
mechanism which could
result in profits or losses
for the joint venture
organisations.
As the TWIA and its
partners operate an “open
book” and operate to an
“actual cost” contract, the
TWIA finance and joint
venture finance teams’
responsibilities cover the
validation, control, and
review of up to 50,000
transactions per month from
all of the businesses, how
they are recorded in the joint
ventures and, ultimately,
Thames Water’s books.
targets, there was a lack of
governance and control, and a
lack of clear accountabilities.
These performance
challenges, coupled with
a lack of accurate and
insightful reporting, led
to the newly appointed
TWIA CEO (appointed in
October 2016), giving a clear
message to me: “I need to
know how my business is
performing. I need KPIs
I can trust and I want
everything summarised onto
a monthly ‘performance
on a page’.” The key areas
that both the TWIA CEO
and the TWIA board were
interested in were leakage
management, customer
service performance, and
financial performance. And
reporting of all of these
activities at a regional level.
QHow does that reflect
wider developments
across the group?
A A number of
management/executive
changes took place at Thames
Water in 2017. These, in a
number of cases, have been
made to provide more focus on
operational delivery within the
wholesale businesses –
having a set of (the right)
KPIs can support getting
leakage back on track.
QWhat process are you
undertaking to implement
KPIs? What teams are you
working with?
A The process was
managed by an
experienced programme
manager who has worked with
me on transformation projects
in the past, and had four parts:
● Targets and outcomes
agreed (this included input
from the wholesale water
strategy, planning, and
assurance team to ensure
agreement of the leakage
targets).
● Primary drivers identified
(eg, the manpower
required to plan and
deliver leakage repair
jobs).
● Primary KPIs agreed
by the TWIA leadership
team. A total of 12 KPIs
were agreed covering the
following areas: service
delivery, commercial
success, people, and
removing harm.
● Service delivery KPIs by
region – to drive ownership
and accountability at

QWhy

was a decision taken
to implement key perfor-
mance indicators (KPIs)? What
areas does this relate to?
leakage performance and
customer service performance
being the key focus areas.
Thames Water missed
ROBERT WILSON
the right level (general
managers for each region
were required to achieve
their targets).

DECEMBER 2017 DECEMBER 2017

12 13
 THE INFORMATION / LED BY FINANCE

“DEFINING AND AGREEING ON

SINGLE SOURCES OF DATA AND
IMPROVING THE QUALITY OF
DATA SIGNIFICANTLY
IMPROVED CONFIDENCE OVER
THE OUTPUTS.”

QWhat are the ultimate

objectives? What should
monthly TWIA leadership
team meetings.
success look like? Operational

A The ultimate objectives

for the business are to:
● Achieve the leakage
reduction target.
● Deliver consistently good
customer service that
results in scores of five
out of five for both office
and field-related activities
managed by the TWIA.
● Deliver the budget, which
includes implementation
of a number of critical
enablers that drive down
cost of delivery.
These objectives
significantly underpin
delivery of Thames
Water’s targets and the
commitments of the
government regulator,
Ofwat. They can result in
significant penalties for
Thames Water if they are
not met.
performance, covering key
areas such as addressing
leakage, job cycle times,
job volume/type of jobs,
cost per job, and team
productivity are KPIs
included in the service
delivery dashboard, which
is reviewed/challenged at
the monthly performance
review, with each general
manager presenting their
performance update.
The dashboards are also
provided to the TWIA board
as an easy reference point
on how well the TWIA is
performing.
QHave any early benefits
been delivered so far?
AThe KPIs have allowed
us to understand that a
large number of the leaks
detected by our contractors
weren’t as large as expected, reactive/event work). important.

Q What progress have you impacting the leakage target Buy-in from the
made so far? (leading to an improved
QWhat have you learnt leadership and operational

A The TWIA KPIs and
dashboards were
launched in April 2017 to
support the reporting for this
new financial year.
We use a set of Excel-
based dashboards to
understand how well the
business is performing
– the primary KPIs are a
core part of the leadership
team dashboard and are
reviewed/challenged at
performance framework
being agreed with the
leak-detection partners).
Also, the dashboard
made it easy to see a
correlation between
the region with the
highest number of major
leakage/no-water events
and adverse leakage
performance (leading to
increased headcount to
be able to manage the
from this experience?
AApeople
good team of talented
(internally and
externally), who I’ve worked
with before, really helped me
accelerate progress and
deliver this.
Defining and agreeing
on single sources of data
and improving the quality of
data significantly improved
confidence over the
outputs, which was also
teams was key – once
management teams
understood the data and
the targets, it helped
establish ownership and
accountability at all levels.
Other businesses in the
utilities sector are willing
to share what they do for
mutual benefit – thanks
go to UK Power Networks
for sharing some of their
operational KPIs. n

DECEMBER 2017
14
 THE INFORMATION / LED BY FINANCE

“DEFINING AND AGREEING ON

SINGLE SOURCES OF DATA AND
IMPROVING THE QUALITY OF
DATA SIGNIFICANTLY
IMPROVED CONFIDENCE OVER
THE OUTPUTS.”

QWhat are the ultimate

objectives? What should
monthly TWIA leadership
team meetings.
success look like? Operational

A The ultimate objectives

for the business are to:
● Achieve the leakage
reduction target.
● Deliver consistently good
customer service that
results in scores of five
out of five for both office
and field-related activities
managed by the TWIA.
● Deliver the budget, which
includes implementation
of a number of critical
enablers that drive down
cost of delivery.
These objectives
significantly underpin
delivery of Thames
Water’s targets and the
commitments of the
government regulator,
Ofwat. They can result in
significant penalties for
Thames Water if they are
not met.
performance, covering key
areas such as addressing
leakage, job cycle times,
job volume/type of jobs,
cost per job, and team
productivity are KPIs
included in the service
delivery dashboard, which
is reviewed/challenged at
the monthly performance
review, with each general
manager presenting their
performance update.
The dashboards are also
provided to the TWIA board
as an easy reference point
on how well the TWIA is
performing.
QHave any early benefits
been delivered so far?
AThe KPIs have allowed
us to understand that a
large number of the leaks
detected by our contractors
weren’t as large as expected, reactive/event work). important.

Q What progress have you impacting the leakage target Buy-in from the
made so far? (leading to an improved
QWhat have you learnt leadership and operational

A The TWIA KPIs and
dashboards were
launched in April 2017 to
support the reporting for this
new financial year.
We use a set of Excel-
based dashboards to
understand how well the
business is performing
– the primary KPIs are a
core part of the leadership
team dashboard and are
reviewed/challenged at
performance framework
being agreed with the
leak-detection partners).
Also, the dashboard
made it easy to see a
correlation between
the region with the
highest number of major
leakage/no-water events
and adverse leakage
performance (leading to
increased headcount to
be able to manage the
from this experience?
AApeople
good team of talented
(internally and
externally), who I’ve worked
with before, really helped me
accelerate progress and
deliver this.
Defining and agreeing
on single sources of data
and improving the quality of
data significantly improved
confidence over the
outputs, which was also
teams was key – once
management teams
understood the data and
the targets, it helped
establish ownership and
accountability at all levels.
Other businesses in the
utilities sector are willing
to share what they do for
mutual benefit – thanks
go to UK Power Networks
for sharing some of their
operational KPIs. n

DECEMBER 2017
14
 THE INFORMATION / OPINION
Rethinking
accountability
in modern
organisations
Evaluating performance based on an integrated
scorecard can help build accountability and close
the expectations gap.
I
n many countries the role of business in
society appears to be in a state of flux. Spe-
cifically, according to the Edelman Trust
Barometer, trust in business is falling. The
reasons are not definitive, but they include
the failure by many organisations to effec-
tively deliver what their customers expect,
the increasing wealth gap, and, for some,
poor behaviours.
This has led to an increase in demand
for accountability in both the public and pri-
Alexsandro vate sectors. Today’s boards need to be the
Broedel Lopes guardian of the reputation of their organi-
sations. The collapse in just one week of the
FCMA, CGMA, Ph.D. public relations firm Bell Pottinger demon-
strates the fragility of reputation; specifically
the need to address their trust P&L, and
accountability to key stakeholders.
Although not a new concept, accounta-
bility has been refuelled by new technolo-
gies that allow for an unprecedented access
to information about organisations’ prac-
tices and performance. Examples of this
renewed interest in making people in charge
of organisations more accountable is easily
seen by the scrutiny that management com-
pensation is subject to by activist investors
Charles Tilley in the corporate arena.
OBE, FCMA, CGMA In the public sector, the August 2016
DECEMBER 2017
16
THE INFORMATION / OPINION
impeachment of Brazilian President Dilma around a broader set of dimensions. Formed
“THE RULES business and its delivery partners, with the
Rousseff amid accusations of public around a six capitals-based model, this critical linkage made to the achievement of
accounting manipulation to hide the mag-
nitude of the country’s deficit is unprece-
includes but is not limited to financial issues
as it considers the social, intellectual, tech- OF THE the strategy within employee job descrip-
tions and incentives.
dented. In the UK, a requirement has recently nological, human, and environmental ele-
GAME MUST Because it is difficult should not work
BE KNOWN
been announced for the multiple of the CEO’s ments of an institution’s behaviour. The IR as an excuse to avoid embracing a broader
remuneration to that of the average employee Framework and metrics it embeds are much set of more sustainable metrics. We have
AND BE
to be published. This will require remuner- closer to the general public’s expectation focused on financial measurements while
ation committees to communicate both the about the performance of modern organi- the majority of value, over 80%, is not rec-
rationale and the link to performance. sations than traditional GAAP measures.
CLEAR TO ALL ognised on the balance sheet.
Revealing as these events may be about Although it is well-recognised that much So we urgently need to address the value
the public interest in how organisations
behave, they reveal some level of frustration
progress has been made by corporations
around the globe to produce integrated PARTIES.” drivers relevant to today, developing non-fi-
nancial KPIs to enable the board and man-
about the current state of corporate and pub- reports and to engage in integrated think- agement to deliver long-term success focused
lic governance practices and the difficulties ing, little has advanced in the use of this not only because they have good financial upon meeting the needs of all key stakehold-
of effectively reforming them. Several pieces framework in internal performance evalu- results but also because they can answer the ers – customers, staff, the supply chain, the
of new legislation have been passed and ation and compensation mechanisms. This claims of a broader and more demanding environment, and, of course, investors.
codes of conduct established, yet governance dichotomy needs to be solved in order to stakeholder group. Active and well-con-
and accountability still seem to need further align the interests of executives, investors, nected boards and other groups responsible Charles Tilley is executive chairman of the CGMA
improvement. The recent demand by the and the global community that expects noth- for establishing corporate governance mech- Research Foundation and the former CEO of
Investor Forum, which makes the case for a ing but the most ethical and competent anisms should seize the initiative and not CIMA. He is a member of the International
long-term approach to investment, on the behaviour from modern institutions. sit waiting for the new wave of regulatory Integrated Reporting Council and is chairman of
disclosure of non-financial information by Managers should have the new demands demands that will eventually surface. the International Federation of Accountants’
banks highlights the current state of affairs.
To understand this frustration it is nec-
for a more sustainable performance explic-
itly included in their job descriptions. This
The task is not insignificant as many of
these dimensions are not easily measured.
Professional Accountants in Business Committee.
essary to dig a little deeper on the mecha- should be well-aligned and harmonised with The key challenge for boards is in ensuring Alexsandro Broedel Lopes is group finance director
nisms being used to make managers more their compensation to avoid a separation that the agreed purpose and values of the of Itaú Unibanco, where he developed one of the
accountable and to align incentives with per- between preaching and practice. The lead- business are clearly integrated into the strat- world’s first integrated reports for a financial
formance. For executives and public officers ing organisations of tomorrow will succeed egy, and are embraced by all those in the institution. He serves on the board of the IIRC. n
to be made accountable it is necessary first
to agree on a common set of metrics that
have to be measurable and established ex
ante of the actual performance. The rules of
the game must be known and be clear to all
parties involved and be contracted before
the performance is actually observed. What
is seen today in many organisations is that
most of the metrics managers are engaged
and remunerated for are financial in nature.
The general public and many stakeholders,
however, expect executives to be accounta-
ble to a much broader set of dimensions
including customer satisfaction, environ-
mental impact, and regulatory compliance,
just to name a few. To fill this expectations
gap it is necessary to evaluate institutions
and personal performances through a com-
mon and integrated set of metrics that can
NICK WILSON, IKON IMAGES/NICK SHEPHERD
be clearly stated and communicated to a
broader audience of stakeholders not lim-
ited to investors.
This integrated scorecard should be clear
and distinct, providing the financial report-
ing picture as well as details of the internal
mechanisms used to evaluate performance
including compensation. In this direction
the International Integrated Reporting Coun-
cil’s (IIRC’s) Integrated Reporting Framework
provides a concise and robust structure to
evaluate an organisation’s performance
DECEMBER 2017
17
 THE INFORMATION / OPINION
Rethinking
accountability
in modern
organisations
Evaluating performance based on an integrated
scorecard can help build accountability and close
the expectations gap.
I
n many countries the role of business in
society appears to be in a state of flux. Spe-
cifically, according to the Edelman Trust
Barometer, trust in business is falling. The
reasons are not definitive, but they include
the failure by many organisations to effec-
tively deliver what their customers expect,
the increasing wealth gap, and, for some,
poor behaviours.
This has led to an increase in demand
for accountability in both the public and pri-
Alexsandro vate sectors. Today’s boards need to be the
Broedel Lopes guardian of the reputation of their organi-
sations. The collapse in just one week of the
FCMA, CGMA, Ph.D. public relations firm Bell Pottinger demon-
strates the fragility of reputation; specifically
the need to address their trust P&L, and
accountability to key stakeholders.
Although not a new concept, accounta-
bility has been refuelled by new technolo-
gies that allow for an unprecedented access
to information about organisations’ prac-
tices and performance. Examples of this
renewed interest in making people in charge
of organisations more accountable is easily
seen by the scrutiny that management com-
pensation is subject to by activist investors
Charles Tilley in the corporate arena.
OBE, FCMA, CGMA In the public sector, the August 2016
DECEMBER 2017
16
THE INFORMATION / OPINION
impeachment of Brazilian President Dilma around a broader set of dimensions. Formed
“THE RULES business and its delivery partners, with the
Rousseff amid accusations of public around a six capitals-based model, this critical linkage made to the achievement of
accounting manipulation to hide the mag-
nitude of the country’s deficit is unprece-
includes but is not limited to financial issues
as it considers the social, intellectual, tech- OF THE the strategy within employee job descrip-
tions and incentives.
dented. In the UK, a requirement has recently nological, human, and environmental ele-
GAME MUST Because it is difficult should not work
BE KNOWN
been announced for the multiple of the CEO’s ments of an institution’s behaviour. The IR as an excuse to avoid embracing a broader
remuneration to that of the average employee Framework and metrics it embeds are much set of more sustainable metrics. We have
AND BE
to be published. This will require remuner- closer to the general public’s expectation focused on financial measurements while
ation committees to communicate both the about the performance of modern organi- the majority of value, over 80%, is not rec-
rationale and the link to performance. sations than traditional GAAP measures.
CLEAR TO ALL ognised on the balance sheet.
Revealing as these events may be about Although it is well-recognised that much So we urgently need to address the value
the public interest in how organisations
behave, they reveal some level of frustration
progress has been made by corporations
around the globe to produce integrated PARTIES.” drivers relevant to today, developing non-fi-
nancial KPIs to enable the board and man-
about the current state of corporate and pub- reports and to engage in integrated think- agement to deliver long-term success focused
lic governance practices and the difficulties ing, little has advanced in the use of this not only because they have good financial upon meeting the needs of all key stakehold-
of effectively reforming them. Several pieces framework in internal performance evalu- results but also because they can answer the ers – customers, staff, the supply chain, the
of new legislation have been passed and ation and compensation mechanisms. This claims of a broader and more demanding environment, and, of course, investors.
codes of conduct established, yet governance dichotomy needs to be solved in order to stakeholder group. Active and well-con-
and accountability still seem to need further align the interests of executives, investors, nected boards and other groups responsible Charles Tilley is executive chairman of the CGMA
improvement. The recent demand by the and the global community that expects noth- for establishing corporate governance mech- Research Foundation and the former CEO of
Investor Forum, which makes the case for a ing but the most ethical and competent anisms should seize the initiative and not CIMA. He is a member of the International
long-term approach to investment, on the behaviour from modern institutions. sit waiting for the new wave of regulatory Integrated Reporting Council and is chairman of
disclosure of non-financial information by Managers should have the new demands demands that will eventually surface. the International Federation of Accountants’
banks highlights the current state of affairs.
To understand this frustration it is nec-
for a more sustainable performance explic-
itly included in their job descriptions. This
The task is not insignificant as many of
these dimensions are not easily measured.
Professional Accountants in Business Committee.
essary to dig a little deeper on the mecha- should be well-aligned and harmonised with The key challenge for boards is in ensuring Alexsandro Broedel Lopes is group finance director
nisms being used to make managers more their compensation to avoid a separation that the agreed purpose and values of the of Itaú Unibanco, where he developed one of the
accountable and to align incentives with per- between preaching and practice. The lead- business are clearly integrated into the strat- world’s first integrated reports for a financial
formance. For executives and public officers ing organisations of tomorrow will succeed egy, and are embraced by all those in the institution. He serves on the board of the IIRC. n
to be made accountable it is necessary first
to agree on a common set of metrics that
have to be measurable and established ex
ante of the actual performance. The rules of
the game must be known and be clear to all
parties involved and be contracted before
the performance is actually observed. What
is seen today in many organisations is that
most of the metrics managers are engaged
and remunerated for are financial in nature.
The general public and many stakeholders,
however, expect executives to be accounta-
ble to a much broader set of dimensions
including customer satisfaction, environ-
mental impact, and regulatory compliance,
just to name a few. To fill this expectations
gap it is necessary to evaluate institutions
and personal performances through a com-
mon and integrated set of metrics that can
NICK WILSON, IKON IMAGES/NICK SHEPHERD
be clearly stated and communicated to a
broader audience of stakeholders not lim-
ited to investors.
This integrated scorecard should be clear
and distinct, providing the financial report-
ing picture as well as details of the internal
mechanisms used to evaluate performance
including compensation. In this direction
the International Integrated Reporting Coun-
cil’s (IIRC’s) Integrated Reporting Framework
provides a concise and robust structure to
evaluate an organisation’s performance
DECEMBER 2017
17
 THE INFORMATION / INSIDER VIEW THE INFORMATION / INSIDER VIEW

P O L A N D “THE INFRASTRUCTURE IS

INSIDER
OBVIOUSLY STILL BEHIND
WESTERN EUROPEAN
COUNTRIES, BUT DUE TO

VIEW
MASSIVE INVESTMENT IN
THE LAST COUPLE OF YEARS
THINGS ARE CHANGING.”
Kamil Gabry , UBS Business Solutions

W Without a single year of negative

hen it comes to
economics, Poland
is developing fast.
With GDP growth of 4%
expected in 2017, following
average annual growth of
3.2% between 2014 and
2016, this nation of 38
million people is finally
starting to move beyond its
turbulent history to realise
its vast potential.
Magdalena Wereda-
Kolasi ska, FCMA, CGMA,
finance director at insurer
PZU Health (PZU Group),
says the unemployment rate
has fallen to around 7%
(from a high of 20% in 2003),
a figure that takes into
account the influx of a
million Ukrainians into
Poland since 2016. “In my
opinion, prospects for
Poland’s economy are
improving all the time,” she
says.
This is echoed by Kamil
Gabry , a financial analyst at
UBS Business Solutions, who
says Central Europe’s biggest
country is developing at a
swift pace.
“The infrastructure is
obviously still behind
Western European countries,
but due to massive
investment in the last couple
expansion spending in
Poland rose by 75% year-on-
growth since transitioning from year in 2016 to almost $10
billion, and added that
communism in 1989, Poland recent announcements from
is one of the economic success investment banks JP Morgan,
UBS, and Goldman Sachs
stories of the last quarter that they are beefing up their
presence in the country
century. Here, FM discovers what shows this trend is
continuing in 2017.
it is like to do business in Central UBS’s Gabry agrees.
Europe’s largest economy. “Poland has become a good
place to do business,” he
says. “There is a big talent
pool as a lot of people
managed to earn some
experience by working in
large multinational
companies and also abroad.
“There is also a
significantly lower cost for
companies coming here.
That means you get a good
mix of experienced,
motivated, and reasonably
countless new playgrounds, changes in law and tax inexpensive talent.”
football and volleyball regulations.” And the prospects for the
pitches, schools, and other But this has not stopped future look bright as well.
infrastructure in small Poland from making a rapid Poland has more than 1.5
communities. rise in the World Bank’s million students, almost half
“Due to fast Doing Business rankings in of whom speak English, says
development, people are recent years, climbing from PZU’s Wereda-Kolasi ska.
starting to become a bit more 55th position in 2013 to a “This presents an
‘cosmopolitan’,” he adds. record high of 25th in 2016. attractive market for
However, he does inject an Jakub Bejnarowicz, multinationals’ functions,”
element of caution. “There is CIMA’s associate director of she says. “And when you
some political uncertainty Central and Eastern Europe, combine it with tax relief for
AL AMY, GE T T Y IMAGES

of years things are
changing,” he says.
“Our biggest cities are
starting to look really similar
to those in the West. An
example is that there are
right now,” he says. “In my
view, our current
government does not try to
facilitate doing business,
and even makes it harder
sometimes with frequent
says this is down to “great
improvement in
infrastructure, transport,
and communications”.
Bejnarowicz says that
foreign companies’
research and development
that was changed in 2016 to
become friendly to
companies, it makes for an
attractive investment
environment.” ■

DECEMBER 2017 DECEMBER 2017

18 19
 THE INFORMATION / INSIDER VIEW THE INFORMATION / INSIDER VIEW

P O L A N D “THE INFRASTRUCTURE IS

INSIDER
OBVIOUSLY STILL BEHIND
WESTERN EUROPEAN
COUNTRIES, BUT DUE TO

VIEW
MASSIVE INVESTMENT IN
THE LAST COUPLE OF YEARS
THINGS ARE CHANGING.”
Kamil Gabry , UBS Business Solutions

W Without a single year of negative

hen it comes to
economics, Poland
is developing fast.
With GDP growth of 4%
expected in 2017, following
average annual growth of
3.2% between 2014 and
2016, this nation of 38
million people is finally
starting to move beyond its
turbulent history to realise
its vast potential.
Magdalena Wereda-
Kolasi ska, FCMA, CGMA,
finance director at insurer
PZU Health (PZU Group),
says the unemployment rate
has fallen to around 7%
(from a high of 20% in 2003),
a figure that takes into
account the influx of a
million Ukrainians into
Poland since 2016. “In my
opinion, prospects for
Poland’s economy are
improving all the time,” she
says.
This is echoed by Kamil
Gabry , a financial analyst at
UBS Business Solutions, who
says Central Europe’s biggest
country is developing at a
swift pace.
“The infrastructure is
obviously still behind
Western European countries,
but due to massive
investment in the last couple
expansion spending in
Poland rose by 75% year-on-
growth since transitioning from year in 2016 to almost $10
billion, and added that
communism in 1989, Poland recent announcements from
is one of the economic success investment banks JP Morgan,
UBS, and Goldman Sachs
stories of the last quarter that they are beefing up their
presence in the country
century. Here, FM discovers what shows this trend is
continuing in 2017.
it is like to do business in Central UBS’s Gabry agrees.
Europe’s largest economy. “Poland has become a good
place to do business,” he
says. “There is a big talent
pool as a lot of people
managed to earn some
experience by working in
large multinational
companies and also abroad.
“There is also a
significantly lower cost for
companies coming here.
That means you get a good
mix of experienced,
motivated, and reasonably
countless new playgrounds, changes in law and tax inexpensive talent.”
football and volleyball regulations.” And the prospects for the
pitches, schools, and other But this has not stopped future look bright as well.
infrastructure in small Poland from making a rapid Poland has more than 1.5
communities. rise in the World Bank’s million students, almost half
“Due to fast Doing Business rankings in of whom speak English, says
development, people are recent years, climbing from PZU’s Wereda-Kolasi ska.
starting to become a bit more 55th position in 2013 to a “This presents an
‘cosmopolitan’,” he adds. record high of 25th in 2016. attractive market for
However, he does inject an Jakub Bejnarowicz, multinationals’ functions,”
element of caution. “There is CIMA’s associate director of she says. “And when you
some political uncertainty Central and Eastern Europe, combine it with tax relief for
AL AMY, GE T T Y IMAGES

of years things are
changing,” he says.
“Our biggest cities are
starting to look really similar
to those in the West. An
example is that there are
right now,” he says. “In my
view, our current
government does not try to
facilitate doing business,
and even makes it harder
sometimes with frequent
says this is down to “great
improvement in
infrastructure, transport,
and communications”.
Bejnarowicz says that
foreign companies’
research and development
that was changed in 2016 to
become friendly to
companies, it makes for an
attractive investment
environment.” ■

DECEMBER 2017 DECEMBER 2017

18 19
Q
&
Helen Gibson, FCMA, CGMA,
deputy finance director at the UK
government’s Cabinet Office, on being
at the heart of the financial and IT
transformation of central government.
Q Q
What does your current
role of deputy director
of finance entail?
A A
In my current role
I’m responsible for
the Cabinet Office
accounts and estimates produc-
tion, and in-year financial report-
ing. At £0.5 billion, the budget is
small compared to other depart-
ments. But the make-up is com-
plex because of the different areas
of spend. We’re the place where
the PM and other cabinet minis-
ters come to set up new teams, so
there is always change.
The central financial manage-
ment team oversees all aspects of
accounts payable, accounts receiv-
able, and business information
THE INFORMATION / Q&A
Q
A
with close links into our shared
services. We do annual reports and
accounts as well as transparency
reporting, and provide briefings
for ministers and Parliament’s
select committees such as the Pub-
lic Accounts Committee (PAC).
As head of the finance profes-
sion for the department, I am
responsible for finance training
and development, and for over-
seeing finance transformation.
I like the learning and devel-
opment part of my role, working
with our CIMA account manager
looking at how we provide train-
ing support for our students –
20-plus in the department and
others in the shared services. For
me, CIMA is part of everything I
DECEMBER 2017
20
THE INFORMATION / Q&A
do every day with my financial is recognised. The role of finance
and non-financial responsibili- professionals is more important
ties. than ever and at the heart of
As the senior responsible everything that is done. With a
officer, I was responsible for the drive to move more transactions
operational transition to Single work to shared services, the focus
Operating Platform (SOP) for the of people at the centre is to per-
department, which took place at form value-added work.
the end of May 2017. It is an Ora-
q
cle platform, one of the largest What was your experi-
in Europe, with 300,000 civil ence when you were
servants on it. It is a huge head of the business
achievement, and from here we management team (BMT)? What
can continue to drive improve- was the remit and biggest chal-
ments and developments. lenges?
A
I am also the department’s I enjoyed my role as head
counter-fraud champion, and the of BMT, which was a
Cabinet Office unveiled coun- team set up following
ter-fraud standards and compe- the transition in 2009 to a
tencies in February 2017. shared-services provider for
Now we’re working closely finance and HR. Involved in the
with the Department for Exiting design and set-up of the team, I
the European Union. Whether enjoyed the shared-services tran-
that is constitutional work or the sition despite teething issues.
digital agenda, it touches most Before, HR, payroll, and
of our work linking out with finance transactions were
other departments. in-house. It was a huge move
which impacted roles and was a
What makes a good different way of working. The Cab-
shared service? inet Office was driving the
shared-services agenda, and we
The principle of shared were the pilot for the whole of gov-
services is to have a
standard offering with
ernment.
The team covered finance,
set procedures, and that can be procurement, and estates support
tricky as government depart- across the department, and this
ments all have slightly different was a challenge as we were cen-
ways of working. We are work-
ing towards standard processes.
tralising the support which had
previously been embedded in the
business. It was a different way of
Why have you working, with a new system, and
remained in the with a third-party provider.
Cabinet Office? For me it was a big piece of
The reason I’ve stayed co-ordinating work. The team was
so long is that the around 30-40 people, so staff man-
department changes so agement was a big part of the role.
frequently. The old-school cul- Leadership for me is about lead-
ture has changed; we’ve got good ing by example and being clear
technology and flexible working, about what you are trying to
which helps if you have – like I achieve and communicating well.
have – caring responsibilities. You need to take time to look after
While the financial side is struc- people.
tured, other work is so varied. Another challenge was learn-
Changes in government ing how to work with the
finance have been positive, with shared-services provider.
much more of a focus and appre- As I’d been part of the team
RICHARD SAKER
ciation for financial profession- that implemented shared services,
als. Their important role a lot of the key relationships were
supporting departments in the already formed, and many have
changing landscape and climate continued since. n
DECEMBER 2017
21
Q
&
Helen Gibson, FCMA, CGMA,
deputy finance director at the UK
government’s Cabinet Office, on being
at the heart of the financial and IT
transformation of central government.
Q Q
What does your current
role of deputy director
of finance entail?
A A
In my current role
I’m responsible for
the Cabinet Office
accounts and estimates produc-
tion, and in-year financial report-
ing. At £0.5 billion, the budget is
small compared to other depart-
ments. But the make-up is com-
plex because of the different areas
of spend. We’re the place where
the PM and other cabinet minis-
ters come to set up new teams, so
there is always change.
The central financial manage-
ment team oversees all aspects of
accounts payable, accounts receiv-
able, and business information
THE INFORMATION / Q&A
Q
A
with close links into our shared
services. We do annual reports and
accounts as well as transparency
reporting, and provide briefings
for ministers and Parliament’s
select committees such as the Pub-
lic Accounts Committee (PAC).
As head of the finance profes-
sion for the department, I am
responsible for finance training
and development, and for over-
seeing finance transformation.
I like the learning and devel-
opment part of my role, working
with our CIMA account manager
looking at how we provide train-
ing support for our students –
20-plus in the department and
others in the shared services. For
me, CIMA is part of everything I
DECEMBER 2017
20
THE INFORMATION / Q&A
do every day with my financial is recognised. The role of finance
and non-financial responsibili- professionals is more important
ties. than ever and at the heart of
As the senior responsible everything that is done. With a
officer, I was responsible for the drive to move more transactions
operational transition to Single work to shared services, the focus
Operating Platform (SOP) for the of people at the centre is to per-
department, which took place at form value-added work.
the end of May 2017. It is an Ora-
q
cle platform, one of the largest What was your experi-
in Europe, with 300,000 civil ence when you were
servants on it. It is a huge head of the business
achievement, and from here we management team (BMT)? What
can continue to drive improve- was the remit and biggest chal-
ments and developments. lenges?
A
I am also the department’s I enjoyed my role as head
counter-fraud champion, and the of BMT, which was a
Cabinet Office unveiled coun- team set up following
ter-fraud standards and compe- the transition in 2009 to a
tencies in February 2017. shared-services provider for
Now we’re working closely finance and HR. Involved in the
with the Department for Exiting design and set-up of the team, I
the European Union. Whether enjoyed the shared-services tran-
that is constitutional work or the sition despite teething issues.
digital agenda, it touches most Before, HR, payroll, and
of our work linking out with finance transactions were
other departments. in-house. It was a huge move
which impacted roles and was a
What makes a good different way of working. The Cab-
shared service? inet Office was driving the
shared-services agenda, and we
The principle of shared were the pilot for the whole of gov-
services is to have a
standard offering with
ernment.
The team covered finance,
set procedures, and that can be procurement, and estates support
tricky as government depart- across the department, and this
ments all have slightly different was a challenge as we were cen-
ways of working. We are work-
ing towards standard processes.
tralising the support which had
previously been embedded in the
business. It was a different way of
Why have you working, with a new system, and
remained in the with a third-party provider.
Cabinet Office? For me it was a big piece of
The reason I’ve stayed co-ordinating work. The team was
so long is that the around 30-40 people, so staff man-
department changes so agement was a big part of the role.
frequently. The old-school cul- Leadership for me is about lead-
ture has changed; we’ve got good ing by example and being clear
technology and flexible working, about what you are trying to
which helps if you have – like I achieve and communicating well.
have – caring responsibilities. You need to take time to look after
While the financial side is struc- people.
tured, other work is so varied. Another challenge was learn-
Changes in government ing how to work with the
finance have been positive, with shared-services provider.
much more of a focus and appre- As I’d been part of the team
RICHARD SAKER
ciation for financial profession- that implemented shared services,
als. Their important role a lot of the key relationships were
supporting departments in the already formed, and many have
changing landscape and climate continued since. n
DECEMBER 2017
21
Wdesk helps
you work smart.
Cloud reporting software built to facilitate good data
governance and an efficient reporting process in: DEEP DIVE
2
FEATURE INTERVIEW: NICK READ, CFO OF VODAFONE
• Disclosure management GROUP, ON ADAPTING BUSINESS MODELS IN THE
• Finance and accounting
TELECOMS SECTOR; THE NEED FOR A DYNAMIC BUSINESS
MODEL; CASE STUDY – AGILE THINKING IN HEALTHCARE;
• Regulatory requirements SUSTAINABILITY, THE ENVIRONMENT, AND LONG-TERM
VALUE; DEVELOPING A BUSINESS MODEL WITH TECH AT
ITS HEART; OPINION – INTEGRATED REPORTING AND
Wdesk connects people, data and processes. INTEGRATED THINKING; AWARD-WINNING REPORTING
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Workiva (NYSE:WK) is a leading provider of enterprise cloud solutions for

improving productivity, accountability, and insight into business data. Thousands
of organisations, including over 70% of the 500 largest U.S. corporations by total
revenue, use Wdesk. For more information, visit workiva.co/uk.
Wdesk helps
you work smart.
Cloud reporting software built to facilitate good data
governance and an efficient reporting process in: DEEP DIVE
2
FEATURE INTERVIEW: NICK READ, CFO OF VODAFONE
• Disclosure management GROUP, ON ADAPTING BUSINESS MODELS IN THE
• Finance and accounting
TELECOMS SECTOR; THE NEED FOR A DYNAMIC BUSINESS
MODEL; CASE STUDY – AGILE THINKING IN HEALTHCARE;
• Regulatory requirements SUSTAINABILITY, THE ENVIRONMENT, AND LONG-TERM
VALUE; DEVELOPING A BUSINESS MODEL WITH TECH AT
ITS HEART; OPINION – INTEGRATED REPORTING AND
Wdesk connects people, data and processes. INTEGRATED THINKING; AWARD-WINNING REPORTING
IN THE RETAIL SECTOR
Learn more by visiting workiva.co.uk/cima

Workiva (NYSE:WK) is a leading provider of enterprise cloud solutions for

improving productivity, accountability, and insight into business data. Thousands
of organisations, including over 70% of the 500 largest U.S. corporations by total
revenue, use Wdesk. For more information, visit workiva.co/uk.
 DEEP DIVE DEEP DIVE

LANGUAGE

OF CHOICE
Vodafone Group
CFO Nick Read,
FCMA, CGMA,
reveals how the
telecoms giant
is constantly
adapting its
business model
to meet the
challenges of an
unpredictable
and disruptive
environment.
THE

DECEMBER 2017 DECEMBER 2017

24 25
 DEEP DIVE DEEP DIVE

LANGUAGE

OF CHOICE
Vodafone Group
CFO Nick Read,
FCMA, CGMA,
reveals how the
telecoms giant
is constantly
adapting its
business model
to meet the
challenges of an
unpredictable
and disruptive
environment.
THE

DECEMBER 2017 DECEMBER 2017

24 25

Protect your business from the
impact of currency volatility
If your business sends or receives international payments, currency movement
can potentially have a detrimental impact on your bottom line.
But there are ways you can look to protect your business from adverse moves.
With HiFX, you can benefit from:
Competitive pricing. s chief financial officer
of Vodafone Group, one
Direct access to your own industry expert. of the world’s largest
telecommunications
The ability to fix exchange rates for up to three years. companies, Nick Read plays a key role in
Our investment grade balance sheet, giving you the confidence ensuring that its finance department is run
effectively. He also has a big say in the stra-
that your money is in the safest hands. tegic direction of the group, which is one of
Corporate hedging expertise. the world’s most valuable brands.
Owning and operating networks in 26
countries, as well as having partner networks
in almost twice that number, gives the group
expansive market power – especially when
you factor in telecoms and IT corporate cli-
ents in 150 countries. But that reach, valu-
ing Vodafone at more than €60 billion, also
creates significant potential for disruption
of its business.
Vodafone has, therefore, developed a
dynamic business model that addresses the
challenges brought by disruptors as well as
other changing factors within its sector,
ensuring it can continue to create value
across its global business.
“Over the past five years, Vodafone has
faced many challenges to its business model
– regulation, competition, macro-economic
conditions, and tech disruptors,” Read says.
“Focusing on the tech disruptors, the
Contact HiFX on:
Tel. +44 (0)1753 752626
international payments eXpertly done
www.hifx.co.uk/business
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DEEP DIVE
largest impact has been felt in text messag-
ing from players such as WhatsApp, Face-
book, Apple, and Google. At its peak a few
years ago, text messaging was a standalone
revenue stream of €6 billion, so clearly this
was critical to the company.
“When facing a disruptor, it’s important
to get real-time operational/customer data,
as a lot of these disruptors work on a social
network effect – so their impacts are fast and
exponential. You need to identify the trends
quickly and respond decisively,” says Read.
“The worst thing you can do is remain
in denial and wait to see if it takes off. In
Vodafone’s case, we moved from charging
customers a metered cost per text message,
to supplying large bundles of messages for
a set cost, to unlimited text messages as part
of a wider package in a relatively short win-
dow.
“We had to disrupt our own business
model, cannibalising our own revenue, to
protect our long-term relevance with the cus-
tomer. We then did the same with voice calls,
given Skype and other free voice services.
“Today, our core price plans are unlim-
ited voice, unlimited text, and a range of data
allowances,” he adds. As revenues came
under pressure, Vodafone had to revise its
“WE HAD TO DISRUPT
OUR OWN BUSINESS
MODEL... TO PROTECT
OUR LONG-TERM
RELEVANCE.”
DECEMBER 2017
27
operating model and cost structure to ensure
protection of the group’s margins and its abil-
ity to continue to reinvest in future services.
“Ultimately, it was a redesign of our busi-
ness model,” explains Read. “With the relent-
less nature of technology and disruptors, you
have to be constantly scanning externally,
questioning and challenging everything both
internal and external to ensure you remain
agile and make the appropriate course cor-
rections on your business model in a dynamic
manner.”
One of the key ways of implementing a
dynamic business model is the development
of a culture of innovation that is enabled by
rapid technological advancement, says Read.
“Technology can offer large companies like
Vodafone opportunities to move into new
spaces or optimise its cost base for compet-
itive advantage,” he says.
“Over the past four years, we have spent
approximately €23 billion acquiring large
cable companies or building next-genera-
tion fixed networks to offer superior high-
speed broadband to homes versus the
copper-based experience they get from their
incumbent telecoms provider.
“We have also invested organically,
spending nearly €50 billion in high-speed

Protect your business from the
impact of currency volatility
If your business sends or receives international payments, currency movement
can potentially have a detrimental impact on your bottom line.
But there are ways you can look to protect your business from adverse moves.
With HiFX, you can benefit from:
Competitive pricing. s chief financial officer
of Vodafone Group, one
Direct access to your own industry expert. of the world’s largest
telecommunications
The ability to fix exchange rates for up to three years. companies, Nick Read plays a key role in
Our investment grade balance sheet, giving you the confidence ensuring that its finance department is run
effectively. He also has a big say in the stra-
that your money is in the safest hands. tegic direction of the group, which is one of
Corporate hedging expertise. the world’s most valuable brands.
Owning and operating networks in 26
countries, as well as having partner networks
in almost twice that number, gives the group
expansive market power – especially when
you factor in telecoms and IT corporate cli-
ents in 150 countries. But that reach, valu-
ing Vodafone at more than €60 billion, also
creates significant potential for disruption
of its business.
Vodafone has, therefore, developed a
dynamic business model that addresses the
challenges brought by disruptors as well as
other changing factors within its sector,
ensuring it can continue to create value
across its global business.
“Over the past five years, Vodafone has
faced many challenges to its business model
– regulation, competition, macro-economic
conditions, and tech disruptors,” Read says.
“Focusing on the tech disruptors, the
Contact HiFX on:
Tel. +44 (0)1753 752626
international payments eXpertly done
www.hifx.co.uk/business
HiFX Europe Limited is authorised by the Financial Conduct Authority under the Payment Services Regulations 2009, registration 462444, for the provision of payment services.
Registered office at Maxis 1, Western Road, Bracknell, Berkshire RG12 1RT, United Kingdom.
DEEP DIVE
largest impact has been felt in text messag-
ing from players such as WhatsApp, Face-
book, Apple, and Google. At its peak a few
years ago, text messaging was a standalone
revenue stream of €6 billion, so clearly this
was critical to the company.
“When facing a disruptor, it’s important
to get real-time operational/customer data,
as a lot of these disruptors work on a social
network effect – so their impacts are fast and
exponential. You need to identify the trends
quickly and respond decisively,” says Read.
“The worst thing you can do is remain
in denial and wait to see if it takes off. In
Vodafone’s case, we moved from charging
customers a metered cost per text message,
to supplying large bundles of messages for
a set cost, to unlimited text messages as part
of a wider package in a relatively short win-
dow.
“We had to disrupt our own business
model, cannibalising our own revenue, to
protect our long-term relevance with the cus-
tomer. We then did the same with voice calls,
given Skype and other free voice services.
“Today, our core price plans are unlim-
ited voice, unlimited text, and a range of data
allowances,” he adds. As revenues came
under pressure, Vodafone had to revise its
“WE HAD TO DISRUPT
OUR OWN BUSINESS
MODEL... TO PROTECT
OUR LONG-TERM
RELEVANCE.”
DECEMBER 2017
27
operating model and cost structure to ensure
protection of the group’s margins and its abil-
ity to continue to reinvest in future services.
“Ultimately, it was a redesign of our busi-
ness model,” explains Read. “With the relent-
less nature of technology and disruptors, you
have to be constantly scanning externally,
questioning and challenging everything both
internal and external to ensure you remain
agile and make the appropriate course cor-
rections on your business model in a dynamic
manner.”
One of the key ways of implementing a
dynamic business model is the development
of a culture of innovation that is enabled by
rapid technological advancement, says Read.
“Technology can offer large companies like
Vodafone opportunities to move into new
spaces or optimise its cost base for compet-
itive advantage,” he says.
“Over the past four years, we have spent
approximately €23 billion acquiring large
cable companies or building next-genera-
tion fixed networks to offer superior high-
speed broadband to homes versus the
copper-based experience they get from their
incumbent telecoms provider.
“We have also invested organically,
spending nearly €50 billion in high-speed

mobile networks, spectrum, and IT to give
a superior mobile experience across our foot-
print. We have also invested in a unique plat-
form to become the global leader in enterprise
internet of things, with particularly strong
focus on the automotive, healthcare, and util-
ities sectors.
“Our innovation comes from a combi-
nation of platform development (unique or
collaborative), big bets on step-change infra-
structure, and a spirit of co-creation with
leading providers. To do the latter, we have
centres of excellence around the world, inno-
vation hubs, and we develop strategic alli-
ances with our major suppliers.”
That approach to innovation is key to
fulfilling customer expectations. To this end,
Read says Vodafone is working on three types
of innovation.
● “Firstly, we see pain points in the customer
experience on a service or product being
supplied today. We focus on innovative
solutions to remove these and improve
the customer journey.
● “Secondly, we work on product/service
road maps over our planning cycle, enrich-
ing the functionality, building on the cus-
tomer’s wish list of what is possible.
● “And finally, we work with leading inno-
DEEP DIVE
vators/tech companies around the world
to define five- to ten-year global indus-
try standards. An example of this is the
future of autonomous cars and how will
they interact with the infrastructure
around us. We are shaping/envisioning
this and many other future possibilities,”
he asserts.
To give a sense of how the group has
employed a rapidly changing approach to
its business model, Read explains how the
composition of the business has completely
changed.
“WE ARE UNIQUELY PLACED AMONG
OUR COLLEAGUES TO ARTICULATE
OUR BUSINESS MODEL AND HOW
VALUE IS CREATED.”
DECEMBER 2017
28
“Just over ten years ago, Vodafone was
a metered by minute/text/MB of data, [with
its] mobile business focused mainly on
Europe,” he says. “Today, nearly half our rev-
enues come from fixed next-generation
high-speed communications and high-
growth emerging markets.”
Read says this high degree of business
model evolution has been achieved as a
result of several factors. He says Vodafone
has been maintaining a global radar on mar-
ket developments and has been commer-
cially dynamic.
He also says there has been a willing-
ness to lead market consolidation to gain
scale, becoming number one or number two
“where we chose to play, so we have the
right economics to compete and earn an
acceptable long-term return”.
Another factor described by Read is bold
investments into new areas that the group
believes have the ability to scale up. “There
is also a zero-based budgeting mindset in
every aspect of the business, in a world of
constrained resources, where we take
resources from non-productive areas and
redeploy into productive future opportu-
nities,” he adds.
Finance and the CFO play a key role in
this approach, says Read, who sits on the
CGMA advisory panel that has been discuss-
NICK WILSON
DEEP DIVE
“OUR GOAL SHOULD BE
TO DYNAMICALLY SHAPE
THE BUSINESS MODEL.”
ing the Business Model Framework consul-
tation paper.
“Given our complete 360 view of the
business, we are uniquely placed among
our colleagues to articulate our business
model and how value is created,” says Read.
“It is critical we communicate this to every-
one in the business, aligning metrics/report-
ing/remuneration to drive the optimal
outcomes, and create the ability to reinvest
for future growth.”
Read adds that this approach requires
finance to own the data standards and defi-
nitions, to embrace the digital agenda so
the company can deliver the best customer
experience at the lowest unit cost, and to
constantly benchmark and challenge all
areas of the business to obtain excellence.
“This year, I was extremely proud that
Vodafone Finance, having been assessed
by the Hackett Group, was awarded the
world-class level – the first telecoms com-
pany globally to be awarded that status,” he
says. “I have a great team; one of the keys
to their success is their desire to learn, to
innovate and break new ground.
“As an example, we have more than 50
robots/artificial intelligence systems in pilot
in our shared services today, delivering three
times the productivity of one person for half
the cost with a higher-quality output. We
plan to expand in routine process areas,
whilst working to retrain our teams to focus NICK READ
on the higher-value-add activities,” he says.
Read says that, historically, Vodafone’s Read became Vodafone Group CFO and a board member of the Vodafone Group Plc
finance and CFOs have strongly influenced in April 2014. Since joining Vodafone he has held a number of senior roles, including
the group’s business model and direction CFO, CCO, and CEO of Vodafone Ltd, the group’s UK operating company. Before being
of the company. “I personally think the made Group CFO, he was the regional CEO for Vodafone’s Africa, Middle East, and Asia
VUCA [volatile, uncertain, complex, and Pacific business for five years and was also a board member of several subsidiaries,
ambiguous] world we face requires CFOs
to step up to an even higher level. “Our goal
including India and Egypt, and Vodafone’s joint venture in Australia.
He previously held senior finance roles at United Business Media and Federal
should be to dynamically shape the busi-
ness model to ensure the company remains
Express Worldwide.
market relevant today, whilst articulating
the investments required to have a bright
future tomorrow,” he says. n
DECEMBER 2017
29

mobile networks, spectrum, and IT to give
a superior mobile experience across our foot-
print. We have also invested in a unique plat-
form to become the global leader in enterprise
internet of things, with particularly strong
focus on the automotive, healthcare, and util-
ities sectors.
“Our innovation comes from a combi-
nation of platform development (unique or
collaborative), big bets on step-change infra-
structure, and a spirit of co-creation with
leading providers. To do the latter, we have
centres of excellence around the world, inno-
vation hubs, and we develop strategic alli-
ances with our major suppliers.”
That approach to innovation is key to
fulfilling customer expectations. To this end,
Read says Vodafone is working on three types
of innovation.
● “Firstly, we see pain points in the customer
experience on a service or product being
supplied today. We focus on innovative
solutions to remove these and improve
the customer journey.
● “Secondly, we work on product/service
road maps over our planning cycle, enrich-
ing the functionality, building on the cus-
tomer’s wish list of what is possible.
● “And finally, we work with leading inno-
DEEP DIVE
vators/tech companies around the world
to define five- to ten-year global indus-
try standards. An example of this is the
future of autonomous cars and how will
they interact with the infrastructure
around us. We are shaping/envisioning
this and many other future possibilities,”
he asserts.
To give a sense of how the group has
employed a rapidly changing approach to
its business model, Read explains how the
composition of the business has completely
changed.
“WE ARE UNIQUELY PLACED AMONG
OUR COLLEAGUES TO ARTICULATE
OUR BUSINESS MODEL AND HOW
VALUE IS CREATED.”
DECEMBER 2017
28
“Just over ten years ago, Vodafone was
a metered by minute/text/MB of data, [with
its] mobile business focused mainly on
Europe,” he says. “Today, nearly half our rev-
enues come from fixed next-generation
high-speed communications and high-
growth emerging markets.”
Read says this high degree of business
model evolution has been achieved as a
result of several factors. He says Vodafone
has been maintaining a global radar on mar-
ket developments and has been commer-
cially dynamic.
He also says there has been a willing-
ness to lead market consolidation to gain
scale, becoming number one or number two
“where we chose to play, so we have the
right economics to compete and earn an
acceptable long-term return”.
Another factor described by Read is bold
investments into new areas that the group
believes have the ability to scale up. “There
is also a zero-based budgeting mindset in
every aspect of the business, in a world of
constrained resources, where we take
resources from non-productive areas and
redeploy into productive future opportu-
nities,” he adds.
Finance and the CFO play a key role in
this approach, says Read, who sits on the
CGMA advisory panel that has been discuss-
NICK WILSON
DEEP DIVE
“OUR GOAL SHOULD BE
TO DYNAMICALLY SHAPE
THE BUSINESS MODEL.”
ing the Business Model Framework consul-
tation paper.
“Given our complete 360 view of the
business, we are uniquely placed among
our colleagues to articulate our business
model and how value is created,” says Read.
“It is critical we communicate this to every-
one in the business, aligning metrics/report-
ing/remuneration to drive the optimal
outcomes, and create the ability to reinvest
for future growth.”
Read adds that this approach requires
finance to own the data standards and defi-
nitions, to embrace the digital agenda so
the company can deliver the best customer
experience at the lowest unit cost, and to
constantly benchmark and challenge all
areas of the business to obtain excellence.
“This year, I was extremely proud that
Vodafone Finance, having been assessed
by the Hackett Group, was awarded the
world-class level – the first telecoms com-
pany globally to be awarded that status,” he
says. “I have a great team; one of the keys
to their success is their desire to learn, to
innovate and break new ground.
“As an example, we have more than 50
robots/artificial intelligence systems in pilot
in our shared services today, delivering three
times the productivity of one person for half
the cost with a higher-quality output. We
plan to expand in routine process areas,
whilst working to retrain our teams to focus NICK READ
on the higher-value-add activities,” he says.
Read says that, historically, Vodafone’s Read became Vodafone Group CFO and a board member of the Vodafone Group Plc
finance and CFOs have strongly influenced in April 2014. Since joining Vodafone he has held a number of senior roles, including
the group’s business model and direction CFO, CCO, and CEO of Vodafone Ltd, the group’s UK operating company. Before being
of the company. “I personally think the made Group CFO, he was the regional CEO for Vodafone’s Africa, Middle East, and Asia
VUCA [volatile, uncertain, complex, and Pacific business for five years and was also a board member of several subsidiaries,
ambiguous] world we face requires CFOs
to step up to an even higher level. “Our goal
including India and Egypt, and Vodafone’s joint venture in Australia.
He previously held senior finance roles at United Business Media and Federal
should be to dynamically shape the busi-
ness model to ensure the company remains
Express Worldwide.
market relevant today, whilst articulating
the investments required to have a bright
future tomorrow,” he says. n
DECEMBER 2017
29
XXXXXXXXXX / XXXXXXXX XXXXXXX
NEW AGE
THINKING
The challenges facing businesses in the digital era
demand a whole new way of thinking about the
business model, writes Lawrie Holmes.
F
or most companies and
organisations the goal of
long-term value creation
is best achieved when an
effective business model
is in place and is well
understood. But the grow-
ing set of challenges for
businesses in the digital
age creates the demand for business mod-
els that are both robust and adaptable to
the rapid changes in the wider environment.
To this end, the Association of Interna-
tional Certified Professional Accountants
is seeking to provide a framework that
matches the demands businesses are seek-
ing to address. Through a series of round-
tables conducted around the world and
subsequent research, members’ expecta-
tions fed into a consultation process that
will be developed into a new model next
year.
In light of rapid changes taking place
in the world, a business model needs to be
dynamic and should be tied closely to both
purpose and strategy, says the Association’s
financial policy specialist David Hackett,
who is leading the research programme. “It
needs to define clearly what we mean by
David Hackett
DECEMBER 2017
30
DEEP DIVE
long-term value creation and value destruc-
tion that is at the heart of the model, for all
stakeholders, not just shareholders,” he
says.
An effective business model also needs
to address the challenges created by dis-
ruptive forces over the horizon. “This takes
into account SWOT and PESTLE analyses
that management accountants are already
familiar with,” Hackett says. “But we’re also
concerned with the importance of long-
term sustainability of the model, and the
role of corporate values in ensuring that
reputational damage, for example, is kept
to a minimum.”
“The other key element considered in
the research programme is who should own
the business model: the CFO or the man-
agement accountant at the operating level
of the business,” Hackett says. “That leads
to the possibility of creating the relevant
KPIs that many of the respondents are inter-
ested in.”
Hackett argues that the more theoreti-
cal understanding of the business model
framework will also have practical appli-
cations for businesses.
John Zheng, FCMA, CGMA, the CFO of
Mitsui-Sumitomo, a Japanese and Chinese
DECEMBER 2017
31
insurance company formed through a joint
venture, believes a dynamic business model
is crucial in the fast-changing and complex
global business environment. He says that
if a market changes at a quicker pace than
expected, the business model should change
in accordance with it.
Zheng says new technology is the major
factor in changing the competition pattern
for businesses. In his field, the insurance
sector, innovations such as mobile inter-
net are having a profound effect in speed-
ing up the claims process. “You could find
that competition between auto insurers is
not only concentrated on price, but also on
focusing on efficiency of service,” he says.
“As a result, the company with a quicker
claim[s] process and better service could
charge more. So an insurance company
should embrace the change and consider
this element in its business model in order
to guide business decisions. Therefore, the
dynamic business model could help the
company’s adjusted competition strategy,
especially when new technology brings
more opportunities to disrupt the traditional
industrial structure.”
Yinqun Zha, FCMA, CGMA, the Shang-
hai-based senior finance director at WuXi
AppTec, a global pharmaceutical, biotech-
nology, and medical device outsourcing
company, is also a firm believer in the
dynamic business model. He says such an
approach is crucial in response to chang-
ing factors such as disruption and new tech-
nologies. “The world is changing fast, so
the business model should be changed
together,” Zha says.
Zha says that businesses operating in
most markets are susceptible to the chal-
lenges posed by new technologies. Reflect-
ing on the “internet plus” strategy proposed
by China’s Premier Li Keqiang in 2015 for
companies to drive through technological
innovation, Zha says applying those
“THE WORLD IS
CHANGING FAST, SO
THE BUSINESS
MODEL SHOULD BE
CHANGED
TOGETHER.”
Yinqun Zha, finance operations
director at Wuxi AppTec
XXXXXXXXXX / XXXXXXXX XXXXXXX
NEW AGE
THINKING
The challenges facing businesses in the digital era
demand a whole new way of thinking about the
business model, writes Lawrie Holmes.
F
or most companies and
organisations the goal of
long-term value creation
is best achieved when an
effective business model
is in place and is well
understood. But the grow-
ing set of challenges for
businesses in the digital
age creates the demand for business mod-
els that are both robust and adaptable to
the rapid changes in the wider environment.
To this end, the Association of Interna-
tional Certified Professional Accountants
is seeking to provide a framework that
matches the demands businesses are seek-
ing to address. Through a series of round-
tables conducted around the world and
subsequent research, members’ expecta-
tions fed into a consultation process that
will be developed into a new model next
year.
In light of rapid changes taking place
in the world, a business model needs to be
dynamic and should be tied closely to both
purpose and strategy, says the Association’s
financial policy specialist David Hackett,
who is leading the research programme. “It
needs to define clearly what we mean by
David Hackett
DECEMBER 2017
30
DEEP DIVE
long-term value creation and value destruc-
tion that is at the heart of the model, for all
stakeholders, not just shareholders,” he
says.
An effective business model also needs
to address the challenges created by dis-
ruptive forces over the horizon. “This takes
into account SWOT and PESTLE analyses
that management accountants are already
familiar with,” Hackett says. “But we’re also
concerned with the importance of long-
term sustainability of the model, and the
role of corporate values in ensuring that
reputational damage, for example, is kept
to a minimum.”
“The other key element considered in
the research programme is who should own
the business model: the CFO or the man-
agement accountant at the operating level
of the business,” Hackett says. “That leads
to the possibility of creating the relevant
KPIs that many of the respondents are inter-
ested in.”
Hackett argues that the more theoreti-
cal understanding of the business model
framework will also have practical appli-
cations for businesses.
John Zheng, FCMA, CGMA, the CFO of
Mitsui-Sumitomo, a Japanese and Chinese
DECEMBER 2017
31
insurance company formed through a joint
venture, believes a dynamic business model
is crucial in the fast-changing and complex
global business environment. He says that
if a market changes at a quicker pace than
expected, the business model should change
in accordance with it.
Zheng says new technology is the major
factor in changing the competition pattern
for businesses. In his field, the insurance
sector, innovations such as mobile inter-
net are having a profound effect in speed-
ing up the claims process. “You could find
that competition between auto insurers is
not only concentrated on price, but also on
focusing on efficiency of service,” he says.
“As a result, the company with a quicker
claim[s] process and better service could
charge more. So an insurance company
should embrace the change and consider
this element in its business model in order
to guide business decisions. Therefore, the
dynamic business model could help the
company’s adjusted competition strategy,
especially when new technology brings
more opportunities to disrupt the traditional
industrial structure.”
Yinqun Zha, FCMA, CGMA, the Shang-
hai-based senior finance director at WuXi
AppTec, a global pharmaceutical, biotech-
nology, and medical device outsourcing
company, is also a firm believer in the
dynamic business model. He says such an
approach is crucial in response to chang-
ing factors such as disruption and new tech-
nologies. “The world is changing fast, so
the business model should be changed
together,” Zha says.
Zha says that businesses operating in
most markets are susceptible to the chal-
lenges posed by new technologies. Reflect-
ing on the “internet plus” strategy proposed
by China’s Premier Li Keqiang in 2015 for
companies to drive through technological
innovation, Zha says applying those
“THE WORLD IS
CHANGING FAST, SO
THE BUSINESS
MODEL SHOULD BE
CHANGED
TOGETHER.”
Yinqun Zha, finance operations
director at Wuxi AppTec

Yinqun Zha
FCMA, CGMA
technologies can realise big successes and
development, but a dynamic business
model will need to be at their heart.
He says that such a model is required
to address the change management taking
place in organisations that are innovating
rapidly, as well as problems stemming from
short product life cycles that appear fre-
quently. “I believe the dynamic business
model is a good solution to those issues as
it offers higher flexibility to business and
enhances the ability to handle the uncer-
tainty,” he adds.
“A common feature of many global
organisations is complexity created by stra-
tegic alliances and extended supply chains
that need to be incorporated into the group’s
business model. But there are many chal-
lenges around how to site their activities
in the wider business model,” says Zha.
“There are issues such as profit shar-
ing, protection of trade secrets, and imple-
menting technological innovation across
the often vast tentacles of an organisation
and its affiliates, for example.
“Wider and more diverse supply chains
may result in higher risk and uncertainty,
so business ethics become very important
to prevent those problems.”
The University of London
Global MBA THE NEXT LEVEL
Rob McInerney, founder of startup
Study online, from anywhere in the world. Intelligent Layer, is focused on
developing machine learning algorithms
With four entry points per year, we’re ready to revolutionise the way companies use
whenever you are. their data and interact with the world.
What he is developing might just be the
Join the next generation of global business leaders. machine at the heart of future business
Right here. Right now. models.
“We believe that data science is
mba.london.ac.uk currently too focused on finding
DEEP DIVE
John Zheng
FCMA, CGMA
And he cites a solution developed by
Alibaba, China’s powerful e-business plat-
form. “Alibaba offers credit scores for all
the traders, most of which are small and
middle-sized companies, on its platform
based on ‘big data’ analysis. It makes the
supply chain more transparent and trust-
able,” he says,
For Wuxi AppTec, a business model
that incorporates strategic alliances has
delivered huge benefits in the key area of
research and development (R&D). “In the
R&D area, a business model incorporating
strategic alliances can realise cost saving
and even break through the entry barriers
to innovation,” says Zha. “We use the con-
tract research organisation (CRO) approach,
which is now widely used in pharmaceu-
tical, biotechnology, and medical device
industries.”
“CROs usually offer research infrastruc-
tures and support, usually for specific steps
in the full R&D cycle, to life science R&D.
With CROs in the business model, big
pharma companies can realise cost savings
as they no longer need to do everything ‘in
house’,” says Zha. “For small pharma com-
panies, entry into drug development
becomes simplified as they do not need to
answers in existing data sets, rather
than exploring the unknown. We
envision systems that enable ‘learning
by doing’, not just retrospective
analysis,” he says.
“The technology we are developing
will allow companies to experiment in
real time with their customers,
products, and services, promoting
innovation and helping find previously
undiscovered trends and preferences at
a highly granular scale,” he adds.
In essence, that means using
DECEMBER 2017
33
invest heavily in infrastructures, and can
focus on innovation areas in which they
have expertise,” he adds.
Zheng says Mitsui-Sumitomo has ben-
efited in three ways from incorporating the
activities of strategic alliances into the
group’s business model. “The forecast of
the result of the business plan can be more
precise and new advice can be more read-
ily accepted by shareholders when consid-
ering support from a strategic alliance,” he
explains. “Also, it is easier to get data and
information from the experience of a stra-
tegic alliance when entering into a new
area.”
Nevertheless, such an arrangement
poses some challenges. Zheng says that a
potential difficulty of incorporating the
activities of a strategic partner into a busi-
ness model may arise when considering the
accuracy of expectations in scenario anal-
ysis. “By analysing bad, average, and good
situations when incorporating or exclud-
ing alliance support, the results of business
plans can be judged as closer to reality,” he
says.
Just how dynamic a business model can
become may depend on to what degree it
can be reinvented. Take the example of
artificial intelligence (AI) and machine
learning to create and market products
and services in a way that is superior to
legacy systems – wrapped with a
business model that can change as fast
as the machine at its heart.
This may seem like science fiction,
but McInerney’s initial product – the
world’s first beer brewed with the help
of AI called IntelligentX – has been on
the market since last year. As for the
business model, he says it can change
by the hour.

Yinqun Zha
FCMA, CGMA
technologies can realise big successes and
development, but a dynamic business
model will need to be at their heart.
He says that such a model is required
to address the change management taking
place in organisations that are innovating
rapidly, as well as problems stemming from
short product life cycles that appear fre-
quently. “I believe the dynamic business
model is a good solution to those issues as
it offers higher flexibility to business and
enhances the ability to handle the uncer-
tainty,” he adds.
“A common feature of many global
organisations is complexity created by stra-
tegic alliances and extended supply chains
that need to be incorporated into the group’s
business model. But there are many chal-
lenges around how to site their activities
in the wider business model,” says Zha.
“There are issues such as profit shar-
ing, protection of trade secrets, and imple-
menting technological innovation across
the often vast tentacles of an organisation
and its affiliates, for example.
“Wider and more diverse supply chains
may result in higher risk and uncertainty,
so business ethics become very important
to prevent those problems.”
The University of London
Global MBA THE NEXT LEVEL
Rob McInerney, founder of startup
Study online, from anywhere in the world. Intelligent Layer, is focused on
developing machine learning algorithms
With four entry points per year, we’re ready to revolutionise the way companies use
whenever you are. their data and interact with the world.
What he is developing might just be the
Join the next generation of global business leaders. machine at the heart of future business
Right here. Right now. models.
“We believe that data science is
mba.london.ac.uk currently too focused on finding
DEEP DIVE
John Zheng
FCMA, CGMA
And he cites a solution developed by
Alibaba, China’s powerful e-business plat-
form. “Alibaba offers credit scores for all
the traders, most of which are small and
middle-sized companies, on its platform
based on ‘big data’ analysis. It makes the
supply chain more transparent and trust-
able,” he says,
For Wuxi AppTec, a business model
that incorporates strategic alliances has
delivered huge benefits in the key area of
research and development (R&D). “In the
R&D area, a business model incorporating
strategic alliances can realise cost saving
and even break through the entry barriers
to innovation,” says Zha. “We use the con-
tract research organisation (CRO) approach,
which is now widely used in pharmaceu-
tical, biotechnology, and medical device
industries.”
“CROs usually offer research infrastruc-
tures and support, usually for specific steps
in the full R&D cycle, to life science R&D.
With CROs in the business model, big
pharma companies can realise cost savings
as they no longer need to do everything ‘in
house’,” says Zha. “For small pharma com-
panies, entry into drug development
becomes simplified as they do not need to
answers in existing data sets, rather
than exploring the unknown. We
envision systems that enable ‘learning
by doing’, not just retrospective
analysis,” he says.
“The technology we are developing
will allow companies to experiment in
real time with their customers,
products, and services, promoting
innovation and helping find previously
undiscovered trends and preferences at
a highly granular scale,” he adds.
In essence, that means using
DECEMBER 2017
33
invest heavily in infrastructures, and can
focus on innovation areas in which they
have expertise,” he adds.
Zheng says Mitsui-Sumitomo has ben-
efited in three ways from incorporating the
activities of strategic alliances into the
group’s business model. “The forecast of
the result of the business plan can be more
precise and new advice can be more read-
ily accepted by shareholders when consid-
ering support from a strategic alliance,” he
explains. “Also, it is easier to get data and
information from the experience of a stra-
tegic alliance when entering into a new
area.”
Nevertheless, such an arrangement
poses some challenges. Zheng says that a
potential difficulty of incorporating the
activities of a strategic partner into a busi-
ness model may arise when considering the
accuracy of expectations in scenario anal-
ysis. “By analysing bad, average, and good
situations when incorporating or exclud-
ing alliance support, the results of business
plans can be judged as closer to reality,” he
says.
Just how dynamic a business model can
become may depend on to what degree it
can be reinvented. Take the example of
artificial intelligence (AI) and machine
learning to create and market products
and services in a way that is superior to
legacy systems – wrapped with a
business model that can change as fast
as the machine at its heart.
This may seem like science fiction,
but McInerney’s initial product – the
world’s first beer brewed with the help
of AI called IntelligentX – has been on
the market since last year. As for the
business model, he says it can change
by the hour.
 DEEP DIVE
Anne Boden
Apple, which has grown to become the
world’s biggest, and arguably most success-
ful, listed company. In a 2008 article in the
Harvard Business Review, Mark W. Johnson,
Clayton M. Christensen, and Henning Kag-
ermann argued that Apple’s big achieve-
ment when it cornered the digital music
market was the development of its busi-
ness model.
“Apple did something far smarter than
take a good technology and wrap it in a
snazzy design,” the writers said. “It took a
good technology and wrapped it in a great
business model. Apple’s true innovation
was to make downloading music easy and
convenient.”
In recent years the nexus between pow-
erful technology and dynamic business
models has become clear to see, with com-
panies such as Facebook, Google, and Net-
flix joining Apple as the world’s most
innovative and dominant companies.
But companies that find new ways of
exploiting artificial intelligence and other
technologies, and can develop an adaptable
business model to fit, are also capable of
becoming extremely successful. In this
year’s book What to Do When Machines Do
Everything, Malcolm Frank, Paul Roehrig,
and Ben Pring of consultancy Cognizant
argue that there are plenty of great exam-
ples of this. They reference US wealth
DESIGN L AD
DECEMBER 2017
34
DEEP DIVE
manager Betterment, South African health
group Discovery through its Vitality pro-
gramme, and America’s McGraw-Hill Edu-
cation, which developed its ALEKS
technology system. “[These companies]
have built and operate these new machines,
and most importantly, they have sur-
rounded these new machines with busi-
ness models that generate remarkable
growth and profitability engines while
expanding the overall market,” say the
authors.
Having technology and a business
model that are both nimble is key, says Anne
Boden, founder and CEO of mobile bank
Starling. With the right model in place, you
can respond quickly to customer demands
and develop new iterations to meet chang-
ing expectations.
“We work on two weekly sprints. In the
first week we make a couple of changes
when working out what we need to change,
and by the end of the second week we go
live with the changes,” she says. “So in
essence we are making changes to our app
every couple of weeks.”
Boden, who previously worked in sen-
ior roles at a number of large financial insti-
tutions, adds: “At the heart of our business
model is the agile development methodol-
ogy that allows us to be as effective as pos-
sible because everyone in the business is
DECEMBER 2017
35
“AT THE HEART OF
OUR BUSINESS
MODEL IS THE AGILE
DEVELOPMENT
METHODOLOGY.”
Anne Boden, founder and CEO,
Starling Bank
included in the process,” she says.
Having the right culture to support a
dynamic business model is something that
Wuxi AppTec’s Zha agrees with. “A dynamic
business model changes the decision-mak-
ing process, and therefore impacts the
organisation in all key aspects, like people,
process, and technology,” he says. “As every-
one in the organisation may be impacted,
having the support of the right culture is
key to success.”
“Collaboration and knowledge sharing
shall be recommended, and at the same time
business ethics must always be empha-
sised,” says Zha. But most importantly, a
culture encouraging innovation must be
fostered at all times. “Stay hungry and stay
foolish” is the mantra behind Wuxi AppTec’s
dynamic business model, he says. ■
To keep up to date with the latest CGMA
business models research and to find out
when new resources become available,
go to: http://bit.ly/2gYP2gP
 DEEP DIVE
Anne Boden
Apple, which has grown to become the
world’s biggest, and arguably most success-
ful, listed company. In a 2008 article in the
Harvard Business Review, Mark W. Johnson,
Clayton M. Christensen, and Henning Kag-
ermann argued that Apple’s big achieve-
ment when it cornered the digital music
market was the development of its busi-
ness model.
“Apple did something far smarter than
take a good technology and wrap it in a
snazzy design,” the writers said. “It took a
good technology and wrapped it in a great
business model. Apple’s true innovation
was to make downloading music easy and
convenient.”
In recent years the nexus between pow-
erful technology and dynamic business
models has become clear to see, with com-
panies such as Facebook, Google, and Net-
flix joining Apple as the world’s most
innovative and dominant companies.
But companies that find new ways of
exploiting artificial intelligence and other
technologies, and can develop an adaptable
business model to fit, are also capable of
becoming extremely successful. In this
year’s book What to Do When Machines Do
Everything, Malcolm Frank, Paul Roehrig,
and Ben Pring of consultancy Cognizant
argue that there are plenty of great exam-
ples of this. They reference US wealth
DESIGN L AD
DECEMBER 2017
34
DEEP DIVE
manager Betterment, South African health
group Discovery through its Vitality pro-
gramme, and America’s McGraw-Hill Edu-
cation, which developed its ALEKS
technology system. “[These companies]
have built and operate these new machines,
and most importantly, they have sur-
rounded these new machines with busi-
ness models that generate remarkable
growth and profitability engines while
expanding the overall market,” say the
authors.
Having technology and a business
model that are both nimble is key, says Anne
Boden, founder and CEO of mobile bank
Starling. With the right model in place, you
can respond quickly to customer demands
and develop new iterations to meet chang-
ing expectations.
“We work on two weekly sprints. In the
first week we make a couple of changes
when working out what we need to change,
and by the end of the second week we go
live with the changes,” she says. “So in
essence we are making changes to our app
every couple of weeks.”
Boden, who previously worked in sen-
ior roles at a number of large financial insti-
tutions, adds: “At the heart of our business
model is the agile development methodol-
ogy that allows us to be as effective as pos-
sible because everyone in the business is
DECEMBER 2017
35
“AT THE HEART OF
OUR BUSINESS
MODEL IS THE AGILE
DEVELOPMENT
METHODOLOGY.”
Anne Boden, founder and CEO,
Starling Bank
included in the process,” she says.
Having the right culture to support a
dynamic business model is something that
Wuxi AppTec’s Zha agrees with. “A dynamic
business model changes the decision-mak-
ing process, and therefore impacts the
organisation in all key aspects, like people,
process, and technology,” he says. “As every-
one in the organisation may be impacted,
having the support of the right culture is
key to success.”
“Collaboration and knowledge sharing
shall be recommended, and at the same time
business ethics must always be empha-
sised,” says Zha. But most importantly, a
culture encouraging innovation must be
fostered at all times. “Stay hungry and stay
foolish” is the mantra behind Wuxi AppTec’s
dynamic business model, he says. ■
To keep up to date with the latest CGMA
business models research and to find out
when new resources become available,
go to: http://bit.ly/2gYP2gP
 XXXXXXXXXX / XXXXXXXX XXXXXXX DEEP DIVE

IN
A population-based approach to health and social care has transformed

T
public sector business models around the world, writes Rob Whiteman.

here are varying struc- nated, on the basis of population charac- within a particular population group. By

E
tures of health and teristics, not on the usual free-market promoting exercise and healthy eating to

T H
social care services principles that have governed the develop-
around the world, but ment of healthcare in many parts of the
the demographic pres- world. Such initiatives were created in
sures with which they response to work, such as that by the Cana-
are grappling are often dian Institute for Advanced Research, which
very similar. These demonstrates that a population’s health is
include lifestyle dis- more acutely influenced by its local envi-
eases, which have had a significant impact ronment and lifestyle decisions than by the
on service demand, funding constraints, quality of services that communities receive.
workforce recruitment, and staff retention A population approach seems the most
issues. likely way of supporting the principle that
Such challenges are overwhelming ser- it is more effective to use funding to sup-
vices as well as having a very real and dam- port schemes that aim to change behaviours
aging effect on the health of the populations and boost living conditions, rather than
they serve. However, they have led to a con- solely channelling resources into organi-
its members who were most at risk, Kaiser
Permanente reduced heart disease mortal-
ity by 26% in a nine-year period. This meant
that its members were nearly a third (30%)
less likely to die from heart disease than
the general population in California. And,
of course, the secondary benefit was a reduc-
tion in hospital demand and resources.
Another example of how a popula-
tion-based approach has helped health
organisations in the US, is the work of the
Southcentral Foundation, a not-for-profit
group supporting Alaskan Native groups.
The foundation developed a system of care
that empowers communities by allowing

I C
certed effort by public service leaders to sations. them to help design and implement the

L
explore ways to improve performance and There has been a significant shift healthcare services that they receive. The

B
boost outcomes. One of the most promis- towards a population-based approach patient-centred model has meant the foun-

U
ing initiatives is a population-based within healthcare organisations in the US. dation can gather insights from the com-

P
approach, which has helped deliver more
cohesive and effective health systems in
several countries.
A population-based approach can
broadly be defined as tailoring health and
social care programmes and interventions
to the specific needs of local populations.
Budgets are set, and programmes coordi-
The results, as outlined in a 2012 report from
the UK’s leading health think tank, The
King’s Fund, demonstrate the plethora of
financial and social benefits that such
schemes can have. One example that the
report draws upon is a scheme, created by
the healthcare organisation Kaiser Perma-
nente, which aims to prevent heart disease
munity on its public health programmes
and then use the feedback to improve deliv-
ery. As a result of such working, there has
been a 42% reduction on the demand for
emergency services since the approach was
introduced by Southcentral Foundation in
the late 1990s.
It is clear that a population-based

E Y E DECEMBER 2017
37
 XXXXXXXXXX / XXXXXXXX XXXXXXX DEEP DIVE

IN
A population-based approach to health and social care has transformed

T
public sector business models around the world, writes Rob Whiteman.

here are varying struc- nated, on the basis of population charac- within a particular population group. By

E
tures of health and teristics, not on the usual free-market promoting exercise and healthy eating to

T H
social care services principles that have governed the develop-
around the world, but ment of healthcare in many parts of the
the demographic pres- world. Such initiatives were created in
sures with which they response to work, such as that by the Cana-
are grappling are often dian Institute for Advanced Research, which
very similar. These demonstrates that a population’s health is
include lifestyle dis- more acutely influenced by its local envi-
eases, which have had a significant impact ronment and lifestyle decisions than by the
on service demand, funding constraints, quality of services that communities receive.
workforce recruitment, and staff retention A population approach seems the most
issues. likely way of supporting the principle that
Such challenges are overwhelming ser- it is more effective to use funding to sup-
vices as well as having a very real and dam- port schemes that aim to change behaviours
aging effect on the health of the populations and boost living conditions, rather than
they serve. However, they have led to a con- solely channelling resources into organi-
its members who were most at risk, Kaiser
Permanente reduced heart disease mortal-
ity by 26% in a nine-year period. This meant
that its members were nearly a third (30%)
less likely to die from heart disease than
the general population in California. And,
of course, the secondary benefit was a reduc-
tion in hospital demand and resources.
Another example of how a popula-
tion-based approach has helped health
organisations in the US, is the work of the
Southcentral Foundation, a not-for-profit
group supporting Alaskan Native groups.
The foundation developed a system of care
that empowers communities by allowing

I C
certed effort by public service leaders to sations. them to help design and implement the

L
explore ways to improve performance and There has been a significant shift healthcare services that they receive. The

B
boost outcomes. One of the most promis- towards a population-based approach patient-centred model has meant the foun-

U
ing initiatives is a population-based within healthcare organisations in the US. dation can gather insights from the com-

P
approach, which has helped deliver more
cohesive and effective health systems in
several countries.
A population-based approach can
broadly be defined as tailoring health and
social care programmes and interventions
to the specific needs of local populations.
Budgets are set, and programmes coordi-
The results, as outlined in a 2012 report from
the UK’s leading health think tank, The
King’s Fund, demonstrate the plethora of
financial and social benefits that such
schemes can have. One example that the
report draws upon is a scheme, created by
the healthcare organisation Kaiser Perma-
nente, which aims to prevent heart disease
munity on its public health programmes
and then use the feedback to improve deliv-
ery. As a result of such working, there has
been a 42% reduction on the demand for
emergency services since the approach was
introduced by Southcentral Foundation in
the late 1990s.
It is clear that a population-based

E Y E DECEMBER 2017
37

approach has had significant benefits to
health outcomes in the US; however, it is
important to note that the schemes imple-
mented focus on specific groups of people
within a population, rather than a whole
area. This means that the benefits may not
be felt across an entire region, and so
socio-economic issues can remain preva-
lent.
To see how a regional population-based
system can have a meaningful impact across
whole areas, one can look to Europe. Exam-
ples include programmes in Kinzigtal,
DEEP DIVE
south-west Germany, which led to savings
in healthcare budgets of 16.9%, and in Alzira,
south-east Spain, where costs of providing
health services to the commissioner reduced
by 25%.
But whether or not a population-based
approach delivers benefits to a whole region
or just a certain group of people, the
approaches and methods are similar, as well
as the requirements to introduce such pro-
grammes. To make a shift towards the pop-
ulation-based approach, the right data need
to be available so organisations can under-
stand the need and also track the outcomes
of interventions; and budgets need to be
set on the basis of population, not activity,
to ensure there are financial incentives to
improving health.
Furthermore, the integration of rele-
vant services is crucial. Many of the health
inequalities prevalent across the world are
exacerbated by fragmented and un-
coordinated services that do not join up to
address joint challenges.
In order to effectively tackle the issues,
all the local partners that have an interest
in the health of a population must come
together with communities to share data,
and design and coordinate services that can
DECEMBER 2017
38
NEW
Introducing an
exciting new range of
2017 CIMA courses
We’ve listened to your feedback and completely redesigned
truly respond to an area’s needs.
By integrating services and introduc-
all our courses for 2017, so you can develop the knowledge
ing a place-based approach to budgeting and exam confidence you need to pass first time.
and delivery – increasingly set up as
“accountable care systems” – it is clear from It’s a better way of learning that’s built around you.
international examples that outcomes can
be improved and savings achieved. That
could offer organisations the best hope of
addressing the many challenges facing
health and social care services by deliver-
ing a more cohesive and effective system.
Rob Whiteman is the CEO of the Chartered Insti-
tute of Public Finance and Accountancy. ■
“TO MAKE A SHIFT
TOWARDS THE
POPULATION-
BASED APPROACH,
THE RIGHT DATA
NEED TO BE
AVAILABLE.”
To find out more about our new CIMA courses:
www.kaplanfinancial.co.uk/cima2017
01908 540 069

approach has had significant benefits to
health outcomes in the US; however, it is
important to note that the schemes imple-
mented focus on specific groups of people
within a population, rather than a whole
area. This means that the benefits may not
be felt across an entire region, and so
socio-economic issues can remain preva-
lent.
To see how a regional population-based
system can have a meaningful impact across
whole areas, one can look to Europe. Exam-
ples include programmes in Kinzigtal,
DEEP DIVE
south-west Germany, which led to savings
in healthcare budgets of 16.9%, and in Alzira,
south-east Spain, where costs of providing
health services to the commissioner reduced
by 25%.
But whether or not a population-based
approach delivers benefits to a whole region
or just a certain group of people, the
approaches and methods are similar, as well
as the requirements to introduce such pro-
grammes. To make a shift towards the pop-
ulation-based approach, the right data need
to be available so organisations can under-
stand the need and also track the outcomes
of interventions; and budgets need to be
set on the basis of population, not activity,
to ensure there are financial incentives to
improving health.
Furthermore, the integration of rele-
vant services is crucial. Many of the health
inequalities prevalent across the world are
exacerbated by fragmented and un-
coordinated services that do not join up to
address joint challenges.
In order to effectively tackle the issues,
all the local partners that have an interest
in the health of a population must come
together with communities to share data,
and design and coordinate services that can
DECEMBER 2017
38
NEW
Introducing an
exciting new range of
2017 CIMA courses
We’ve listened to your feedback and completely redesigned
truly respond to an area’s needs.
By integrating services and introduc-
all our courses for 2017, so you can develop the knowledge
ing a place-based approach to budgeting and exam confidence you need to pass first time.
and delivery – increasingly set up as
“accountable care systems” – it is clear from It’s a better way of learning that’s built around you.
international examples that outcomes can
be improved and savings achieved. That
could offer organisations the best hope of
addressing the many challenges facing
health and social care services by deliver-
ing a more cohesive and effective system.
Rob Whiteman is the CEO of the Chartered Insti-
tute of Public Finance and Accountancy. ■
“TO MAKE A SHIFT
TOWARDS THE
POPULATION-
BASED APPROACH,
THE RIGHT DATA
NEED TO BE
AVAILABLE.”
To find out more about our new CIMA courses:
www.kaplanfinancial.co.uk/cima2017
01908 540 069
 DEEP DIVE DEEP DIVE

grave threats posed by climate change and

the increasing environmental degradation

TOP OF THE
of the planet, the next wave of transforma-
Business leaders from tion is likely to be dominated by sustaina-
bility considerations, suggests Rajan. He says
around the globe tell an investor perception survey conducted by
the Tata Group revealed that investors are
FM how business

WORLD
increasingly concerned about environmen-
models reflect the wider tal, social, and governance issues.
“Investors and regulators are also expect-
environment in which ing higher levels of transparency and dis-
companies operate. closures on the vulnerability of their
businesses to sustainability challenges,” he

F
orcompaniesto surviveover
the long term, their busi-
ness models must be able
to respond to challenges.
These include the threat of
climate change, or, in the
short term, the denial of a
licence to operate if envi-
ronmental, social, and governance issues
are not taken into consideration.
Anders Bouvin, chief executive of Han-
delsbanken, says the business model devel-
oped at one of Scandinavia’s biggest banks
is finely attuned to the ecosystem it sits
within. He says that it has been developed
in response to changing expectations from
the community the bank serves, whether
in its home market in Sweden or in the UK,
where the bank has more than 200 branches.
For example, Bouvin says that thinking
about the wider environment begins with
staff empowerment. “We believe that peo-
ple naturally want to take responsibility and
do good work,” he says. “When given the
responsibility and power to decide, they find
better solutions and achieve more than a
top-down approach could hope to. We also
know that over many decades customers’
individual needs are seen
and met best by those closest to them. This
is why we decentralised our organisation,
with a head office in the UK to build and
maintain the services our customers ask
their branches for.”
Working this way helps the bank focus
on real-world change in the here and now,
and determine how its actions should relate
to its values and competitive strengths, says
Bouvin. “Then we avoid fixed plans, budg-
ets, or targets, so that we can adapt quickly
and co-operatively once a direction is
agreed,” he adds.
Bouvin says the benefits of placing com-
munity engagement at the heart of the busi-
ness model are many: “This way of working
means we deliver what we know our cus-
tomers actually want, rather than what some
strategic report tells us they should want or
that we should give them.”
Digitisation is a good example of how
technology and community engagement
combine to influence how the business
model needs to continually adapt.
“The way customers access the bank con-
tinues to change at pace and so do their
demands for digital services. At the same
time, we experience even stronger positive
responses to the individual service and rela-
tionships our branches provide,” he adds. has met all manner of opportunities and
“So while other banks are retreating from challenges over the years.”
local communities, we will use digital tech- “Handelsbanken’s business model is
nologies to build on our promise that ‘the built to absorb change and shape it to our
branch is the bank’, providing more ways advantage, without altering our fundamen-
for a branch to serve its customers and the tal values or approach,” says Bouvin. “Our
local community.” business model is built around a set of fun-
Bouvin, who ran Handelsbanken’s UK damental values which are timeless and
business before moving to the top role last shared throughout the bank. These values
year, says the bank has always believed in inform our analysis of change and how we
playing a responsible role in society. “Sus- should respond to it.”
tainability issues matter increasingly to our For India’s Tata group of companies,
customers and other stakeholders, and the developing a business model that reflects
local benefits of our principle go beyond its changing interaction with the ecosystem
simply having a solid, stable banking part- in which it operates is key to long-term, sus-
ner in the community,” he explains. “Given tainable value creation, says Mukund Rajan,
our commitment to local relationship bank- Ph.D., chief ethics officer and chairman of
ing, branches see every reason to put their Tata Global Sustainability Council of Tata
knowledge, energy, and support into initi- Sons, the holding company of the Tata Group.
atives that make a difference in their home- Rajan says the fact that nine out of every
towns.” ten Fortune 500 companies that existed 60
Bouvin says it pays to be different if you years ago are gone today demonstrates the
aim to outperform your peers. “But an organ- dynamism and competitiveness of the world
isation needs self-confidence and a shared we live in. “Any company striving for growth,
sense of purpose to go its own way, as we profitability, and longevity will therefore
so often do,” he adds. “Culture plays a vital have to constantly reinvent itself and adapt
role here in binding us around our core val- its business models if it hopes to compete
ues, oiling the gears of co-operation, and for the long term,” he says.
reminding us how successfully our approach IMAGES
GE TT TT YY IMAGES Looking ahead, in the context of the
says. “BlackRock, the world’s largest asset
manager, urging oil companies like Exxon
Mobil Corp to ‘enhance disclosures’ regard-
ing risks related to climate change earlier
this year is a case in point. The recent draft
report of the task force on climate-related
financial disclosure (TCFD) set up by the
Financial Stability Board (FSB) recommends
that businesses disclose material climate-
related risks in their financial filings. Going
forward, it will become incumbent on cor-
porates to disclose the risks they face from
climate change impacts.
“All these developments mean that com-
panies will have to assess their risks and
constantly adapt their business models to
future-proof their businesses,” he adds.
“Within the Tata group, Tata Power, our
energy company, for example, has commit-
ted to generate 40% of its power through
renewables by 2025. Another good example
of an innovative model is Jaguar Land Rov-
er’s Recycled Aluminium Car project around
the theme of the circular economy.”
Tata, India’s biggest conglomerate with
100 or so companies, has developed many
ways in which business models are being
adopted to address the wider ecosystem,
says Rajan. These include the use of new
technology, new communication tools
including social media, and innovations in
distribution.
“Tata Global Beverages’ Gaon Chalo ini-
tiative is a great example of an innovation
in rural distribution which addressed the
wider ecosystem,” he says. “The initiative
started in 2006, where villagers in rural India
were motivated to sell Tata Tea products in
their local communities. Not only did this
help in boosting rural incomes, it also solved
the company’s problem of tackling the final
leg of rural distribution.
“Currently, Gaon Chalo is present in 18
Indian states, with direct reach across 70,000
villages. As a result of this initiative, Tata
Tea’s consolidated market share from rural
areas rose from 18% to 26.6%, and an addi-
tional 20,000 retailers in 10,000 villages
were brought into the Tata Tea fold,” he adds.
When it comes to the benefits accrued
from engaging with the wider community,
Rajan says the brand rub-off is immense.
Increasing numbers of consumers are
becoming more inclined to buy products
or services that align with their own life-
styles and value systems, and pur-
pose-driven brands consequently
get very good traction in the mar-
ket, he says.
“For consumers, it is
increasingly not just about

“INVESTORS AND
Jaguar Land Rover’s
Recycled Aluminium Car

REGULATORS ARE project reuses aluminium

PHOTOS: GE

from end-of-life

ALSO EXPECTING
VAHER; PHOTOS:

cars in new Jag-

uar Land Rover
HIGHER LEVELS OF vehicles.
TERJE VAHER;

TRANSPARENCY AND
ATION: TERJE

DISCLOSURES.”
ILLUSTR ATION:

Mukund Rajan, chief ethics officer

ILLUSTR

and chairman of Tata Global

Sustainability Council of Tata Sons
DECEMBER 2017 DECEMBER 2017
40 41
 DEEP DIVE DEEP DIVE

grave threats posed by climate change and

the increasing environmental degradation

TOP OF THE
of the planet, the next wave of transforma-
Business leaders from tion is likely to be dominated by sustaina-
bility considerations, suggests Rajan. He says
around the globe tell an investor perception survey conducted by
the Tata Group revealed that investors are
FM how business

WORLD
increasingly concerned about environmen-
models reflect the wider tal, social, and governance issues.
“Investors and regulators are also expect-
environment in which ing higher levels of transparency and dis-
companies operate. closures on the vulnerability of their
businesses to sustainability challenges,” he

F
orcompaniesto surviveover
the long term, their busi-
ness models must be able
to respond to challenges.
These include the threat of
climate change, or, in the
short term, the denial of a
licence to operate if envi-
ronmental, social, and governance issues
are not taken into consideration.
Anders Bouvin, chief executive of Han-
delsbanken, says the business model devel-
oped at one of Scandinavia’s biggest banks
is finely attuned to the ecosystem it sits
within. He says that it has been developed
in response to changing expectations from
the community the bank serves, whether
in its home market in Sweden or in the UK,
where the bank has more than 200 branches.
For example, Bouvin says that thinking
about the wider environment begins with
staff empowerment. “We believe that peo-
ple naturally want to take responsibility and
do good work,” he says. “When given the
responsibility and power to decide, they find
better solutions and achieve more than a
top-down approach could hope to. We also
know that over many decades customers’
individual needs are seen
and met best by those closest to them. This
is why we decentralised our organisation,
with a head office in the UK to build and
maintain the services our customers ask
their branches for.”
Working this way helps the bank focus
on real-world change in the here and now,
and determine how its actions should relate
to its values and competitive strengths, says
Bouvin. “Then we avoid fixed plans, budg-
ets, or targets, so that we can adapt quickly
and co-operatively once a direction is
agreed,” he adds.
Bouvin says the benefits of placing com-
munity engagement at the heart of the busi-
ness model are many: “This way of working
means we deliver what we know our cus-
tomers actually want, rather than what some
strategic report tells us they should want or
that we should give them.”
Digitisation is a good example of how
technology and community engagement
combine to influence how the business
model needs to continually adapt.
“The way customers access the bank con-
tinues to change at pace and so do their
demands for digital services. At the same
time, we experience even stronger positive
responses to the individual service and rela-
tionships our branches provide,” he adds. has met all manner of opportunities and
“So while other banks are retreating from challenges over the years.”
local communities, we will use digital tech- “Handelsbanken’s business model is
nologies to build on our promise that ‘the built to absorb change and shape it to our
branch is the bank’, providing more ways advantage, without altering our fundamen-
for a branch to serve its customers and the tal values or approach,” says Bouvin. “Our
local community.” business model is built around a set of fun-
Bouvin, who ran Handelsbanken’s UK damental values which are timeless and
business before moving to the top role last shared throughout the bank. These values
year, says the bank has always believed in inform our analysis of change and how we
playing a responsible role in society. “Sus- should respond to it.”
tainability issues matter increasingly to our For India’s Tata group of companies,
customers and other stakeholders, and the developing a business model that reflects
local benefits of our principle go beyond its changing interaction with the ecosystem
simply having a solid, stable banking part- in which it operates is key to long-term, sus-
ner in the community,” he explains. “Given tainable value creation, says Mukund Rajan,
our commitment to local relationship bank- Ph.D., chief ethics officer and chairman of
ing, branches see every reason to put their Tata Global Sustainability Council of Tata
knowledge, energy, and support into initi- Sons, the holding company of the Tata Group.
atives that make a difference in their home- Rajan says the fact that nine out of every
towns.” ten Fortune 500 companies that existed 60
Bouvin says it pays to be different if you years ago are gone today demonstrates the
aim to outperform your peers. “But an organ- dynamism and competitiveness of the world
isation needs self-confidence and a shared we live in. “Any company striving for growth,
sense of purpose to go its own way, as we profitability, and longevity will therefore
so often do,” he adds. “Culture plays a vital have to constantly reinvent itself and adapt
role here in binding us around our core val- its business models if it hopes to compete
ues, oiling the gears of co-operation, and for the long term,” he says.
reminding us how successfully our approach IMAGES
GE TT TT YY IMAGES Looking ahead, in the context of the
says. “BlackRock, the world’s largest asset
manager, urging oil companies like Exxon
Mobil Corp to ‘enhance disclosures’ regard-
ing risks related to climate change earlier
this year is a case in point. The recent draft
report of the task force on climate-related
financial disclosure (TCFD) set up by the
Financial Stability Board (FSB) recommends
that businesses disclose material climate-
related risks in their financial filings. Going
forward, it will become incumbent on cor-
porates to disclose the risks they face from
climate change impacts.
“All these developments mean that com-
panies will have to assess their risks and
constantly adapt their business models to
future-proof their businesses,” he adds.
“Within the Tata group, Tata Power, our
energy company, for example, has commit-
ted to generate 40% of its power through
renewables by 2025. Another good example
of an innovative model is Jaguar Land Rov-
er’s Recycled Aluminium Car project around
the theme of the circular economy.”
Tata, India’s biggest conglomerate with
100 or so companies, has developed many
ways in which business models are being
adopted to address the wider ecosystem,
says Rajan. These include the use of new
technology, new communication tools
including social media, and innovations in
distribution.
“Tata Global Beverages’ Gaon Chalo ini-
tiative is a great example of an innovation
in rural distribution which addressed the
wider ecosystem,” he says. “The initiative
started in 2006, where villagers in rural India
were motivated to sell Tata Tea products in
their local communities. Not only did this
help in boosting rural incomes, it also solved
the company’s problem of tackling the final
leg of rural distribution.
“Currently, Gaon Chalo is present in 18
Indian states, with direct reach across 70,000
villages. As a result of this initiative, Tata
Tea’s consolidated market share from rural
areas rose from 18% to 26.6%, and an addi-
tional 20,000 retailers in 10,000 villages
were brought into the Tata Tea fold,” he adds.
When it comes to the benefits accrued
from engaging with the wider community,
Rajan says the brand rub-off is immense.
Increasing numbers of consumers are
becoming more inclined to buy products
or services that align with their own life-
styles and value systems, and pur-
pose-driven brands consequently
get very good traction in the mar-
ket, he says.
“For consumers, it is
increasingly not just about

“INVESTORS AND
Jaguar Land Rover’s
Recycled Aluminium Car

REGULATORS ARE project reuses aluminium

PHOTOS: GE

from end-of-life

ALSO EXPECTING
VAHER; PHOTOS:

cars in new Jag-

uar Land Rover
HIGHER LEVELS OF vehicles.
TERJE VAHER;

TRANSPARENCY AND
ATION: TERJE

DISCLOSURES.”
ILLUSTR ATION:

Mukund Rajan, chief ethics officer

ILLUSTR

and chairman of Tata Global

Sustainability Council of Tata Sons
DECEMBER 2017 DECEMBER 2017
40 41

“AN ORGANISATION
NEEDS SELF-
CONFIDENCE AND A
SHARED SENSE OF
PURPOSE.”
Anders Bouvin, CEO,
Handelsbanken
Visit MY JOBS to try
what you ‘buy’, but what you ‘buy into’,” he
says. “The Tata brand is India’s most valu-
able brand, valued 118% higher than its clos-
our new salary insight
est competitor, according to a third-party
study by Interbrand, and it is our commit-
ment to strive for value creation for all our
stakeholders, and not just our sharehold-
tool and discover your
ers, that has earned us the trust of the
nation.”
“Second, the growing trend of concern
earning potential
for environmental and social issues has
opened up a new channel to raise capital via
green bonds. According to the Climate Bonds
Initiative, about $81 billion of green bonds
were issued last year to fund socially respon-
sible initiatives. In May last year, Starbucks
issued the largest-ever corporate sustaina-
bility bond, raising half a billion dollars to
fund the coffee chain’s sustainability activ-
The tool allows you to explore average salaries by ities.
“Third, companies that earn their social
industry, job role, level of experience and country. licence to operate within the communities
Visit the tool today to: they serve have a better chance of succeed-
ing in the long term. An interesting exam-
ple within the Tata group is the karigar
· Compare and contrast your own salary against (craftsman) parks set up by Titan Industries
CGMAs and CIMA students across the globe for its jewellery business. Recognising that
gold jewellery craftsmen came from pre-
· Make use of the data available to get the most dominantly marginalised communities and
were unorganised, Titan set up safe, healthy,
accurate view of your earning potential and modern working facilities. The work-
Find out what you are worth – visit MY JOBS
and use the new salary insight tool today.
myjobs.cimaglobal.com
Copyright © 2017 Association of International Certified Professional Accountants. All rights reserved. CIMA and The Chartered
Institute of Management Accountants are trademarks of The Chartered Institute of Management Accountants and are registered
in the United Kingdom and other countries. The design mark is a trademark of the Association of International Certified
Professional Accountants.
DEEP DIVE
ers were also given financial aid, insurance, climate change and sustainable develop-
and medical facilities at the parks. The ini- ment to help build a culture of sustainabil-
tiative not only significantly enhanced the ity in the organisation. We are also looking
productivity levels of the workers and at the sustainability requirements of our
streamlined the assembly chain, it also supply chain partners and working on devel-
improved the average standard of living of oping a strategic approach towards sustain-
the craftsmen,” he says. able sourcing.”
Environmental and social factors will In many ways the Tata business model
have an increasing influence on the oper- is continuing to adapt to the changing envi-
ating context of global businesses, explains ronment – an area that all corporates will
Rajan. He says that to create future-ready need to finesse.
businesses, organisations need to integrate “As the sustainability imperatives of
sustainability thinking into their businesses businesses become more nuanced, compa-
by mainstreaming sustainability into each nies will need to develop an integrated sus-
business function. “This requires a shift in tainability approach to stay relevant in this
the mindset from compliance to culture, changing business context,” Rajan says. ■
and involves collective effort across the
stakeholder segments, including employ-
ees and value-chain partners,” he adds.
“One of the ways in which we sensitise
colleagues in the Tata group on the sustain-
ability challenges we all face is through a
groupwide volunteering programme. Called
‘Tata Engage’, it is India’s largest corporate
volunteering program, with Tata colleagues
contributing 1.2 million hours of volunteer-
ing support last year to nonprofits around
the world.
“We also celebrate a Tata sustainability
month in June every year, when numerous
campaigns are conducted on subjects like
Tata Global Beverages’ Gaon Chalo
initiative helps villagers in tea-
producing areas establish their own
distribution networks.
DECEMBER 2017
43

“AN ORGANISATION
NEEDS SELF-
CONFIDENCE AND A
SHARED SENSE OF
PURPOSE.”
Anders Bouvin, CEO,
Handelsbanken
Visit MY JOBS to try
what you ‘buy’, but what you ‘buy into’,” he
says. “The Tata brand is India’s most valu-
able brand, valued 118% higher than its clos-
our new salary insight
est competitor, according to a third-party
study by Interbrand, and it is our commit-
ment to strive for value creation for all our
stakeholders, and not just our sharehold-
tool and discover your
ers, that has earned us the trust of the
nation.”
“Second, the growing trend of concern
earning potential
for environmental and social issues has
opened up a new channel to raise capital via
green bonds. According to the Climate Bonds
Initiative, about $81 billion of green bonds
were issued last year to fund socially respon-
sible initiatives. In May last year, Starbucks
issued the largest-ever corporate sustaina-
bility bond, raising half a billion dollars to
fund the coffee chain’s sustainability activ-
The tool allows you to explore average salaries by ities.
“Third, companies that earn their social
industry, job role, level of experience and country. licence to operate within the communities
Visit the tool today to: they serve have a better chance of succeed-
ing in the long term. An interesting exam-
ple within the Tata group is the karigar
· Compare and contrast your own salary against (craftsman) parks set up by Titan Industries
CGMAs and CIMA students across the globe for its jewellery business. Recognising that
gold jewellery craftsmen came from pre-
· Make use of the data available to get the most dominantly marginalised communities and
were unorganised, Titan set up safe, healthy,
accurate view of your earning potential and modern working facilities. The work-
Find out what you are worth – visit MY JOBS
and use the new salary insight tool today.
myjobs.cimaglobal.com
Copyright © 2017 Association of International Certified Professional Accountants. All rights reserved. CIMA and The Chartered
Institute of Management Accountants are trademarks of The Chartered Institute of Management Accountants and are registered
in the United Kingdom and other countries. The design mark is a trademark of the Association of International Certified
Professional Accountants.
DEEP DIVE
ers were also given financial aid, insurance, climate change and sustainable develop-
and medical facilities at the parks. The ini- ment to help build a culture of sustainabil-
tiative not only significantly enhanced the ity in the organisation. We are also looking
productivity levels of the workers and at the sustainability requirements of our
streamlined the assembly chain, it also supply chain partners and working on devel-
improved the average standard of living of oping a strategic approach towards sustain-
the craftsmen,” he says. able sourcing.”
Environmental and social factors will In many ways the Tata business model
have an increasing influence on the oper- is continuing to adapt to the changing envi-
ating context of global businesses, explains ronment – an area that all corporates will
Rajan. He says that to create future-ready need to finesse.
businesses, organisations need to integrate “As the sustainability imperatives of
sustainability thinking into their businesses businesses become more nuanced, compa-
by mainstreaming sustainability into each nies will need to develop an integrated sus-
business function. “This requires a shift in tainability approach to stay relevant in this
the mindset from compliance to culture, changing business context,” Rajan says. ■
and involves collective effort across the
stakeholder segments, including employ-
ees and value-chain partners,” he adds.
“One of the ways in which we sensitise
colleagues in the Tata group on the sustain-
ability challenges we all face is through a
groupwide volunteering programme. Called
‘Tata Engage’, it is India’s largest corporate
volunteering program, with Tata colleagues
contributing 1.2 million hours of volunteer-
ing support last year to nonprofits around
the world.
“We also celebrate a Tata sustainability
month in June every year, when numerous
campaigns are conducted on subjects like
Tata Global Beverages’ Gaon Chalo
initiative helps villagers in tea-
producing areas establish their own
distribution networks.
DECEMBER 2017
43
T
DEEP DIVE DEEP DIVE

he machine at the heart a charitable fund “for the promotion and
of business models of dissemination of knowledge in account-
the future will be very ancy and other related subjects”.
different because big In the talk, which was titled “Making
data will create new Decisions Amidst the Data Deluge”, Cukier
forms of value, argues described how the ways we are making deci-
Kenneth Cukier, sen- sions are changing as a result of the rapid
ior editor of digital advances in technical innovation.
products at The Econo- What’s changed, said Cukier, is that
mist and the speaker at the 2017 CIMA technology has become so powerful, the
Anthony Howitt lecture in September. The cost of memory has gone down, and data
biennial lecture is named after Anthony storage ability has massively increased, so
Howitt, FCMA, who was CIMA president that there has been a rise of the big data
between 1972 and 1973, and who established mindset. There has been a big advancement
of how to create economic value from data,
he said. “You can make decisions based on
that data in a way that you really couldn’t
previously.”
“Classical economists saw the world
based on the three factors of production –
land, labour, and capital. They hadn’t put
data into the equation because it was so hard
to collect, store, and process. But those con-
straints have largely gone away now, so we
can introduce data in ways that we couldn’t
before,” he said. “We can put data into the
mix of our decision-making, and maybe
even automate it.”
The term big data means different things
to different people, argued Cukier. “For some
it means how we are applying statistics that

THE VALUE
can be amassed in a way that couldn’t be
previously,” he said.
“But at its origins it meant something
specific – it meant the amount of data that
existed had surpassed the ability of the tech-

MACHINES
nical skills to process it. They had to find a
new term to explain how they were trying
to address this challenge.
“At the same time a technique of artifi-
cial intelligence called machine learning,
that up until then hadn’t worked very well,
started to show a lot of promise. Today the
use of machine learning to process big data

leads from a quantitative shift to a quali-
The Economist’s Kenneth tative shift. More isn’t just more, more is
different,” added Cukier.
Cukier explains how So what does all this information mean
artificial intelligence for decision-making? How does it make
decision-making faster and more accurate,
and machine learning or at least quicker and less expensive?
have created a new form “With machine learning, ie, the ability
of computers to learn without being explic-
of value that will drive itly programmed, the idea of computers
translating in areas such as voice recogni-
change in organisations tion or self-driving cars is no longer as
and society as a whole. laughable as it might once have been,” Cuk-
ier said.
“In the past, computer programming
was about instructing a computer what to
do, but with machine learning a computer
is inferring what to do based on the data it
continuously learns, so we can do new
things. Salesforce.com allows a company
to track a salesman’s performance, can reg-
ister all activities, run analytics around it,
and suddenly now can aggregate all this
information, so working out how to best
approach a client,” said Cukier, who co-au-
thored Big Data: A Revolution That Will Trans-
form How We Live, Work, and Think in 2013
and Learning With Big Data: The Future of
Education in 2014 with Viktor Mayer-Schön-
berger. More interesting still is how the
approach is being used in medical science,
said Cukier. “In an experiment diagnosing
advanced cancer, scientists didn’t tell the
computer what were features to look for in
the cell sample. They only gave the com-
puter thousands of cell samples and infor-
mation on what the patients’ survival rates
were,” he said.
“They wanted to see how the algorithm
would perform against a human patholo-
gist. The result was that three of the traits
the algorithm was able to identify were ones
the human practitioners didn’t know to
look for,” he added.
Cukier stressed that by far the most
important message to come out is that there
is now a new way of looking at the world.
“It is thinking about the world as a plat-
form for the collection and analysis of data.
As a result, we recognise we are now see-
ing a new form of value being created,” he
urged. n
To learn more about how management
accountants are embracing the big
data revolution, go to the CGMA Big
Data Innovation resources webpage at:
http://bit.ly/2xAyKxS

DECEMBER 2017
45
T
DEEP DIVE DEEP DIVE

he machine at the heart a charitable fund “for the promotion and
of business models of dissemination of knowledge in account-
the future will be very ancy and other related subjects”.
different because big In the talk, which was titled “Making
data will create new Decisions Amidst the Data Deluge”, Cukier
forms of value, argues described how the ways we are making deci-
Kenneth Cukier, sen- sions are changing as a result of the rapid
ior editor of digital advances in technical innovation.
products at The Econo- What’s changed, said Cukier, is that
mist and the speaker at the 2017 CIMA technology has become so powerful, the
Anthony Howitt lecture in September. The cost of memory has gone down, and data
biennial lecture is named after Anthony storage ability has massively increased, so
Howitt, FCMA, who was CIMA president that there has been a rise of the big data
between 1972 and 1973, and who established mindset. There has been a big advancement
of how to create economic value from data,
he said. “You can make decisions based on
that data in a way that you really couldn’t
previously.”
“Classical economists saw the world
based on the three factors of production –
land, labour, and capital. They hadn’t put
data into the equation because it was so hard
to collect, store, and process. But those con-
straints have largely gone away now, so we
can introduce data in ways that we couldn’t
before,” he said. “We can put data into the
mix of our decision-making, and maybe
even automate it.”
The term big data means different things
to different people, argued Cukier. “For some
it means how we are applying statistics that

THE VALUE
can be amassed in a way that couldn’t be
previously,” he said.
“But at its origins it meant something
specific – it meant the amount of data that
existed had surpassed the ability of the tech-

MACHINES
nical skills to process it. They had to find a
new term to explain how they were trying
to address this challenge.
“At the same time a technique of artifi-
cial intelligence called machine learning,
that up until then hadn’t worked very well,
started to show a lot of promise. Today the
use of machine learning to process big data

leads from a quantitative shift to a quali-
The Economist’s Kenneth tative shift. More isn’t just more, more is
different,” added Cukier.
Cukier explains how So what does all this information mean
artificial intelligence for decision-making? How does it make
decision-making faster and more accurate,
and machine learning or at least quicker and less expensive?
have created a new form “With machine learning, ie, the ability
of computers to learn without being explic-
of value that will drive itly programmed, the idea of computers
translating in areas such as voice recogni-
change in organisations tion or self-driving cars is no longer as
and society as a whole. laughable as it might once have been,” Cuk-
ier said.
“In the past, computer programming
was about instructing a computer what to
do, but with machine learning a computer
is inferring what to do based on the data it
continuously learns, so we can do new
things. Salesforce.com allows a company
to track a salesman’s performance, can reg-
ister all activities, run analytics around it,
and suddenly now can aggregate all this
information, so working out how to best
approach a client,” said Cukier, who co-au-
thored Big Data: A Revolution That Will Trans-
form How We Live, Work, and Think in 2013
and Learning With Big Data: The Future of
Education in 2014 with Viktor Mayer-Schön-
berger. More interesting still is how the
approach is being used in medical science,
said Cukier. “In an experiment diagnosing
advanced cancer, scientists didn’t tell the
computer what were features to look for in
the cell sample. They only gave the com-
puter thousands of cell samples and infor-
mation on what the patients’ survival rates
were,” he said.
“They wanted to see how the algorithm
would perform against a human patholo-
gist. The result was that three of the traits
the algorithm was able to identify were ones
the human practitioners didn’t know to
look for,” he added.
Cukier stressed that by far the most
important message to come out is that there
is now a new way of looking at the world.
“It is thinking about the world as a plat-
form for the collection and analysis of data.
As a result, we recognise we are now see-
ing a new form of value being created,” he
urged. n
To learn more about how management
accountants are embracing the big
data revolution, go to the CGMA Big
Data Innovation resources webpage at:
http://bit.ly/2xAyKxS

DECEMBER 2017
45
DEEP DIVE / OPINION
“Integrated reporting can play a key role in
devising a dynamic, living business model.”
RICHARD HOWITT, CEO OF THE INTERNATIONAL
INTEGRATED REPORTING COUNCIL
I
ntegrated reporting and the dynamic
business model are interlinked in
the way they help companies and
organisations define and commu-
nicate their business strategy, and
in doing so deliver long-term value
creation.
What integrated reporting has
done is define the business model
as an essential building block, not
just for management internally, but as part
of what investors expect when they’re rat-
ing companies in terms of their prospects.
It’s a very different situation from ten
years ago, before the strategic report became
a reality in the UK and when few major com-
panies wrote down and communicated their
business model. We’re now in a position
where that situation is becoming the excep-
tion rather than the norm.
Now we exist in a world where share-
holders want to understand how a company
can deliver long-term value creation and
stakeholders want details of all aspects of
its activities in a globalised, interdepend-
ent, inter-related world, with changing soci-
etal expectations.
In this context, stakeholder relations
are absolutely crucial to value in a way that
just wasn’t true 20-30 years ago. Therefore
integrated reporting is a tool to help meet
stakeholders’ expectations because they can
see how the company is delivering against
its targets. Stakeholders can also see that
the company is looking at their expecta-
tions seriously.
The business model comes into the
WILSON
NICKWILSON
equation because companies and other
organisations cannot be all things to all peo-
ple, but stakeholders don’t expect that
NICK
DECEMBER 2017
46
DEEP DIVE / OPINION
either. What they’re looking for is credibil-
ity in a company to confirm whether they
can trust what a company is saying about
its activities. The more clarity the company
can offer in defining and indicating what
is really intrinsic to it, the stronger is the
bond of trust.
The business model may deliver on what
some stakeholders want, which is a chal-
lenge when we live in a world of different
interests that have to be resolved. But there
are a lot of companies doing an awful lot
of work to close the trust deficit by accu-
rately describing who they are and how they
operate to their different stakeholder com-
munities. The business model is at the heart
of whether they’re telling an authentic,
believable story.
Even where companies and organisa-
tions have to take a decision leading to neg-
ative impacts, if external stakeholders can
see that the business intrinsically has the
right purpose and core, it’s much easier for
them to accept that decision-making.
With regard to integrated reports, inves-
tors say that not every bit of information,
every line on every page, is important. The
issue is whether the company is telling the
story and has a story to tell – that it has
worked out for itself what its business model
and strategy is. They can agree or disagree
with some of its forecasts and predictions,
but the fact that it has gone through rigor-
ous internal thinking and has clarity in its
business model, is what the investor is rat-
ing them on.
Integrated reporting can play a key role
in devising a dynamic, living business
model. The whole point underpinning inte-
grated reporting is that there’s a shift to a
DECEMBER 2017
47
long-term, forward-thinking, and strategic
vision for the company and its manage-
ment. You only embrace the long term by
recognising all the forces of change that
exist in markets and then understanding
how the company fits into that.
That change process doesn’t stop when
a company produces its first integrated
report in year one. It is a dynamic process,
where integrated thinking, not just inte-
grated reporting, becomes the company’s
ethos. It’s a broader, more strategic and con-
nected way of viewing how the company
operates, with some powerful examples.
Take the Dutch technology group,
Philips, which split from its electronics busi-
ness to focus on healthcare. The group has
completely changed its business model, and
integrated reporting has been intrinsic to
how it did that. Now, with demographic
challenges and resource constraints affect-
ing welfare, it needs to adapt to constant
challenges.
Another good example is Italian insurer
Unipol, which sits in a sector where trust
is paramount. Questions it must answer
are: Do you trust it to deliver when required,
and will it still be there in 20–30 years? The
group recognised it had a trust deficit, so it
used integrated reporting to articulate its
business model to win support from its cus-
tomers.
The risks and challenges that it is pric-
ing day in and day out are continually chang-
ing, so its business model needs to
constantly evolve, which can be achieved
through integrated thinking. With a con-
stantly evolving business model, the com-
pany can respond in a dynamic way to
market and societal changes. ■
DEEP DIVE / OPINION
“Integrated reporting can play a key role in
devising a dynamic, living business model.”
RICHARD HOWITT, CEO OF THE INTERNATIONAL
INTEGRATED REPORTING COUNCIL
I
ntegrated reporting and the dynamic
business model are interlinked in
the way they help companies and
organisations define and commu-
nicate their business strategy, and
in doing so deliver long-term value
creation.
What integrated reporting has
done is define the business model
as an essential building block, not
just for management internally, but as part
of what investors expect when they’re rat-
ing companies in terms of their prospects.
It’s a very different situation from ten
years ago, before the strategic report became
a reality in the UK and when few major com-
panies wrote down and communicated their
business model. We’re now in a position
where that situation is becoming the excep-
tion rather than the norm.
Now we exist in a world where share-
holders want to understand how a company
can deliver long-term value creation and
stakeholders want details of all aspects of
its activities in a globalised, interdepend-
ent, inter-related world, with changing soci-
etal expectations.
In this context, stakeholder relations
are absolutely crucial to value in a way that
just wasn’t true 20-30 years ago. Therefore
integrated reporting is a tool to help meet
stakeholders’ expectations because they can
see how the company is delivering against
its targets. Stakeholders can also see that
the company is looking at their expecta-
tions seriously.
The business model comes into the
WILSON
NICKWILSON
equation because companies and other
organisations cannot be all things to all peo-
ple, but stakeholders don’t expect that
NICK
DECEMBER 2017
46
DEEP DIVE / OPINION
either. What they’re looking for is credibil-
ity in a company to confirm whether they
can trust what a company is saying about
its activities. The more clarity the company
can offer in defining and indicating what
is really intrinsic to it, the stronger is the
bond of trust.
The business model may deliver on what
some stakeholders want, which is a chal-
lenge when we live in a world of different
interests that have to be resolved. But there
are a lot of companies doing an awful lot
of work to close the trust deficit by accu-
rately describing who they are and how they
operate to their different stakeholder com-
munities. The business model is at the heart
of whether they’re telling an authentic,
believable story.
Even where companies and organisa-
tions have to take a decision leading to neg-
ative impacts, if external stakeholders can
see that the business intrinsically has the
right purpose and core, it’s much easier for
them to accept that decision-making.
With regard to integrated reports, inves-
tors say that not every bit of information,
every line on every page, is important. The
issue is whether the company is telling the
story and has a story to tell – that it has
worked out for itself what its business model
and strategy is. They can agree or disagree
with some of its forecasts and predictions,
but the fact that it has gone through rigor-
ous internal thinking and has clarity in its
business model, is what the investor is rat-
ing them on.
Integrated reporting can play a key role
in devising a dynamic, living business
model. The whole point underpinning inte-
grated reporting is that there’s a shift to a
DECEMBER 2017
47
long-term, forward-thinking, and strategic
vision for the company and its manage-
ment. You only embrace the long term by
recognising all the forces of change that
exist in markets and then understanding
how the company fits into that.
That change process doesn’t stop when
a company produces its first integrated
report in year one. It is a dynamic process,
where integrated thinking, not just inte-
grated reporting, becomes the company’s
ethos. It’s a broader, more strategic and con-
nected way of viewing how the company
operates, with some powerful examples.
Take the Dutch technology group,
Philips, which split from its electronics busi-
ness to focus on healthcare. The group has
completely changed its business model, and
integrated reporting has been intrinsic to
how it did that. Now, with demographic
challenges and resource constraints affect-
ing welfare, it needs to adapt to constant
challenges.
Another good example is Italian insurer
Unipol, which sits in a sector where trust
is paramount. Questions it must answer
are: Do you trust it to deliver when required,
and will it still be there in 20–30 years? The
group recognised it had a trust deficit, so it
used integrated reporting to articulate its
business model to win support from its cus-
tomers.
The risks and challenges that it is pric-
ing day in and day out are continually chang-
ing, so its business model needs to
constantly evolve, which can be achieved
through integrated thinking. With a con-
stantly evolving business model, the com-
pany can respond in a dynamic way to
market and societal changes. ■
 DEEP DIVE DEEP DIVE
SHOP AND AWE
With their vast supply chains, large retailers face the
unenviable challenge of developing business models
that are both sustainable and stand up to stakeholder
scrutiny. But Marks & Spencer and the John Lewis
Partnership are doing just that and were both highly
commended recently at a prestigious awards ceremony.
W
hen suppliers to retail giant Marks & Spen-
cer (M&S) and ASOS, two of the UK’s best-
known brands, were found to have employed
child labour last year, customers, sharehold-
ers, and other stakeholders demanded
change.
Though M&S reacted quickly to address
the issue – launching a full investigation
into employment practices in its entire sup-
ply chain – the ripple effect has continued,
as everyone within the company and out-
side recognises the negative impact that
such revelations mean for businesses. The
incident reaffirms the need for transpar-
ency across a company’s activities, no mat-
ter how extended its operations are.
In this year’s PwC Building Public Trust
in Corporate Reporting Awards, M&S was
highly commended in the Innovation cat-
egory for its efforts to convey transparency
across the group and set out its corporate
vision. Anthony Clarke, M&S’s deputy com-
pany secretary, says: “Customers are at the
heart of everything we do at Marks & Spen-
THE PROJECT T WINS
cer, and the last decade has seen growing
demand from customers for greater trans-
parency about where and how retailers
source their products.
“Customers are increasingly aware of
DECEMBER 2017 DECEMBER 2017
48 49
their personal impact on the world, and
businesses must work hard to build and
maintain their trust. We take transparency
and traceability very seriously and have
extremely high production standards.”
And it is not just customers who have
an interest in the sustainability of the com-
pany, but investors, too.
“Increasingly we know that our inves-
tors are interested in creating sustainable
value,” Clarke adds. “It is something that is
recognised as a point of difference for M&S
through Plan A – our eco and ethical plan.
It is fully embedded into the way we do busi-
ness, and the way we draft our reporting
allows us to demonstrate this throughout
the annual report and the dedicated Plan A
report.”
Integrated reporting is a key pillar of
M&S’s approach to producing its annual
report, with Clarke outlining that the group
focused on non-financial value creation
throughout, from the chairman’s statement
to the detailed divisional performance
reviews, through to risk and governance.
“Our strategy was, first and foremost,
to start early,” he explains. “Integrated
reporting can only be a reflection of inte-
grated thinking.
 DEEP DIVE DEEP DIVE
SHOP AND AWE
With their vast supply chains, large retailers face the
unenviable challenge of developing business models
that are both sustainable and stand up to stakeholder
scrutiny. But Marks & Spencer and the John Lewis
Partnership are doing just that and were both highly
commended recently at a prestigious awards ceremony.
W
hen suppliers to retail giant Marks & Spen-
cer (M&S) and ASOS, two of the UK’s best-
known brands, were found to have employed
child labour last year, customers, sharehold-
ers, and other stakeholders demanded
change.
Though M&S reacted quickly to address
the issue – launching a full investigation
into employment practices in its entire sup-
ply chain – the ripple effect has continued,
as everyone within the company and out-
side recognises the negative impact that
such revelations mean for businesses. The
incident reaffirms the need for transpar-
ency across a company’s activities, no mat-
ter how extended its operations are.
In this year’s PwC Building Public Trust
in Corporate Reporting Awards, M&S was
highly commended in the Innovation cat-
egory for its efforts to convey transparency
across the group and set out its corporate
vision. Anthony Clarke, M&S’s deputy com-
pany secretary, says: “Customers are at the
heart of everything we do at Marks & Spen-
THE PROJECT T WINS
cer, and the last decade has seen growing
demand from customers for greater trans-
parency about where and how retailers
source their products.
“Customers are increasingly aware of
DECEMBER 2017 DECEMBER 2017
48 49
their personal impact on the world, and
businesses must work hard to build and
maintain their trust. We take transparency
and traceability very seriously and have
extremely high production standards.”
And it is not just customers who have
an interest in the sustainability of the com-
pany, but investors, too.
“Increasingly we know that our inves-
tors are interested in creating sustainable
value,” Clarke adds. “It is something that is
recognised as a point of difference for M&S
through Plan A – our eco and ethical plan.
It is fully embedded into the way we do busi-
ness, and the way we draft our reporting
allows us to demonstrate this throughout
the annual report and the dedicated Plan A
report.”
Integrated reporting is a key pillar of
M&S’s approach to producing its annual
report, with Clarke outlining that the group
focused on non-financial value creation
throughout, from the chairman’s statement
to the detailed divisional performance
reviews, through to risk and governance.
“Our strategy was, first and foremost,
to start early,” he explains. “Integrated
reporting can only be a reflection of inte-
grated thinking.

“However, throughout, we knew we had
to be careful to balance integrated report-
ing best practice with ensuring the report
was readily comprehensible to a wide vari-
ety of stakeholders, including institutional
investors and retail shareholders.”
Continuing to innovate and move for-
ward in terms of integrated reporting best
practice was a key objective of this year’s
report, says Clarke. “A new addition this
year was the introduction of ‘value crea-
tion in action’ case studies, which demon-
strate how M&S really creates value on the
ground, as well as a new spread offering
external context as well as insights from
our Customer Insight Unit.”
“Integrated reporting is a valuable tool
for keeping the report focused, relevant,
more coherent for stakeholders and easier
for them to navigate. It helps to ensure that
the report tells the story of a business that
is more than the sum of its parts, and that
has a clear strategy and the right operating
model to grow profits in a sustainable way.”
For the John Lewis Partnership (JLP),
the largest employee-owned company in
the UK, its unique structure requires it to
convey transparency and vision in its
annual report. Simon Fowler, director of
communications at JLP, explains the con-
text of the partnership’s approach to report-
DEEP DIVE
ing, which was highly commended in the
PwC awards’ Private Business category.
He says that when John Spedan Lewis
set up the partnership in 1929, he created
a constitution that clearly defines how the
business, its partners, and its staff are
expected to behave towards customers, sup-
pliers, the environment, the wider com-
munity, and each other.
“As an employee-owned business, the
partnership operates democratically and
follows the principles of being fair, open,
and transparent to all our stakeholders,”
he says. “This extends to our annual report
and accounts, and we take pride in being
transparent with our partners and custom-
ers. We will always go above and beyond
what is needed for this report even though
sometimes this may not be required as we
are not a listed company.”
“Unlike shareholders in other busi-
nesses, JLP’s partners own the business in
perpetuity and therefore are responsible
to future generations of partners for the
partnership’s long-term sustainability,”
Fowler explains. “With so much fundamen-
tal change happening in society, the work-
place, and in the retail sector, our ownership
structure enables us to take a long-term
view of our businesses and its strategy,
which looks forward to 2028.”
DECEMBER 2017
50
Given that JLP sources 380,000 prod-
ucts from around 13,000 suppliers in more
than 90 countries, Fowler says it’s vitally
important to explain supply chain impact
in the report.
“JLP recognises that growing pressure
on global supply chains, the people who
work in them, and the natural environ-
ment [is] likely to make our costs more
CGMA Essentials:
volatile and impact the stability of our sup-
ply,” he says. “Changes in society – such
as growing public health pressures – will
also require us to respond to ever more
A new world of knowledge
complex needs in our product offer if we
are to attract and retain valued custom-
ers.”
at your fingertips
Integrated reporting is key to JLP’s
approach. In 2013 an integrated reporting
framework was introduced to help bring
to life the connectivity between strategy,
performance, JLP’s role in society, and long-
term value creation, says Fowler.
The greatest finance leaders keep ahead through the most relevant professional
“It has helped us design our commu-
nication to give partners, as co-owners, a guidance, leadership skills and career development tools. Join the best with
clearer, more forward-looking perspective CGMA Essentials — an annual subscription to thought-provoking insights from
on the business. For example, our busi-
ness model is designed to help partners to
over 75 on-demand conferences and webcasts that provides:
understand the vast natural, social, and
physical resources we depend on in order
• Relevant, timely industry trends and technical updates from the profession’s
to achieve our purpose and to return value leading experts
not just to us but to our stakeholders.” n
• Critical career development resources
• 24/7 access to watch, rewind and replay videos as often as you’d like
“WE TAKE PRIDE IN • New conference sessions and webcasts added monthly
BEING TRANSPARENT Available for less than £1 per day for CIMA members and students, take
WITH OUR PARTNERS advantage of this all-access pass to advance your career and subscribe
today at www.cimaglobal.com/CGMAEssentials
AND CUSTOMERS.”
Simon Fowler, director of
communications, JLP © 2017 Association of International Certified Professional Accountants. All rights reserved. CGMA and Chartered Global Management
Accountant are trademarks of the Association of International Certified Professional Accountants and are registered in the United States
and other countries. The design mark is a trademark of the Association of International Certified Professional Accountants. 23090-344

“However, throughout, we knew we had
to be careful to balance integrated report-
ing best practice with ensuring the report
was readily comprehensible to a wide vari-
ety of stakeholders, including institutional
investors and retail shareholders.”
Continuing to innovate and move for-
ward in terms of integrated reporting best
practice was a key objective of this year’s
report, says Clarke. “A new addition this
year was the introduction of ‘value crea-
tion in action’ case studies, which demon-
strate how M&S really creates value on the
ground, as well as a new spread offering
external context as well as insights from
our Customer Insight Unit.”
“Integrated reporting is a valuable tool
for keeping the report focused, relevant,
more coherent for stakeholders and easier
for them to navigate. It helps to ensure that
the report tells the story of a business that
is more than the sum of its parts, and that
has a clear strategy and the right operating
model to grow profits in a sustainable way.”
For the John Lewis Partnership (JLP),
the largest employee-owned company in
the UK, its unique structure requires it to
convey transparency and vision in its
annual report. Simon Fowler, director of
communications at JLP, explains the con-
text of the partnership’s approach to report-
DEEP DIVE
ing, which was highly commended in the
PwC awards’ Private Business category.
He says that when John Spedan Lewis
set up the partnership in 1929, he created
a constitution that clearly defines how the
business, its partners, and its staff are
expected to behave towards customers, sup-
pliers, the environment, the wider com-
munity, and each other.
“As an employee-owned business, the
partnership operates democratically and
follows the principles of being fair, open,
and transparent to all our stakeholders,”
he says. “This extends to our annual report
and accounts, and we take pride in being
transparent with our partners and custom-
ers. We will always go above and beyond
what is needed for this report even though
sometimes this may not be required as we
are not a listed company.”
“Unlike shareholders in other busi-
nesses, JLP’s partners own the business in
perpetuity and therefore are responsible
to future generations of partners for the
partnership’s long-term sustainability,”
Fowler explains. “With so much fundamen-
tal change happening in society, the work-
place, and in the retail sector, our ownership
structure enables us to take a long-term
view of our businesses and its strategy,
which looks forward to 2028.”
DECEMBER 2017
50
Given that JLP sources 380,000 prod-
ucts from around 13,000 suppliers in more
than 90 countries, Fowler says it’s vitally
important to explain supply chain impact
in the report.
“JLP recognises that growing pressure
on global supply chains, the people who
work in them, and the natural environ-
ment [is] likely to make our costs more
CGMA Essentials:
volatile and impact the stability of our sup-
ply,” he says. “Changes in society – such
as growing public health pressures – will
also require us to respond to ever more
A new world of knowledge
complex needs in our product offer if we
are to attract and retain valued custom-
ers.”
at your fingertips
Integrated reporting is key to JLP’s
approach. In 2013 an integrated reporting
framework was introduced to help bring
to life the connectivity between strategy,
performance, JLP’s role in society, and long-
term value creation, says Fowler.
The greatest finance leaders keep ahead through the most relevant professional
“It has helped us design our commu-
nication to give partners, as co-owners, a guidance, leadership skills and career development tools. Join the best with
clearer, more forward-looking perspective CGMA Essentials — an annual subscription to thought-provoking insights from
on the business. For example, our busi-
ness model is designed to help partners to
over 75 on-demand conferences and webcasts that provides:
understand the vast natural, social, and
physical resources we depend on in order
• Relevant, timely industry trends and technical updates from the profession’s
to achieve our purpose and to return value leading experts
not just to us but to our stakeholders.” n
• Critical career development resources
• 24/7 access to watch, rewind and replay videos as often as you’d like
“WE TAKE PRIDE IN • New conference sessions and webcasts added monthly
BEING TRANSPARENT Available for less than £1 per day for CIMA members and students, take
WITH OUR PARTNERS advantage of this all-access pass to advance your career and subscribe
today at www.cimaglobal.com/CGMAEssentials
AND CUSTOMERS.”
Simon Fowler, director of
communications, JLP © 2017 Association of International Certified Professional Accountants. All rights reserved. CGMA and Chartered Global Management
Accountant are trademarks of the Association of International Certified Professional Accountants and are registered in the United States
and other countries. The design mark is a trademark of the Association of International Certified Professional Accountants. 23090-344
 CIMA on demand

Anytime.
Anywhere.
Access CPD courses.
CIMA on demand is our catalogue of over 130 online CPD courses, designed
for busy finance and business professionals who need training that’s flexible.
With a running time of up to 90 minutes, the courses cover a variety of topics
including management accounting, financial reporting, tax, as well as personal
and management skills.

• Best sellers pack – £99 +VAT

• 10 course pack – £199 +VAT
• Full 130+ course pack – £495 +VAT
• Finance partnering pack – £199 +VAT
IN PRACTICE
3
Q&A: BOB BEEDHAM, CHAIR OF CIMA’S
• 20 course pack – £299 +VAT PROFESSIONAL STANDARDS COMMITTEE; HARNESSING THE
POWER OF STRATEGIC ALLIANCES; HOW TO FOSTER A CULTURE
Find out what you could learn today at: cimaondemand.com OF CREATIVITY; INSTITUTE NEWS; THE VIEW FROM
ANDREW HARDING, CE0 – MANAGEMENT ACCOUNTING
© 2017 The Chartered Institute of Management Accountants. All rights reserved.
 CIMA on demand

Anytime.
Anywhere.
Access CPD courses.
CIMA on demand is our catalogue of over 130 online CPD courses, designed
for busy finance and business professionals who need training that’s flexible.
With a running time of up to 90 minutes, the courses cover a variety of topics
including management accounting, financial reporting, tax, as well as personal
and management skills.

• Best sellers pack – £99 +VAT

• 10 course pack – £199 +VAT
• Full 130+ course pack – £495 +VAT
• Finance partnering pack – £199 +VAT
IN PRACTICE
3
Q&A: BOB BEEDHAM, CHAIR OF CIMA’S
• 20 course pack – £299 +VAT PROFESSIONAL STANDARDS COMMITTEE; HARNESSING THE
POWER OF STRATEGIC ALLIANCES; HOW TO FOSTER A CULTURE
Find out what you could learn today at: cimaondemand.com OF CREATIVITY; INSTITUTE NEWS; THE VIEW FROM
ANDREW HARDING, CE0 – MANAGEMENT ACCOUNTING
© 2017 The Chartered Institute of Management Accountants. All rights reserved.
 IN PRACTICE IN PRACTICE

Q
If you could give advice to a newly qualified fied Public Accountants (AICPA) through our
management accountant, what would it be? Association is providing access to an even larger suite
of lifelong learning resources for our members, and

A
I benefited early on in my career from the advice
of Jack Burton, who put me on the accountancy
path. For newly qualified management account-
ants today, I would say put yourself in the position of
the person receiving the information. What would be
the first question you would ask, and what kind of reac-
that together we will continue to support them through-
out their careers, equipping them to respond
effectively to the challenges that they will undoubt-
edly face as the pace of change in business continues
to accelerate. ■

STANDARD-SETTER
tion are you trying to achieve? Sometimes you need to
step back from the detail and look at the big picture
before you present the information. We can all make
that extra effort to do our chosen job that much better. CIMA’s Professional Standards Committee
oversees the regulation of CIMA members

The gold standard Q

How do you see the future of ethics and
professionalism developing for CGMA
designation-holders?
As he moves through his two-year term as chair of
A
Every professional member needs to be respected
and trusted if they are going to contribute to
CIMA’s Professional Standards Committee (PSC), the success of businesses. CIMA members help
Bob Beedham talks about ethics and professionalism. businesses to succeed and in so doing must uphold
the highest professional standards. This is the foun-
dation upon which everything else is built. Secondly,
our members must grow and improve once they have
obtained their qualification. So continuing professional
development and remaining relevant is vital if we want
to be the leading profession that provides financial
and business advice. I am delighted that the continu-
ing relationship with the American Institute of Certi-
and registered students. This includes
adherence to the requirements of external
regulators. The committee approves changes
to the Royal charter, byelaws, and
regulations and is responsible for the Code
of Ethics, and develops and oversees several
monitoring regimes to ensure that members
comply with these requirements. It also
provides guidance for members on
compliance, and ensures that CIMA’s
professional standards and conduct
processes remain up to date and command
the confidence of stakeholders and the
public.

Q
How do you see the PSC’s role in helping choices and decisions. It is important that the Insti-
members? tute supports the membership in as many ways as pos-
sible, so we can all achieve that high level of competency

A
Having been a member of the PSC for three years
prior to becoming chairman, it is clear the pro-
fession has credibility with employers and the
general public because the membership complies to a
high standard of working practices and ethics. This
creates a high level of trust. Without the trust of our
stakeholders, our members cannot be considered val-
uable employees or advisers.
I believe it is the role of the Institute to provide its
members with the right and appropriate standards and
also the tools to fulfil their roles. The standards of pro-
fessionalism set by the committee are core to the Insti-
tute’s role, as is the guidance provided to support
members in their adherence to those standards. I want
to see members embracing the standards as a positive
differentiator between them and the unqualified and
unregulated individuals out there who call themselves
accountants.
IKON IMAGES/SIMON CRITCHLE Y
and honesty. The PSC can help our members uphold
these standards. Committee members have a wealth
of knowledge and experience across a variety of busi-
nesses. This, combined with talented and focused CIMA
staff, provides a great opportunity to oversee the reg-
ulatory framework within which our members oper-
ate.
The purpose of regulation is to serve the public
interest, and it includes helping our members to be
the best professionals they can be. It can sometimes
be difficult to achieve the right balance between
robust regulation and proportionate
enforcement.
This is why we sample our
members’ CPD [continuing pro-
fessional development] records
– we trust all members to keep
their CPD up to date, but by hav-

ing a monitoring process, we

Q
What do you want to achieve in your stand up to public scrutiny.
two-year term? Effective regulation should be
as easy as possible to under-

A
The Institute has a vital role in ensuring we
uphold the highest possible levels of profes-
sionalism and ethics. Our members know what
is the right thing to do, and how to face up to difficult
stand and comply with, which
is why the professional standards
department always looks to pro-
vide explanation and guidance.

DECEMBER 2017
54
 IN PRACTICE IN PRACTICE

Q
If you could give advice to a newly qualified fied Public Accountants (AICPA) through our
management accountant, what would it be? Association is providing access to an even larger suite
of lifelong learning resources for our members, and

A
I benefited early on in my career from the advice
of Jack Burton, who put me on the accountancy
path. For newly qualified management account-
ants today, I would say put yourself in the position of
the person receiving the information. What would be
the first question you would ask, and what kind of reac-
that together we will continue to support them through-
out their careers, equipping them to respond
effectively to the challenges that they will undoubt-
edly face as the pace of change in business continues
to accelerate. ■

STANDARD-SETTER
tion are you trying to achieve? Sometimes you need to
step back from the detail and look at the big picture
before you present the information. We can all make
that extra effort to do our chosen job that much better. CIMA’s Professional Standards Committee
oversees the regulation of CIMA members

The gold standard Q

How do you see the future of ethics and
professionalism developing for CGMA
designation-holders?
As he moves through his two-year term as chair of
A
Every professional member needs to be respected
and trusted if they are going to contribute to
CIMA’s Professional Standards Committee (PSC), the success of businesses. CIMA members help
Bob Beedham talks about ethics and professionalism. businesses to succeed and in so doing must uphold
the highest professional standards. This is the foun-
dation upon which everything else is built. Secondly,
our members must grow and improve once they have
obtained their qualification. So continuing professional
development and remaining relevant is vital if we want
to be the leading profession that provides financial
and business advice. I am delighted that the continu-
ing relationship with the American Institute of Certi-
and registered students. This includes
adherence to the requirements of external
regulators. The committee approves changes
to the Royal charter, byelaws, and
regulations and is responsible for the Code
of Ethics, and develops and oversees several
monitoring regimes to ensure that members
comply with these requirements. It also
provides guidance for members on
compliance, and ensures that CIMA’s
professional standards and conduct
processes remain up to date and command
the confidence of stakeholders and the
public.

Q
How do you see the PSC’s role in helping choices and decisions. It is important that the Insti-
members? tute supports the membership in as many ways as pos-
sible, so we can all achieve that high level of competency

A
Having been a member of the PSC for three years
prior to becoming chairman, it is clear the pro-
fession has credibility with employers and the
general public because the membership complies to a
high standard of working practices and ethics. This
creates a high level of trust. Without the trust of our
stakeholders, our members cannot be considered val-
uable employees or advisers.
I believe it is the role of the Institute to provide its
members with the right and appropriate standards and
also the tools to fulfil their roles. The standards of pro-
fessionalism set by the committee are core to the Insti-
tute’s role, as is the guidance provided to support
members in their adherence to those standards. I want
to see members embracing the standards as a positive
differentiator between them and the unqualified and
unregulated individuals out there who call themselves
accountants.
IKON IMAGES/SIMON CRITCHLE Y
and honesty. The PSC can help our members uphold
these standards. Committee members have a wealth
of knowledge and experience across a variety of busi-
nesses. This, combined with talented and focused CIMA
staff, provides a great opportunity to oversee the reg-
ulatory framework within which our members oper-
ate.
The purpose of regulation is to serve the public
interest, and it includes helping our members to be
the best professionals they can be. It can sometimes
be difficult to achieve the right balance between
robust regulation and proportionate
enforcement.
This is why we sample our
members’ CPD [continuing pro-
fessional development] records
– we trust all members to keep
their CPD up to date, but by hav-

ing a monitoring process, we

Q
What do you want to achieve in your stand up to public scrutiny.
two-year term? Effective regulation should be
as easy as possible to under-

A
The Institute has a vital role in ensuring we
uphold the highest possible levels of profes-
sionalism and ethics. Our members know what
is the right thing to do, and how to face up to difficult
stand and comply with, which
is why the professional standards
department always looks to pro-
vide explanation and guidance.

DECEMBER 2017
54
 IN PRACTICE

Par
tne
ring
up
Uncover a world ilt
a

of possibilities for
u
a s b es.
h
nce Holm
llia wrie

your future
A
ishi y La
b .B
itsu rks
M o
an- n w
Niss satio
Discover a different perspective on global - i
ault gan
business. Learn more about the award-winning
Ren er or
e
CIMA Islamic Finance qualification.
, th artn
s p
cimaglobal.com/differentperspective urer ulti-
t
ufac he m
an ow t
o m h
aut ects
t
ges t refl
’s lar tha
l
orld ode
he w ss m
t
e of sine
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dy

© 2017 The Chartered Institute of Management Accountants. All rights reserved. CIMA is a trademark of The Chartered
Institute of Management Accountants and is registered in the United Kingdom, United States and other jurisdictions.
The design mark is a trademark of the Association of International Certified Professional Accountants.

DECEMBER 2017
57
 IN PRACTICE

Par
tne
ring
up
Uncover a world ilt
a

of possibilities for
u
a s b es.
h
nce Holm
llia wrie

your future
A
ishi y La
b .B
itsu rks
M o
an- n w
Niss satio
Discover a different perspective on global - i
ault gan
business. Learn more about the award-winning
Ren er or
e
CIMA Islamic Finance qualification.
, th artn
s p
cimaglobal.com/differentperspective urer ulti-
t
ufac he m
an ow t
o m h
aut ects
t
ges t refl
’s lar tha
l
orld ode
he w ss m
t
e of sine
s on ic bu
A am
n
dy

© 2017 The Chartered Institute of Management Accountants. All rights reserved. CIMA is a trademark of The Chartered
Institute of Management Accountants and is registered in the United Kingdom, United States and other jurisdictions.
The design mark is a trademark of the Association of International Certified Professional Accountants.

DECEMBER 2017
57
 IN PRACTICE
W
hen you are working with
several of the world’s
leading carmakers to
develop vehicles on every
continent, you need to
have a clearly understood
plan for navigating the
complex challenges that
are affecting the industry. While carmakers are
renowned for creating and refining some of the most
innovative management practices, it’s also a precari-
ous sector to be in. As well as the economic factors
and constantly changing tastes that can dramatically
raise or lower expectations of the industry’s leaders,
increasing environmental concerns are also shaping
levels of demand.
In this context, the Renault-Nissan-Mitsubishi Alli-
ance has grown to become the world’s fourth-largest
carmaker, manufacturing one in every nine cars pro-
duced on the planet, and has devised a business plan
that can adapt to this multitude of changing variables.
“A dynamic business model is very important to
us, especially considering the challenges that the auto-
motive industry is currently facing,” says Jérémie Papin,
the Alliance’s head of financial strategy. “But mostly I
would say that the key to a successful business model
is its ability to understand and constantly embrace cus-
tomers’ needs.”
“Another key factor to a successful business model
DECEMBER 2017
58
is to be conscious of the levers and key assets it is made
of,” says Papin. “For Groupe Renault, I would name a
few that enable the company to look at the future with
confidence, even if this future is fast changing and
complex. These would include Alliance synergies for
resource communalisation, a customer-centric
approach written in our DNA, and a comprehensive
regional organisation and footprint.”
Papin says there have been significant challenges
to developing a business model that encompasses the
complex mix of strategic alliances that the group has
been finessing for 18 years. Since 1999, Renault has
proved, within the Alliance, with Nissan and now Mit-
subishi Motors, its ability to build strong partnerships,
says Papin, the right-hand man of the Alliance’s chair-
man and CEO Carlos Ghosn, arguably the world’s best
strategist when it comes to motor manufacturing.
Papin’s skillset, honed at investment banks
Deutsche Bank, Lehman Brothers, and Nomura after
earning degrees in economics and political science and
a master’s degree in corporate finance, both gained in
France, were put to the test when he arrived at Renault
in 2009.
Development of the Alliance has taken place in sev-
eral stages. In 2002, a set of cross-functional teams,
GE T T Y IMAGES
staffed by people from Renault and Nissan, started to
seek out opportunities. By 2009, a much more trans-
parent process was in place, featuring cross-functional
teams and functional task teams managed by a small
The assembly line at Nissan’s
American manufacturing
plant in Canton, Mississippi.
team of dedicated Alliance directors in order to accel-
erate synergies and best-practice sharing. The Alliance
adopted its current name last September, a year after
Nissan acquired a controlling stake in Mitsubishi.
“It has not been an easy journey, but I think the
success relies on a specific approach. We call it ‘win-
win’, which means that any project should benefit all
parties,” he says. “Win-win does not mean all benefits
are equal for the parties in every project, but that we
engage in joint projects every time all partners are bet-
ter off economically thanks to the project.
“The consequence today is more than €5 billion of
savings, going towards €10 billion in 2022. Today we
are facing new challenges in the automotive value chain:
the application of new technology – electric vehicle,
autonomous driving, and connected cars – is chang-
ing the shape of the value chain,” says Papin, who is
also responsible for strategic partnerships and new
ventures.
He says that means new entrants, the emergence
of mega suppliers, and a need for increased collabora-
tion between original equipment manufacturers (OEMs)
and innovators. Papin says new questions arise, in terms
of liability, development methods, revenue sharing,
and the relation with the end customer. “Our approach
is that collaboration will become attractive for each
stakeholder as long as we have a clear strategy and a
clear technology plan,” he says.
For Renault-Nissan-Mitsubishi, having a business
IN PRACTICE
model that is flexible enough to incorporate a number THE RENAULT-
of alliances offers several pluses. “The first benefit of NISSAN-
our strategic alliance is scale,” Papin says. “It creates a MITSUBISHI
virtuous circle where, by enabling better and optimised ALLIANCE
development, at the best cost, it directly serves qual-
ity and customer satisfaction,” he says.
“More concretely, if we think of Groupe Renault’s
strategic plan: We plan on spending €18 billion until
9.96
MILLION
2022, and thanks to the Alliance with Nissan and Mit- VEHICLES SOLD
subishi, it will give us access to over €50 billion worth BY ALLIANCE IN
of research and development.” 2016, WHICH IS...
Papin says another benefit of strategic alliances
reflected in the case of Renault is the direct impact of
synergy. “Cost avoidance helps us free resources in order
to focus on more projects,” he says. “There’s the abil-
ity for a relatively small OEM to offer a very wide prod- 11%
uct portfolio and an easier regional presence thanks
to shared investments and optimised return on capi-
tal employed.” OF ALL
“All in all, we are in a position today, and this is CARS SOLD
thanks to the strategic alliance we have, to ensure that WORLDWIDE
we are ready to meet all automotive industry challenges,
regulations without having to compromise,” he adds.
“Ensuring the right culture is also a matter of resil-
ience and conviction,” he says.
“We have to be sure that everybody, at each level
of the company, buys into the benefits from the Alli-
ance. We have to explain the causes for our growth
momentum at Renault and make the link with the
efforts to build projects within the Alliance.” n
THE WINDS OF CHANGE
Hala Farouk Almoayyed, the executive director of Almoayyed
Contracting Group (ACG), one of Bahrain’s largest private
employers, has had to rework the firm’s business model to
address a changing economic environment.
In recent years the falling oil price has had a big impact on the
Middle Eastern region where ACG – a building services company
that employs around 6,000 people – undertakes most of its work.
“As client spending has gone down it has forced a rethink on the
business model with greater onus on effectiveness and efficiency,”
she says.
One adaptation has been to seek out alliances with potential
partners in the region. ACG, which sits in the group of companies
called YK Almoayyed & Sons, has continued to thrive in Bahrain
after Almoayyed’s grandfather began trading in the 1920s. The
company has traditionally undertaken a lot of work for the Bahrain
government and private developers.
One area where the group has responded to changing
circumstances is to develop more housing with facilities to capture
more alternative energy sources. “We are always looking at the
most efficient energy for households,” says Almoayyed, who
regularly features in the Forbes list of the 50 most powerful Arab
women.
“By delivering greater societal value we are benefiting from
what is a virtuous circle,” she adds. “Although the core business is
still there, the business model should change with changing
market conditions.”
DECEMBER 2017
59
 IN PRACTICE
W
hen you are working with
several of the world’s
leading carmakers to
develop vehicles on every
continent, you need to
have a clearly understood
plan for navigating the
complex challenges that
are affecting the industry. While carmakers are
renowned for creating and refining some of the most
innovative management practices, it’s also a precari-
ous sector to be in. As well as the economic factors
and constantly changing tastes that can dramatically
raise or lower expectations of the industry’s leaders,
increasing environmental concerns are also shaping
levels of demand.
In this context, the Renault-Nissan-Mitsubishi Alli-
ance has grown to become the world’s fourth-largest
carmaker, manufacturing one in every nine cars pro-
duced on the planet, and has devised a business plan
that can adapt to this multitude of changing variables.
“A dynamic business model is very important to
us, especially considering the challenges that the auto-
motive industry is currently facing,” says Jérémie Papin,
the Alliance’s head of financial strategy. “But mostly I
would say that the key to a successful business model
is its ability to understand and constantly embrace cus-
tomers’ needs.”
“Another key factor to a successful business model
DECEMBER 2017
58
is to be conscious of the levers and key assets it is made
of,” says Papin. “For Groupe Renault, I would name a
few that enable the company to look at the future with
confidence, even if this future is fast changing and
complex. These would include Alliance synergies for
resource communalisation, a customer-centric
approach written in our DNA, and a comprehensive
regional organisation and footprint.”
Papin says there have been significant challenges
to developing a business model that encompasses the
complex mix of strategic alliances that the group has
been finessing for 18 years. Since 1999, Renault has
proved, within the Alliance, with Nissan and now Mit-
subishi Motors, its ability to build strong partnerships,
says Papin, the right-hand man of the Alliance’s chair-
man and CEO Carlos Ghosn, arguably the world’s best
strategist when it comes to motor manufacturing.
Papin’s skillset, honed at investment banks
Deutsche Bank, Lehman Brothers, and Nomura after
earning degrees in economics and political science and
a master’s degree in corporate finance, both gained in
France, were put to the test when he arrived at Renault
in 2009.
Development of the Alliance has taken place in sev-
eral stages. In 2002, a set of cross-functional teams,
GE T T Y IMAGES
staffed by people from Renault and Nissan, started to
seek out opportunities. By 2009, a much more trans-
parent process was in place, featuring cross-functional
teams and functional task teams managed by a small
The assembly line at Nissan’s
American manufacturing
plant in Canton, Mississippi.
team of dedicated Alliance directors in order to accel-
erate synergies and best-practice sharing. The Alliance
adopted its current name last September, a year after
Nissan acquired a controlling stake in Mitsubishi.
“It has not been an easy journey, but I think the
success relies on a specific approach. We call it ‘win-
win’, which means that any project should benefit all
parties,” he says. “Win-win does not mean all benefits
are equal for the parties in every project, but that we
engage in joint projects every time all partners are bet-
ter off economically thanks to the project.
“The consequence today is more than €5 billion of
savings, going towards €10 billion in 2022. Today we
are facing new challenges in the automotive value chain:
the application of new technology – electric vehicle,
autonomous driving, and connected cars – is chang-
ing the shape of the value chain,” says Papin, who is
also responsible for strategic partnerships and new
ventures.
He says that means new entrants, the emergence
of mega suppliers, and a need for increased collabora-
tion between original equipment manufacturers (OEMs)
and innovators. Papin says new questions arise, in terms
of liability, development methods, revenue sharing,
and the relation with the end customer. “Our approach
is that collaboration will become attractive for each
stakeholder as long as we have a clear strategy and a
clear technology plan,” he says.
For Renault-Nissan-Mitsubishi, having a business
IN PRACTICE
model that is flexible enough to incorporate a number THE RENAULT-
of alliances offers several pluses. “The first benefit of NISSAN-
our strategic alliance is scale,” Papin says. “It creates a MITSUBISHI
virtuous circle where, by enabling better and optimised ALLIANCE
development, at the best cost, it directly serves qual-
ity and customer satisfaction,” he says.
“More concretely, if we think of Groupe Renault’s
strategic plan: We plan on spending €18 billion until
9.96
MILLION
2022, and thanks to the Alliance with Nissan and Mit- VEHICLES SOLD
subishi, it will give us access to over €50 billion worth BY ALLIANCE IN
of research and development.” 2016, WHICH IS...
Papin says another benefit of strategic alliances
reflected in the case of Renault is the direct impact of
synergy. “Cost avoidance helps us free resources in order
to focus on more projects,” he says. “There’s the abil-
ity for a relatively small OEM to offer a very wide prod- 11%
uct portfolio and an easier regional presence thanks
to shared investments and optimised return on capi-
tal employed.” OF ALL
“All in all, we are in a position today, and this is CARS SOLD
thanks to the strategic alliance we have, to ensure that WORLDWIDE
we are ready to meet all automotive industry challenges,
regulations without having to compromise,” he adds.
“Ensuring the right culture is also a matter of resil-
ience and conviction,” he says.
“We have to be sure that everybody, at each level
of the company, buys into the benefits from the Alli-
ance. We have to explain the causes for our growth
momentum at Renault and make the link with the
efforts to build projects within the Alliance.” n
THE WINDS OF CHANGE
Hala Farouk Almoayyed, the executive director of Almoayyed
Contracting Group (ACG), one of Bahrain’s largest private
employers, has had to rework the firm’s business model to
address a changing economic environment.
In recent years the falling oil price has had a big impact on the
Middle Eastern region where ACG – a building services company
that employs around 6,000 people – undertakes most of its work.
“As client spending has gone down it has forced a rethink on the
business model with greater onus on effectiveness and efficiency,”
she says.
One adaptation has been to seek out alliances with potential
partners in the region. ACG, which sits in the group of companies
called YK Almoayyed & Sons, has continued to thrive in Bahrain
after Almoayyed’s grandfather began trading in the 1920s. The
company has traditionally undertaken a lot of work for the Bahrain
government and private developers.
One area where the group has responded to changing
circumstances is to develop more housing with facilities to capture
more alternative energy sources. “We are always looking at the
most efficient energy for households,” says Almoayyed, who
regularly features in the Forbes list of the 50 most powerful Arab
women.
“By delivering greater societal value we are benefiting from
what is a virtuous circle,” she adds. “Although the core business is
still there, the business model should change with changing
market conditions.”
DECEMBER 2017
59

TECH NOTES
A QUESTIONING MIND
Leadership expert Sir Ken Robinson on how to harness
the power of creativity in the workplace.
P
rofessor Sir Harry Kroto won the
Nobel Prize for Chemistry in 1996.
He was also a professional
designer. I asked him what differences
there are, if any, between creativity in the
arts and sciences: in the studio and the
laboratory. He said that for him the
process is the same, even though the
outcomes are different. In all creative
processes we are pushing the boundaries
of what we know now, to explore new
possibilities; we are drawing on the skills
we have now, often stretching and
evolving them as the work demands.
In the early stages, being creative
may involve playing with an idea,
doodling, or improvising around the
theme. It may begin with a thought that
is literally half-formed – as a sketch, a
first plan, or a design; the first notes of a
melody or the intimation of a solution
to a problem. There may be several ideas
in play and a number of possible
starting points. Creativity doesn’t
always require freedom from
constraints or a blank page. A lot of
creative work has to conform to a
specific brief or set of conventions, and
great work often comes from working
within formal constraints. When US
President John Kennedy declared in
1961 that America would land a man on
the moon and bring him safely back to
IN PRACTICE
earth, he mobilised a ferment of
creativity and innovation that involved
billions of dollars, millions of
individuals, and hundreds of
institutions embracing scores of
disciplines. The challenge was clear and
so were the constraints. No one asked if
he could adjust the laws of gravity or
possibly move the moon a little closer.
The sonnet has a fixed form to
which the writer must submit. Japanese
haiku makes specific formal demands
on the poet, as do many other forms of
poetic structure. These do not inhibit
the writer’s creativity; they set a
framework for it. The creative
achievement and the aesthetic pleasure
lie in using standard forms to achieve
unique effects and original insights.
Because being creative involves
doing something, it will always involve
using some form of media. These may
be physical media, such as steel, wood,
clay, fabric, or food; they may be sensory
media, like sound, light, the voice, or
the body; they may be cognitive media,
including words, numbers, or notation.
Whatever the media, there is an
intimate relationship between the ideas
and the media through which they take
shape. This is true whether the task is
designing a building, or developing a
mathematical theorem, a scientific
DECEMBER 2017
61
hypothesis, or a musical composition.
Creativity is a dialogue between the
ideas and the media in which they are
being formed. Dancers do not begin
from a verbal proposition and try to
dance it. Dance evolves in the making. It
is a material process of movement and
reflection on movement. Often it is only
in developing the dance, the image, or
music that the idea emerges at all.
Creativity is not only about
generating ideas; it involves making
judgements about them. It involves
elaborating on the initial ideas, testing
and refining them and even rejecting
them in favour of others that emerge
along the way. Sometimes creative
works arrive in the world more or less
fully formed and need no further work.
It’s said that Mozart made few revisions
to many of his compositions. The poet
John Milton was blind. Each morning he
dictated whole sections of his epic work
Paradise Lost to his daughters and made
only minor changes to the text. Good for
them. Usually, creative work is more
tentative and exploratory.
Evaluating which ideas work and
which do not can involve standing back
in quiet reflection. Deciding which
ideas work can be an individual or
collective process, involve instant
judgements or long-term testing. There

TECH NOTES
A QUESTIONING MIND
Leadership expert Sir Ken Robinson on how to harness
the power of creativity in the workplace.
P
rofessor Sir Harry Kroto won the
Nobel Prize for Chemistry in 1996.
He was also a professional
designer. I asked him what differences
there are, if any, between creativity in the
arts and sciences: in the studio and the
laboratory. He said that for him the
process is the same, even though the
outcomes are different. In all creative
processes we are pushing the boundaries
of what we know now, to explore new
possibilities; we are drawing on the skills
we have now, often stretching and
evolving them as the work demands.
In the early stages, being creative
may involve playing with an idea,
doodling, or improvising around the
theme. It may begin with a thought that
is literally half-formed – as a sketch, a
first plan, or a design; the first notes of a
melody or the intimation of a solution
to a problem. There may be several ideas
in play and a number of possible
starting points. Creativity doesn’t
always require freedom from
constraints or a blank page. A lot of
creative work has to conform to a
specific brief or set of conventions, and
great work often comes from working
within formal constraints. When US
President John Kennedy declared in
1961 that America would land a man on
the moon and bring him safely back to
IN PRACTICE
earth, he mobilised a ferment of
creativity and innovation that involved
billions of dollars, millions of
individuals, and hundreds of
institutions embracing scores of
disciplines. The challenge was clear and
so were the constraints. No one asked if
he could adjust the laws of gravity or
possibly move the moon a little closer.
The sonnet has a fixed form to
which the writer must submit. Japanese
haiku makes specific formal demands
on the poet, as do many other forms of
poetic structure. These do not inhibit
the writer’s creativity; they set a
framework for it. The creative
achievement and the aesthetic pleasure
lie in using standard forms to achieve
unique effects and original insights.
Because being creative involves
doing something, it will always involve
using some form of media. These may
be physical media, such as steel, wood,
clay, fabric, or food; they may be sensory
media, like sound, light, the voice, or
the body; they may be cognitive media,
including words, numbers, or notation.
Whatever the media, there is an
intimate relationship between the ideas
and the media through which they take
shape. This is true whether the task is
designing a building, or developing a
mathematical theorem, a scientific
DECEMBER 2017
61
hypothesis, or a musical composition.
Creativity is a dialogue between the
ideas and the media in which they are
being formed. Dancers do not begin
from a verbal proposition and try to
dance it. Dance evolves in the making. It
is a material process of movement and
reflection on movement. Often it is only
in developing the dance, the image, or
music that the idea emerges at all.
Creativity is not only about
generating ideas; it involves making
judgements about them. It involves
elaborating on the initial ideas, testing
and refining them and even rejecting
them in favour of others that emerge
along the way. Sometimes creative
works arrive in the world more or less
fully formed and need no further work.
It’s said that Mozart made few revisions
to many of his compositions. The poet
John Milton was blind. Each morning he
dictated whole sections of his epic work
Paradise Lost to his daughters and made
only minor changes to the text. Good for
them. Usually, creative work is more
tentative and exploratory.
Evaluating which ideas work and
which do not can involve standing back
in quiet reflection. Deciding which
ideas work can be an individual or
collective process, involve instant
judgements or long-term testing. There

are likely to be dead ends − ideas and
designs that do not work. There may be
failures and changes before the best
outcome is produced. You can see
examples of the iterative nature of
creative work in the successive drafts of
poems and novels, of scholarly papers,
or in designs for inventions and so on.
Thomas Edison famously ran through
dozens of ideas and designs for the light
bulb before settling on the final version.
Terence Tao may be the greatest
living mathematician. In 2006, at the
age of 31, he received the Fields Medal
for mathematics, the equivalent of the
Nobel Prize. He says that discovery in
mathematics is always about trial and
error: “You come up with a wrong idea,”
he says, “work on it for a month and
realise it doesn’t work, and then you
come up with the next wrong idea and
then finally, by process of elimination,
IN PRACTICE
you come up with something that does
work.”
I asked Sir Harry Kroto how many of
his experiments failed. He said about
95% of them, although he also said that,
of course, failure is not the right word:
“You’re just finding out what doesn’t
work.” Albert Einstein put the point
sharply: “Anyone who has never made a
mistake has never tried anything new.” I
don’t mean to say that being wrong is
the same thing as being creative, but if
you are not prepared to be wrong, it is
unlikely that you’ll ever come up with
anything original.
Hungarian chemist and philosopher
Michael Polanyi makes a distinction
between “focal” and “subsidiary”
awareness in his book Personal
Knowledge. If you’re knocking a nail
into a piece of wood with a hammer, the
focus of your attention is on the head of
DECEMBER 2017
62
the nail. You also have to be aware, in a to be given time to flower. At the right
time and in the right way, critical
subsidiary way, of the weight of the
hammer and the arc of your arm. It is appraisal is essential. At the wrong
important that this relationship is the point, it can kill an emerging idea.
right way round. If you start to focus on
what your arm is doing, you’re likely to
Similarly, creativity can be inhibited by
trying to do too much too soon or at the
miss the nail. Polanyi continues: same time. The final phases are often to
“Subsidiary awareness and focal do with refining the detail of the
awareness are mutually exclusive. If a expression: with producing the neat
pianist shifts his attention from the copy so to speak. Trying to produce a
piece he is playing to the observation of finished version in one move is usually
what he’s doing with his fingers while impossible. Unless you are dealing with
playing it, he gets confused and may John Milton, asking people to write a
have to stop. This happens generally if poem right away in their best
we switch our focal attention to handwriting can inhibit the spontaneity
particulars on which we had previously they need in the initial phase of
been aware only in their subsidiary generating ideas. They need to
role.” understand that creativity moves
In any creative work the focus of our through different phases, and to have
attention has to be right. Although there some sense of where they are in the
are always points where criticism is process. Not understanding this can
necessary and generative thinking has make people think that they are not
creative at all.
This is an edited extract from Out of
Our Minds: The Power of Being Creative,
3rd edition, by Sir Ken Robinson, Ph.D.
SIR KEN ROBINSON, Ph.D., is an
internationally recognised leader in the
development of creativity, innovation, and
human resources. In 2003, he received a
knighthood from H.M. Queen Elizabeth II for
his services to the arts. He is co-author of The
New York Times bestsellers The Element:
How Finding Your Passion Changes
Everything and Finding Your Element:
How to Discover Your Talents and
Passions and Transform Your Life. ■
UNDERSTANDING
AND MANAGING
GROUP DYNAMICS
By Gill Hasson
IKER AYESTAR AN/SYNERGY ART
IN PRACTICE
5
FOR READING
TIPS PEOPLE BETTER:
1 4
Practise people watching. In a
variety of situations, observe
people and notice how they act and
react to each other. Try to get a
sense of what is going on between them.
Observe how the group interacts. Be
aware of how different individuals
interact with each other – how they
behave differently with one person
compared to another.
2
Be aware of non-verbal
communication. What’s that
telling you about how they really
feel? What combination of
non-verbal language – the gestures,
facial expressions, tone of voice, etc. –
leads you to conclude that a person is
feeling a particular way about the group
or other individuals in the group?
3
Be aware of “matching and
mirroring”. People who are in
tune with each other “mirror”
each other; they tend to use the
same posture and body language. These
are natural signs of a shared liking,
harmony, and understanding. Look for
how other people do or don’t mirror each
other.
W
hether it’s a meeting at work, in
a classroom, or a social
occasion, when there are three
or more people with a common reason to
be together, then those people can be
considered a group.
And whether that group is made up of
three people or 30 people, they’re each
going to have their own individual
temperament, quirks, and
characteristics, and they will each take
on distinct roles and behaviours when
they’re in a group.
“Group dynamics” is the term for the
effects of these roles and behaviours on
other group members and the group as a
whole. A group’s dynamic is the force that
impacts on the motivation, development,
or stability of a group. It’s characterised
by forces of personality, ambition, energy,
DECEMBER 2017
63
Remind people of what you have
in common. When individuals’
different quirks, characteristics,
and agendas appear to be
creating poor group dynamics, find a
way to remind them why you’re together
– what you all have in common and what
you’re all aiming for.
5
Focus on communication. Open
communication is central to good
business dynamics. Find out how
people feel. Ask people not just
what they think about issues, problems,
and achievements, but also how they
feel about them.
This is an edited extract from Gill
Hasson’s Emotional Intelligence
Pocketbook: Little Exercises for an Intuitive
Life, which has been shortlisted for the
2018 CMI Management Book of the Year
in the “Commuters Read” category.
About the author
GILL HASSON is a teacher, trainer, and
writer whose books include Confidence
Pocketbook: Little Exercises for a
Self-Assured Life.
Follow on Twitter: @gillhasson
and ideas. In a group with a positive
dynamic, individuals work towards
collective decisions; they trust and
encourage one another and take
responsibility for making positive things
happen.
But in a group with poor group
dynamics, the behaviour of one or more
of the group can be disruptive. Separate
individuals could be overly critical or
negative of others’ ideas. Emotions can
often run high; some individuals could be
full of enthusiasm while others are
sarcastic or appear uninterested.
Dealing with different personalities
and personal agendas are common
challenges at work and in social
situations. It helps to be more aware of
what’s going on between people if you
want to manage these dynamics.

are likely to be dead ends − ideas and
designs that do not work. There may be
failures and changes before the best
outcome is produced. You can see
examples of the iterative nature of
creative work in the successive drafts of
poems and novels, of scholarly papers,
or in designs for inventions and so on.
Thomas Edison famously ran through
dozens of ideas and designs for the light
bulb before settling on the final version.
Terence Tao may be the greatest
living mathematician. In 2006, at the
age of 31, he received the Fields Medal
for mathematics, the equivalent of the
Nobel Prize. He says that discovery in
mathematics is always about trial and
error: “You come up with a wrong idea,”
he says, “work on it for a month and
realise it doesn’t work, and then you
come up with the next wrong idea and
then finally, by process of elimination,
IN PRACTICE
you come up with something that does
work.”
I asked Sir Harry Kroto how many of
his experiments failed. He said about
95% of them, although he also said that,
of course, failure is not the right word:
“You’re just finding out what doesn’t
work.” Albert Einstein put the point
sharply: “Anyone who has never made a
mistake has never tried anything new.” I
don’t mean to say that being wrong is
the same thing as being creative, but if
you are not prepared to be wrong, it is
unlikely that you’ll ever come up with
anything original.
Hungarian chemist and philosopher
Michael Polanyi makes a distinction
between “focal” and “subsidiary”
awareness in his book Personal
Knowledge. If you’re knocking a nail
into a piece of wood with a hammer, the
focus of your attention is on the head of
DECEMBER 2017
62
the nail. You also have to be aware, in a to be given time to flower. At the right
time and in the right way, critical
subsidiary way, of the weight of the
hammer and the arc of your arm. It is appraisal is essential. At the wrong
important that this relationship is the point, it can kill an emerging idea.
right way round. If you start to focus on
what your arm is doing, you’re likely to
Similarly, creativity can be inhibited by
trying to do too much too soon or at the
miss the nail. Polanyi continues: same time. The final phases are often to
“Subsidiary awareness and focal do with refining the detail of the
awareness are mutually exclusive. If a expression: with producing the neat
pianist shifts his attention from the copy so to speak. Trying to produce a
piece he is playing to the observation of finished version in one move is usually
what he’s doing with his fingers while impossible. Unless you are dealing with
playing it, he gets confused and may John Milton, asking people to write a
have to stop. This happens generally if poem right away in their best
we switch our focal attention to handwriting can inhibit the spontaneity
particulars on which we had previously they need in the initial phase of
been aware only in their subsidiary generating ideas. They need to
role.” understand that creativity moves
In any creative work the focus of our through different phases, and to have
attention has to be right. Although there some sense of where they are in the
are always points where criticism is process. Not understanding this can
necessary and generative thinking has make people think that they are not
creative at all.
This is an edited extract from Out of
Our Minds: The Power of Being Creative,
3rd edition, by Sir Ken Robinson, Ph.D.
SIR KEN ROBINSON, Ph.D., is an
internationally recognised leader in the
development of creativity, innovation, and
human resources. In 2003, he received a
knighthood from H.M. Queen Elizabeth II for
his services to the arts. He is co-author of The
New York Times bestsellers The Element:
How Finding Your Passion Changes
Everything and Finding Your Element:
How to Discover Your Talents and
Passions and Transform Your Life. ■
UNDERSTANDING
AND MANAGING
GROUP DYNAMICS
By Gill Hasson
IKER AYESTAR AN/SYNERGY ART
IN PRACTICE
5
FOR READING
TIPS PEOPLE BETTER:
1 4
Practise people watching. In a
variety of situations, observe
people and notice how they act and
react to each other. Try to get a
sense of what is going on between them.
Observe how the group interacts. Be
aware of how different individuals
interact with each other – how they
behave differently with one person
compared to another.
2
Be aware of non-verbal
communication. What’s that
telling you about how they really
feel? What combination of
non-verbal language – the gestures,
facial expressions, tone of voice, etc. –
leads you to conclude that a person is
feeling a particular way about the group
or other individuals in the group?
3
Be aware of “matching and
mirroring”. People who are in
tune with each other “mirror”
each other; they tend to use the
same posture and body language. These
are natural signs of a shared liking,
harmony, and understanding. Look for
how other people do or don’t mirror each
other.
W
hether it’s a meeting at work, in
a classroom, or a social
occasion, when there are three
or more people with a common reason to
be together, then those people can be
considered a group.
And whether that group is made up of
three people or 30 people, they’re each
going to have their own individual
temperament, quirks, and
characteristics, and they will each take
on distinct roles and behaviours when
they’re in a group.
“Group dynamics” is the term for the
effects of these roles and behaviours on
other group members and the group as a
whole. A group’s dynamic is the force that
impacts on the motivation, development,
or stability of a group. It’s characterised
by forces of personality, ambition, energy,
DECEMBER 2017
63
Remind people of what you have
in common. When individuals’
different quirks, characteristics,
and agendas appear to be
creating poor group dynamics, find a
way to remind them why you’re together
– what you all have in common and what
you’re all aiming for.
5
Focus on communication. Open
communication is central to good
business dynamics. Find out how
people feel. Ask people not just
what they think about issues, problems,
and achievements, but also how they
feel about them.
This is an edited extract from Gill
Hasson’s Emotional Intelligence
Pocketbook: Little Exercises for an Intuitive
Life, which has been shortlisted for the
2018 CMI Management Book of the Year
in the “Commuters Read” category.
About the author
GILL HASSON is a teacher, trainer, and
writer whose books include Confidence
Pocketbook: Little Exercises for a
Self-Assured Life.
Follow on Twitter: @gillhasson
and ideas. In a group with a positive
dynamic, individuals work towards
collective decisions; they trust and
encourage one another and take
responsibility for making positive things
happen.
But in a group with poor group
dynamics, the behaviour of one or more
of the group can be disruptive. Separate
individuals could be overly critical or
negative of others’ ideas. Emotions can
often run high; some individuals could be
full of enthusiasm while others are
sarcastic or appear uninterested.
Dealing with different personalities
and personal agendas are common
challenges at work and in social
situations. It helps to be more aware of
what’s going on between people if you
want to manage these dynamics.
 IN PRACTICE IN PRACTICE

INN STE I TWUT ES

New members
Elections to Council 2018 required for CIMA’s
Retirements by rotation
Panel of CPD Assessors
Notice is given that, as the term of office of the council member in each of the CIMA is inviting members to apply to become
following CIMA electoral constituencies (EC) expires at the end of the Annual a member of its Panel of CPD Assessors. The
General Meeting in 2018, elections will be held in February 2018. Nominations role of the panel is to ensure quality within
for candidates (fellows) to fill the vacancies may be made by six or more mem- CPD submissions. It also receives and con-
bers (three of whom must be fellows) whose registered addresses are in the siders reports from monitoring staff on cases
EC concerned. of non-compliance and determines the appro-
priate action.
EC Current member Being a member of the Panel of CPD Asses-
EC1 Central London and North Thames Amarjeet Hans sors is voluntary, bringing benefits that can
EC2 South West England and South Wales Nigel Davies further your own development and career. If
EC3 East Midlands and East Anglia Kevin Bragg you are interested in the role, please email
EC3 East Midlands and East Anglia Andrew McGunnigle no later than January 5th 2018 your current
EC3 East Midlands and East Anglia Sue Stapleford CV, a brief outline of why you are interested,
EC4 West Midlands Bina Kakad and what value you would bring to the role
EC5 North East England Howard Whitehead * to: cpd.monitoring@aicpa-cima.com.
EC6 North West England and North Wales Robert Beedham
EC7 Scotland Alasdair Macnab
EC11 Central Southern England Michael Agate * Submission of 2017
EC11
EC19
Central Southern England
Australasia
Richard Sharp
Chandana Panditharatne *
CPD records
As a CIMA member you are required to under-

Salary survey predicts

* Members not eligible to stand again, having served on Council for nine or take CPD and keep a record of your learning
more years and development activities throughout the
year. If you have been selected to submit your

pay increases
CGMA designation holders across the world are expecting an
average year-on-year salary increase up from 4% to 5% in the
coming year. This is one of the main findings of the recently
published Association of International Certified Professional
Accountants 2017 member and student salary survey. The sur-
vey also reveals that, globally, the average salary for a CGMA
designation holder is $89,000 and 82% are expecting a pay rise
in the year ahead.
A further finding is that CIMA students anticipate, on aver-
age, a 10% salary increase in the next year as they progress on
the route to earning the CGMA designation.
The survey also looked at participants’ commitment to con-
tinuing professional development (CPD). The top three skills
that respondents are looking to invest in over the next 12 months
are strategy (38%), performance (31%), and negotiating (27%).
Andrew Harding, FCMA, CGMA, chief executive – manage-
ment accounting at the Association, said: “The skills and expe-
rience [management accountants] use to overcome challenges
and seize opportunities are clear for employers to see. This is
reflected in the salaries and positions being offered globally.”
More information on the survey can be found on the Asso-
ciation’s Salary Insights Tool at salary.aicpaglobal.com, where
CGMA designation holders and CGMA students can compare
their salary across the profession.
Nomination forms for candidates for election may be obtained from the
Corporate Affairs department at CIMA by emailing at corporate.affairs@aicpa-
cima.com. The form and other information are also available to download at
bit.ly/2yoA3V2. Please read the rules carefully before completing the form.
The nomination must be received on the prescribed form by 12 noon UK
time on Monday January 8th 2018 and should be clearly marked for the atten-
tion of the Corporate Affairs Manager. A scanned and emailed copy of a signed
and completed form would be considered acceptable.
The Corporate Affairs department will acknowledge receipt of the nomi-
nation form promptly, either through an automated process or by individual
acknowledgement. It is, however, the candidate’s responsibility to ensure that
his/her form has been received. In order to avoid uncertainty, it is recom-
mended that, if candidates do not receive such confirmation, they contact the
Corporate Affairs department directly (corporate.affairs@aicpa-cima.com)
BEFORE the closing date, to actively seek such confirmation.
In the event there is more than one candidate for a vacancy, a ballot will
be conducted.
2017 CPD record, please do so by the deadline
given in the email you have received.
You are only required to submit your record
for the last 12 months, but you can do so in
any format as long as it covers the six steps of
the CIMA Professional Development Cycle.
Members who have been selected to submit
by using the Competency and Learning web-
site are not required to submit until Septem-
ber 2018.
If you have any queries or would like fur-
ther guidance, please visit the CPD section of
the CIMA website or email cima.contact@
aicpa-cima.com.
Failure to submit your CPD record upon
request, as prescribed by Regulations Part I,
13-18, may lead to disciplinary action by CIMA.

DECEMBER 2017 DECEMBER 2017

64 65
 IN PRACTICE IN PRACTICE

INN STE I TWUT ES

New members
Elections to Council 2018 required for CIMA’s
Retirements by rotation
Panel of CPD Assessors
Notice is given that, as the term of office of the council member in each of the CIMA is inviting members to apply to become
following CIMA electoral constituencies (EC) expires at the end of the Annual a member of its Panel of CPD Assessors. The
General Meeting in 2018, elections will be held in February 2018. Nominations role of the panel is to ensure quality within
for candidates (fellows) to fill the vacancies may be made by six or more mem- CPD submissions. It also receives and con-
bers (three of whom must be fellows) whose registered addresses are in the siders reports from monitoring staff on cases
EC concerned. of non-compliance and determines the appro-
priate action.
EC Current member Being a member of the Panel of CPD Asses-
EC1 Central London and North Thames Amarjeet Hans sors is voluntary, bringing benefits that can
EC2 South West England and South Wales Nigel Davies further your own development and career. If
EC3 East Midlands and East Anglia Kevin Bragg you are interested in the role, please email
EC3 East Midlands and East Anglia Andrew McGunnigle no later than January 5th 2018 your current
EC3 East Midlands and East Anglia Sue Stapleford CV, a brief outline of why you are interested,
EC4 West Midlands Bina Kakad and what value you would bring to the role
EC5 North East England Howard Whitehead * to: cpd.monitoring@aicpa-cima.com.
EC6 North West England and North Wales Robert Beedham
EC7 Scotland Alasdair Macnab
EC11 Central Southern England Michael Agate * Submission of 2017
EC11
EC19
Central Southern England
Australasia
Richard Sharp
Chandana Panditharatne *
CPD records
As a CIMA member you are required to under-

Salary survey predicts

* Members not eligible to stand again, having served on Council for nine or take CPD and keep a record of your learning
more years and development activities throughout the
year. If you have been selected to submit your

pay increases
CGMA designation holders across the world are expecting an
average year-on-year salary increase up from 4% to 5% in the
coming year. This is one of the main findings of the recently
published Association of International Certified Professional
Accountants 2017 member and student salary survey. The sur-
vey also reveals that, globally, the average salary for a CGMA
designation holder is $89,000 and 82% are expecting a pay rise
in the year ahead.
A further finding is that CIMA students anticipate, on aver-
age, a 10% salary increase in the next year as they progress on
the route to earning the CGMA designation.
The survey also looked at participants’ commitment to con-
tinuing professional development (CPD). The top three skills
that respondents are looking to invest in over the next 12 months
are strategy (38%), performance (31%), and negotiating (27%).
Andrew Harding, FCMA, CGMA, chief executive – manage-
ment accounting at the Association, said: “The skills and expe-
rience [management accountants] use to overcome challenges
and seize opportunities are clear for employers to see. This is
reflected in the salaries and positions being offered globally.”
More information on the survey can be found on the Asso-
ciation’s Salary Insights Tool at salary.aicpaglobal.com, where
CGMA designation holders and CGMA students can compare
their salary across the profession.
Nomination forms for candidates for election may be obtained from the
Corporate Affairs department at CIMA by emailing at corporate.affairs@aicpa-
cima.com. The form and other information are also available to download at
bit.ly/2yoA3V2. Please read the rules carefully before completing the form.
The nomination must be received on the prescribed form by 12 noon UK
time on Monday January 8th 2018 and should be clearly marked for the atten-
tion of the Corporate Affairs Manager. A scanned and emailed copy of a signed
and completed form would be considered acceptable.
The Corporate Affairs department will acknowledge receipt of the nomi-
nation form promptly, either through an automated process or by individual
acknowledgement. It is, however, the candidate’s responsibility to ensure that
his/her form has been received. In order to avoid uncertainty, it is recom-
mended that, if candidates do not receive such confirmation, they contact the
Corporate Affairs department directly (corporate.affairs@aicpa-cima.com)
BEFORE the closing date, to actively seek such confirmation.
In the event there is more than one candidate for a vacancy, a ballot will
be conducted.
2017 CPD record, please do so by the deadline
given in the email you have received.
You are only required to submit your record
for the last 12 months, but you can do so in
any format as long as it covers the six steps of
the CIMA Professional Development Cycle.
Members who have been selected to submit
by using the Competency and Learning web-
site are not required to submit until Septem-
ber 2018.
If you have any queries or would like fur-
ther guidance, please visit the CPD section of
the CIMA website or email cima.contact@
aicpa-cima.com.
Failure to submit your CPD record upon
request, as prescribed by Regulations Part I,
13-18, may lead to disciplinary action by CIMA.

DECEMBER 2017 DECEMBER 2017

64 65
 THE VIEW FROM ANDREW HARDING, CEO – MANAGEMENT ACCOUNTING
THE ASSOCIATION OF INTERNATIONAL CERTIFIED PROFESSIONAL ACCOUNTANTS
“This glimpse into the future will require us to
rethink how we operate and do business.”
T
echnology is
driving trans-
formation. It
is estimated
by Intel that
there will be 200 billion
connected smart devices
worldwide by 2020 – up
from 2 billion in 2006. It
is also predicted that rev-
enues from cloud ser-
vices and SaaS (software
as a service) will pass the
$200 billion milestone in
2020.
Blockchain, which is
still in its infancy, has the
potential for wide and
varied applications and
scalability. Banks in
major financial centres
are already creating blockchain solutions,
and IBM estimates that by 2020, 65% of the
world’s banks will have blockchain solu-
tions in production.
This glimpse into the future will require
us to rethink how we operate and do busi-
ness ourselves; it will require us to be a pro-
fession that recognises, leads, and exploits
the opportunities that change offers.
Author, entrepreneur, and “change
guru” Seth Godin said: “The easiest thing
is to react. The second easiest is to respond.
But the hardest is to initiate.”
It is impossible not to agree with this
– we need to get ahead of change and cre-
ate the future we want to see. If we are react-
ing, we are too late.
We are not alone: Companies around
the world are initiating change. A 2016
KPMG survey revealed that four in ten com-
panies expect to be transforming them-
selves into significantly different entities
in the next three years, and 65% will pur-
sue growth through partnerships and alli-
ances.
There are some signs of a public back-
lash to the disruption seen in some indus-
tries, but business models have – and will
continue to be – radically transformed.
Business transformation itself is not
new. For example, it is well known that
Rolls-Royce has changed over many years
from a manufacturer and cyclical vendor
of large aero engines to its “Power-by-the-
Hour” service-based model.
Earlier this year, Rolls-Royce Marine
announced the signing of a new Power-by-
the-Hour agreement with the Norwegian
shipping and logistics company Nor Lines.
Using the power of big data, Rolls-Royce
will monitor through onboard sensors the
equipment it has installed on a small num-
ber of cargo vessels. It will also plan and
perform maintenance and repairs on the
equipment remotely or, if necessary, send
a service engineer to do the work. Nor Lines
pays a fixed charge per hour of operation,
per ship for Rolls-Royce to carry out this
work.
In the IT sector we have also seen chang-
ing business models. For example, IBM has
moved from hardware to services and data,
and Google is still the leading search engine
but has also moved into driverless cars and
consumer products.
The response of CIMA and the AICPA
has been to create our new Association. In
building on the best of our two organisa-
DECEMBER 2017
66
TURN BACK FOR...
TECH DISRUPTION
“With the relentless nature of
technology and disruptors, you
have to be constantly scanning
Boost your
externally, questioning and
challenging everything both
internal and external to ensure you
remain agile.”
Nick Read, p24
career
BUSINESS REPORTING
“Integrated reporting can play a key
role in devising a dynamic, living
business model.”
Richard Howitt, p46
STANDARDS
“Sometimes you
need to step back
by joining the Global Management
from the detail Accounting Principles Pioneer
and look at the big
picture.” Community today
Bob Beedham, p54
As a Pioneer you will be at the forefront of promoting and driving the
tions, we are expanding recognition of the
CGMA designation around the world so that
adoption of the world’s first standard for management accounting in
our members – whether working in an SME, your organisation.
large company, or multinational – have an
enhanced passport to career success. Registration is free and you will:
We continue to carry out our thought
leadership research across the world – • Gain access to expertise via the global practitioner community
including recently a large number of round-
tables in South Africa, the UK, and the US • Receive invitations to exclusive webinars to build your knowledge
– as part of our Future of Finance research.
This will inform a refresh of our syllabus • Use the framework to build benchmarking data around the
and the CGMA Competency Framework,
effectiveness of your finance function
and also feed into CPD for our members to
help future-proof their careers.
Our research on business models is also
• Lead best practice standards in your organisation
moving forward. Talking directly to the busi-
ness community, over the summer we car-
ried out a global consultation on the
business model framework (in the CGMA Sign up now at:
Rethinking the Business Model white paper),
and held successful roundtables on every cgma.org/gmappioneer
continent.
This work is clearly important for devel- Please feel free to invite your colleagues to join
oping learning and knowledge for the man-
agement accounting profession. It also
means we can continue to lead and deliver Read more about the Global Management Accounting Principles at: cgma.org/principles
SUKI DHANDA
for our members and students in today’s –
and tomorrow’s – uncertain and rapidly © 2017 Association of International Certified Professional Accountants. All rights reserved. CIMA and The Chartered Institute of Management Accountants
are trademarks of The Chartered Institute of Management Accountants and are registered in the United Kingdom and other countries. The design mark is a
changing world. n trademark of the Association of International Certified Professional Accountants. 978-1-85971-848-3.
 THE VIEW FROM ANDREW HARDING, CEO – MANAGEMENT ACCOUNTING
THE ASSOCIATION OF INTERNATIONAL CERTIFIED PROFESSIONAL ACCOUNTANTS
“This glimpse into the future will require us to
rethink how we operate and do business.”
T
echnology is
driving trans-
formation. It
is estimated
by Intel that
there will be 200 billion
connected smart devices
worldwide by 2020 – up
from 2 billion in 2006. It
is also predicted that rev-
enues from cloud ser-
vices and SaaS (software
as a service) will pass the
$200 billion milestone in
2020.
Blockchain, which is
still in its infancy, has the
potential for wide and
varied applications and
scalability. Banks in
major financial centres
are already creating blockchain solutions,
and IBM estimates that by 2020, 65% of the
world’s banks will have blockchain solu-
tions in production.
This glimpse into the future will require
us to rethink how we operate and do busi-
ness ourselves; it will require us to be a pro-
fession that recognises, leads, and exploits
the opportunities that change offers.
Author, entrepreneur, and “change
guru” Seth Godin said: “The easiest thing
is to react. The second easiest is to respond.
But the hardest is to initiate.”
It is impossible not to agree with this
– we need to get ahead of change and cre-
ate the future we want to see. If we are react-
ing, we are too late.
We are not alone: Companies around
the world are initiating change. A 2016
KPMG survey revealed that four in ten com-
panies expect to be transforming them-
selves into significantly different entities
in the next three years, and 65% will pur-
sue growth through partnerships and alli-
ances.
There are some signs of a public back-
lash to the disruption seen in some indus-
tries, but business models have – and will
continue to be – radically transformed.
Business transformation itself is not
new. For example, it is well known that
Rolls-Royce has changed over many years
from a manufacturer and cyclical vendor
of large aero engines to its “Power-by-the-
Hour” service-based model.
Earlier this year, Rolls-Royce Marine
announced the signing of a new Power-by-
the-Hour agreement with the Norwegian
shipping and logistics company Nor Lines.
Using the power of big data, Rolls-Royce
will monitor through onboard sensors the
equipment it has installed on a small num-
ber of cargo vessels. It will also plan and
perform maintenance and repairs on the
equipment remotely or, if necessary, send
a service engineer to do the work. Nor Lines
pays a fixed charge per hour of operation,
per ship for Rolls-Royce to carry out this
work.
In the IT sector we have also seen chang-
ing business models. For example, IBM has
moved from hardware to services and data,
and Google is still the leading search engine
but has also moved into driverless cars and
consumer products.
The response of CIMA and the AICPA
has been to create our new Association. In
building on the best of our two organisa-
DECEMBER 2017
66
TURN BACK FOR...
TECH DISRUPTION
“With the relentless nature of
technology and disruptors, you
have to be constantly scanning
Boost your
externally, questioning and
challenging everything both
internal and external to ensure you
remain agile.”
Nick Read, p24
career
BUSINESS REPORTING
“Integrated reporting can play a key
role in devising a dynamic, living
business model.”
Richard Howitt, p46
STANDARDS
“Sometimes you
need to step back
by joining the Global Management
from the detail Accounting Principles Pioneer
and look at the big
picture.” Community today
Bob Beedham, p54
As a Pioneer you will be at the forefront of promoting and driving the
tions, we are expanding recognition of the
CGMA designation around the world so that
adoption of the world’s first standard for management accounting in
our members – whether working in an SME, your organisation.
large company, or multinational – have an
enhanced passport to career success. Registration is free and you will:
We continue to carry out our thought
leadership research across the world – • Gain access to expertise via the global practitioner community
including recently a large number of round-
tables in South Africa, the UK, and the US • Receive invitations to exclusive webinars to build your knowledge
– as part of our Future of Finance research.
This will inform a refresh of our syllabus • Use the framework to build benchmarking data around the
and the CGMA Competency Framework,
effectiveness of your finance function
and also feed into CPD for our members to
help future-proof their careers.
Our research on business models is also
• Lead best practice standards in your organisation
moving forward. Talking directly to the busi-
ness community, over the summer we car-
ried out a global consultation on the
business model framework (in the CGMA Sign up now at:
Rethinking the Business Model white paper),
and held successful roundtables on every cgma.org/gmappioneer
continent.
This work is clearly important for devel- Please feel free to invite your colleagues to join
oping learning and knowledge for the man-
agement accounting profession. It also
means we can continue to lead and deliver Read more about the Global Management Accounting Principles at: cgma.org/principles
SUKI DHANDA
for our members and students in today’s –
and tomorrow’s – uncertain and rapidly © 2017 Association of International Certified Professional Accountants. All rights reserved. CIMA and The Chartered Institute of Management Accountants
are trademarks of The Chartered Institute of Management Accountants and are registered in the United Kingdom and other countries. The design mark is a
changing world. n trademark of the Association of International Certified Professional Accountants. 978-1-85971-848-3.
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