How Boards Can Bounce Back from the Brexit Bombshell
Diligent Webinar: Good morning everyone and welcome today to today’s webinar with Diligent, How Boards Can Bounce Back from the Brexit Bombshell in response to the outcome of last week’s referendum. I am part of the marketing team here at Diligent and I will be your moderator for today. I’m joined today by my colleague Nathan Birtle who’s the VP of Sales and Business Development in the Europe, Middle East, and Africa region at Diligent.
Before we get started today, I have a couple of housekeeping notes. This webinar will last approximately 30 minutes long. We are recording it and we’ll send a copy of the recording to everybody that registered in the next 24 hours. You can feel free to forward that along to any of your colleagues or your board members who may not have been able to join us today. We will be taking questions during the webinar, so please feel free to use the ask a question pane on the right hand side of your screen. Anything that we don’t have time for we’ll come back to you over email after the webinar ends. Finally, we have a poll today. We would appreciate if you could participate in that. With that I’m going to hand you over to Nathan.
Nathan: Thank you. It was Harold Wilson, the Labour Prime Minister in the 1960s and 70s who’s attributed with the quote that a week is a long time in politics. I don’t think that’s ever been more true than the past week that we’ve had. As we record this webinar it’s literally a week ago today that David Cameron was announcing his resignation as Conservative Party leader and therefore Prime Minister. The country was in shock at the outcome of the referendum on the EU. Even supporters of the Leave campaign themselves were declaring that they would expecting a loss the night before the referendum itself. I think it’s about this time last week that Mark Carney, governor of the Bank of England was making a statement to reassure people about the stability of the UK economy.
What we’re looking at today is what this result means in terms of some of the implications for boards and decisions and factors that companies will need to look at when it comes to their planning for the future, and how you can best prepare for that. We’ll examine briefly what we mean by crisis management, is this situation we’re in now a crisis for many companies, and if so, how their management and the communications of that management enable organisations to respond more effectively to changes as they occur.
Then we’ll finally wrap up with looking at the role that a board portal can play in that effective communication and helping organisations to respond more quickly and more effectively, to not only the changes that have happened recently but the undoubted changes that will be happening over the next few months and years. For the agenda today we will actually round off the session with a little demonstration to show you how this system works in action, so it gives you a sort of vision as to the topics we’re talking about.
It was a few months ago now, in fact even a bit longer than that, but Ernst and Young produced a report looking at how a board should assess and prepared for the UK referendum and the implications of a [inaudible 03:40] vote to leave the EU. At the time some of the things that Ernst and Young was saying could result from a Leave vote would be a call for a next election, a second referendum on Scottish independence, pressure on Sterling, changes to the UK credit rating, and uncertainty over our relationships for trading in future.
If we look at what’s happened over the past week, then in fact we are seeing symptoms of the fact that we might have a call for another general election, although that’s not being mooted. Certainly there’s been movement from Scottish Nationalist Party for a second referendum in Scotland. Bear in mind the diversity in the votes for Remain and Leave in different parts of the United Kingdom. Certainly pressure on Sterling. As we speak Pound is trading about 132, 133 compared to 150 prior to the referendum vote, it had bubbled up a little higher on the expectation of a Remain vote. It’s fallen by 12% in that time. 12% in a week is pretty startling. Changes to the UK credit rating. Well, the UK has been downgraded by both Moody’s and S&P. In fact, not only the UK, but yesterday the EU credit rating was downgraded to AA from previous rating by Standard & Poor itself. Uncertainty over institutionalised trading relationships that we have.
We know that this is only the beginning because there’s plenty of uncertainty out there as to how this whole process will develop over the next couple of months and years and what the relationships we have will be, how they will work. It’s all very much up in the air and things are changing day to day. These changes have an impact on how organisations do their business, how they can best prepare themselves for that business.
However, if you actually look at how boards prepared in advance for this vote it’s sort of interesting. A study done by ICSA in conjunction with the Financial Times said that only 49% of boards were considering implications for their business ahead of the vote. Another study by the IoD said that these organisations were not well prepared or not prepared at all for Brexit. In fact, a further study on this, if you look at the FTSE 100 annual reports for 2015, only 26 of the 100 organisations actually mentioned Brexit as a risk in their annual reports and the actions that people would take as a result. I think there may be evidence to the fact that organisations were not only surprised by the outcome of the vote, but also had maybe not prepared as well and didn’t have the contingency plans in place for that vote and for the different results that could occur and in fact the result that did occur.
Now let’s pause and take a poll for the participants in this webinar. It’s very interesting for us to just survey you and see if you have and your organisation had a contingency plan in place for the result of the referendum. There are 3 options on this poll, either yes, there was a plan in place, no, there wasn’t, or it might be possible that you’re not sure whether the organisation had a plan in place at all for either a Remain or a Leave vote. We’ll wait for a moment or 2 while those polls are being collected and we’ll close the vote now and we should be able to see. Interesting, we got a fairly even split between yes or don’t know and sort of half of the participants in this webinar indicate that there was no contingency plan in place for their organisation.
If we look at the definition of a crisis or crisis management one of the definitions I like is a crisis management is defined as a process by which an organisation deals with sudden or major events which threaten to harm that organisation or its stakeholders, including the general public in that. Now I think if you use that you can certainly argue that a sudden or a major event is the result from this referendum and the implications that that has. Therefore, the effective handling of the way an organisation works with that, as a form of crisis management, I think would be welcomed.
Typically, the way that organisations either survive and prosper or struggle is the result of how they handle a crisis and how their crisis management and their crisis communication is done. There are plenty of examples of good and both bad crisis management. If you look at some of the good examples one off cited one is the way that Johnson & Johnson responded to the Tylenol crisis in the 80s where some of their capsules were sabotaged with cyanide and resulted in 7 deaths. But their response to that, the changes they made and the way they communicated mean that they were able to bring back the level of sales to that preceding the crisis. Similarly, Mattel had issues with their production and had to invoke several product recalls throughout the 2000s. But again, they were highly praised for the way that they took fast decisive action, proactive in their communication about the issues, and that the corresponding actions that they were taking to resolve those.
If you look at examples of good response to crisis management, typically what you see as a common thread between them is the fact that you have fast decision plan in place or implemented. That plan is backed up by well-informed actions and data and that the communications around that is very well coordinated. If you have those factors in place you give yourself the best chance of providing a healthy response for your organisation to whatever the crisis or the major event, sudden threat that’s occurred.
Unfortunately, there are some examples of situations where it probably wasn’t quite so well handled. A brief example of that might be the hack that occurred at TalkTalk in October last year, October 2015. In the immediate aftermath of that hack being made aware the communication around how many users were affected, whether their data was encrypted or not, and what the action plan was to resolve any concerns that customers had was typically not that well-handled and was sort of widely perceived as not the ideal way to respond. There were phrases used at the time in response to the crisis from TalkTalk about whether data was encrypted and comments such as, “Well, we were not legally obliged so to do.”
In that sort of situation what the customers are looking for is fast decisive and positive response rather than what any particular legal obligation may be. I think there are good examples both positive and negative as to how working through a crisis situation can either enhance in the long term an organisation’s performance and its reputation in the market, or how it can diminish it.
If we look at what organisations can actually do in response to this, then firstly you need a crisis management strategy process management plan and also the communication infrastructure to make that work. Now for the purposes of this session today we don’t really have time to go into details around what makes up a crisis management plan. There’s plenty of information, and I’m sure plenty within each of your own organisations of information as to how that crisis management plans are put into place.
Typically, there are 3 aspects to that that organisations need to consider, diagnosis of the problem and the situation itself, the strategy chosen to make for the organisation to follow to respond to that sudden event or crisis, and thirdly how you implement and communicate around that strategy. In fact, communication infrastructure is important to all aspects of that. As a management team you need to be able to diagnose a situation together, you need to work on the chosen strategy to ensure that you’re selecting the right options, and then the implementation and communication of that strategy has to be done in a clear, consistent, and coordinated way. What we’ll focus on for the remaining part webinar is what that communication infrastructure needs to entail and what the best ways are to set that up so that your organisation is best positioned for success.
A typical communication infrastructure, the aspects which you need to have in place are certainly preparation. You need to be well prepared. At the time a crisis is likely to occur or a sudden event in this way, you need to have a plan that’s been thought through to some degree so that you’re already part prepared. When we look at the Ernst and Young study that was quoted previously, a lot of what has happened in the last week since the result of the referendum has come true to varying degrees. For most organisations it wouldn’t be a surprise that if that result occurred that those following impacts would happen on the market. But how many organisations actually had a plan in place to cope with that or were able to communicate quickly and effectively around that once the situation occurred.
You want to be prepared. You want to make sure everyone has the right level of information in the board or the senior executive team who are going to be making a call on the way that your organisation should respond to this. Everyone should not only be well informed, but coordinated in the way that they work with that information together. Should be able to make decisions quickly, because again, some of the best examples of good crisis management are where decisions are made very quickly, communicated very effectively such that any concerns around the way the organisation is handling it are responding too fast.
Communication obviously has to be secure at this time, because you’re talking about aspects of the way a company operates that really boil down to the strategic direction a company is taking in response to this event. Finally, it needs to be mobile because you cannot control where at any point in time the people that needed to be around a table to make a decision actually are in the world. Actually having a virtual boardroom where everyone is together around the decision-making process, wherever they are in the world, how mobile they are, is important.
If you think about that then organisations often should consider how they make those communication decisions, how they work together today. Some people are working with sending information through printed materials by courier, which obviously is slow to communicate the information, not particularly well coordinated, when it’s mobile I guess because you can send this stuff anywhere, but it’s not particularly secure either. Other organisations will email information in PDF and Word format and typically add that as an attachment to an email, which although it might be fast is not necessarily secure and not the best way to coordinate the information.
Other organisations have their tools in place such as Dropbox, SharePoint, other file sharing solutions. Again, there are advantages to those, but disadvantages mainly in the area of usability, coordination, security. Others use custom developed or in-house tools that have some of the same issues actually as Dropbox, SharePoint, but they also have trouble with the ongoing support. Typically, you’re going to need directors to be able to access and work with these solutions 24/7 and providing effective support for that is going to be important.
If we pause for a moment to look at how leading organisations typically do this, it’s use of a system such as a board portal. A board portal is a way of allowing organisations to securely set up and distribute information to their board members and senior executives, allowing them to access that same information in a secure fashion, in a mobile form, and in a form that’s convenient to them, so via tablet, laptop, et cetera. Highly sensitive documents are always encrypted. They will not fall into the wrong hands. They can only be received and viewed and acted on by the people that they’re intended for.
Also with a board portal for the more advanced ones you can make sure that people are made aware and highlighted over the information that’s most important to them, so you minimise the risk of overlooking any crucial information. One of the big problems in times of crisis, times of big change, is there’s lots of information being made available. You really want to highlight the content that’s most important to people to ensure that that doesn’t get overlooked. Make sure material is confidential wherever it’s stored and ensure that material can be retrieved and archived back at the corporate headquarters as is necessary. More and more enable the collaboration amongst board members and allowing people to make decisions, communicate within the team, and sign off on items so that you can work more effectively as an organisation when it comes to working together in this way.
That’s a brief example of what a board portal, a brief description of what a board portal is. We have a few moments time just to show you how that might work in practice. What I’m going to do is in a moment I’ll bring up the Diligent system. What you should be able to see now, it’ll come up in a second, is a view of my iPad. I have an iPad by the side of my PC here that I’m using. We’re using a tool to allow the mirroring of the iPad onto the display so you can see it by the webinar.
Now as a board member I could be anywhere in the world and I have my iPad with me, and when I sign into the Diligent application, which is an app that I download onto my iPad or other tablet device such as a Windows Surface, what it enables me to do is to see the information and the different board meetings and the books, the board books that have been prepared for those. If I have an emergency meeting in July about issues to do with the recent Brexit vote for example, I can see in here that I’ve got a July board meeting, but that’s been set up for me. This icon here, the little arrow, second arrow, shows that there’s an update available. I can also see here it says there’s an update available.
Now all I need to do to download that as a director wherever I am in the world is just tap on that icon and what you’ll see happen, oops, I touched on the wrong icon there, what you’ll see happen is firstly it prompts me for my security because I had been inactive for a period of time. Having done that it will synchronise the update that’s being made available by the organisation for me to review. Now that happened very quickly. This is a book of several pages, but the update was only a couple of pages. As a board member all I need to do is download that update.
The other thing you may notice is there’s an update history here that shows what’s been changed in that particular document. Rather than having to wade my way through all of the information and try and search for what’s changed myself, my attention can be drawn to it directly. If I just tap on this update history button there, what you’ll see telling me is that there’s a revised contingency plan that’s been put into place under the extraordinary items agenda for this meeting. Now if I tap on that rather than go to the start of the book, it will take me directly to that revised contingency plan for example.
Now as a director one of the things I might want to do is make comments on that and feed it back immediately to the person who’s created that plan to begin with. The easy way to do that is just tap on this pen icon, and I can use various highlighting and annotation techniques such as highlighter or pen, oops, or a sticky note to make my comments on this particular contingency plan. I can save that note. I can select it and drag it and drop it to the item that I wish to refer to.
If I actually would like to make that note just not a message for myself and keep it private, but I wish to share it with others, then what I can do is just tap here and change the note from being private to either share with everyone or share with selected viewers. In this case I’ll share it with a couple of my colleagues, James and Sarah for example. It tells me I’m going to be sharing it with those 2 people. Now I see it shared with 2 people and I just share that. Now it’s available for all 3 of us to have a collaboration, a collaborative discussion, and open up a threat of communication about that particular point.
If I open up that sticky note one more time, you’ll see if I add another comment to this, it will now add that comment to the thread, and any responses I get from the other 2 people on that thread, I’ll see a little bubble appear, a little speech bubble and I’ll be able to go in and see how people are updating and what changes they’re suggesting around this particular topic.
In a matter of seconds, I’ve received latest information from the company about an updated contingency plan, I’ve been able to download that to my local device, I’ve reviewed it, I’ve made comments on it, I’ve invited other people to give their view, their contribution to that as well. This is the basis for the manner in which you can communicate much more effectively and efficiently and support the things that make effective response to a crisis management situation. Fast informed decision-making plan in place that everyone has agreed to, the right communication strategy and the right information behind it, in order to be seen to be decisive organised company and responding to the situation in the most appropriate way.
The other thing that may be appropriate around this sort of application of the system is to sign off on certain things. You agree that this is the right way to handle a situation. I’ll just quickly show how that can be accomplished. If I select this icon here it takes me to a navigation view of this particular meeting. I have some voting options. There’s a little voting button there. I have 2 votes available to me here that I need to either support or not based on the contingency plan we put in place. I just tap here and it will take me to that particular vote. There’s 3 of us voting on this issue. I will vote now just by tapping on the tick box there, and I can choose to vote for, against, or abstain. In this case I’ll vote for the motion and I have to confirm that. Once I’ve confirmed it, you’ll see that my signature along with the time stamp is included at the appropriate point in the document.
Others who are reviewing this document such as Joe or Gale in this case, once I’ve signed, they will see on their view of the system that I’ve signed. Likewise, if either of these 2 sign right now, I would see that appear on my system too. You can not only communicate, collaborate, but you can also make decisions in a very fast effective way. Just a quick example of the way the system works. It’s a sort of infrastructure, an application that allows organisations to respond to these situations in a much more effective manner.
Before we finish we’ll say a couple words about our company, just to give you a flavour for how we’ve been involved in these sorts of applications. Diligent was founded in 2001. We have over 4,000 organisations who work with us, and 140,000 board members and senior executives use our system for secure effective communication collaboration and decision-making around issues such as crisis management and the like. We have 5 data centres worldwide and 12 offices worldwide as well. We operate in over 70 countries and one of the things that we’re most proud of is, as you see on the top right there, our client retention rate is 99%. For organisations who work with us that number of people and that percentage renew their contracts with us each year. That’s something we are very proud of and I think speaks to the fact to both the usability of the system but also the importance of this sort of system in those organisations.
I’ll pause at that point because we’re coming up to half an hour, but hopefully the Brexit vote, the changes that we’re seeing not just in the UK economy or European economy, but the global economy as a result of that cause organisations to make very important decisions very quickly as to how they handle the sudden impact of this change. That will continue over the next months and years, but organisations that we believe are best positioned to make the best informed decisions and therefore to come out in the best manner from these sorts of changes are those that can implement solutions such as the board portal we’ve shown you today. Admittedly that’s only one aspect of it, but we think it’s a very important aspect of it. I’ll pause there and hand it over in case there are any questions that have come through.
Diligent Webinar: Thanks Nathan. I think we’ve got time for just one question today. The first, this question comes through from Andy. He asks: how simple is it to make the information available to the directors via the app?
Nathan: Yeah, thank you for that question Andy. It’s important that the information can be communicated very quickly and efficiently from administrator up to the directors wherever they may be in the world. We haven’t had time to show you the way that [inaudible 27:57] work with the system in this particular webinar. There are other webinars in our series where we go into a little bit of detail behind that. You’re very welcome to view those online. The recordings are available.
Essentially it’s simply a case of dragging and dropping a file from the revised information to the application, once you approve that, there’s a workflow for approving it to make sure that the communication that’s sent out to directors is always complete. Going through that approval process which can take a matter of moments, then it’s available for the directors to download. It’s very fast, very efficient, and that is one of the benefits that people like from this sort of system.
Diligent Webinar: Thank you. We do have a few more questions but in the interest of time we’ll come back to everybody over email. We just move on to the final slide for today. You’ll see there that we have Nathan’s contact details on the screen. If you would like to contact Nathan directly for either a demo or any other questions you might have, please feel free to do so. You can also visit our website www.diligent.com. There you will see a whole host of resources such as white papers and case studies for you to learn more about how the Diligent solution might be able to help you.
As I mentioned right at the start of the presentation, today we have been recording it, so we will send a copy of the recording out within the next 24 hours so that you can watch it in your own time, or as I said earlier, pass it on to any board directors or colleagues who were not able to join us today. On behalf of Nathan and myself, thank you very much for joining us today. We wish you a lovely weekend and thank you very much. Bye-bye.