It’s no secret. We live in challenging times. In today’s hyper-competitive and evolving business landscape, it’s more important than ever for companies to challenge the status quo. Otherwise—like we’ve seen over the last years—it’s only a matter of time before the lack of preparation and foresight returns as a bet your organization cannot afford to pay.
From Sony and Equifax to Volkswagen and Uber, no organization is untouchable. It’s time for enterprises to rethink their most crucial operational linchpins if they wish to take their companies to the next level—and stay there. Here are three challenges that CEOs need to address to survive in a digitalized world.
The Question of Security
2017 saw big-name organizations make the headlines for all the wrong reasons. Target, Sony and Equifax (to name a few) suffered severe data breaches that hurt their customers, damaged their brands and adversely impacted their bottom lines. In each digital heist, customer or employee data was stolen—not the best way for a company to inspire trust in a digital economy. In fact, data theft is the leading cause of breaches worldwide at an astounding 91.6%.
To match the threat, legislation continues to evolve. A December 2017 report noted that Uber’s servers were breached in October 2016, a fact Uber hoped to hide and Reuters uncovered. In response, U.S. lawmakers introduced legislation that, if enacted, would require organizations to disclose any data breaches within 30 days. Similarly, EU and EEA countries are preparing for the General Data Protection Regulation (GDPR)—a set of consumer privacy laws which go into effect on May 25, 2018. Governments and consumers are demanding better from enterprises when it comes to their data, privacy and security.
Despite extremely public examples and new regulations, many organizations still aren’t taking security seriously enough. 93% of IT professionals still report challenges with data privacy; more than a quarter of business leaders say their IT teams aren’t up to date with laws and requirements. As a result, it is estimated that nearly 5 million records are lost or stolen each day—58 data records per second!
Suffice it to say that security should be top of mind for every CEO in 2018. But the reality is that for most, there’s a lot of work to do to get to where you need to be. Where to start? To protect your data—and ensure privacy—look for solutions and services that are designed specifically to comply with regulations like GDPR. In today’s digital world, who you trust matters.
Bureaucracy, payoffs, bribery, harassment and whistleblowing—clearly, many organizations have yet to embrace transparency. Quite the opposite, they operate in secrecy—often with devastating results.
The stats speak for themselves. 80% of whistleblowers report their concerns internally before taking them public, and 65% of successful whistleblowers are insiders. Just look at Wells Fargo’s recent scandal. 700 whistleblowers came forward to report that the bank’s incentive program encouraged the fraudulent opening of new accounts. Despite these reports, those concerns were largely ignored, and the practice continued. When Wells Fargo’s deceit finally became public, customers were understandably irate.
CEOs have a lot to learn from Wells Fargo’s missteps. Instead of waiting for scandals to leak out, forward-thinking companies are moving toward a culture of transparency, empowering employees to share their invaluable insight—positive and negative. In doing so, these leaders can avoid costly mistakes like Wells Fargo.
This insight also powers characteristics coveted by most organizations. Frontline insight bridges the gap between strategy and execution. It enables proactive risk mitigation, increases productivity and often identifies new opportunities.
And, customers care about your organization’s transparency. They care a lot. Today’s customers prefer transparent brands. 94% of customers are more likely to be loyal to a brand when it commits to full transparency. And loyal customers can be responsible for as much as 70% of all sales. In other words, become a transparent organization, and you’ll have an army of loyal customers reaching deep into their wallets to support your brand.
How exactly can an organization become fully transparent? It starts with dialogue. Embrace your employees and whistleblowers, offer a comprehensive framework and solution to hear what they say and leverage their feedback. It’s indispensable insight. Starting the conversation is the first step towards the more transparent organization consumers crave.
Governance in an Information Age
Security, data privacy and transparency illuminate the need for organizations to address their larger and broader governance issues. Fraud, child labor, toxic spills, product recalls and gross health & safety negligence are among a few frequently in the spotlight. The recent onslaught of rampant sexual harassment and discrimination is another example, one that is sparking a revolution in the workplace.
Society demands greater governance—from all perspectives. Nearly 75% of customers desire increased transparency from organizations, and 81% want to see more accountability. More than eight of ten investors now pay greater attention to nonfinancial disclosures, and to that point, global sustainable investments stand at $23 trillion with a 25% growth rate. Goldman Sachs launched a socially responsible ETF as Wall Street continues to champion environmental, social and governance (ESG) risk management. Not to forget, the CEO of the largest investor in the world, BlackRock, recently made a loud proclamation in his annual letter to CEOs stating,
“To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.”
With a section devoted to “A New Model for Corporate Governance,” the call for increased governance is reverberating throughout boards, executive teams, investors and consumers. ESG factors are receiving much-needed attention and creating a shift in organizations and society. Per investors, consumers and society at large, making a dollar is no longer enough.
How do companies progress? The sooner CEOs understand the importance of ESG initiatives—and collect pertinent insight to proactively address them—the more likely their companies will enjoy long-term success. Expectations are great, and the companies that rise to the occasion will not just survive but thrive.
The pressure is on. Leaders and their organizations need to evolve with our current times. Society calls for a new organization to emerge from the past’s lessons learned. A new organization that embraces security, transparency and a new form of governance.
But there is more to the story. On the cusp of massive societal, business and consumer transformations, the next blog in the series dives into what organizations need to understand and embrace to thrive in the new year and beyond.
- By Questback