The secret to great governance in our (scary) new world order
By Annamarie van der Merwe
Executive Chair
FluidRock Governance Group
There is a definite shift happening in the world order, says leading scenario planner and futurist Chantell Ilbury. But she emphasises that it’s not just about the fact that it’s shifting. What matters is what it’s going to shift to.
Ilbury examined the topic of “Trump, South Africa and Your Business: Navigating Uncertainty with Scenario Planning” at a recent event we co-hosted with auditors Nolands and JSE Private Placements.
It was a brilliant, if sometimes rather bleak, examination of how our world is changing. These changes are driven largely by factors beyond our control: the disruption of the current order, the decline of the US’s global power, the rise of new powers such as China and the BRICS+ bloc and a shift in voice to the Global South.
There is also increasing fragmentation of existing power, technological evolution, a swing away from the US dollar as our global currency and growing scepticism and uncertainty.
Navigating the new world order
At the heart of it all lies the “Trump Effect”. This refers to the global impacts US President Donald Trump is making with his words and deeds, which are helping to rewrite the world order.
In the South African context, she noted several “flags” to watch for. These include crime and corruption (an issue Trump hammered in a recent White House meeting with President Cyril Ramaphosa), the quality of our infrastructure, entrepreneurship, our neutrality on the global stage and pockets of economic excellence such as agriculture and mining. Other critical factors include consumer affordability and our fragile-but-functioning government of national unity.
The implications of these issues for South African businesses are wide-ranging. They include power and water risk, port inefficiencies, labour costs and unrest, environmental concerns, skills shortages, exchange rate volatility, and challenges with roads, rail and rural service delivery. However, with every risk comes opportunity. Strategically, Ilbury argued that success depends on finding new ways of seeing the world, thinking differently about issues and taking innovative action.
She stressed that it’s not just about being aware of the changing ecosystem and new players. It’s about making sense of it all. Scenario planning, she argued, is vital to understanding and navigating this new world order.
The secret to great governance in uncertain times
Ilbury’s words led me to reflect on how this relates to my field: corporate governance. Too often, governance is seen only as a collection of boards, charters, plans and committees.
But it goes far beyond policies and structures. Even our world-class King IV Report on Corporate Governance (King IVTM) makes this clear. It’s built on the foundation of effective and ethical leadership. That means people.
Leadership is about having the right people in the boardroom and corporate corridors. These individuals must have the skills, insights and commitment to lead sustainably and ethically. They must also communicate and trust each other. As Ilbury said, they must be people who can see, think and do.
Let’s use an analogy. A company is like a ship. The board serves as the bridge watch, and management works in the engine room. For the ship to operate successfully and navigate its journey, both groups must collaborate and communicate.
But what happens when ominous clouds gather on the horizon? Together, and steered ultimately by the bridge watch, they must respond to the situation. The bridge considers options and, in consultation with the engine room, decides whether to press on or change course. For this to work, there must be trust and respect.
If trust breaks down and the bridge watch leaves its post to assess the engine status, who remains to monitor the horizon and external risks? Similarly, the engine room crew must trust the bridge’s observations and provide feedback about the vessel’s capacity.
The secret to great governance begins with people.
In my advisory work, I am often surprised at how many companies view their non-executive directors, the “bridge watch”, as nothing more than a statutory requirement. They fail to use their oversight role and expertise.
Non-executive directors must receive adequate information. This enables them to fulfil not just statutory duties, but also to add tangible value. If not, the ship risks hitting the proverbial iceberg.
So much depends on the quality of the people implementing governance, not just the procedures. A board must consist of diverse, capable individuals who bring specific skills. There should be no free rides. Every executive and non-executive director must add long-term value for the business and all its stakeholders.
The secret to great governance in a VUCA world
This is how companies will navigate uncertainty, the only certainty we can rely on. As our keynote speaker, Brand Pretorius, said, we’re living in a world that feels more uncertain than ever. Or, in his words: “We’re living in a VUCA world on steroids”. VUCA stands for volatility, uncertainty, complexity and ambiguity.
VUCA describes the challenges companies face. It helps them anticipate key issues, understand consequences, and appreciate how variables interrelate. It also prepares them for different scenarios and helps identify opportunities. This is no exaggeration.
Today, companies must embrace the secret to great governance if they want to succeed in this new, uncertain world. That includes applying the framework of King IVTM and empowering leaders who can anticipate global shifts. These leaders must recognise risks and seize opportunities.
As Chantell Ilbury concluded, successful leaders are those who can see, think and do.