Financial Failure Lessons Leading to Business Sustainability Success

The Financial Director article, The road to ruin, does more than report the mistakes of the major financial firms over the past few year. It provides our sustainability consulting with insights to business sustainability development opportunities. Here is a run-down of the post’s seven underlying risk factors that led to corporate failures, which we instead view as business improvement opportunities.

Board effectiveness: the board’s ability to monitor and control senior executives effectively.
Board risk blindness: the board’s ability to engage with important risks, such as risks to reputation and license to operate, to the same degree that they engage with reward and opportunity.
Poor leadership on ethos and culture: a lack of a moral compass too often leads to poor decision making.
Defective communication: poor internal and external communication leads to sever misalignment across the entire value chain.
Excessive complexity: immense complexity of company offerings, information structures, supply chains and corporate organizational hierarchy slows identification and response to shifting risk and opportunity.
Inappropriate incentives: recent corporate actions have taught us the value of aligned incentives.
Information glass ceiling: Inability of internal audit or risk management teams to report on risks originating from higher levels in their organizations' hierarchy.

Is it a question of leadership? Experience has shown that inspired direction aligned with the business sustainability goals and objectives of the organization and its key stakeholders can lead to a definable business step-change. In fact, we have already seen how this clear line-of-sight creates shared incentives and drives the success of the entire value chain.

Our professional consulting finds that companies today are looking to redefine traditional leadership and build new structures to make this “invaluable skill-set” a competitive core competency. By identifying and aligning the actions that support over-arching business sustainability goals, leaders are enabling leadership cultures to increase value beyond the traditional models.