A warm welcome once again! I very much appreciate your patronage as we share valuable information to help build and promote entrepreneurship globally. In some of my previous blogs I mentioned some things about the unimaginable and intrinsic value of entrepreneurship to humanity. I remember stating that entrepreneurship has the capacity to solve so many ills in society that governments can never solve. This of course requires quite some effort on the part of entrepreneurs globally, and a paradigm shift in the attitudes and mentalities of entrepreneurs themselves, governments, society and other stakeholders. That is my opinion, and I’m entitled to it and will defend it even if you will object to this, criticize me, or call me names. I don’t even care if you come up with strong research papers against my opinion. Spare me that. Ok? So, as we develop entrepreneurship we are indirectly solving some of the world’s problems. Great!
Let me put aside that solutions-to-humanity agenda, as that is not my focus today. It is a by the by. My focus today is some terminology or phrase called integrated reporting and thinking. Have you heard about this Mr. Entrepreneur? Do you already know this or you are still grey or even opaque in this regard? It is reported that this principle originated from an initiative by the Prince of Wales in 2009, involving the Prince’s Accounting for Sustainability Project, and other stakeholders such as the UN, companies, investors, accounting bodies and accounting standard setters. I’m not going to bore you with more history and lots of things about this. In any case, you can do your own findings and satisfy your crave if at all you have it. My point is basically to bring out some important aspects of this principle that I think entrepreneurs should learn from. I desire that you get to know this (if you haven’t) before your accountant rams it into your mind. I’m an accountant myself but I know how accountants sometimes do things.
Again, I have entitled this blog Critical Lessons for Every Entrepreneur On The Future of Business, as I principally intend to keep bringing once in a while some new thoughts and directions that businesses are taking globally. This will ensure that we don’t remain behind as entrepreneurs. Come on, isn’t this pretty good? Don’t pretend to dislike this. I know you like it even if you don’t write back or document your response in this blog platform. This integrated reporting of a thing basically brings together various information regarding your business strategy, governance, performances and prospects. It does this in such a way that it creates value through demonstrating sustainability and reflecting the commercial, environmental and social context in which your business operates. I will leave it at that, as we don’t need to make things complex. Don’t you agree with me? So, what are some good things an entrepreneur must learn from this agenda? What value can an entrepreneur get from this? Read on and let’s explore some of the issues.
- It makes you report what matters about your business. Entrepreneur, you should know that there are many stakeholders who might be interested in your financial reports. Now, I know some of us entrepreneurs don’t like financial reports and yet it’s one of the areas that smart entrepreneurs never ignore. You should not be taken for a ride by your accountants. Even if you don’t like numbers, ratios and statistics, accounting and finance, financial reports etc. please read on as we are not going into all those things. I promise. We will keep it simple. Integrated reporting responds to stakeholders demand for greater transparency. The traditional financial reports such as the statement of financial position (or balance sheet or statement of affairs) and statement of comprehensive income (or profit and loss statement, operating statement, or income and expense statement) do not give enough or mean so much. This is true even with the numerous notes that accountants usually add to the financial statements. I mean, what do your numbers in your reports mean? Can someone get some more facts behind those numbers? This is the gist behind integrated reporting and thinking.
- It enhances communication of your business value and sustainability in a clear and concise way. When you adopt integrated reporting, this helps drive and communicate value in your business. Now, value is what people pay you for and if you don’t have that value, only the insane people will pass by to give you offerings in your business. Do you get what I mean here? Your business is to continue creating and delivering value, in a way that others cannot, and keep people coming back to you over and over again. So, integrated reporting enables you to tell a story about your enterprise. It enables you to be unique. It enables you to illustrate what is driving business and profit or loss in your enterprise. It brings out the critical factors and performance yardsticks. The sustainability element assures your market that you will still be in business in the next many years; and hence you will continue meeting the needs of the market. Just imagine a situation where your customers or clients know that you will not be in business next year. This can be disaster! Don’t you believe this? They will move on to other businesses long before you shut your doors.
- Integrated thinking generates integrated reporting which generates integrated action. This is simply fantabulous! When you think in a coordinated, linked, blended, fused and homogenized way in your enterprise, this is integrated thinking and hence you can also report in an integrated way. When you think in an integrated way your actions are most likely going to be integrated too, unless you are simply not smart. Of course, there are people who just screw up things even if gold or silver is given to them on a plate. So, we can confidently say that integrated thinking gives rise to integrated reporting and integrated action. By the way, I may be accused here because some people think that integrated reporting should come first before you can have integrated thinking. This is similar to the chicken and egg story. We may argue until the cows come back, as is commonly said in some parts of Africa, meaning until late evening from a morning start. Never worry pal, what I want is that you have the three elements of thinking, reporting and action. I don’t care if you have it down upside and I have it upside down! Agreed?
- It enables decision making based on a much broader perspective, and in a more interconnected and forward looking way. By the way, critical decision making is an area where many entrepreneurs just move in a tangent from reality, and they ultimately pay a high price. The reality is that many entrepreneurs never analyse issues enough before they make important decisions. Oftentimes decisions are made in a hurry with half-baked and insufficient information. Decisions are made without much focus on the interconnectivity with other critical components of the business, and without considering much about the future. This will no longer be possible if you really practice integrated thinking and reporting, because you will be challenged. Either yourself through your own conscience or brain, or someone else, will tell you that you are not authentic with your plans and ideas, because they are simply inconsistent, shallow, disconnected and disorganized.
- It requires enlightened leadership. Ah yah yah yah! This is another dangerous area we are venturing into. The reality is this. The great enterprises you see today have great leaders, or have had great leaders in the past. There is absolutely no way you are going to build a great enterprise without good leadership. Don’t blame people anyhow! Do you understand me? Leadership is important, not only for businesses but for all entities be they families, churches, nations, organizations etc. Integrated thinking, reporting and action demands for enlightened leaders. I mean leaders who have seen the light! There is no scope for shallow minded and opaque guys here. This means that if you are not an enlightened entrepreneur, this approach should ideally start throwing some light around you. When your torch is lightened, you will help light other people’s torches and your torch will not diminish. This approach compels you to think more deeply, reflect, analyse, search, learn and develop your mental and emotional faculty. Come on, why not grab this then? Do you need me to persuade you?
- It focuses on and places emphasis on your business strategy, performance, prospects and model. Factors such as business strategy, performance, prospects and model are things you cannot ignore my dear entrepreneur. If you want long-term success you cannot ignore these. Prospects relate to your future business and revenue generation. I will not go about explaining all these, possibly I will only mention something about the business model. The business model simply illustrates how you transform your business inputs, through your business activities, to get your business outputs and related outcomes. The business model comprises the processes that create and deliver value to meet customer needs, amidst resource constraints and competitive actions, to guarantee long term success. If you get this right through integrated thinking, reporting and action, and blend this with your strategy and performance, you are on your way to entrepreneurial success.
- It considers a broader range of capitals including more efficient and productive use of capital. Now, the term capital has transformed over the years and this has left some entrepreneurs in the dark. I think I will one of these days do an article specifically on this matter. Just watch this space so that you don’t miss it. One of the new forms of capital today is intellectual capital. The integrated approach ensures that you consider all the different capitals you have in your enterprise, and also use them in an efficient, effective and productive way. We could go on for ages talking about capital but I leave it here for now.
- It synchronizes an enterprise’s resources, skills and risk appetite, and entrenches a continuous improvement process through timely and effective interventions. Entrepreneur, do you know that successful business has a lot to do with synchronization? You can synchronize your inputs such as capital, machinery, materials, human capital etc.to be able to produce and deliver goods and services. You can synchronize your processes to be efficient and effective. I don’t have the appetite to talk about the sometimes catastrophic chaos, which results in a business when this synchronization fails. Synchronizing your resources, skills and risk appetite is another challenging thing that can be made easy through integrated thinking and reporting. The approach also compels you to implement continuous improvement. This brings me back to the Japanese word kaizen which I love and talk about quite often. You can search my blogs about this word if you like. All this synchronization does wonderful things for your enterprise.
- It means better business. Last but not least, the sum total of integrated thinking, reporting and action done well is better business. Look, if you disciplined yourself to all the above, you should certainly have an improving business over the years until you reach the heights of other great businesses. Tell me, who does not like success in their endeavors? What is your reason for being in business? If your plan is to run a serious, sustainable, profitable and great business, then you better embrace these principles. Don’t say I’m advocating for this because I am an accountant and accountants where involved from the beginning with the Prince of Wales in this agenda. I was not there. Ok? But I use common sense and my six senses to see and determine what is good. I adopt things that are good. Of course you know I can only share with you good things. Don’t you?
Candidly, I have overwritten today but I hope you have got some few good things anyway. Incidentally, never be too free and careless with your confidential and critical issues that competitors can take advantage of. I’m not telling you to write and expose everything about your business to the entire world, in the name of integrated reporting! Be smart.
With every good wish, as you move towards integrated thinking, reporting and action in the interest of the future of your enterprise and the world,
The Wise Entrepreneur