Last week I had a day trip to Canberra and as I waited in the pre-dawn darkness for my cab to the airport, it only took a moment to swipe my phone and find out that it was currently -4.7 degrees in the capital (feels like -7.7!). However inconvenient for a Queenslander, I had no hesitation in carting my winter coat, gloves and scarf, because I knew I would need them.
Prior to the 1840s the concept of a weather report didn't exist. The transmission of information was so slow that by the time weather information arrived, it was too late for it to be useful. Weather was largely a surprise.
That all changed with the introduction of the electric telegraph, when for the first time, people had what James Gleick describes as 'some approximation of instant knowledge of a distant place'. They could be warned, for example, that rain was coming from the North, before it rained. The idea was transformative and by the 1850s governments had begun to establish meteorological offices.
Value is created only when customer needs are met. Weather information has little value if the weather has already passed.
Asset Managers are often concerned with asset performance, whereas the board is concerned with company performance. From the board's perspective, value is measured in terms of the outcomes for the company as a whole, rather than for any individual asset, or group of assets. The two however, are inextricably linked. Just as today's temperature is tomorrow's weather report, today's asset data is tomorrow's financial statements.
Value creation is at the core of the board's strategy role. It requires an outward looking perspective, to understand what stakeholders value and how that value can be delivered. Effective boards see asset management as a competitive advantage, not just as a compliance obligation.
Are you creating value, or delivering yesterday's news?
United States President Harry Truman had a sign on his desk that read 'The buck stops here.' He's quoted as saying, “It's easy for the Monday morning quarterback to say what the coach should have done, after the game is over. But when the decision is up before you — the decision has to be made.”
Leadership and culture are determinants of value. The board is ultimately responsible for value creation and it's part of the board's role to 'set the tone from the top'. Like the President, the board has nobody else to pass the buck to. Leadership overarches all of the roles of the board and is one of the fundamentals of asset management, as defined in the ISO 55001 international standards for asset management.
The aim of asset management is to create value for stakeholders through the organisation's assets. While technical systems and processes may be in place, without effective leadership, value creation will be limited. Stakeholder expectations will drive many aspects of asset management decision making. Working with and through the CEO, the board has a crucial leadership role in engaging with relevant internal and external stakeholders, setting expectations and monitoring and reviewing performance.
Important questions for the board to ask with respect to its leadership role in asset management:
This is the first in a series of articles on the board's role in asset management.
Stay tuned next week for the board's strategy role.
The 'Oarsome Foursome' were an Australian Olympic and World Champion rowing team, competing most famously as a coxless four. Through the 1990s and into the early 2000s they were an unbeatable team and hugely popular in Australia.
One of the essentials of a winning rowing team is that they all row together, in the same direction, at the same time. They don't 'divy it up'. Imagine if the coach decided to delegate: OK Nick, you go forwards, Mike, you go backwards, Sam, you go left, James, you go right. Instead of winning the race, they'd just go around and around in circles.
Delegation is not integration. When tasks are divided up between managers who aren't working together, they're no longer whole of organisation objectives. This approach can perpetuate silos and be a barrier to true integration.
When we talk about alignment, as an asset management fundamental, or in any management context, it's not just about a vertical alignment between organisational objectives and functional plans, it's also about horizontal alignment - across teams, across functions and across stakeholder groups.
How do you create opportunities for transdisciplinary collaboration?
How do you ensure that you have integration, not just delegation?
How do you ensure that you're all rowing together?
We create value through connections, not in isolation.
As a Certified BCorporation, it's been great to be a part of #BCorpmonth across Australia and New Zealand. It's fantastic to be involved in a community of business that is playing their part in creating a better world for our community and for our planet, now and into the future.
As BCorps we've been asked to reflect on our hope for the future of better business for a better world. In my work in asset management I'm increasingly seeing the importance of connectedness to creating value for stakeholders. Connecting people with assets, connecting assets with each other and ultimately, connecting people with each other.
The World's largest and most successful companies are now primarily built on intangible assets rather than tangible assets. This shift over the past few decades has changed the way we create and perceive value. It's no longer enough to have a good business case - we have to make the human case. That requires us to do more than create value, we need to create meaning.
I hope for a future where work is meaningful for everyone and each person can play their part in creating a better world.
What do you hope for?