09 Jul 2019
E-Leadership for an Information Age
Advances in information communication technology have changed almost all aspects of life in the 21st Century. This is no less true of the nature of leadership where a global economy, e-commerce, artificial intelligence (AI), the Internet-of-Things (IoT), big data, digital tribes, cloud computing, and other advances continue to disrupt old paradigms, models, industries, relationships and institutions and lead to new ones. While it is perhaps too soon to draw any definitive conclusion, how have these and related forces changed the nature of leadership? Do we require e-leadership for an Information Age? What type of leadership and what skill-set will be required if public and private sector organisations in China, the US, the EU and all countries are to ensure that technology will result in a better life for all citizens and our planet?
What is E-Leadership?
There is no accepted definition of e-leadership. Indeed, at this stage it remains a new term with an unsettled definition. Other terms and contexts in which e-leadership or its synonym is deployed in the academic, business and governance literature include: technology leadership, ICT leadership, online leadership, virtual leadership, digital leadership, virtual team leader, etc.
On the one hand, e-leaders can be described in terms of traditional leaders. They confront issues of motivating followers, organizing their members, gaining trust, establishing principles and responding to challenges. On the other hand, E-leaders have the additional and new challenges of dealing with across many jurisdictions with different legal systems, reaching across diverse cultures with many languages, operating in a virtual environment that is highly fluid and rapidly changing, forming and dealing with digital tribes whose membership and values are amorphous and often changing, and so on. E-leaders must be masters of new and diverse forms of communication such as social media, Twitter, We Chat, websites, electronic polls, etc.
What Skills Are Required of E-Leaders?
Effective e-leadership requires skills that are both broad and deep. They typically require in-depth knowledge and skill set from a particular discipline (eg engineering, law, finance, medicine) as well as a broad range of skills such as time management, negotiation, advocacy, critical and systems thinking, innovation, entrepreneurship, cultural intelligence, and emotional intelligence. Underpinning e-leaders’ specialized skill set and their broad skills is an understanding of technology and the multi-layered abilities to use it to lead in this new 21st Century information environment. This includes the ability to form and effectively lead virtual teams. E-leaders must also be skilled in managing external partnerships. They must be data driven and customer/citizen-focused as opposed to product-focused. They must be effective at initiating and managing change, balancing disruption and innovation.
What Role for E-Learning and Human-Machine Partnerships?
Today, all organisations must be learning organisations and e-leaders must be skilled in and committed to e-learning and the global implications of e-learning for all. Today’s e-leaders must be adept at developing new and more effective leadership and management understandings of how to master this new environment with its network of personal and organisational relationships extending across national borders and diverse cultures and technologies.
With the growth of artificial intelligence, big data, robotics and the divide between machines and humans is becoming increasingly blurred. E-leaders will also have to learn how to leverage new knowledge creation and increasingly sophisticated AI driven systems. This will involve learning how to leverage this new knowledge power and even partner with artificial intelligence systems in creating new models, new systems and new forms of accountability which often raise novel and unclarified ethical challenges as machine and human intelligence increasingly merge.
What are some of the Contexts and Tasks in which E-leadership will be crucial?
E-leadership will take place in almost every conceivable context. At the highest level, this will require leading the design and shape of visions of the future. As French author, Antoine de Saint-Exupéry, eloquently put it: “If you want to build a ship, don’t drum up the men to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea.”
Vision will remain but a dream without specific strategies and action steps to make things. Happen. Thus, e-leadership will also involve leading strategic planning in this new environment and helping to shape new and adaptive systems that shape behaviours, define new relationships, create trust, develop organisational values, promote collaboration, encourage diversity and more. E-leadership will be involved in attracting, training and nurturing talent for e-leadership at all levels of the organisation. E-leaders will have to be adept at forging partnerships across industries, across different cultures, across national boundaries, etc. E-leadership will be involved in adapting, evaluating and constantly improving systems, balancing risks with innovation. This will be very challenging given a significant shortage of such high-order skills.
What will be the Role of Educational Institutions?
For a Knowledge Economy and Information Age to succeed, there must be an effective tri-partite relationship and collaboration among government, business and academia. Learning must become truly life-long. There must be greater cohesion between the private and public sectors and among businesses, governments and education. Within education itself, there has to be much greater cooperation and curricula coherence in primary, secondary and tertiary level education. The worlds of work and learning, knowledge creation and acquisition, must come together. There must be stronger links between theory and practice.
What about bridging the Digital Divide?
E-leaders in both public and private spheres must also be ever mindful of bridging digital divides between the technology-haves and the technology have-nots. While technology can present many problems, it can also offer solutions, especially in relation to citizen participation and new developments in e-governance and e-democracy that hold great promise for more inclusivity and community and citizen participation.
Conclusion
E-leadership talent and skills are required at all levels of society and in both public and private sectors. E-leaders are crucial if we are to reap the benefits of technological advances while minimising negative impacts. E-leadership enables networks to operate effectively. It brings together digital tribes and virtual communities around the world. E-leaders are required to disrupt old unresponsive constructs and to create new networks that bring people together to innovate and rebuild old institutions and create new ones to cope with a complex global society whose people are increasingly interdependent on one another and dependent upon technology.
09 Jul 2019
Achieving Regulatory Compliance in a Digital World
The world today is increasingly complex and our lives increasingly digital. In a global economy, human activity—goods and services move across national borders. In this environment, legal compliance has grown in volume and complexity. Moreover, the regulatory context is constantly changing with liability ever more likely to extend to personal responsibility, in addition to corporate. Aggressive regulatory agencies and new procedures such as class actions and expanded discovery are making the cost of non-compliance more prohibitive than ever.
This new environment has seen greater attention by regulators and those regulated to use technology to monitor compliance. ‘RegTech’ is the blended term that describes the use of technologies to deliver regulatory requirements. This involves using technology to better deliver value in relation to reporting, monitoring, providing analytics and fulfilling auditing requirements. Compliance is thus able to be achieved more efficiently, more effectively and with greater transparency. The technology enables better outcomes for both the regulator and the entity being regulated. It is superior to traditional systems that have been, and largely remain, paper-based, bureaucratically centred, transaction-focused, and involving many intermediaries in the regulatory chain.
Although RegTech has been focused in the early days on the banking and finance industries and is often seen as a subset of FinTech, its applications are rapidly expanding to many other areas, such as share markets, debt collection, health and insurance. The growth of RegTech also highlights the reality of that most areas of human activity are experiencing disruption. This, in turn, is leading to a greater willingness of regulators and business to disrupt existing practices as information systems become digitized, dematerialized and widely distributed.
Included among the growing ‘tool-set’ of RegTech are: data warehouses able to engage in big data analytics, for example to spot gaps in regulation and areas of high risk for non-compliance; checking/auditing tools that eventually may have the capacity to audit 100% of transactions; automation tools which disintermediate the value chain and reduce or eliminate the many intermediaries that present the opportunity for fraud and corruption; transaction reporting, information management tools, enhanced regulatory reporting, training packages, case management tools and more.
Another driving factor in the growth of RegTech is the fact that with the growth of e-government, business-to-business and e-commerce today, organisations have more touch points across multiple media, with multiple channels. Organisations are required to be more citizen and customer-centric. Technology such as machine learning, high powered computing, big data analytics, Internet-of-things, mobile and cloud computing help organisations to be more responsive, to provide tailored service, and an enhanced customer/citizen experience. In this sense, compliance is aligned with good business practice, dedicated customers, enhanced trust and transparency, and brand enhancement.
Another feature of much RegTech is that these technology advances are often more likely to be undertaken by more nimble start-ups. This is because bureaucratic entities are often laden down with restrictions, less adaptive and less flexible than outside entities.
In order to maximize the potential of RegTech continuing legal reform is required, especially in developing uniform standards. We need a type of ‘legal lego’ in order for innovative applications to use these bricks to build the systems architecture required for a 21st Century Information Age. International and industry-specific organisations such as APEC, UNCITRAL, UNIDROIT, standard-setting bodies and many others all play a role in this process. As they make progress in e-government, nations will also need to focus more on re-design of the whole regulatory value chain. This work should include consultation with all key stakeholders and based upon an analysis of how people are interacting online.
As RegTech grows in momentum, governments and industry will have to focus on adding value to the consumer and providing for consumer protection. In China, the Shanghai Futures Exchange in 2016 introduced SMARTS, the new market surveillance platform powered adopted as Nasdaq’s flagship surveillance solution. In May of this year, China’s central bank, the People’s Bank of China (PBOC announced the creation of a FinTech committee under the supervision of the PBOC’s. This committee is charged with monitoring the impact of RegTech and FinTech and serves to coordinate growth in this important area. Indeed, just as China has been a world leader in infrastructure, RegTech and FinTech represent opportunities for China to be leaders in this area of future growth and development thereby enhancing its economic competitiveness.
Another strategy being used in the US, Australia, Canada, and the UK, is the creation of a regulatory ‘sandbox’ in which startups have a safe space to develop, test and pilot new RegTech applications. In the UK, for example, the Financial Conduct Authority has initiated an industry sandbox providing a space for continuous dialogue, idea generation, testing, and feedback between FinTechs, key stakeholders, regulators, and regulation technology (RegTech) groups. The Australian Securities and Investments Commission (ASIC), which regulates financial services and markets in Australia, provided recommendations and engaged in consultation on how to establish best practices and guiding principles for the Australian regulatory technology (RegTech) eco-system
Governments also need to enhance innovation in regulation and compliance. The Indian Government has pushed for RegTech through its Startup India and Digital India Initiatives. Late last year, the Singapore Stock Exchange collaborated with two firms to develop applications to detect market misconduct and search for ways to promote good market practices and a fair, open and competitive market.
The technology industry and governments must also do a better job of partnering. In the past, many technology companies have tended to view regulation as a barrier. With the advent of RegTech, companies and governments are increasingly seeing it as an opportunity. This will only happen, however, if companies and regulators engage with one another, agree on priorities and focus on demonstrated benefits to citizens and customers.
The RegTech industry is also getting itself organized. Evidence of the rapid growth of RegTech is the formation of the International RegTech Association (IRTA): https://regtechassociation.org/ . IRTA) exists to ease and accelerate the evolution of RegTech by promoting innovation and facilitating integration and collaboration, throughout the global RegTech ecosystem.
Finally, University academics, working across multiple disciplines, should also be proactive in the RegTech process as by helping to develop, evaluate, design and re-design new regulatory theory and models so that the benefits of RegTech may be maximized for the benefit of all.
09 Jul 2019
Accounting for the Future
“What’s measured improves”, wrote management guru Peter F. Drucker. This observation underscores the point that if China and other countries are to be successful in achieving improvements in air and water quality, living standards, probity and, then business and government reporting has to do a better job of measuring and reporting progress and value creation in relation to all aspects of these matters.
Peter Drucker also noted that while the modern corporation is the greatest vehicle ever invented to maximize profit and wealth, its Achilles heel is that it lacks moral authority. In a world where pollution is having a dramatic negative effect on the daily lives of citizens and even threatening our survival, making profits alone is no longer enough. Thus the call is for corporations and business to protect the environment rather than being a ‘free rider’ polluting our air and water and paying nothing. Similarly, society and regulators are increasingly calling for corporations to be mindful of the reality that they are part of society and have a responsibility to more than shareholders, but also to employees and other stakeholders, including society in general.
This goal will not be achieved, however, unless the full extent of the problem is measured, made transparent and acted upon. A vital starting point is to have businesses in their strategies and reporting to account for progress made in achieving not only financial goals but also other important values such as protecting the environment and being socially responsible. This is the theme of Jane Gleason-White, Six Capitals: the Revolution Capitalism has to Have or Can Accountants Save the Planet?[i]
Gleason-White argues that we are now experiencing the beginning of a second revolution in accounting, the first being the invention of double entry accounting centuries ago. While traditional accounting was highly efficient in helping us to measure capital in terms of finances and manufacturing, it has not sufficiently accounted for new forms of wealth that have come about with the shift form an Industrial to an Information Society. In this environment, accounting methods and reporting must also account for two new capitals--human capital and software—nerds and intellectual property—ie the new forms of wealth.
In addition, in the 21st Century and with our growing realization of the fragility of our environment and the inter-connectedness of society, Gleason White argues our business reporting and accounting systems must also find ways to measure and account for the impact of business on the environment and the value the business adds to society.
It is argued we require a new form of business reporting or accounting that accounts for these six forms of capital rather than merely the traditional two related to manufacturing and financial capital. Businesses in this new environment need a reporting system that enables a business to report and shareholders and stakeholder able to understand the value that the enterprise adds to shareholders and stakeholders.
Significant moves toward this new form of accounting is seen in the notion of ‘triple bottom line’, and calls for business reports to reflect values related to: profit, people and planet. Similar notions are captured in a ‘balanced scorecard’ approach. In the US, there is the Sustainability Accounting Standards Board (www.sasb.org/ ) which is developing non-financial reporting standards for 89 industries.
As stated on their website:
“Sustainability accounting standards are intended as a complement to financial accounting standards, such that financial fundamentals and sustainability fundamentals can be evaluated side by side to provide a complete view of a corporation’s performance.”
Perhaps of greatest impact is the formation of the International Integrated Reporting Committee (IIRC) (now Integrated Reporting Council: http://www.iasplus.com/en/resources/sustainability/iirc). Since 2012 an international movement to transform corporate accounting, and the rise of natural capital accounting for nations and the global economy. The IIRC brings together a cross-section of representatives from corporate, investment, accounting, securities, regulatory, academic and standard-setting sectors as well as civil society. It comprises a Steering Committee, a Working Group and three taskforces working on content development, engagement and communications, and governance.
On July 3, 2014 the International Federation of Accountants (IFAC) and the Chartered Institute of Public Finance and Accountancy (CIPFA) released an international framework on governance in the public sector and the IIRC released the International Integrated Reporting Framework in December 2013.
As articulated in the Framework:
“The IIRC's vision is a world in which integrated thinking is embedded within mainstream business practice in the public and private sectors, facilitated by Integrated Reporting as the corporate reporting norm. The cycle of integrated thinking and reporting, resulting in efficient and productive capital allocation, will act as a force for financial stability and sustainability.”
The purpose of establishing IR Framework is stated as:
“…..is to explain to providers of financial capital how an organisation creates value over time. An integrated report benefits all stakeholders interested in an organisation’s ability to create value over time, including employees, customers, suppliers, business partners, local communities, legislators, regulators, and policy-makers.”
Conceptually, the IR Framework is based on the notion of value creation by a firm, taking into account the six capitals and developing a process by which such value creation can be achieved, demonstrated, understood and reported in terms that shareholders, stakeholders and the public can understand.
Conclusion
While the move to integrated reporting is in its early stages it offers our best hope yet of developing a way to measure value in a way that accounts for and integrates these values into one metric based system. While few would argue with the need for integrated reporting, putting it into practice with reliable and understandable metrics has a long way to go. Perhaps even greater is the challenge to achieve buy-in from governments, business and the general public. Yet, there is a case for optimism as the public, business and regulators become increasingly aware of both the need for and importance of such a mechanism to the future of the global economy and our fragile planet.