“Oxygen for Sustainable Firms of the Future: Human Potential Vs Innovation” was the topic for our inaugural Panvest Forum held in May. I am grateful to our forum speakers and panelists along with 70 attendees, representing family offices, asset owners, policy makers, corporates, sustainability consultants, people specialists, research partners, academia and our own pioneer panvestors, who tried to unravel the question at hand.
For this month’s ARCUS, our Partnership Panvestor, Davina Ho, and MC for the event has shared some of the main discussion points from the event.
Enjoy & Happy Panvesting!
Munib Madni, Founding Panvestor
At our forum, we welcomed expert speakers and panelists on innovation and human capital to walk us through how they tackle the challenges of the fast-changing innovative environment we are now living in.
Our first speaker, CEO of Group Digital Life at Singtel Samba Natarajan discussed how innovation can happen in a behemoth traditional telco but the market might not value it in the same way it would value a new-age start-up.
This was followed by an insightful and fact-filled session from the Executive Director of Deloitte’s Future of Work Indranil Roy, who spoke about how they help MNCs navigate the big changes innovation brings to their workforce in skills and learning. Listen Here
Our panel discussion focused on how investors can evaluate a company’s strategy with regard to innovation and human capital, with expert opinions from Stephanie Nash, Chief People Officer of Chapman Group, Amer Iqbal, Innovation Consultant and author of ‘The Five Ways to Innovate’ and Investing, Mark Hon, Entrepreneur and Founder of Sugar Ventures. Listen Here
Finally, our attendees engaged with us on the major challenges facing the four forms of capital through an interactive breakout session, thus becoming PANVESTORS.
What we learnt from the speakers and panelists…
Billions of dollars can be seen on the balance sheet of companies in R&D but the capacity of a company to innovate comes from its employees who create, build and bring to market these ideas and this depends on certain competencies, organizational culture and strategies. Traditionally, when we look at human capital it is treated as an expense, not an asset as Amer Iqbal articulated, “It’s tough to get executives to invest in people… the returns are sometimes intangible and it can take a lot of time. Technology, on the other hand, is much more immediate in terms of creating efficiencies.”
How is technology changing the requirements of employees in the future workplace?
When we talk about the future of human capital, one of the most anxious generations of our time come to mind is Gen Z; born after 1995. This generation does not remember a time without internet connection or mobile devices, their social networks are built digitally, they are tech savvy and worldly but have the most anxiety when it comes to connecting with other generations in the workforce. They want purpose and influence immediately, they want real-time feedback on their value, and want freedom to do what they want with the flexibility to change their role and try new things.
“The only thing worse than training an employee and having them leave, is to not train them and have them stay.”
Zig Ziglar
While employees are anxious about their future careers, there is a need for a flexible, open-minded and adaptable workforce that is ready for continual growth and change in the future. Indranil Roy explained in his session that the half-life of a new degree or skill is now only 5 years and that we need 100 days of training/year to meet this gap between our present and future skills.
When we surveyed the attendees during our break-out sessions, 88% responded that they do not envisage being in the same role in the next 5 years, and skills most required in their workplace in the next 3 years were in data, technology, innovation, coding and the ability to challenge the status quo. Yet many of us lack the time or money to invest in these skills.
So where does the responsibility rest? With ourselves? Our employers? Or institutions?
We look at investing in companies that look at human capital not only from traditional metrics of diversity or training and development, but also from a flexibility perspective. Can an organization adapt appropriately to the ever-changing environment and expectations of all of its stakeholders including its employees? Stephanie Nash explained companies need to create an environment where an innovative culture allows for:
Continuous learning and curiosity
Rapid experimentation and risk taking
The ability to challenge the status quo
An organization that is inclusive and values diverse opinions, experiences and expertise
While this might be easy for a start-up, Samba Natarajan explained the difficulties a management team of a traditional company like Singtel may face to adapt this new blended workforce style…
“Our average employee at telco like ourselves is between the ages of 45 and 50… whereas the average employee in an internet business is 25. So we operate on two different planets, two different paradigms… and we have to learn how to value those two employees and the same management team has to deal with those situations. Unless you are able to address the needs of reskilling, upskilling, training these different employees in the same group we would not be able to sustain what we do.”
And when it comes to dividing up talent, Mark Hon made a brilliant analogy of dividing teams into marathon runners and sprinters. You put the sprinters in the innovative start-up teams and the marathon runners in the mothership.
As investors it is truly important to understand the capacity of an organization’s ability to be flexible, as proven by the collapse of traditional brick and mortal retail in the last two decades. Amer Iqbal succinctly put together three questions to evaluate the organizational flexibility of management teams:
1: Do they understand their strengths?
2: Can they play outside their comfort zone?
3: Are they able to turn a threat into an opportunity?
What we learnt from the attendees…
As with social and environmental capital, human capital also has the perceived notion that there is an increased cost when it comes to investing in these non-financial forms of capital, and hence lack of financial returns. That perception seems to be changing. We asked our attendees:
1. Do you expect financial returns to improve or decrease with sustainable practices?
100% responded that financial capital returns will improve with sustainable practices, albeit with a caveat that it will be seen in the medium to longer term.
2. Should companies be judged for progress on other forms of capitals?
100% responded YES unequivocally.
3. Would you pay more for sustainable products and companies?
100% responded YES, including a few who gave us a cap on the premium they would be willing to pay.
At Panarchy Partners, we believe a resilient company is one that focuses on all four forms of capital. It was exciting to see that the top question that our forum attendees wanted answered for each of the four forms of capital were:
Environmental Capital – What environmental targets should a company set?
Human Capital – What motivates the workforce of the future?
Financial Capital – Sustainability vs Risk/Return? Facts vs Fiction?
Social Capital – Can innovation create opportunities for social impact?
We hope to find and share the answers to these and many more questions.
Forum 2019 Key Take-aways:
Organizations need to invest in more than traditional training and development, and should be looking at budgets for up-skilling over 5 years,
Innovation can be developed internally or acquired externally depending on the organization’s needs and capabilities… it really depends on the organization’s culture, buy-in from the founders, board and executive management team, and
Our panel shared the view that understanding the talent pool you have within in an organization is vital to creating a successful and innovative organizational culture.
We would like to thank all of our speakers, panelists and attendees for the engaging discussions and thought-provoking conversations that we had.
Kindest,
Davina Ho
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