It’s now a commonly held view that this is the new ‘age of uncertainty’. Regular readers will know I have been banging this drum ever since I started writing this column.
After the fall of the Berlin Wall, the world – or at least the global north and west – saw 25 years of what the Federal Reserve’s former chair, Ben Bernanke, christened ‘the Age of Moderation’. Inflation was low, economics were relatively benign and the triumph of liberal democracy seemed assured.
But, as the measures taken to ameliorate the 2008 crash unwound, a rising tide of apparently disconnected events – including the Russian invasion of Crimea, the UK Brexit vote and the first Trump presidential win – ushered in a much more turbulent period.
Actually, I think the world has always been pretty uncertain – but now it’s also deeply unpredictable. For many in business and beyond, that really is unsettling. It elevates the practice of systematically identifying risks and putting in place detailed mitigation plans to a level of significant importance in all sorts of organisations.
‘What might happen? and ‘What must we do if it does?’ are questions every company should ask itself continuously. For decades, risk management and the corporate risk register have been business backwaters, reluctantly ritually visited annually by boards and executives alike. No more.
Now career-minded non-executive directors know the chances of expanding their portfolio depends on being highly activist in policing their company’s potential capacity for inadvertent self-harm. Not masters of disaster but of its avoidance. In fact, it seems to me many NEDs see this as an area that can advance their own reputation independent of the businesses whose shareholders they serve – but that’s a topic for another column.
It’s not just NEDs, of course. Senior executives who aren’t across all the risks in their business face the prospect of being held to account sooner rather than later. Alison Rose at NatWest is just one of those who ended up walking the plank because she failed to see the dangers for the bank’s reputation in cancelling Nigel Farage.
A few weeks ago, the Unilever board took activism in this arena a major step further. It decided to fire CEO Hein Schumacher after just 18 months in place and replace him with CFO Fernando Fernandez. Announcing the surprise change, Unilever chair Ian Meakins said the board was “committed to accelerating the execution of our growth action plan”. “The board have been impressed with Fernando’s decisive and results-orientated approach and his ability to drive change at speed,” he added.
Decoding all that, most commentators summarised the board felt Schumacher was not delivering change fast enough, even in this uncertain world. Looked at positively, it tells us that the board – and in particular Meakins – were more confident in the delivery potential of their CFO than their CEO, even though the latter had been in place for a relatively short period. In effect, they judged the risk of not changing horses as greater than the status quo. You could read that as great confidence in the judgement of the chairman.
For me, that decision also crosses a rubicon. It sets the bar for performance and speed of delivery in big global consumer goods companies substantially higher than it has been before. In effect, Meakins has challenged all those businesses with sluggish performance to consider radical options even when the CEO has been in place a short time.
Shareholders – particularly activists (though perhaps, ironically, not all those on the Unilever register), will cheer the Meakins doctrine – which might be paraphrased as ‘if ‘twere done, ‘twere best done quickly’. Other chairs and those CEOs who have their heads on the block will not thank him for the light he has shone on speed of delivery. But they would do well to take note of his logic, as it may be quickly applied to them.
Ian Wright of Acuti Associates
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