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    Might the potential liabilities of cyber risk change the face of business as we know it?

    Governance Performance Societal Wellbeing Strategy
    Stephen Catlin, head of the largest Lloyd's insurer Catlin Group, delivered a stark message to the business and the insurance communities this week. He said that the potential liabilities following a cyber attack are too large for insurers to cover.
    Wow. Most company directors and executives have a general awareness of cyber risk: that attacks can have drastic impact on business. However, many directors and executives have probably felt that their insurances and risk plans have been sufficient. Until now perhaps. 
    What might Catlin's comments mean for business? Could the uber-connected world and the seemingly headlong thrust towards the Internet of Things have some nasty side-effects that we are only just becoming apparent? For example, if companies cannot secure adequate insurance cover (either outright or at a reasonable cost), might they be faced with the challenge of reviewing their business models? Progress rarely occurs without consequences. Perhaps some of the so-called old ways that many have rushed to consign to history—like walking into a store and buying groceries and other goods in person—might not be so bad after all. Is your board prepared to wrestle with this issue, or will it simply walk away?
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    HSBC: Should the directors and executives be "banished from the City"?

    Accountability Societal Wellbeing
    In issuing an apology letter and statement that HSBC has been completely overhauled, Stuart Gulliver, chief executive, has put a stake in the ground. He wants to move on. Some may argue that more needs to be done because accountability and consequence are important foils to anarchy and chaos. However, the sentiment underpinning Gulliver's message is an important foundation of civil society: that sooner or later communities need to respond to scandals, make adjustments, and then consign them to history.
    With this in mind, should the directors and executives of HSBC be "banished from the City"?
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    Google Glass: a metaphor for what's "wrong" with Silicon Valley?

    Societal Wellbeing
    Reports are starting to emerge that the euphoria that was Google Glass might be over, before it started. I'm not that surprised, actually. Try as I might, I simply could not get past the possibility that Glass was just a gimmick, a "solution" in search of a problem.
    Glass could be a metaphor for a lot of what goes on in Silicon Valley. The Valley is full of well-intentioned and well-funded engineers who spend their day drinking coffee, standing around white boards, generating ideas (lots of ideas) and writing code—because that it what they are paid to do. While many good ideas have emerged through this process (just imagine what economic productivity might be like if the personal computer and its various descendants had not been created), a reality check is probably needed. 
    We have become dependent on smart devices and uber-connectedness. Everything has the appearance of being urgent, even if it is not. But what of conversations with people, of long walks along the beach or some quiet walking trail, or of time out to relax and reflect on life? Silicon Valley has brought us to the brink of losing sight of these things that probably matter more than whether we've checked our Facebook account in the last thirty second, or viewed the latest (trivial) Snapchat picture. When I was sitting on the train in London last week, reading a book, I noticed that about 80% of the passengers around me were using their smartphones. One or two others were sleeping. One older man was also reading a book. When he looked up, he smiled at me. No one else did that.
    I'm no Luddite, but I do wonder where this Silicon Valley-led journey might be taking us.
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    ECMLG2014: Service as a required leadership competency

    Conferences Leadership Performance Research Societal Wellbeing
    Noel Pearse, of the Rhodes Business School, Grahamstown, South Africa, presented the next chapter in what is rapidly becoming his magnum opus.  I first met Noel twelve months ago, in Vienna, when he presented a paper on servant leadership. This year, he spoke on service as a specific leadership competency. 
    Thinking of leaders and followers, most people understand that an important role of the follower is to serve. In a business context, that means to serve other colleagues; managers; and, customers. The same people would probably suggest that leaders are to be followed and, by implication, to be served. However, emerging leadership trends provide an interesting juxtaposition, whereby leadership responsibility is being distributed; so-called celebrity leadership status is being rejected; and,  ethical leadership is becoming increasingly valued. Further, servant leadership is quite common in high-performance organisations.
    With this background, Pearse posed an interesting question: whether service is actually a required leadership competency. Building on the seminal work of Boyatzis (1982) which identified attributes and competencies of effective leaders, he asked whether certain underlying attributes (my phrase, not Pearse's) are necessary. I was fascinated by Pearse's work—still at a theoretical stage—because it appears to bisect my work on underlying personal qualities of effective effective directors as they seek to exert influence in the boardroom. We plan to stay on stay in touch.
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    What is the real purpose of business?

    Governance Management Performance Research Societal Wellbeing
    Does the question posed in the title of this musing have a straightforward, even profound‚ answer? I would have thought so. In fact, when I am asked this question—as happens on a fairly regular basis—my reply is that the purpose of business is to provide a return to the shareholders, whether by way of a dividend or a capital gain, or both. The shareholders own the asset (the business), so it seems fair that they receive a reward for making the asset available. I've thought this for the long time, on the basis that the shareholders are the ones that put up the money in the first place. Staff, suppliers and others receive payments for services rendered and products supplied at the time they are provided.
    However, if companies become selfish and get too greedy, by trying to maximise profit at the expense of almost anything else, as some do, then cries of protest can be expected from some quarters. Do cry-ers have a point? Maybe, but not if they are promoting some form of social engineering, whereby profits are distributed to others beyond the shareholder base. Businesses exist for the purpose of making money for their shareholders. They are not social clubs for a wide group of so-called stakeholders. Others disagree, I know, but the purpose of a for-profit business is to make a profit! Otherwise, the business would be a not-for-profit agency.
    It would seem to me that, in the context of an open market, those companies that achieve dominant positions are very good at what they do. Yet no business is exempt from the invisible hand. The self-regulating behaviour of the market described by Smith over 200 years ago remains in control. It will have an effect, perhaps sooner rather than later if boards and shareholders get too greedy with profit maximisation.
    So, back to the question. What is the real purpose of any business? To make a profit for its shareholders, and those that do this well, in an ethical manner, can and should expect to operate successfully for many years.
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    Have you seen the poppies?

    Societal Wellbeing
    My wife and I had the opportunity to see the poppies at the Tower of London first-hand in early September, as the display commemorating the soldiers that paid the ultimate price in World War 1 was being prepared. This is what we saw:
    Picture
    Picture
    As impressive as it was at the time, the display then is not a patch on the moat today, now that all 888,246 poppies have been "planted". The poppy had huge significance for the allied soldiers on the Western Front. It continues to be significant for their descendants. I am looking forward to visiting the commemoration again, on Monday 10 November—along with a great many others, I suspect.