OMG! Exemplary reporting reflects reality - FutureValue
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OMG! Exemplary reporting reflects reality
16/02/2016
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Using the narrative of a Strategic Report to assess future performance will remain of questionable value to many, however rigorous and consistent the assessment will have been. And when FutureValue’s scoring system suggested that a company has progressed in just three reporting years from being in the pack and not much better than average to within a whisker of becoming the FTSE100 Strategic Leader, even our research team did a double take and had a momentary concern about about our interpretation and evaluation of corporate reporting. Is it possible that such sudden year-on-year improvements in strategy-centric narrative content could really presage a corresponding upswing in performance? We needn’t have worried. The company in question, we recently and unexpectedly learned, has successfully undertaken a radical organisational and cultural transformation over the last few years. What we have been interpreting in its annual Strategic Report is the evidence of that transformation and the early fruits of its impact on performance and results. That company is Old Mutual Group – OMG!

The occasion that yielded this insight was a workshop on integrated reporting entitled ‘Values as a Blueprint for Value Creation’ and presented by a research team from the University of Pretoria, South Africa. The workshop, led in London in early February, attracted an audience of the usual suspects one might expect to find at any leading corporate reporting event in the UK. To most of us it seemed odd that this academic research team should come all the way to London from South Africa to present its research findings. Any scepticism was quickly assuaged when we learned that the research had been funded, surprisingly, by the UK High Commission in Pretoria. So, a presentation of the findings to a London audience interested in integrated reporting was a natural consequence.

The centrepiece of the explanation of the team’s research findings was a case study of Old Mutual Group. The case study explored how this London-listed South African financial services group had adopted this complex management technique – with its catchy title of ’The Barrett Seven Levels of Organisational Consciousness’. Liz Murphy, OMG’s Group Head of Talent, took the assembled gathering through the case study explaining how the Group has been applying consistently the management technique to achieve enduring radical cultural change that is now having positive impact on the Group’s operational performance and on its results. Notably an important pre-requisite for the adoption of this technique was clear strategic thinking on the part of the OMG senior executive team. Over time this has effectively transcended from good strategic management into demonstrable strategic leadership.

And it is the effective reporting of this clarity of strategic thought and its consequent application that made OMG’s 2014 Strategic Report an exemplar. Its 2015 FutureValue score was 8.7 (out of 10), up from 7.2 in 2014 and 6.6 in 2013; at 8.7 it was only 0.1 below the FTSE100 Strategic Leader. Driven by the twin impetus of South African mandatory integrated reporting standards and statutory London-listed strategic reporting requirements Old Mutual has set out to do far more than merely comply in its corporate reporting. What Liz Murphy’s presentation confirmed to us all is that really good strategy-centric corporate reporting will usually reflect the underlying reality of a business. And if that reporting is exemplary it will add up to being a differentiator and a real source of competitive advantage. In the case of OMG (or OML to use its LSE stock symbol) investors have recognised it and have secured the collective benefit with their resource allocations, certainly relative to its sector, if not to the FTSE100 index as a whole.

So, how much of this success is down to the management technique that the research team presented? In truth it is probably not as much as that team might care to think. The South Africans introduced us to a good organisational development process at this workshop. But it is only transformational here due to the assiduous and consistent attention to its application throughout OMG by the Group’s leaders and its staff.

For us one question remains unanswered. Why did the UK High Commission in Pretoria fund this research? That remains a mystery so we can only surmise as to what that answer may be. What we can conclude, however, is that the High Commission’s initiative is yet another small manifestation of how corporate reporting and in particular integrated reporting is helping Britain to expand its soft power influence globally.