Image: Davide Bonaldo - stock.adobe.com
On Governance, Ethics, Data – And Collaboration
We think of corporate governance as the essence of a business, good for building better companies which inspire public trust and that is why we spend so much time focusing on getting the thinking on the principles of governance right.
Every business faces daily challenges today the likes of which we have not seen before, due to technological advances, global supply chains, rising concern on environmental and climate risk, changing consumer attitudes and more. But the coronavirus pandemic must be the biggest challenge faced by corporate governance in a very long time. It is also one that should bring minds back to focus on fundamental issues of ethics and what we value.
The rise and rise of Amazon as a near instant delivery business that has continued to operate with remarkable efficiency has been apparent in recent weeks. It said recently it was looking to hire another 100,000 workers in the US and announced a raise in pay in the US, UK and Europe as it tries to meet the surge in demand for online shopping.
Amazon’s business model of low-cost workers and reliable logistics powered by data is seemingly working for everyone’s benefit at the moment, as it reaches out to those in the hospitality industry who are out of work. It is providing employment, fuelling the economy, and continuing to focus on the customer – as anyone who has tried to call about an order in the last few weeks will know. Does that mean however, that the important focus on working conditions and worker’s rights at the business will slowly be eclipsed as a governance concern?
Last Friday, the UK’s competition watchdog, the Competition Markets Authority (CMA) provisionally cleared Amazon’s investment in the food delivery start-up Deliveroo, which it was looking at to consider whether the deal could damage competition by serving to discourage Amazon from re-entering the restaurant and online restaurant delivery market in the UK. Amazon was the lead investor in Deliveroo’s $575 million funding round announced in May last year.
The “wholly unprecedented circumstances have meant reassessing the focus of this investigation, reacting quickly to the impact of the coronavirus and deciding what it would mean for the businesses involved in this transaction and, in turn, for customers” Stuart McIntosh, Chair of the CMA’s independent inquiry group, said.
“Without additional investment, which we currently think is only realistically available from Amazon, it’s clear that Deliveroo would not be able to meet its financial commitments and would have to exit the market. This could mean that some customers are cut off from online food delivery altogether, with others facing higher prices or a reduction in service quality. Faced with that stark outcome, we feel the best course of action is to provisionally clear Amazon’s investment in Deliveroo” he added.
Faced with stark outcomes, clearly the decisions can change. They can also change when guided by the pursuit of different outcomes. Covid-19 is demonstrating the value both of data, and digital infrastructure. They have rapidly become critical to the future of our public health as is clear by looking at what we are focusing on in the pandemic response: from contact tracing, to harnessing manufacturing and production of personal protective equipment to support the NHS from re-purposed large businesses to the capabilities of small teams with access to 3D printers, to scientific collaboration.
Europe’s fastest growing companies ranked by the Financial Times, the FT 1000, are dominated by technology, and at the very top of last month’s ranking is OakNorth Bank, a UK fintech backed by SoftBank’s Vision Fund that specialises in lending to medium-sized businesses. Where was it ranked in 2019 and 2018? Founded in 2015, it did not feature in the ranking until 2020.
Earlier this week, on my independent blog Board Talk I looked at Snoop, a fintech start-up that just launched whose Executive Chair is Jayne-Anne Gadhia, one of the best known bankers in London.
On April 20th, the UK’s Chancellor of The Exchequer, Rishi Sunak, announced further funding for innovation via a £1.25bn package to support tech start-ups and firms specialising in research and development. In January this year customer use of Open Banking in the UK surpassed the one million customer mark for the first time.
In the last few weeks we have seen a level of collaboration in the global pharmaceutical industry that has not been seen before. Just a week ago the Financial Times reported that GlaxoSmithKline and Sanofi were joining forces to develop a Covid-19 vaccine with the aim of getting a treatment to market in the next 12 to 18 months. Calling the partnership of former rivals “unprecedented”, Sanofi’s head of vaccines David Loew told the FT that teaming up made sense because each company held “a piece of the puzzle”.
Finding ways to continue to share knowledge – and data for the common good– would be a good addition to best practice in corporate governance after a pandemic that is by all accounts likely only to increase inequality as it ravages the world.
BBVA, the Bilbao-based bank, was among the first in 2017 globally to launch “open banking.” Carlos Torres Vila, BBVA’s Group Executive Chairman, wrote an opinion piece in June 2019 in the FT headlined We should extend EU bank data sharing to all sectors. Open Banking rules, he argued, are a model for a broader digital solution.
“There is also the potential for enormous socio-economic benefits if we can create consent-based free data flows. We need data-sharing across companies in all sectors in a real time, standardised way — not at a speed and in a format dictated by the companies that stockpile user data” wrote Mr Torres Vila.
A lot has changed since June last year, and the UK has left the European Union. But as we continue to try to cope with the fight against coronavirus, we have also found ways to unite as a country. There has steadily been growing interest over the last 18 months too in the concept of ‘responsible capitalism’ and businesses are being judged every day in the public eye by how they are treating their employees in their response.
It all points to an emphasis on refreshing and reiterating the importance of better corporate governance, even as businesses struggle to survive.
Follow us on Twitter @ABExcellence
You can find us at Advanced Boardroom Excellence on LinkedIn
