The Strategic Value in Corporate Reporting Awards 2011

 

WHO WON?

FIND OUT

Tuesday
Apr242012

THE WINNERS 2012

Strategic Leadership

 

How does a Company demonstrate strategic leadership in narrative reporting? It shows clarity and rigour in its strategic thinking through a well-articulated and robust framework. It demonstrates implicit understanding that effective strategic management is as much about where it has been as where it is now and where it is going – past, present, future. It illustrates how it is investing in the capabilities its strategy will require in future. It embraces and integrates social, environmental with the economic dimensions of the business within that framework. 

Each of the four short-listed companies makes a strong claim on this award. Anglo has made great strides and is at the van of the mining sector. BAE Systems too has shown its stakeholders increasing strategic effectiveness, while Man Group has more recently developed its compelling strategic framework. But, of all four, Rolls-Royce Holdings is, in the judges' opinion, the most deserving of the 2012 Strategic Leadership Award. Rolls-Royce published here another high quality strategy-centric Annual Report that does credit to the Group and to its brand. The judges added that this is a suitable valedictory award too, maintaining the standard that Sir John Rose, the now retired Chief Executive, has set and presided over in recent years. 

Group Strategy

 

This award is for Companies with multiple business segments. More complex corporate structures require even greater clarity of strategic thinking and robust strategic frameworks to show unequivocally that the Group as a whole is worth more than the mere sum of its parts. The truly effective Group strategy discussion will demonstrate: how the Group's business model applies effectively to its underlying businesses, how its declared objectives are relevant to all its business units and how its strategy adds value not otherwise achievable independently. 

The four short-listed companies here all presented a quality of strategy reporting that will have persuaded respective Report users of the depth of strategic thinking and, in their related divisional performance commentaries, effective strategic management across each Group. Lloyds Banking Group was, in the judges' opinion, the best on both aspects, capturing divisional strategy and providing evidence through the performance commentaries of divisional strategy in action. 

Business Model

 

The business model is the foundation of a Company's strategic framework, defining the logic of the business. The business model provides both data and evidence to demonstrate how an enterprise, whether group of business units or single entity business, creates and delivers value distinctively to its core markets. This requires a Company to understand the sources of competitive advantage that contribute to its profitability across the value system of its enterprise. A well-defined business model enables clearly defined and consistent corporate goals, objectives and strategy. 

In this reporting cycle the application of the UK Corporate Governance Code, with its requirement of compliance [or explain why not] in presenting a Company's business model, effectively applied only to a minority of companies – those with year-ends of 30 June 2011 or after. But, the best strategic reporters have long recognised the importance of presenting the foundation of their strategic framework. The judges concluded that of the four short-listed, Man Group is the most deserving. Man Group produced a truly strategic business model in its March 2011 Annual Report to make its complex financial business intelligible to the widest range of stakeholders. 

Strategic Governance

 

Too often a Board seems remote from the essential processes of setting a Company's strategic agenda – evaluating risk sensitivity, addressing integral social and environmental dimensions, and applying strategy oversight in using KPIs to monitor performance. It is a remoteness that emanates from references to Board involvement that are all too often little more than compliant boilerplate buried in corporate governance statements. Strategically effective companies focus not only on the 'what' of strategy but also on the 'how' that makes it a living driver of value and future potential. 

No company does this better than BAE Systems where the narrative in the 2010 Annual Report addresses intrinsically strategic governance processes. All four companies are clearly sensitive to the strategic processes around KPIs and risk as well as strategy. But, for BAE it is fundamental as evidenced by the Chairman who opened his letter in the Directors' Report with an explanation of the Group's strategic framework and the various roles in keeping this current. 

Key Performance Indicators

 

Effective strategy is about the past and the present as well as about the future. Of crucial importance are the metrics that measure a company's operational performance on a regular basis to provide senior Executives and the Board with an effective means to monitor strategic achievement. So, the quality of these 'key performance indicator's reveals a Company's potential for good strategic management. 

For each of the four short-listed companies Key Performance Indicators have a fundamental strategic role. But, one more than the other three puts its Key Performance Indicators at the centre of the discussion of strategy and performance. ARM Holdings's uses its six non-financial KPIs for a strategic evaluation of its performance over the year. 'Future opportunities' also show how KPIs are central to ARM's strategy for long-term growth. 

Strategic Risk

 

How a Company thinks about, evaluates and reports risk is an important aspect of the quality and rigour of its overall strategic thinking. There are broadly two elements to reporting risk in the Annual Report. One concerns the processes for managing risk. The other concerns the capacity for identifying and prioritising principal risks and uncertainties. Good risk reporting explains risk management processes, recognises that risk can have an upside as well as a downside and focuses on specific factors that may influence the achievement of a Company's desired goals and objectives. It reveals a Company's sensitivity to its future and is a further confirmation of strategic literacy. 

Each of the four short-listed companies shows distinct merits in how it reports risk, its governance and management. But, Marks and Spencer Group is the best of these addressing its comprehensive approach to risk under the principle of Accountability in its application of the new UK Corporate Governance Code. Here M&S uses diagrams to explain how mitigation reduces likelihood and impact of a risk factor and to position risk factors on a radar map to show how the M&S facilitates wider Executive and Board discussion of risk in its strategic context. 

Strategic Capability

 

Growth strategy requires continuing investment in the enterprise. Most of this investment in customers, employees, partners, suppliers, distributors and the organisation itself is beyond the balance sheet in hidden assets 'expensed 'off the balance sheet. These are the strengths and resources essential to future growth. Companies that think strategically understand how these capabilities are fundamental to their future success. They also know that it is important to show how they continue to invest in those capabilities that will enable them to deliver their strategy and achieve their goals. 

Of the four companies short-listed for this award one is more effective at showing how it is investing in and develop the strategic capability its resource-based strategy will require –  in successful pursuit of its vision "to be the world's greatest service company". Serco Group makes 87 identifiable references to its investment in intangibles. The emphasis here is on employee and organisational drivers with knowledge the most referenced intangible element. This rich and expansive narrative is particularly readable. 

Most Improved

 

Companies are increasingly sensitive to the value of their Annual Reports and to the benefits good narrative can confer.  But, experience suggests that much of the change and improvement made by Companies in narrative reporting is at best incremental.  Only a few attempt to do anything more radical to enhance significantly the strategic value of their next Annual Report. This is usually because substantial improvement of reporting narrative presents a major challenge – a challenge that often has as much to do with the impact of such change within the business as it does with how the business reports. 

This year four companies vied for the honour of being the most improved. Of the four the judges considered that Telecity Group achieved the most notable improvement of +1.6 in the strategic value added in its 2010 Annual Report to second quartile score of 6.5 on FutureValue's scoring scale. The deciding factor was the fact that this was the second year running that Telecity achieved a marked increase ascending from a low of 3.7 in 2008. 

Shared Value

 

Shared strategic value is about good stewardship and the fundamental sustainability of a business to the advantage and benefit of all its stakeholders. Sustainability is central to strategic thinking and strategic management, blending social, environmental and economic dimensions. Although many companies prepare a separate sustainability or corporate responsibility report, what really matters is for a Company to show how it integrates its approach to social and environmental matters into its overall strategy for the business, and shares value with all. 

This year three mining companies made the short list for this award, reflecting the growing focus by the mining industry on embracing sustainability and sharing value appropriately with all its stakeholders. Anglo American demonstrates a wholly integrated strategic commitment to sustainable development that is credibly fundamental to its business. Its Chief Executive confidently reports that Anglo continues to lead change in the mining industry.

Friday
Mar232012

SHORT LIST ANNOUNCED

The Society will make nine awards based on corporate reporting for year-ends between 1 October 2010 and 30 September 2011. The following companies have been short listed following the initial assessment by the Society's awards selection board.

Strategic Leadership

  • Anglo American
  • BAE Systems
  • Man Group
  • Rolls-Royce Group

Group Strategy

  • Aviva
  • Lloyds Banking Group
  • Rio Tinto
  • UBM

 Business Model

  • 3i Group
  • Aggreko
  • Inchcape
  • Man Group

 Strategic Governance

  • African Barrick Gold
  • BAE Systems
  • Tullow Oil
  • Unilever

 Key Performance Indicators

  • ARM Holdings
  • EasyJet
  • National Grid
  • Rolls-Royce Group

 Risk

  • Marks and Spencer Group
  • RSA Insurance Group
  • TUI Travel
  • Unilever

 Strategic Capability

  • AstraZeneca
  • Aviva
  • Premier Farnell
  • Serco Group

Improved

  • ARM Holdings
  • Drax Group
  • Telecity Group
  • UBM

Shared Value

  • Anglo American
  • Fresnillo
  • Land Securities Group
  • Rio Tinto
Friday
Mar232012

KEYNOTE SPEAKER ANNOUNCED

The Strategic Planning Society is pleased to announce that Richard Whittington, Professor of Strategic Management at Saïd Business School, University of Oxford, will make the keynote speech and co-present the awards with respective sponsors.

In support of the long-term view to the benefit of all stakeholders

The advent of the regulatory 'Strategic Report' as a key element of the annual reporting process will put a premium on companies establishing effective strategic capability in the business and communicating that capability in their annual reporting. Companies that consistently achieve the highest standards with a robust and effective strategic framework at the heart of their corporate reporting achieve marked benefit in their stock market performance – the best are 76.21% above the FTSE350 over four years*. 

In his keynote Richard will provide some interesting insight into the critical importance of strategy to the listed company. He will offer some timely thoughts on how to develop strategic thinking, strategic management and strategic capability effectively in the business, and how to communicate that successfully in the new era of the 'Strategic Report'. As Adviser to the IoD on Director Development this is sure to be germane and insightful.

Wednesday
Jan182012

The 2012 Awards

The 2012 Strategic Value in Corporate Reporting Awards will take place on Monday 23rd of April at the Royal Overseas League, Piccadilly, London.

The award categories have just been announced. They represent a change to the categories in 2011, but are the same in total Number number. They Include: 

Best Strategic Leadership

This award acknowledges the FTSE100 or FTSE250 Company that shows strategic leadership most effectively through its corporate reporting.

Best Group Strategy

This award recognises the most coherent and complete articulation of Group strategy by a FTSE100 or FTSE250 Company.

Best Business Model

This award recognises the most effective exposition of business model by a FTSE100 or FTSE250 company.

Best Strategic Governance

This award recognises the most effective presentation of strategic governance by a FTSE100 or FTSE250 company.

Best Key Performance Indicators

This award recognises the FTSE100 or FTSE250 Company that declares the most effective set of KPIs.

Best Strategic Risk

This award recognises the best reporting of risk by a FTSE100 or FTSE250 company.

Best Strategic Capability

This award recognises the most relevant coverage of strategic capability by a FTSE100 or FTSE250 company.

Most Improved Strategic Value

This award is in recognition of the comoany whose report in 2012 represents a step-change improvement on previous reports from the same company.

Best Shared Strategic Value

This award recognises the best evidence of shared value by a FTSE100 or a FTSE250 Company.

For full details see Award Categories

 

Upon annoucing the award categories we also invite expressions of interest in sponsoring on of the awards. Potential sponsors should email paul.barnett@sps.org.uk 

Thursday
May122011

Awards Keynote Speech

Penny Shepherd of UKSIF gave a keeynote speech about the importance of sustainable investment as an important part of forward looking strategy, and the importance investors place on the future rather than the past. She also outlines more broadly what it is investors are increasingly looking for in corporate reports. Click the link if you would like to listen