Updated: Jan 2
Many disruptive economic, financial and business events are presented in the media as surprises, but in most cases we could–and should–have seen them coming. Concerns about BP’s safety record, the accounting practices of Tesco, sloppy mortgage lending – all were in the public domain for years before disaster struck.
Few predictable surprises are as large and dramatic as the Deepwater Horizon disaster. Nor are they as shocking. But we should be equally shocked by the frequency, quantity and cost of preventable surprises that do not appear in new headlines. They represent a major economic and social problem that needs to be resolved.
Some sectors are more prone to predictable surprises than others, because of the nature of them. And the damage they produce comes in many forms, from damage to the environments and loss of life, to financial losses and the collapse of businesses.
Major projects are one sector particularly prone to predictable surprises of one kind or another. But they are a feature of every sector and the cumulative costs represent a major drag economic performance and prosperity. The costs are not only in value lost. They are also in the value not added as a consequence of failings.
Such events have a massive impact on the economy and the prosperity of nations. They can result in the demise of once iconic enterprises. And they can have catastrophic consequences for the people involved, and for future retirees whose pensions are often at stake.
For these reasons, we believe predictable surprises are a strategic management issue that needs to be addressed as a matter of urgency. All are the result of board-level failures in governance and stewardship, poor strategic decisions at the executive level, bad incentives, ineffective systems of accountability and poor risk management.
We believe the problem must be addressed urgently by investors, business leaders, policy makers, accountants, risk managers, directors, business leaders, all the related professions and business school professors.
As the name of the initiative suggests, costly surprises are often predictable and can be prevented. Equally, the costs of those that cannot be prevented may be mitigated by the steps taken to avoid the preventable ones.
There is no single solution. Prevention will only be possible if it is addressed as a systemic issue, by all the players in the system, based on a shared understanding of the issues and necessary changes. And by focused, coordinated and concerted actions.
The initiative will aim to design a way of systematically eliminate predictable surprises wherever possible, and to reduce the organisational, economic and social impact of them. An evidence-based research programme of Director Dialogues will not only aim to articulate all the issues. It will also propose practical ways to resolve them.
Our wish is to ensure the project is international in scope and includes businesses and organisations of all types from all sectors. All are prone to the problems we will explore and will benefit from the solutions we identify.
Who should take part in the initiative?
Given our view, that predictable surprises must be viewed as a systematic problem and must be addressed in a systematic way, we will be inviting participation from all the payers in the system: board members, senior executives, business owners, investors and lenders, policy makers, accountants, risk managers, insurers, representatives of stakeholder groups (e.g. employers unions), people from relevant professional bodies, interested academics and advisers with relevant expertise.
Particularly welcome are people with an existing interest in the issues we are discussing, especially people we might call mavericks - unorthodox or independent-minded people – who think they can offer insights that may lead to solutions.
A First Meeting
In the first instance we convened a meeting of people interested in playing a leading role in the design of the initiative. Participants included maverick thinkers known to the founder of the Strategic Management Forum. They are people that have been trying to effect change in their own ways, through their own networks, for some time. People who, working collectively, will be able to amplify their impact.
The represent several of the parts of the system mentioned above. More importantly, they are all driven by the desire, determination and willingness to bring about change, for the right reasons.
The group is already international and quite diverse but, will become even more so as the initiative grows and the core group expands to form an Advisory Panel.
A second meeting
A second meeting with the larger Advisory Panel will take place in January 2020. It will be tasked with discussing the agenda of the first one-day conference that introduces the intended themes of a proposed research agenda to follow.
Resources & Budget
The project will be managed and coordinated by the Strategic Management Form. All content will also be produced and published by the forum. Future resource and budget requirements will be discussed during the first meeting.
Given the costs of preventable surprises, even a small reduction in their number could generate a dramatic improvement in the performance of businesses and their reputations and the returns earned by investments. Losses to insurers could also be reduced, and the levels of prosperity enjoyed by all stakeholders, including society in general, could also be vastly improved. The surprises that can be prevented should be, and they can be. Better understanding of the issues will make it possible to take better strategic management decisions.
Contact firstname.lastname@example.org to express an interest in participation.