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A thought-provoking second day at Ethical Corporation's European summit looked at the unexpected implications of digitalization, the challenges of extracting value from Big Data, and the benefits of long-term investing. Here are nine titbits from day two
1 "Everything that can be digitized will be digitized", said Minna Aila, vice-president of corporate affairs at Nokia. As a result, while the pace of change has never been as fast as it is now, at the same time, it will never be as slow again. The changes that digitization will bring will be huge individually, but are also so interconnected that we will not always be able to see the implications. For example, an increase in autonomous vehicles will significantly reduce the 1.3 million deaths in car accidents, which is obviously to be welcomed. However, given that most organ donations currently come from victims of road accidents, “what happens if we don’t have accidents any more?” Aila asked.
2 We are moving into a post-transparency era, Aila added, where what you show is more important than what you do. With so much information out there, customers will come to rely on companies they trust. “Companies must seriously focus on building trust,” she said. “They will need to build walls of glass and have a kind of corporate nakedness that will help them improve how they operate because people will be able to point out their shortcomings.”
3 When it comes to doing the right thing, it can be easier to be privately owned so that there is no short-term pressure to maximize profits. Gitte Aabo, CEO of LEO Pharma, said that because her company is 100% owned by a foundation, it can recycle all of its profits into research and development. “We don’t work for shareholders, we work for patients,” she added. Likewise, Juan Martin, president of Mars Multisales, said that the advantage of working for a company that is still family-owned is that “the owners don’t think in short-term cycles, they think in generations”.
90% of the data ever produced has been created in the last two years. (Credit: Scanrail1/Shutterstock)
4 While it is widely accepted that big data and other new technologies will bring huge benefits, there is a danger that the fourth industrial revolution is becoming the end, rather than the means, said Charles Henderson, corporate climate change expert at South Pole Group. Some 90% of all the data ever produced has been created in the last two years and the sheer volume of material available can create a new level of complexity, said Kimon De Ridder, UK compliance oversight director at Aviva. The key is to be able to move from producing insight, which is backward-looking, to producing foresight, which can explain what will happen in the future.
5 In a way, we are already moving beyond the age of big data, said Thinkstep CEO Jan Poulsen. “We generate so much data that we can’t keep up with it, we can’t process it and we can’t store it," he pointed out. “But it’s not about having all the data, it’s about the value you can generate from very specific data. You need to know what data is really critical to allow you to reach your goals.” It is also important to remember why people want the data, he added. “We’re interested in the data because we want to foster positive change. If you don’t have the right information, you can’t consider sustainability issues.”
6 To bring your customers with you on your sustainability journey, you need to have a powerful story to tell, said Fox, marketing director of Pukka Herbs. “The most powerful brands are those that can tell stories really well.” However, the stories must be authentic. “They can’t be made up, they have to be real and you have to really believe in them. You shouldn’t do it to gain a competitive advantage. Using Fair Trade is about inspiring people. That’s part of our job as a company.”
7 Investing for the long term does not come naturally to most investors. It can be done, although it requires a considerable change in mindset. Jürgen Gerke, CEO of Allianz Capital Partners, explained how after the financial crisis, his firm decided to switch from a typical private equity investment horizon of five to eight years, where the firm would buy an asset, maximize its value and then sell it. “It makes no sense for an insurance company that has liabilities that will fall due in 50 to 90 years,” he said. Instead, the company adopted a buy and hold approach. “There is absolutely no consideration of selling the asset. We want to capitalize on the cash returns of the assets instead,” he said, citing the firm’s investment in the Thames Tideway, the project to build a super sewer for London, which is expected to last 120 years.
8 To make a company more sustainable, it is crucial to get buy-in from senior management, said Jorge Laguna-Celis, director, governance affairs office and private sector relations at UN Environment. “It starts from the top. The message will only be heard if it is emphasised at the highest level.” However, it can be a challenge to get that buy-in when it comes to sustainability. “At the macro level, it’s a massive opportunity, but it’s very difficult to translate that to the micro level,” said Léon Wijnands, global head of sustainability at Dutch bank ING. The key, according to Antoni Ballabriga, global head of responsible business at Spanish banking group BBVA, is to make the issue relevant, to create a sense of urgency and a sense of opportunity by framing sustainability as a narrative. “The more you can link it to the bottom line, the easier it is,” agreed Wijnands.
9 Companies that look to build partnerships to solve big social issues have to set top-line objectives but take an open, experimental approach to who to work with so all angles are covered, said Charlie Beevor, global vice president of household cleaning brands at Unilever, who gave insights into Domestos' campaign to end open defecation. "You have to be comfortable with the confusion that will no doubt follow.... But it is amazing how quickly confidence will build." He said it was also important to help all the partners achieve their individual objectives. "Every six months you need to restate the objectives of each member of the partnership." Subhanu Saxena, regional director of life science partnerships at the Bill and Melinda Gates Foundation, said partnerships are "living organisms, not static, and you will be amazed about the depth of knowledge of each partner". He added that the partnership should always be about the top-line goal rather than the company that is leading it. If the partnership runs into problems, the focus will be on seeking solutions instead of protecting the company's reputation.Big data long-term value fourth industrial revolution ING Nokia LEO pharma Pukka Herbs Mars South Pole Group Allianz Capital Partners UN Environment