Publicly available information can be a looking glass into the future
By Michelle Sandberg & Johanna Hallin
There’s no arguing that we’re living in a time of rapid and dramatic change — making the road into the future foggy and uncertain, and making it difficult to predict who will be a force to be reckoned with. But the answer is there, right in front of us, in publicly available materials for everyone to see.
The key is to change perspective to ability to create interconnected value, and use the right analytic lens. So long live the annual report ! It can give us the information needed to create a looking glass into the future.
Publicly available information can be a looking glass into the future. Photo by Dawid Zawila
Holistic value creation in businesses
So how do we create value in several dimensions, meaning to secure value for the businesses, for people and the world? We believe that we need to redefine business valuation to facilitate long-term strategies towards true sustainability. And to that, we need to look at the skills that give us the tools to actually do so (1).
There are four skills that are imperative for future preparedness of business.
Purpose: Related to the meaning derived from carrying forward values-driven work. The purpose of the business activity needs to be described and acted on in relation to core business, and the company’s actions need to align with — not deviate from — this purpose. Knowing your purpose therefore requires a clear and consistent understanding of what the company is about.
Empathy: The ability to place oneself in the shoes of the stakeholder — a skill that should be embraced as a foundational element of better business. An Inter Business company is aware of the significance of empathy delivered to the entire marketplace, from customers and employees to the public.
System approach: In order to move away from ‘linear’ forms of thinking — where the emphasis is on ‘fixing’ isolated problems — towards a holistic view of sustainability, businesses and organizations must embrace a system approach. This means assessing performance and progress using required practices for the future and planetary boundaries as benchmarks, display a genuine understanding of one’s responsibility and place in the system and maintain a steady connection to the surrounding world.
Transformation: Fundamental for businesses to be able to cope with, and adapt to, a rapidly changing world and taking new challenges and demands into account. This entails willingness to innovate for change, creativity in problem-solving and resilience to gear strategy towards the future.
How we can see these skills and get a sneak-peak into the future?
But how can one access information on skills from the outside? We argue that the best way to access this kind of information is to look at publicly available material produced by the companies themselves. It’s of course impossible to tell the future, but material like annual reports, sustainability reports, press releases and social media — and taking them through the analytic lens of Inter Business — give us a good indication of where businesses are heading.
In materials available publicly today, lie the answer to if a business will be a force to be reckoned with in the future — that is if it will have what it takes to create value in an interconnected way. And herein lies an indication of the value of the company.
Annual- and sustainability reports as a valuable source of information
The best way to access and asses a business — how they present themselves, their values, ideology, what they perceive as important — is to look at their annual- and sustainability report and other publicly available materials.
In a recently published article, Bromley & Sharkey (2017) (2) are examining actorhood portrayals among businesses over time, by analysing their annual reports between 1960 and 2010. Their findings showed that the way businesses portrays themselves in their annual reports have change quite drastically over time — containing only a couple of pages of financial information to expressing traits of actorhood, like a firm identity, sovereignty and purposiveness.
Resent research has found that annual reports contain information expressing a business’ traits of actorhood.
And this is in line with what we have found: What we see is that the annual report and sustainability not only can provide us with valuable information on changes that have occurred historically over time, but also provide is with information on the businesses and their way forward — their vision of the future.
Information on how businesses create holistic value is what we aim to analyse, and looking at their own communicated material is a great way of acquiring this information. Businesses nowadays not only report on financial information, but communicates their vision, mission, strategy and sustainability initiatives in their reports. One of the big advantages of using annual reports is that every business is abided by law to submit a report of their business every year — which provides comparable information for analysis.
Our tests and pilots over the past years have resulted in two articles, in which we describe the methodology and analysis of using publicly available information to indicate value — through the ability of a business to create holistic value into the future. For each of the articles we have analysed 50 Swedish companies — the first time including businesses considered as front-runners by industry peers (3), and the second time the 50 largest corporations in Sweden (1).
In the most recent article — “The Inter Business Index: Developing a Tool for Measurement and Comparability of Holistic Sustainability in Businesses”– we discuss the development and method of the Inter Business framework and Index recently in the peer-reviewed academic journal “Journal of Management and Sustainability”.
