H. Pierson

HIGH-PRIORITY RISKS (Potential Impact: High, Likelihood: High)

1. Security Threats: Continued security threats from militant groups and kidnappings.
– Mitigant: Enhance security measures, engage with government officials, and conduct regular risk assessments.
2. Cyber-Physical Attacks: Increased risk of cyber-physical attacks on oil and gas infrastructure.
– Mitigant: Advanced cybersecurity measures, conduct regular vulnerability assessments, and enhance employee training.
3. Regulatory Uncertainty: Uncertainty surrounding regulatory frameworks and policies.
– Mitigant: Engage with government officials & regulatory bodies, thorough risk assessments, develop contingency plans.
4. Climate Change-Related Litigation: Growing risk of climate change-related litigation and regulatory actions.
– Mitigant: Develop and implement sustainable practices, conduct climate risk assessments, and engage with stakeholders.

MODERATE-PRIORITY RISKS (Potential Impact: High, Likelihood: High)

1. Supply Chain Disruptions: Disruptions to global supply chains due to trade wars, pandemics, or natural disasters.
– Mitigant: Diversify supply chains, develop contingency plans, and enhance logistics resilience.
2. Local Content Requirements: Increasing local content requirements, potentially impacting procurement and operations.
– Mitigant: Develop local content strategies, engage with local stakeholders, and enhance supplier development programs.
3. Environmental, Social, and Governance (ESG) Risks: Growing ESG risks, including community protests and reputational damage.
– Mitigant: Develop and implement ESG strategies, engage with stakeholders, and enhance transparency.
4. Asset Nationalization: Risk of asset nationalization or expropriation due to changing government policies.
– Mitigant: Engage with government officials, conduct thorough risk assessments, and develop contingency plans.

LOW-PRIORITY RISKS (Potential Impact: High, Likelihood: High)

1. Digital Transformation Risks: Risks associated with digital transformation, including data breaches and system downtime.
– Mitigant: Implement robust cybersecurity measures, conduct regular system updates, and enhance employee training.
2. Artificial Intelligence (AI) and Machine Learning (ML) Risks: Risks associated with AI and ML adoption, including data bias and system failures.
– Mitigant: Implement robust AI and ML governance frameworks, conduct regular system audits, enhance employee training.

SPECIFIC RISKS (Potential Impact: High, Likelihood: High)

1. Infrastructure Challenges: Inadequate infrastructure, including transportation and storage facilities.
– Mitigant: Invest in infrastructure development, engage with government officials, and develop contingency plans.
2. Corruption and Governance: Corruption and governance risks impacting operations.
– Mitigant: Implement anti-corruption measures, engage with government officials, and enhance transparency.

Digital transformation has changed the face of every industry. Companies in this trend must strive for the ultimate digital experience and meet the ever-changing consumer demands.

Companies (irrespective of size) underwent strategic shifts in this transformation process. Some have skyrocketed with trends, some have entered into technology mergers and acquisitions, and some have ended up in shackles.

Although businesses have long understood the value of digital transformation’s future, other priorities sometimes take precedence over it. On the other hand, prioritizing digital efforts has emerged as one of the most critical business enablers for success in a world of rising competition.

In 2023, the field of digital transformation showcases an overwhelming adoption rate, with over 90% of organizations engaging in various digital initiatives, emphasizing the pervasive nature of digitization across industries (Source: Gartner). This shift is further underscored by the fact that a mere 23% of businesses find themselves without any dependency on digital operations or products, highlighting the widespread integration of digital technologies into the core of organizational processes (Source: Forrester).

Digital transformation is no longer merely a strategic choice but a business imperative, as expressed by 27% of managers who recognize it as crucial for survival in the competitive market (Source: IDC). The investment and spending trends in digital transformation are equally noteworthy. Direct investment in digital transformation is projected to soar to an impressive USD 7 trillion, reflecting a robust CAGR of 18% from 2020 to 2023 (Source: IDC).

The economic repercussions of this shift are significant, as organizations undergoing digital transformation are expected to make up over 50% of the global GDP by 2023, totaling an approximately USD 53.3 trillion (Source: Research and Markets). The digital transformation market is set to experience substantial growth, with a projected CAGR of 23% between 2019 and 2025, reaching a market value of USD 3.3 trillion (Source: IDC).

As organizations prioritize their digital transformation strategies, key trends emerge. Seventy percent of surveyed organizations identify leveraging technology to simplify workflows and manual processes as their top priority, indicating a focus on operational efficiency (Source: Quixy). Moreover, the driving forces behind digital transformation efforts are diverse, with 51% originating from growth opportunities and 41% spurred by increased competitive pressure (Source: Prophet).

Looking ahead, while the Internet of Things (IoT) dominated the digital transformation market in 2019, Virtual Reality (VR) and Augmented Reality (AR) technologies are predicted to experience the fastest growth until 2025 (Source: Research and Markets), showcasing the dynamic and evolving nature of technological priorities within the digital transformation strategies.

In 2024, a significant trend in the digital transformation journey will be the expanded use of automation technologies. Similarly, effective use of cloud technologies, low-code/no-code tools, hyper-automation, AI, and other technologies would greatly aid company scaling.

Hybrid work, intelligent search, Customer data platforms (CDPs), AIOps and machine learning, and platforms that link Agile, DevOps, and ITSM are some of the most recent advancements in digital transformation technology.

Media and entertainment saw a rapid transition due to the trend of digital transformation managed services. Amid interactive video ads and content-driven strategies widened social media and other internet platforms, the media and entertainment industry has seen the proper form of digital transformation strategies in recent years.

Every industry, including media and entertainment, is following this path. In parallel, consumers are demanding more content in more unique ways!

Before going in-depth about the digital transformation trends in 2024, we need to know the future of digital transformation.

What is Digital Transformation?

Digital transformation solutions use technology to generate new customer experiences, cultural norms, and business practices. It entails utilizing cutting-edge technology to modify corporate strategies for the digital era.

The digital transformation strategies aim is to shift the focus away from sales, marketing, and digital transformation customer experience services and toward the actual customers, in contrast to previous attitudes and methods. As a result, over the past 10 years, customers have received significant priority when developing corporate goals, and businesses now base their goals on what customers need.

The paper must be replaced with online and mobile apps as part of a digital transformation strategy. As a result, it is more organized, tidier, sustainable, and environment-friendly.

The shift to digital requires data protection. For instance, team members organize everything in a secure cloud that they can easily access instead of sending spreadsheets or physical notes.

Why is the Digital Transformation Essential?

Now that you know the purpose of digital transformation solutions, why should your company adopt its trends? You can better appreciate why you should care about the digital transition by considering the following arguments:

1) It’s a Modern Requirement

We live in a contemporary digital environment; thus, you should be concerned about digital change. Organizations must adjust to the top digital transformation trends in manufacturing to stay competitive as they transition from a traditional to a modern environment.

Tools and methods should evolve as circumstances do. Let’s face it: 30-year-olds cannot ride the same bicycle they did when they were five since it is no longer appropriate for their physical needs.

It also applies to welcoming the digital revolution in the modern day. Organizations must implement the newest technology that best meets their requirements.

2) Enhancing Client Satisfaction

Another reason to be concerned about digital transformation strategies is that client happiness increasingly defines company outcomes. Organizations now run digitally and use new technologies to do more in less time and give clients better service.

You can follow the development of successful businesses and see that they have appreciated their users through time. Due to increased market rivalry, consumers favor businesses that respect their needs. You may learn more about your audience and determine what is ideal for them by utilizing technology that makes it easier to care about users by storing their data in the cloud. After that, you may use that information to tailor your goods and services to their needs.

3) It Facilitates Team Collaboration

Additionally, digital transformation service providers include internal interactions like communication and teamwork among staff and exterior connections. Artificial intelligence can be used to build effective communications within your firm, regardless of business models or company size.

Businesses may utilize digital solutions to coordinate their team members and ensure that each assignment is completed by the deadline. This makes team members more productive, enables them to work together, and allows them to communicate more efficiently.

Top 10 Essential Digital Transformation Trends for 2024:

1) AI for Cutting Down OPEX

One of the leading surveys shows that the media and entertainment industry is witnessing enormous spending and ending up with fewer profits. The industry’s operational expenditures (OPEX) exceed profit margins. The spending goes beyond control in running for early profits or gaining a competitive edge. Precisely at this juncture, the industry should rethink its strategy.

It’s time to recheck the way they handle content and spending abilities. And AI and Machine Learning (ML) are right in front to show the way! AI and ML techniques help you smartly use content and spending.

Now, the focus should ideally be on how effectively the content should be utilized rather than creating it for content’s sake. AI can eventually help you cut down OPEX.

2) Privacy and Trust

Privacy and trust are the two essential aspects that will decide organizational progress in the digital transformation services journey.

One global survey involving more than 4000 brands and consumers found that 61% of brands admitted to losing consumer trust by failing to protect their data and information. This is an increasing gap between consumers and brands that brands need to focus more on to progress. Traditional media was reportedly among the top three distrusted industries besides social media and government.

Given this fact, the future will involve maintaining the visibility of consumer data and delivering the best user experience with the collected data. Data regulations have already supported such measures, and more are expected.

3) Enterprise Resource Planning

Technology is often the first thing that comes to mind when discussing successful digital transformation services. But that might not always be the case.

Digital Transformation service providers are more about implementing a new culture within an organization. It’s a combination of people, processes, and technology. So, instead of building effective media arms or channels to promote services, the organizations should equally focus on building intelligent Enterprise Resource Planning (ERP).

ERP can help reduce spending, improve resource efficiency, and enhance productivity. While you might have already invested in technology and tools, it is time to focus on your back-office operations for continuous refinement to see measurable results and high profitability.

4) Personalization

Personalization of services will be a vital factor in deciding an organization’s digital transformation services companies’ success in 2024 and beyond. No content for free or content for all! The more innovative the approach, the brighter the results will be. So, organizations must personalize their approach to draw the best from their consumers instead of just pushing some content for traction.

Termed ‘smarter personalization,’ this approach is not just for content. It should be reflected everywhere, whenever the brand meets the customer! This will be crucial for successful digital transformation and customer relationship management.

Given these four trends, one can estimate the transition the digital transformation ideas consulting services trend will likely bring to the industry’s functioning.

No doubt, 2024 is going to be a different ballgame together for digital transformation services.

5) Connected User Experience

The average number of applications used in an organization is increasing rapidly. Consumers expect consistency as they traverse multiple channels, such as messaging or mobile service portals.

Given this requirement, offering a connected experience is the need of the hour for companies as part of their digital transformation ideas consulting services efforts. Omni-channel customers with better-connected experiences were found to stay online longer than single-channel customers.

Connected experience means enabling customers with improved and easy accessibility anywhere and anytime. As the surveys find, while an average of 900 applications in an enterprise, only 29% of them can offer a connected experience.

6) Data-driven Business

Data is undoubtedly the heart of the future of digital transformation services companies. Unlocking and analyzing data potential has become crucial to driving business, streamlining operations, and launching new products and services.

Adequate movement of resources and easy flow of operations across organizations are primarily attributed to effective data utilization.

7) Multi-cloud Utilization

Most enterprises today operate on multi-cloud environments. However, managing multi-clouds, especially when moving workloads between clouds, is one of the prime challenges. API-led development and containers offer solutions to this problem.

APIs help unlock the unique functionalities of applications residing in multi-cloud environments. Containerization has also been a proven solution to address concerns with multi-cloud environments.

Get multi-cloud to achieve better results in your digital transformation ideas managed services journey.

8) Effective IT

The IT department is a core enabler of any business today. It helps tap the full potential of technology to deliver more through effective and proper decision-making regarding utilizing emerging technologies. So, to succeed in the digital journey, organizations need to scale beyond their current IT capabilities.

9) Partner Ecosystem

Engaging in strategic partnerships becomes crucial for any organization as the business expands. Successful businesses have already begun building a collective ecosystem of external partners, stakeholders, and customers.

This partner ecosystem helps digital businesses transform in the seamless incorporation of products and services into the customer experience.

10) IoT and 5G

The fifth generation of mobile network technology is known as 5G. Some of 5 G’s essential traits include multi-peak data speeds, minimal latency, a better user experience, better connectivity and availability, and increased network bandwidth.

Edge computing and 5G can result in some fascinating advances. For instance, IBM will provide Verizon and Telefonica with cloud services to power 5G networks.

In turn, automation of routine jobs will prevent network problems using technologies like artificial intelligence (AI), drone-initiated inspections, and video inspections.

Source: veritis.com

The hype surrounding “digital transformation” shows no signs of fading. For many, it is just a buzzword – another way of saying “digitization” or “digitalization”. However, that’s a mistake. These are, in fact, three separate concepts, and understanding how they differ is crucial to developing the skills needed to digitally transform an organization and identify the secrets to success. The checklist at the end of this text will help you do just that.

Although we hear the terms “digital transformation”, “digitization” and “digitalization” on a regular basis, attempts to actually put these concepts into practice tend to fail almost as often. That is because opinions on what these terms actually mean differ widely. Some see them as buzzwords – they sound good in a marketing strategy, but are tricky to define. Others think they all mean the same thing, but that’s a misconception that prevents many companies from successfully transforming their operations on a digital basis.

Digitize, digitalize or digitally transform?

Although these three concepts look similar and are closely related, they have distinct meanings. It can help to think of them as three separate stages:

Digitization
You could say that it all starts with digitization, perhaps the simplest of the three terms to define. Digitization is the process of converting analog information into a digital format. Photographs, paper documents, video tapes and cassette tapes can all be digitized to preserve or leverage their content. For example, scanning pictures and documents is an effective way to digitize the data they contain so it can be utilized in computer systems.
Digitalization
This is the second stage and is primarily about organizations (whether corporations, medium-sized enterprises or small businesses) using digital technologies in current workflows and existing business models. The aim is to create added value on an effective and efficient basis. New information technology is transforming processes in companies. For instance, training courses and meetings that would previously have taken place in person are now being held digitally using collaboration tools such as Teams. Established procedures such as order entry are also being digitalized thanks to new technologies. Another example would be customers using apps and online shops to place their orders instead of sending them in by mail, fax or email. At every level, digital formats and technologies simplify handling and save both time and money.
Digital transformation
The third stage is to complete the transformation by adopting new business strategies and approaches on an enterprise-wide basis. After all, digitalization can cast doubt not just on individual workflows, but also on entire business models. Companies can use new options such as cloud computing and big data technologies to gain access to new sales channels and digital services. Take, for example, platform companies, which offer goods, real estate and services digitally and have the potential to revolutionize entire sectors. Even startups, when they set themselves up as digital enterprises, can compete with the biggest players in their market. It’s all about revolutionizing business models and the customer experience.

Digitalization is a vehicle

While the definition of digitization is pretty concrete, the distinction between the other two stages is perhaps less clear. Digitalization is a powerful force that can trigger a new way of thinking and that encourages companies to question what has gone before. However, it is worth noting that digital development is not driven solely by internal factors – external circumstances, such as COVID-19, also have a part to play.

What’s more, it is important to remember that although digitalization enables the creation of digital business models, it is not one in its own right. If transformation is the destination, then digitalization and digital technologies are just the vehicle and every company has to find the best route and strategy for getting there.

Digital transformation – a continuous process

This is where “digital transformation” comes in. The phrase covers more than just the digitalization of products, workflows and business models. It is a global concept that factors in all aspects of a business – the customer experience, products, the market and the new economy. The authors of a European case study on digital transformation in industry defined it as follows: “We understand the digital transformation as the seamless, end-to-end connectivity of all areas of the economy, and as the way in which the various players adapt to the new conditions that prevail in the digital economy.” That means digital transformation is a continuous and disruptive process that extends far beyond the definition of digitalization. Digitalization is just one aspect of digital transformation, albeit an integral one.

Companies should adopt a more global outlook and not just rely on technology alone to digitize data and digitalize their operations as they are. If they can’t see the bigger picture, they risk ending up in a situation that was neatly summed up a number of years ago by trained electrical and telecommunications engineer and senior executive Thorsten Dirks:

“If you digitalize a crappy process, then you end up with a crappy digital process!”

Sometimes, this concept of transformation is taken even further – beyond the corporate context. In these cases, it is viewed in very general terms as a continuous process of change that is impacting wider society and the economy. It is also referred to as the digital revolution, in reference to the industrial revolution.

Five secrets for a successful digital transformation (competencies and prerequisites).

How the transformation actually works – five secrets to success

Digital transformation will succeed if products, workflows and business models are understood within the aforementioned context and actually put into practice in day-to-day business. To ensure the transformation works, certain skills are required and certain conditions need to be created – these are the secrets to success, and there are five factors that are crucial:

Capacity for change
The ability to innovate
Specialist expertise and methodological know-how
Cooperation
Data expertise

1. Capacity for change – a genuine opportunity

One of the key issues to clarify is how well the company in question embraces change. If you want to take digital transformation seriously, you need to look closely at the organization, initiate a structural and systemic process of change and ensure staff are on board at the same time. Is enough information being shared with employees? Most importantly – are they prepared for the forthcoming change?

For a transformation to be successful, it is vital to create interest in the new arrangement and nurture the right kind of mindset among staff. For everything to work out, the entire company needs to be set to the task. Various roles and aspects can function as positive “drivers” in this – the management team, the corporate culture, the employees themselves, and the organization’s innovative capacity and agility.

For your checklist: How to encourage curiosity and a readiness to change

How do we respond to changes and what do we need to do better?
To what extent can organization and corporate culture help us in this respect?
Which measures and applications can we use to help our staff more when it comes to the capacity for change?
What part can corporate communications play in this?

2. Innovative capacity – identifying and adopting new approaches

Digital transformation means change – stepping into a brand-new digital landscape. That’s why it is important to be focused when driving forward innovation and to know which direction changes need to take and how to achieve them. This calls for creativity, plenty of ideas and also the courage to adopt a visionary approach and imagine totally new things before they are put into practice. It also takes perseverance, since the task at hand is all about breaking up and redefining old workflows, outdated structures and obsolete digital infrastructures in the organization. As if on an expedition, enterprises sometimes need to enter new territory. Moreover, new approaches may require innovative methods, technologies and strategies that have not been tried out before. This again underscores just how important it is that companies can embrace the spirit of innovation when trying to transform their organization digitally.

For your checklist: How your company can promote a passion for innovation

What role does innovation play when it comes to setting up internal procedures and how agile are we in our response to changes in the market?
How innovative are our strategies and corporate culture and what can we improve?
Which agile and new methods and technologies might help drive innovative capacity in the company?
How keen are our staff on innovation? Do they have the information and skills required?

3. Specialist expertise and methodological know-how – rapid know-how transfer is essential

Digitalization transforms products, workflows and business models. From the perspective of staff, who get new tasks and roles as a result, this development poses a real challenge. They are the players in day-to-day procedures and the users of the new, digital technologies. This means they need to be integrated into an ongoing learning process, since companies need to constantly adapt to changing market conditions.

This makes specialist expertise and methodological know-how all the more important. Staff should be in a position where they can rapidly assimilate specialist knowledge. To do that, they need access to the right methods and tools and they must know how to use them. This is where the management team comes in – it must make the right material and technologies available to its workforce.

For your checklist: How to take learning to a whole new level

What new specialist expertise and methodological know-how do we need in the company?
What specialist expertise and methodological know-how do our staff have already?
How can we give staff precisely the training they need so we can build up the specialist expertise and methodological know-how we need in the company?
Which digital applications, methods, technologies, content or platforms will help us achieve that best?

4. Cooperation – networking with partners

When embarking on a difficult journey, it’s best not to travel alone. The same applies to digital transformation. That’s why it is important to understand your organization’s strengths and expertise while at the same time recognizing your limits and knowing when it’s a good idea to seek outside support. There are always experts that a company can turn to at any time – and doing so saves time and money. In the ideal scenario, a partnership can be the thing that tips the balance in your favor and helps you edge ahead of the competition.

For your checklist: How to benefit from a partnership

Which skills and capabilities do we have and which do we need to acquire?
In which specific areas do we need outside support and is it worth establishing a longer-term partnership?
Which type of partnership is suitable and what should the partner provide?

5. Data expertise – finding and reading the right sources

Digital transformation never stops. Companies must continuously re-evaluate themselves, keep an eye on the market and constantly realign themselves to meet demands and needs that have arisen. To do that, they need data – and the right sort. This needs to be collected, analyzed and then correctly interpreted. Different companies in different sectors have different priorities when it comes to data. They might use information from production to make operations run more smoothly on a digital basis, or use customer data to develop or improve products digitally.

For your checklist: How to make the most of your data

What type of information is strategically important for implementing our projects?
What type of data can we already harvest and what insights can we gain from it?
How can gaps in information or content be closed?
Which evaluation processes have we already established and how can we make good use of data for digital development?

To summarize, digitization is a method that uses technology to convert analog information into a digital format, while digitalization is a vehicle that uses technology to make digital transformation possible. When correctly understood and implemented, digital technologies can help companies make crucial progress and get in shape for the future – particularly as part of a strategic transformation. This also requires a change in mindset. It is only when a company has achieved this that it will be well prepared on a long-term basis for a successful future.

Source: insights.tt-s.com

Every business facility plugged into a power grid is at the forefront of the fight against global warming.

Nearly everyone agrees that our global relationship to the production and usage of energy needs to change, but recent reports show we’re still falling short of meeting our climate goals.

While drastic change will require coordination action from world governments, every business can make a meaningful difference in their own corner of the world—and their bottom line—by implementing an energy management system.

Any facility that has been operating for the last few years without a systematic plan to improve efficiency is sure to be wasting energy. Without regular monitoring and reviewing, it is impossible to say how much.

The average commercial building wastes 30% of its energy, an especially troubling statistic amid a climate crisis and rising energy costs.

An energy management system provides businesses with a framework for determining how much of the energy they’re purchasing goes toward productive output, how to minimize waste, and where unavoidable waste energy might find some use.

It can help you improve efficiency in terms of both utilization and sourcing. Switching to green energy sources is key to the success of any plan to optimize emissions and reduce efficiency.

Right now, solar and wind power are the largest sources of green energy, and these renewable sources—along with nuclear energy—are expected to provide the majority of the world’s power by 2030.

By implementing an energy management system, businesses can start making the changes necessary to get in step with the green power sources of the future.

This will not only support your local community and country in meeting its climate goals, but it will also allow you to maintain sustainable, revenue-saving commercial facilities for years to come. It’s a win-win situation.

What is an energy management system?

Energy management systems are processes that monitor and control your energy assets to optimize their performance, along with the technological resources needed to carry out these operations. An effective energy management system should address energy consumption, production output, and environmental impact.

Energy management processes go hand-in-hand with strategies to reduce emissions and meet sustainability goals such as the Net Zero target.

With an energy management system in place, businesses can be proactive about laying the groundwork for future energy production and storage methods, improving asset durability and lessening the need for frequent on-site maintenance.

Energy management systems vs energy management software

One question that sometimes comes up is whether a software platform can serve as an entire energy management system. An energy management system has to consist of computerized devices that use software to monitor and control energy assets, but software alone cannot fulfill all of the functions of an energy management system.

Hardware devices must interface with the facility, energy assets, and production equipment.

Energy management software can serve as a central hub for monitoring performance data, providing in-depth analytics and remote management options.

What are the benefits of an energy management system?

The obvious and immediate advantage of an energy management system is it helps you become more energy efficient, but let’s break down exactly how many benefits businesses can expect to see:

Increased visibility of energy usage provides greater awareness of your actual costs.
Optimizing energy efficiency reduces wasted energy and lowers your overall operational costs.
Early detection of performance issues allows you to prevent problems before they escalate.
Remote management capability lessens the need for on-site inspections and maintenance.
Maximizing renewable energy use over fossil fuels means a smaller carbon footprint, greater sustainability, and less impact on the environment.
Opportunities to capture and utilize excess energy output that would otherwise be wasted.

Automating certain processes and managing energy assets remotely are two of the most significant advantages of a well-implemented energy management system.

In addition to reducing maintenance costs, these features allow facility operators to identify and correct inefficiencies without delay.

Building up an energy management system from scratch may require a substantial initial investment, but the long term ROI will easily justify it.

4 Key components of an energy management system

When comparing facilities for different regions and industries, energy management systems can look very different. However, there are four key components that every effective energy management system will need.

1. Monitoring and analysis

The first job of any good energy management system is to monitor, track, and analyze the performance of your energy assets.

The system should inform you how much energy you’re using and alert you to any issues that may be developing.

For your system to be successful at this, you need to provide clear thresholds for the expected performance of your assets.

2. Resource management

With thresholds and monitoring in place, you will receive alerts when an issue is detected.

Your energy management system can evaluate live data in the context of historical performance data and predict possible asset failure before it occurs.

When you can respond immediately to these alerts by using remote management software to reallocate resources and shut down malfunctioning assets, you can minimize downtime and costs related to repairing or replacing equipment.

3. Efficiency

The most important function of an energy management system is to optimize your energy efficiency, which minimizes your environmental impact and lowers your operational costs.

The right energy management system will facilitate the prioritization of renewable sources over fossil fuel energy and minimize unnecessary energy consumption during the hours when equipment is not in use.

By using an energy management system to reduce the energy consumption of idle assets, you can lengthen their usable lifespan and save on maintenance, repair, and replacement costs.

4. Regulation and policy

Every companies’ energy consumption is affected by mandatory regulations and voluntary commitments.

Standards like ISO 50001 can serve as a framework for an effective energy management system and simplify implementation.

By factoring in both external regulations and your internal policies, you can establish clear objectives for your energy management system and ensure that your resources and procedures can reliably meet them.

How to calculate energy efficiency?

Understanding the importance of energy efficiency is one thing. Knowing exactly how to quantify it is another. Fortunately, there’s a formula that can be used to accurately calculate the energy efficiency of a given facility:

The Energy Efficiency Formula is Energy Output divided by Energy Input. The result is your Energy Efficiency Ratio, which can be multiplied by 100% to express it as a percentage.

“Energy input” is the amount of energy the facility consumes, as measured in watts or joules.

“Energy output” is the energy equivalent of the facility’s productive output.

In other words, if a manufacturing plant consumes 6,000 kilowatt-hours of energy to produce 1,500 kilowatt-hours of output, its energy efficiency ratio is 0.25, or 25%.

How to be energy efficient from the start?

Before you even start building your energy management system, there’s a lot you can do to set yourself up for success. Here’s where to begin:

1. Make a climate plan

If you’re aiming for Net Zero, you must define your goals for sustainability and draw a road map for how you intend to get there.

Start by assessing the challenges and opportunities currently in front of you, and try to identify outdated systems, inefficient processes, and other areas that can be addressed as soon as your energy management system goes live.

2. Focus on renewables

Switching to renewable energy used to cost a fortune in initial costs, but thanks to new technologies and a broader marketplace, renewables are more affordable than ever.

Some sources, such as wind and solar, are now even cheaper than fossil fuels.

By hooking up to renewable energy sources and systematically managing their usage, you’ll have no trouble saving money and the planet simultaneously.

3. Build smart facilities

Monitoring and managing your energy usage is much easier when your equipment – and the facility – can assist.

Innovative technologies based on artificial intelligence, machine learning, and the Internet of Things can detect issues and send immediate alerts.

When problems arise, these devices can be used in conjunction with energy management software to shut malfunctioning equipment down and prevent power overloads.

4. Watch your metrics

A good energy management system needs an equally good monitoring system.

To function correctly, energy management systems rely on accurate, real-time data and key performance indicators like power usage effectiveness.

Smart sensors and other monitoring devices can be used to maintain visibility into your energy usage at all times.

How to build a successful energy management system

Once you’ve made your initial preparations, you can start building a successful energy management system by following this four-step process:

1. Collect the necessary data

The lifeblood of any energy management system is data.

Begin the construction of your system by identifying the key performance indicators most relevant to your operations.

You may have to break down several metrics related to your energy usage and asset performance to determine the KPIs that will provide you with the best insights for making your operations more efficient.

2. Analyze your data

By subjecting the metrics you’ve identified to rigorous analysis, you can establish performance thresholds for your remote assets.

This will show you when something is going wrong and help you understand the ebb and flow of production activity, highlighting the peak hours and idle time when proactive energy efficiency interventions will have the greatest impact.

3. Find opportunities for improvement

Once you’ve got data and analytics in hand, you can start using them to find areas where you can make meaningful improvements.

This could involve generators running when they aren’t needed, devices being charged improperly, fuel leaks, or any other issues that can negatively impact efficiency.

Remote monitoring software can inform you when equipment requires maintenance or replacement, allowing you to take preventive action instead of scrambling to deal with an unexpected breakdown.

4. Never stop reviewing

Your energy management system may be set up and functioning as intended, but that doesn’t mean you get to rest on your laurels.

Energy efficiency optimization is a continuous cycle, and you have to monitor the changes you’ve made to be certain they’re working as intended and delivering positive results. If not, you can correct the course before wasting more energy.

Resources for creating an effective energy management system

There’s a lot that goes into a practical and dependable energy management system. The following resources can help you design, evaluate, and refine your system.

What is energy management?

Implementing an energy management system usually requires the participation of the entire organization. Getting buy-in from key decision-makers can be a lot easier when you have the facts and reasoning that explain why energy management systems are necessary and what benefits they can provide.

To make this case, you have to explain exactly what energy management is, how businesses can put energy management systems in place, and why energy management is so important.

Energy management’s first and most attention-grabbing benefit is that it saves businesses money by eliminating waste and reducing maintenance costs. The sustainability argument is also an increasingly important factor for today’s consumers.

It can also be helpful to provide use case examples and a breakdown of different energy management techniques.

The essential guide to energy management systems

It never hurts to have a comprehensive overview of energy management systems, or a detailed guide that explains the benefits, itemizes key functionalities and breaks down the implementation process.

Putting an energy management plan into action can be a huge project for a large organization, especially if you have a lot of equipment and energy assets already deployed in the field.

Arming yourself with knowledge can help you clear avoidable mistakes and set up the advanced conditions that will enable your energy management system to function properly and deliver real and meaningful efficiency improvements.

Energy asset management: what is it and what tools do I need?

An energy management system is often a complex framework that consists of a variety of devices, equipment, and production environments.

To implement your system effectively and ensure that it can perform all the critical functions that are required, various supplementary tools may be required.

You’ll want to select tools that provide:

Full real-time visibility over your energy assets
Alert systems to notify you immediately when issues are developing
Analytical software to provide you with actionable performance insights
Systems to secure your facility and the assets located there
And, monitoring tools that can show battery charge status in real-time.

On top of all this, having a software platform that can provide a single reporting dashboard and remote access hub for all the devices and tools utilized by your energy management system will be beneficial.

Source: galooli.com

In today’s ever-changing business landscape, the term “strategy” has evolved into a versatile concept, and its importance in the context of Mergers and Acquisitions (M&A) cannot be overstated. This article examines the different sides of strategy, from its historical origins to its pivotal role in shaping successful M&A endeavors. By delving into both historical and contemporary examples and offering actionable insights, we aim to elevate our understanding of strategy to an unparalleled level.

From War Rooms to Boardrooms

To truly grasp the essence of strategy, it’s essential to trace its lineage from ancient warfare to the modern business world. The Greek term “strategos” was synonymous with the art of war, characterized by meticulous planning, resource allocation, and decisive action. Even as the concept of strategy has transitioned from the battlefield to boardrooms, the core principles remain profoundly relevant.

Historically, the concept of strategy is not confined to a specific era or culture. It is adaptable and universal. The ability to adapt, outmaneuver competitors, and seize opportunities forms a common thread in both military campaigns and corporate competitions.

Corporate Strategy vs. M&A Strategy

In the realm of business strategy, two distinct yet interrelated concepts play a pivotal role: Corporate Strategy and M&A Strategy. These two facets are integral to an organization’s growth and evolution, each with its unique focus and purpose.

Corporate Strategy: Setting the Stage

Corporate Strategy is the foundational pillar upon which an organization’s overarching goals are established. It encompasses the grand vision of a company and defines its path for future growth and prosperity. Initially, most companies begin with a generic growth strategy, aiming to expand their market presence and increase their revenue. However, as a company matures, it often finds the need to diversify its approach and explore new avenues for growth.

In this phase, a shift occurs from the conventional strategy of generic growth to a more nuanced and sophisticated approach. This evolution may be triggered by various factors such as market saturation, changing consumer preferences, or emerging disruptive technologies. The corporate strategy then takes on a more refined shape, focusing on diversification, operational efficiency, or other specialized goals.

M&A Strategy: Aligning with Desired Outcomes

In the realm of M&A Strategy, the core emphasis is on identifying and achieving specific outcomes that align with the evolved corporate strategy. This stage involves strategic decision-making regarding market expansion, diversification, operational efficiency, or other targeted goals. M&A Strategy serves as the bridge between the broad corporate strategy and the tactical actions required to make it a reality.

Setting Well-Defined Goals: The Cornerstone

In the context of Corporate Strategy, the foundation is built upon well-defined goals that provide direction and purpose. These goals serve as the guiding light, illuminating the path toward strategic success. Companies aspire to shift from generic growth objectives to more focused and specialized goals, which are aligned with their evolving corporate strategy.

For instance, consider Amazon’s acquisition of Whole Foods. of Whole Foods. This strategic move exemplified the company’s goal to enhance its market presence and distribution capabilities, reflecting a shift from generic growth towards a more targeted objective.

Making Strategic Choices: The Heart of M&A

In the M&A realm, strategy thrives on the choices made to achieve the desired outcomes. These choices revolve around target selection, negotiation tactics, and integration approaches. M&A Strategy is the vehicle that translates corporate goals into actionable plans. It involves assessing potential targets, evaluating the synergy they offer, and selecting those that best align with the company’s evolving corporate strategy.

Take, for example, Disney’s acquisition of 21st Century Fox. This strategic choice was made to gain a competitive edge in content production and streaming services, reflecting Disney’s decision to diversify and enhance its content portfolio.

Executing with Precision: Bringing Strategy to Life

No strategy is complete without effective execution. In M&A, the focus shifts to implementing the chosen strategies. It involves the integration of acquired entities, successful negotiation of terms, and ensuring a seamless transition. Effective execution is paramount to achieving the desired outcomes set by the corporate and M&A strategies.

An excellent illustration of effective execution is the integration of Pixar into Disney’s animation division. This showcases the importance of well-executed actions in realizing strategic goals, aligning with Disney’s goal of becoming a dominant player in the animation and content industry.

Contextualizing Strategy in Mergers and Acquisitions

Corporate Strategy lays the groundwork for a company’s overarching goals, while M&A Strategy is the tactical approach that aligns with these goals, aiming to bring them to fruition. These two facets work in harmony, ensuring that an organization adapts and evolves in a dynamic business environment.

M&A strategy is a nuanced and complex discipline. It involves acquiring or merging with another company to achieve strategic objectives like growth, diversification, or cost reduction. The strategic fit between the acquirer and the target company is a critical aspect of M&A strategy.

The concept of strategic fit in M&A mirrors the alignment of military forces on the battlefield. In M&A, it means ensuring that the target company aligns with the acquirer’s overall strategic vision.

Example: Microsoft’s acquisition of Linkedin aimed to harness the platform’s professional network and align it with Microsoft’s suite of productivity tools, creating a synergy that enhanced both companies’ strategic positions.

Valuation in M&A is akin to assessing the lay of the land before entering the battlefield. Overpaying for an acquisition can have dire consequences. Thorough valuation ensures the price paid for the target company is justified.

Example: Verizon’s acquisition of AOL required a meticulous valuation process to ensure the purchase price aligned with the assets and potential synergies.

Effective integration of acquired entities is the equivalent of consolidating territories after victory. An integration plan should cover aspects like merging IT systems, streamlining operations, and eliminating redundancies.

Example: The successful integration of Pixar into Disney’s animation division showcases the importance of a well-executed integration plan.

Cultural Integration: Combining organizations with distinct cultures can be complex, affecting employee morale. Effective cultural integration is crucial.

Regulatory Hurdles: Navigating complex regulatory environments, especially in cross-border deals, is a significant challenge. Compliance and legal considerations must be addressed.

Financial Risks: Overleveraging or underestimating financial risks can lead to instability. Careful financial planning and due diligence are vital.

Communication and Stakeholder Management: Effective communication with employees, stakeholders, and customers is key to maintain trust and confidence throughout the M&A process.

Source: maa-institute.org

In the post-pandemic M&A landscape of economic uncertainty and geopolitical tension, strategic M&A planning is fundamental for organizations to adapt to the new normal and shift their focus from mere financial gains to tactical objectives, like market expansion and access to new technology.

The article explores the basics of mergers and acquisitions strategy, provides merger and acquisition strategy examples, and explains how to mitigate M&A risks, including ESG and cultural alignment.

What is an M&A strategy?

Mergers and acquisitions strategy or M&A strategy is a company’s approach and method for combining or acquiring other businesses to achieve certain goals, such as expanding market share, accessing new technologies, or diversifying product offerings.

To understand M&A strategies, it’s important to distinguish between two buyer types: financial and strategic buyers.

Financial buyers

Financial buyers engage in M&A transactions with the goal of financial return. These are professional investors, often from private equity firms, who stick to the following process:

Acquisition. They choose target companies, identifying and purchasing the best financial option.
Performance enhancement. They work to enhance the target company’s performance by implementing measures to reduce costs, improve cash flow, and boost profit margins. The primary objective is to enhance returns on invested capital.
Exit strategy. They sell the acquired company or list it on the stock market with an initial public offering. For insights on how to pitch a stock during the exit phase, refer to our article.

Strategic buyers

Strategic buyers are companies that regard M&A as a logical extension of their broader growth strategy. In strategic mergers and acquisitions, one company buys another to pursue specific strategic aims, such as:

Synergy realization. When starting the M&A processes, companies often focus on cost synergies. However, studies demonstrate that a failure to consider revenue synergies from the start of M&A may slow the realization of value by a year or more. To prevent it, companies involved should develop cross-functional teams to create realistic plans for achieving goals.
Market expansion. The most visible sign of a company’s growth is market presence, often quantified through metrics like market share, customer loyalty, and brand recognition. When Microsoft purchased LinkedIn for $26.2 billion, it entered the professional networking and social media space, broadening its market access beyond traditional software and technology.
Access to new technologies and intellectual property. Without innovation, businesses are left behind. That’s what happened to hundreds of large companies, including Kodak, which was so focused on the success of photography film that it missed the digital revolution. That’s why pursuing technology-driven M&A opportunities is a must, especially for tech companies and the pharmaceutical industry. It allows you to get the technology quickly without the need to develop it and helps avoid royalty payments on patented technologies.

Strategic planning in M&A

When the objective of an M&A lacks clarity and a well-defined strategic rationale, the deal falls apart. Take, for instance, the merger between America Online and Time Warner, which was valued at a stunning $350 billion in 2000. Despite initial expectations for success, the new entity failed. The inability to see the future of the internet, understand the landscape of the media industry, and identify cultural misalignments led to the collapse of a merged company.

That’s why, before starting the M&A process, careful strategic planning is essential. It involves outlining the objectives and actions necessary for a successful transaction. Consider the following:

Clear objectives. Define the strategic objectives driving the M&A, whether it’s entering a new market, acquiring technologies, or realizing cost savings through economies of scale. For example, when acquiring LinkedIn, Microsoft formulated its goal as “to grow the professional networking site and integrate it with Microsoft’s enterprise software,” indicating market expansion as their key strategic objective.
Thorough due diligence. Prepare to conduct comprehensive due diligence on the target company, evaluating its financials, operations, IP, and legal aspects. Seek advice from professional services firms that can help identify potential risks or opportunities associated with the target firm. Also, leverage tools such as virtual data rooms to ensure secure and efficient information exchange.
Employee retention. According to EY research, 47% of employees leave after a transaction. The number grows to 75% within three years. To minimize the human capital loss, both the target and acquiring firm are recommended to nominate the 2% of critical talent in each business area and prepare retention packages for them. It’s also essential to develop a comprehensive M&A communication plan to provide employees with a clear vision for the company’s future.
M&A regulatory compliance. During M&A, both target and acquiring companies become subject to regulatory scrutiny and legal considerations from bodies like antitrust authorities or competition commissions. The aim is to assess the transaction’s potential impact on market and price competition to prevent monopoly and ensure compliance with relevant regulations. To mitigate legal complexities, seek advice from legal experts specializing in M&A.

Types of M&A strategies

Companies may employ various M&A strategies, depending on the objectives they want to achieve.

Category	Most suitable for	Key objectives	M&A strategy cases
1Horizontal mergers	Two businesses that operate in the same industry and share the same product lines and markets (direct competitors)	To eliminate competition, reduce costs, and achieve economies of scale by combining similar operations	Disney’s acquisition of Pixar united two entertainment industry giants, aiming to consolidate resources and eliminate competition
2Vertical mergers	Companies at different stages of the supply chain	To improve supply chain efficiency, reduce operating costs, and enhance control over the production process	Vertical integration of Tesla with SolarCity united electric vehicles and solar energy, enhancing efficiency and creating comprehensive sustainable energy solution
3Market extension M&A	Companies selling the same products in different markets	To expand market reach and increase customer base	Procter & Gamble’s acquisition of Gillette brought together two consumer goods giants. This market-extension merger allowed P&G to expand its market presence globally
4Product extension M&A	Companies offering complementary products or services in the same market	To diversify product or service offerings and cross-sell to existing customers	Google expanded its services and entered the online video-sharing space through the product-extension merger with YouTube
5Conglomerate mergers	Two companies with unrelated business activities	To increase market share and diversify businesses	Amazon’s acquisition of Whole Foods is an example of a conglomerate merger. It united an e-commerce business with a grocery chain, diversifying its business portfolio and expanding its presence in the retail industry
6Cross-border acquisition	Companies aiming for global expansion and international market access	To expand into new markets internationally	Visa’s acquisition of UK-based fintech Currencycloud allowed Visa to strengthen its position in the global payments industry and improve its services for international transactions

It may happen that after carefully analyzing a deal, the buy-side or sell-side decides that merger and acquisition strategies don’t present the best choice for the company’s organic growth. In this case, it may consider other options, such as an alliance, joint venture, or franchise.

An alliance is a collaborative partnership between two or more companies that involves the sharing of resources and expertise. In joint ventures, two or more businesses come together to undertake a specific project. Franchises grant the right to operate using an established business model.

Some companies might also opt for a divestiture strategy that involves divesting some acquired assets or business units to grow and increase market value.

The human factor: Cultural mergers in strategy

A strategic merger between the German-based Daimler-Benz and American-based Chrysler serves as an excellent example of how a significant cultural gap can lead to the failure of corporate consolidation. The clash in management styles, communication practices, and decision-making processes resulted in operational challenges and hindered the expected synergies and revenue growth.

That’s why cultural alignment in mergers should never be underestimated. When companies combine, it’s not only about the financial and operational aspects. The human factor plays a crucial role and should be considered during post-merger integration and included in the M&A integration plan.

Here are the best practices for successful post-merger change management and cultural integration:

Early cultural due diligence. Conduct thorough cultural due diligence early in the M&A process. Understand the values, beliefs, and practices of both organizations to identify potential areas of misalignment.
A cultural integration plan. Develop a plan with initiatives that can help culturally integrate the companies. For example, create cross-cultural training sessions and invite experts to discuss cultural nuances, potential challenges, and strategies to navigate them.
Leadership alignment. Schedule regular senior management meetings where leaders from a target and an acquiring company can express their expectations and concerns for the integrated organization.
Feedback sessions. Organize regular feedback sessions where employees can express their thoughts, concerns, and suggestions regarding the integration.

Risk mitigation in M&A strategy

Effective risk assessment is key to successful deals. Let’s explore how identifying and managing risks paves the way for smooth and prosperous transactions.

Key risks to know	Description	Risk mitigation tactics
1Challenging economic times	It’s believed that M&A activity decreases in an economic downturn. However, a PwC analysis found that companies pursuing deals during economic uncertainty saw higher shareholder returns than industry peers	1. Stay adaptive and confident even in uncertain economic times. This helps identify and capitalize on emerging business models, as in past recessions 2. Diversify funding sources, focusing on maintaining access to capital and considering both public and private funding options
2Risk of target overvaluation	According to McKinsey, 25% of deals are overestimated by at least 25% in planned cost synergies, potentially leading to a 5% to 10% valuation error	1. Conduct a thorough and objective evaluation, assessing the target’s past performance and future potential. Use methods like discounted cash flow or precedent transaction analysis 2. Hire external financial advisors to offer an unbiased perspective
3Poor due diligence	Inadequate due diligence can lead to poor valuation, unexpected litigation, or tax issues, while thorough due diligence allows the buyer to adjust expectations, devise effective negotiation tactics, and reduce the risk of legal or financial challenges	1. Start due diligence early, ideally after the signing of a Letter of Intent (LOI) 2. Assign specialists with business, legal, and financial expertise and industry knowledge to conduct due diligence

ESG considerations

Due to a rising awareness of the significance of sustainability and ethical practices in business, the ESG impact on M&A shouldn’t be overlooked. In fact, almost 70% of respondents surveyed by Deloitte consider ESG strategically important in M&A.

However, they also admitted that it’s not always clear how to incorporate ESG factors into M&A strategies. For example, 43% said they include ESG in M&A discussions just occasionally, and 39% lack clearly defined metrics for evaluating ESG.

To respond effectively to the growing importance of ESG in M&A strategies, let’s explore the three key ways ESG is reshaping M&A:

ESG presents new value-creation opportunities. In 2021, private investors saw remarkable returns, with $86 billion generated from 80 exits in climate tech, clean tech, and impact investing. Studies also indicate that better ESG performance aligns with higher annual returns, leading to a compounded effect of 20% to 45% over 5 to 10 years.
ESG reveals new risks. These risks include climate-related threats to assets and challenges from the global move away from fossil fuels. These risks raise questions that companies and investors can address in advance, like the vulnerability of assets to rising sea levels and extreme weather events, the cost of compliance with future regulations, and the impact of new climate tech innovations on markets and supply chains.
ESG impacts can be quantified. Many organizations struggle to translate ESG issues into financial terms, but this can be addressed with the help of advisory services. For example, in one case described by Deloitte, a potential deal to acquire an energy provider was abandoned due to greenwashing in revenue reporting. That was because achieving the target’s stated 80% revenue from renewable fuels would have required a $300 million investment.

Key takeaways

M&A strategy involves a company’s methods for combining with or acquiring other businesses to achieve specific goals like cost and revenue synergies, market expansion, or access to new technologies.

Mergers and acquisitions business strategy types include horizontal, vertical, market-extension, product-extension, conglomerate, and cross-border acquisition strategies.

Strategic planning is vital for successful M&A, emphasizing clear objectives, thorough due diligence, employee retention strategies, and compliance with regulatory requirements.

To achieve cultural alignment, which is so important in M&A, consider early cultural due diligence, a comprehensive cultural integration plan, leadership alignment strategies, and regular feedback sessions.

The most common risks companies should address in M&A are uncertainties in economic times, target overvaluation, and poor due diligence.

Source: mnacommunity.com

Risk Considerations:

1. Regulatory Risks: Evolving regulatory environments, licensing issues, and compliance challenges.
2. Infrastructure Risks: Aging infrastructure, power outages, and fiber cuts.
3. Cybersecurity Threats: Increasing cyber attacks and data breaches.
4. Competition and Market Saturation: Intense competition and market saturation in key countries.
5. Currency Fluctuations and Economic Instability: Currency fluctuations and economic instability.

Mitigants:

1. Regulatory Risks:
– Engage with regulators and industry associations to shape policy and advocate for favorable regulations.
– Ensure compliance with regulatory requirements through robust internal controls.
2. Infrastructure Risks:
– Invest in modernizing and expanding infrastructure to improve resilience and capacity.
– Implement backup power systems and redundancy measures.
3. Cybersecurity Threats:
– Implement robust cybersecurity measures, including threat detection and incident response plans.
– Conduct regular security audits and penetration testing.
4. Competition and Market Saturation:
– Differentiate through innovative products and services.
– Focus on customer retention and loyalty programs.
5. Currency Fluctuations and Economic Instability:
– Diversify revenue streams across countries and currencies.
– Implement hedging strategies to manage currency risk.

Additional Mitigants:

1. Develop a comprehensive risk management framework.
2. Conduct regular risk assessments and reviews.
3. Implement a robust compliance program.
4. Foster a culture of innovation and continuous improvement.
5. Develop strategic partnerships and collaborations.
6. Invest in employee training and development.
7. Engage with stakeholders, including customers, investors, and communities.

By understanding these risk considerations and implementing effective mitigants, boards in the telecommunications sector in Africa can minimize risks and drive long-term success.

Key issues facing boards of directors in 2025

Strategic Leadership and Oversight
Boards must prioritize strategic leadership and oversight, ensuring alignment with the company’s goals and objectives.

Diversity, Equity, and Inclusion
Boards should focus on diversity, equity, and inclusion, recognizing the benefits of diverse perspectives and experiences.

ESG and Sustainability
Boards must address environmental, social, and governance (ESG) issues, prioritizing sustainability and responsible business practices.

Technology and Innovation
Boards should stay informed about technological advancements, such as generative AI, and their impact on the company’s business model and operations.

Global Uncertainty and Risk Management
Boards must navigate global uncertainty, managing risks associated with geopolitical tensions, economic volatility, and regulatory changes.

Talent Management and Succession Planning
Boards should focus on talent management and succession planning, ensuring the company has a strong leadership pipeline.

Stakeholder Engagement and Communication
Boards must prioritize stakeholder engagement and communication, maintaining transparency and trust with investors, customers, and employees.

Board Composition and Refreshment
Boards should regularly assess their composition and refreshment, ensuring they have the right skills, expertise, and perspectives to drive the company’s success.

Culture and Values
Boards must promote a strong culture and values, supporting ethical decision-making, accountability, and a positive work environment.

Diversity and Inclusion: Ensure the board reflects a diverse range of skills, experiences, backgrounds, and perspectives to drive informed decision-making and innovation.
Strategic Alignment: Recruit directors whose expertise aligns with the company’s strategic goals and objectives, enabling effective oversight and guidance.
Independence and Objectivity: Prioritize independent directors who can bring objective perspectives, unbiased by conflicts of interest or personal agendas.
Relevant Expertise and Experience: Identify directors with relevant industry, functional, or technical expertise to provide valuable insights and informed decision-making.
Leadership and Governance Skills: Recruit directors with proven leadership and governance skills, including the ability to engage in constructive debate, build consensus, and hold management accountable.

Additionally, consider factors like:

– Director tenure and term limits

– Board size and composition

– Director compensation and incentives

– Ongoing training and development

– Succession planning and board renewal

By addressing these issues, organizations can recruit high-quality board directors who drive long-term success and sustainability.

Abstract- This article talks about need of Directors Training as well as it summarizes what the law requires in different jurisdictions, and at the end it distinguishes for each country whether these requirements are mandatory or voluntary. In a world of instant communication and ever changing business models, the traditional task of the Professionals in business is evolving. The mounting drift focus on:
• Increased governance requirements
• More regulations
• More emphasis on documentation
• More intervention from governments

Together with guiding corporate strategy, the board is chiefly responsible for monitoring managerial performance and achieving an adequate return for shareholders, while preventing conflicts of interest and balancing competing demands on the corporation. Now more than ever, directors need to understand their fiduciary, legal, and ethical oversight responsibilities hence the bar has been hoisted. Board of directors must focus more on economic performance, not conformance. Public confidence in corporations has reached an all-time low and the role of directors has become even more challenging and demanding.

Besides, Governance-related policy changes introduced in recent years have increased the focus on the experience and qualifications of corporate directors. Accompanying these changes is an increased expectation that companies and boards take affirmative steps to ensure directors are prepared to address emerging opportunities and challenges. The board of directors has had often the business shrewdness, but lack a deep grasp of corporate governance or the leadership skills required to reform policies, practices, and behaviours that can undermine a company’s performance.

Today’s boards of directors are facing an unprecedented level of scrutiny and pressure from regulators, investors, media, institutional investors, and other stakeholders. Besides, Directors’ training and development is fundamental element in enhancing board effectiveness and can help board members be better prepared to tackle misgiving. An effective board education program offers ongoing educational opportunities that help board members continuously cultivate skills that heighten the overall effectiveness and performance of the board.

Boards today can be a competitive advantage for companies. They can provide an outside view, overcome blind spots in strategy, raise awareness of external risks, connect with governments, society and other stakeholders, give credibility and build trust in ways that executive teams cannot. But most board education programs today add little value and instead either focus on the regulatory environment or copy existing managerial education for senior executives. But boards need more than this to become effective. For example, the board’s strategic role is different from the strategic role of executives. It ranges from supervision to co-creation of supporting the executives

The Board of directors not only monitor the company’s innovation performance, they actively contribute to it. Board diversity is key in this regard as board members from other industries are faster to foresee sudden industry shifts or disruptive moves. Employee representatives can also be an excellent source of innovative thinking. Board education is failing to address many other important questions, such as which structures enable boards to add real value, as opposed to mere regulatory compliance. And, most importantly, what makes an individual a good board member.

Besides, Board development and training is important because today’s chief executive officers (CEOs) are overstretched and confronted with an incredible rise in complexity of society, governments, alternative business models, global changes, new risks and opportunities and shifts in economic conditions. Even the best executives cannot be expected to respond consistently to all these challenges.

As organizations strive to compete in the global economy, differentiation on the basis of the skills, knowledge, and motivation of their workforce takes on increasing importance. According to a recent industry report by the American Society for Training and Development alone spend more than $126 billion annually on training and development. Undoubtedly, Education is important, but people learn from their practical experiences much better as compared to bookish knowledge. Now a days training and development has been the most important factor in the business world because it increases the efficiency and the effectiveness of both directors and the organization.

OCED in 2004 avowed that in order to improve board practices and the performance of its members, an increasing number of jurisdictions are now encouraging companies to engage in board training and voluntary self-evaluation that meets the needs of the individual company. (Principle VI.E.3)

a)Orientation of Director on Board
The move from being a manager to a directorship or from director to chairman is more than a change in responsibilities; it is a major change in behaviour and identity. Most of directors will have been becoming more experts in a narrower field, or focusing only on the interests of a single department. Suddenly, a need to have equal responsibility for all departments scanning the external environment for opportunities and developments and joining a new, elite, group at the top. Their need and requirement is different from the seasoned and full time director working with other board of similar or different product line.

Numerous companies are faced with the need to make a step change in the way they operate, perhaps when the business has grown from small, informal beginnings to a point where a more structured organization is appropriate. Effective company directors understand that directing the organization is much more than managing it.

They aim to maximize their contribution to the work of the board and ensure that they achieve high performance in all aspects of their role as company director. The difficulty is for the newly-appointed company directors manage their transition to the board effectively, by explaining both the theory and the practice of corporate governance and by building on
their existing competencies.

b) Why is it Important to Welcome and Train new Board Members?
A proper welcome and training will help new members:

• Take on their roles in the organization both quickly
and comfortably;
• Feel more connected to one another;
• Feel more connected to the organization;
• Better understand their role on the Board;
• Operate from the same “script” that is, to
understand the vision, mission, and their roles in the
organization;
• Feel more motivated to do a better job.

i. Ideal Training Objectives
The training objectives of the new director(s)
must be:
• A knowledge of the law relating to company
directors’ liabilities;
• A better appreciation of how to apply the principles
of corporate governance to building an effective
organization;

An insight into how to balance the different aspects of the company director role – governance, entrepreneurship and management;

• A clear understanding of the leadership and organizational issues involved in stakeholder management and performance delivery;

• A sharper focus on their own competencies and how they can be further enhanced in order to maximize the effectiveness of their dealings with the rest of the board as well as with the organization as a whole.

Source: globaljournals.org

Newer Posts

Older Posts