Do your sustainability work and reporting provide value?

I hear many clients say: “We have a sustainable business but have been bad at reporting about all the great things we do!” I respond: “We have to do something about that, because if you do not tell your stakeholders what you do, how could they value your efforts?”

Sustainability reporting has entered a new era as the business impact of sustainability is more apparent and stakeholder expectations drive legislation, reporting frameworks and practices. If you already contribute to sustainability reporting – congratulations!

I believe that those who are starting their sustainability reporting journey with the sole target to be compliant with the EU Non-Financial Reporting Directive (NFRD), will find more business case in it than they thought.

Most companies are working on making their reporting governance, processes and practices more efficient, less error prone and easier to control and audit. Reporting is not only driven by demand but also by active supply, as it is crucial to equip stakeholders with relevant and credible information.

What should you consider in your supply of sustainability actions and reporting?

— Do you work with material topics? A materiality analysis guides what to include in reporting and supports business in focusing sustainability efforts on what matters the most for business and stakeholders.
— Do you analyze changes in your company’s operative environment and how you contribute to change? Consider how your company is contributing to the UN’s SDGs and the Paris climate agreement.
— What value does your company create for society? You can measure and monetize the societal value of sus-tainable business, investment, programs, partnerships or products using credible methodologies. This enables you to communicate a more comprehensive value creation story to investors
— Is sustainability integrated in your company’s business strategy process and other key business processes? Show how sustainability drivers are considered in shaping your future business and how sustainability is integrated on a strategic and operative level.

Be active, relevant and creative. The ways of reporting and providing value to stakeholders are countless!

What do the stakeholders expect?

During the past couple of years, there has been much discussion about the form, context and contents of corporate sustainability reporting. This discussion is flavored by three important developments.

1. Information on key ESG topics. Investors are increasingly interested in ESG-related investment relevant information for their decision-making. Investors have e.g. realized that the impact of climate change and the Paris climate agreement on risk and return in their investment portfolio is significant. Simultaneously responsible investment practices have become more mature.

2. Compliance with both legislation and sound guidance-based schemes. The demand for sustainability reporting has led to the launch of a multitude of mandatory and voluntary reporting schemes and in particular the implementation of the NFRD, which has made reporting mandatory for thousands of European companies which have not reported on corporate sustainability before.

3. Enhanced integrated reporting. The Secretariat of the Global Reporting Initiative launched the GRI Standards in 2016. The International Integrated Reporting Council launched its reporting framework which responds to the demand for integrating reporting of financial and non-financial information. Guidelines such as the Financial Stability Board’s Task Force recommendations on climate-related financial risk disclosures adds to these.

Results from the KPMG Reporting Survey reveal that reporting on sustainability is increasingly an integral part of annual financial reporting. Nordic companies have room for improvement as concerns climate disclosures, supply chain management, approach on human rights and reporting on value creation. I am, however, pleased to note that Swedish and Finnish companies are among the world’s top 6 countries in reporting on how they contribute to the SDGs.

Whether you are a new entrant on the market for sustainability reporting or an experienced master of disclosures, know that you have an important job. Use your influence wisely!

tomas-otterstrom-100x100

Partner Tomas Otterström vastaa Suomen ja Ruotsin KPMG:n vastuullisen sijoittamisen ja yritysvastuun palveluista. Hänellä on parinkymmenen vuoden kokemus liikkeenjohdon konsultoinnin, sijoitus- ja varainhoitotoiminnan sekä yritysvastuun johtotehtävistä.

Vapaa-aikaansa Tomas viettää perheensä kanssa sekä sulkapalloa jahdaten, johtamiskirjoja lukien että elämysmatkailua harrastaen. Hän on myös hyvän ruuan ystävä.

Scaling agile portfolio management for large enterprises

Everybody seems to agree that agile methodologies are best practice. Pretty much all the customers I work with are agile to at least some degree, and typically have a multi-speed (or “bi-modal”) operating model consisting of entirely new businesses that have been built agile from ground-up and older legacy businesses that work with more traditional, slower clock speeds.

Agile portfolio management

However, after the initial enthusiastic wave of adopting agile methodologies is over, most companies seem to hit a stone wall. Agile just doesn’t seem to fit big businesses. And I’m not talking only about old giants, encumbered by legacy systems and large organizations. I see this even in new school technology companies.
There’s a gap between business strategy and what the agile teams are doing. Nobody seems to be able to link individual teams’ activities to the big picture of enterprise strategy. IT struggles to prove its alignment with business goals.

Interdependencies start creeping in and coordination between different, self-contained teams becomes difficult. For example, although your CRM development may be agile, its progress may be blocked by issues with the ERP – which has a one-year release cycle. The legal department may want a cumbersome regulatory acceptance process before go-live, which thus forms a waterfall gate in the process.

How do you scale agile from a bunch of small teams to larger, strategic projects and an enterprise-wide way of working – without losing agility?

Agile portfolio management

The answer is clear. You need a comprehensive agile portfolio management system reaching all the way from the company’s strategy to individual agile teams:

– The corporate strategy process clock cycle needs to be intensified (e.g. a rolling 3-month cycle), and there needs to be more constant feedback from both customers and operations back to decision-making.

– There needs to be a process for cascading the strategy to a portfolio of themes, within given financial and resource constraints, as well as a governance structure and portfolio-related ownership.

– If it doesn’t already exist, a clear program management layer must be built for the purpose of prioritizing projects arising from large, strategic initiatives into more operational projects, and bundling groups of e.g. 5-10 project teams under unified management (e.g. those with a shared vision and backlog, as well as common coordination).

The changes may be significant, but the benefits will be tangible. You’ll get more innovations and shorter lead times for testing new ideas. Employees will be happier, because they’ll understand the big picture and find purpose in what they’re doing. You’ll increase the alignment between IT and business. Due to the continuous updating of business cases, it will be easier to kill projects that aren’t delivering, or are no longer strategic. You’ll get more trust and transparency throughout the enterprise.

Many customers have adopted the Scalable Agile Framework (SAFe). It’s a robust approach, but only a part of the solution. It does not cover the full scope of changes required for an agile enterprise – in other words, how to make a high-level corporate strategy process more agile. And ultimately, all frameworks and governance systems require tailoring to your organization. You need a comprehensive system without gaps that fits the purpose and suits your needs. And that’s something you can’t just buy off-the-shelf.

Toni Heinonen works as a Senior Manager in KPMG’s Global Strategy Group. He has 17 years of experience in management consulting, ranging from growth strategies and M&A to large-scale transformation projects. Toni has worked extensively with technology, media, telecoms, consumer services and other industries that have been heavily disrupted by digitalization.

Outside of his work, Toni enjoys jogging, outdoor activities with his dog, playing musical instruments, and photography.

Understanding organizations’ unwritten rules in post-merger integrations

Post-Merger Integration (PMI) has been a challenge for many companies, as is amply testified by the countless articles and books written on this subject around the world. Global research indicates that, in most cases, a clash of corporate cultures or incompatible cultures are among the top five reasons why PMIs have not been successful.

post-merger integration

Companies are very seldom really interested in understanding cultural issues during the pre-deal phase. In most cases, resources are focused on the negotiations, and on financial and legal Due Diligence (DD) for the purpose of closing the deal. In some cases, companies spend time on operational DD, but very rarely from the perspective of corporate culture.  Even those companies that claim to take cultural issues into consideration during the pre-deal phase often face just as many challenges during the post-merger integration as those that neglect this area entirely.

In my opinion, one of the major failures related to culture is that companies are unable to identify the unwritten rules of their organizations. What companies see and observe during the negotiation, the interviews they conduct with key individuals and the various kinds of DD carried out, relate to what I call the written rules – policies, procedures, descriptions, codes of conduct, etc.  After closing, when the sweet talk about the deal is over and the integration process starts, the unwritten rules slowly make their presence felt through simple expressions such as “yes, but” or “however”.

These caveats tell us what drives each individual’s day-to-day behavior and reveal the existence of “unwritten rules”, or what I call it “The internal politics of the business”, – the honest advice one would give to a friend about how to get on in the organization.

These unwritten rules are neither good nor bad, only appropriate or inappropriate for what you want to achieve from the integration. You must be aware of them, and plan well in advance on how to tackle them.

But where do the unwritten rules of companies actually come from? They typically start with top management. On the one hand, they derive from the way top management thinks and acts, and, on the other hand from what can be conceived of as the “written” rules that they establish or maintain.

The unwritten rules are what help people survive and thrive. They are a set of highly sensible coping skills adopted by all employees – not just by those destined for the top.

Bozorg Amiri is Partner and Head of the Global Strategy Group in KPMG Finland.

Building a bridge for strategy implementation

Over and over we hear the importance of strategy implementation. You can have a great strategy, but if you are unable to put it into practice, it is worthless. So if it is already old news that implementation is the key to success, why do we still see many companies failing at this stage? Well, simply because the complexity of implementation is underestimated.

Though many rely on external support to develop a new strategy, people consider implementation more of an internal activity or separate task. I met a client who told me “Strategy is developed in the ivory tower, and then it’s up to us to figure out how to make it work”. That got me thinking what had gone wrong in that particular case. In my experience, development and implementation go hand-in-hand. So how can we help to build a bridge between strategy development and implementation?

Here are three key points:

Involve key stakeholders from different organizational levels

If you involve different organizational levels at the development stage, not only will you develop a strategy that addresses the points that are important to your team and has a practical approach, but you will also get easier buy-in to the strategy.  Selecting the right people to involve will also take you one step further when it’s time to execute the strategy. In this respect, it’s not only expertise that is important, but leadership skills and the ability to influence others will also be key to ensuring successful implementation.

Make your strategy implementable

Make a robust plan that considers funding, phases, tasks, timetabling, resources, and well-defined roles and responsibilities. Furthermore, be realistic about the resources you need to implement the strategy and how daily work will be affected by the additional tasks. Getting an extra pair of hands and expert advice at this stage can pay off, if it paves the way to a smoother transition.

Communicate and manage change

Unfortunately, this is many times overlooked. Clear, timely communication doesn’t just happen. Spend time thinking exactly what needs to be communicated, when it should happen, and who will do it. This will benefit by getting your organization onboard faster and avoiding negative feelings due to people not knowing what’s going on. Remember, the larger the scale of change, the more effort you need to exert in order to make it happen. A proper change management plan will make your life easier by accelerating the pace at which changes are adopted in the organization.

What’s your view? Can you think of any other points to add to the list?


Claudia Salto
is an Assistant Manager at the KPMG Global Strategy Group. She has experience in Operations Planning, Procurement, Change Management and Process Improvement. She has worked for several international companies in industries such as Telecommunications, Retail, Consumer Durables and FMCG. In her free time, she enjoys being with her family and friends and travelling to sunny places that remind her of home.

Kaikkien Suomi!

Sote- ja maakuntauudistuksen myötä olemme luomassa uutta suomalaista hyvinvoinnin mallia. Maamme erityispiirteenä on ikääntyminen tahdilla, jota edes poliitikoiden reipasotteiset lausunnot eivät hidasta.

Miten luoda ikääntyvälle Suomelle toimiva ja turvallinen asuinympäristö, jossa eläminen ja osallistuminen yhteiskunnan toimintaan on helppoa ja houkuttelevaa?

Kuulumme niihin maihin, joissa väestön ikääntyminen on ratkaisuja vaativa ilmiö. Tarvitsemme nyt ja jatkossa yhteiskunnan, jossa asukkaat saavat apua ja tukea mm. asumiseen, liikkumiseen ja yhteiskuntaan osallistumiseen omien tarpeidensa mukaisesti. On keskeistä, että alueiden ja kaupunkien yhdyskuntasuunnittelu tähtää selkeään, turvalliseen ja osallistumisen mahdollistavaan infrastruktuurin rakentamiseen ja asumiseen liittyvät innovaatiot ja teknologian tarjoamat mahdollisuudet saadaan osaksi arjen elämää.

Ikäystävällisen yhteiskunnan tekijöitä

Tärkeää on luoda kanavat, joissa kohtaavat tilojen ja palveluiden loppukäyttäjä sekä palveluiden järjestäjät ja tuottajat. Keskustelua ja yhteiskehittämistä yhteisön jäsenten kesken vahvistamalla ja asukkaita kuuntelemalla löydetään tekijät, jotka koetaan tärkeiksi oman elämän hyvinvoinnille. Tämä voi tarkoittaa esimerkiksi parempaa käyttäjä- ja asiakaskokemuksen keräämistä ja hyödyntämistä palveluiden kehittämisessä sekä uusia liiketoimintamahdollisuuksia.

KPMG on selvittänyt useiden eri maiden kehittämisohjelmia ja -projekteja, joiden tarkoituksena on parantaa ikääntyvien ja heidän lähipiirinsä elämänlaatua asumiseen, liikkumiseen tai hyvinvoinnin palveluihin liittyen. Esimerkiksi tiedetään, että muistisairauden vaikutus ulottuu moninkertaiseen määrään sairastuneisiin nähden. Siksi jaksamista tukevia palveluita on kehitettävä myös lähipiirille, omaisille ja ystäville.

Ikäystävällisen yhteiskunnan tekijöitä ovat muissa maissa olleet mm.:
– Yhdyskunta- ja infrastruktuurin suunnittelu erityisesti liikkumista helpottavaksi
– Käyttäjä- ja asukaspaneelit, joiden tuloksia hyödynnetään suunnittelussa
– Kolmannen sektorin vahva mukana olo, palveluiden tuottajana, tiedon jakajana ja keskustelun herättäjänä
– Kokemusasiantuntijoiden osallistaminen palveluiden ja ympäristön kehittämiseen

Talkoohenkeä tarvitaan

On myös tutkittu ikääntyneiden yksinäisyyttä ja eristäytymistä yhteiskunnasta. Millä tavoin ja keiden toimesta tähän voitaisiin Suomessa tarttua napakammin? Uskomme, että näissä talkoissa tarvitaan kaikkien osapuolten yhteistyötä. Julkinen, yksityinen ja kolmas sektori ovat kukin tahoillaan vahvoja asiantuntijoita hyvinvoinnin, innovaatioiden ja palveluiden kehittämisessä. Yhteiselle keskustelulle, päätöksille ja konkreettisille toimenpiteille olisi nyt kysyntää!

Keskustelua, avauksia ja keinoja ikäystävällisen yhteiskunnan rakentamiseksi on tarjolla KPMG:n ja Rambollin seminaareissa 3.10. Helsingissä ja 10.10. Oulussa.

Eeva Juntunen

Eeva Juntunen työskentelee muutosjohtamisen asiantuntijana KPMG:n julkishallinnon palveluissa. Vapaa-ajalla Eeva nauttii piha- ja puutarhatöistä kotona ja mökillä.

Industrial B2B companies need to join the Data Race

data & analytics

I’ve noticed that Finnish companies, especially in the industrial sector, have only scratched the surface in utilizing the huge amount of data and information gathered from their manufacturing and service processes. The problem in most companies is that the potential of the masses of data is diluted to a small stream instead of a gushing waterfall – from both the business and Data & Analytics perspectives.

Digitalization, Data & Analytics, Big Data, leadership and management by information – whatever we choose to call it – is an inevitable evolution. It’s highly likely that you are dealing with competitors who have already passed you – or who are about to pass you with the boost that comes from harnessing information in a way your company has not.

From data underutilization to process optimization

Especially in traditional settings such as manufacturing – unit, batch or process – there is much to gain in taking the next step to utilize data better than your competitors. Chances are you are already gathering enough data – there just hasn’t been a good way to clean it, combine it and analyze it. With current technology and the right people, making your data truly work for your benefit may require smaller investments than you think.

Of course, much time and effort has been invested to create a basis for data utilization, but in my view these investments have increased the amount of information available, rather than improving how it can be used for business benefit. Especially in manufacturing, where data is already abundant, there is still untapped potential to increase throughput, optimize process bottlenecks, increase product mix profitability or reduce machinery and process downtime – among countless other uses.

Harness previously unavailable computing power

We’ve used an analytical, data-driven approach for decades. But as good as engineers are in creating analyses from different data sources, the human mind’s capacities are simply far too limited to fully understand the underlying causalities, relations and consequences in big data sets. However, currently available algorithms and analysis methodologies can process vast amounts of information from dozens of sources to highlight the concrete sources of business benefits, helping businesses to achieve growth and control costs.

Take action now!

The importance of Data & Analytics will continue to grow, but instead of joining the Information Race just for the sake of sounding “forward-thinking”, the business objectives must always be clear in mind. Check whether you or your company have done the basics:

  1. Consider and clarify your business objectives.
  2. Understand what data is available, what data is currently utilized, and where the gaps are.
  3. Create an agile plan to systematically grow your analytics capabilities, in-house or outsourced.
  4. Start pilots in specific processes to find the right approach and increase your efforts in a controlled manner.
  5. Implement changes that will arise as you understand your business better.
  6. Return to step 1.

Remember, don’t wait too long to accept the inevitable. Your competitors are already in the race, and so should you be.

Ville Huovinen is a Manager at KPMG Global Strategy Group. He has worked as a Strategy and Operations Advisor with Finnish and multinational companies for close to 10 years in various development programmes, including improving supply chain performance, designing and implementing management & performance systems, as well as building and running Program Management Offices. Outside office hours Ville enjoys cooking, cycling and travelling.

strategy forum

Mikä ihmeen disruptio?

Sekasorto, häiriö, hajaannus ─ yleisimmät käännökset strategiatyössä jatkuvasti esillä olevalle sanalle ”disruption”. Näillä sanoilla on jokseenkin haasteellista lähteä rakentamaan positiivista viestiä organisaatiolle. Suomi on valtavan rikas ja monitahoinen kieli, mutta tämä käännöstyö jättää toivomisen varaa. Positiivisen asian ympärillä me kuitenkin ehdottomasti olemme.

Tarkastelen disruptiota omassa roolissani KPMG:n toimitusjohtajana, ja tuskin koskaan asiantuntijatalossa tilanne on ollut niin mielenkiintoinen kuin nyt. Meidän on tarkasteltava omia prosessejamme ja hyödynnettävä kaikki se muutos, mitä esimerkiksi teknologian kehittyminen tuo tullessaan. Meillä on myös mahdollisuus jatkuvasti tarkastella, mitä eri toimialoilla ja eri yrityksissä tapahtuu, ja hyödynnettävä se markkinoilla.

Disruptio on positiivinen oppimisprosessi

Konsulttitalon tärkein resurssi on sen henkilöstö, ja tärkein muuttuja tämän osalta tällä hetkellä on henkilöstön muutosvalmius. Muutos on oppimista, ja oppimisessa vaikeinta on tunnistetusti poisoppiminen. Meille se tarkoittaa totuttujen rutiinien kyseenalaistamista, mikä puolestaan vaatii päivittäistä innovointia.

Uskon, että jokaisella on muutoshalukkuutta, jos se on vahvasti viestitty osana strategiaa. Organisaatiolle hyvä asia on, että ainakin meillä se tarkoittaa myös uusien, muutoksessa mukana olevien henkilöiden rekrytoimista. En yritä keksiä uutta suomen kielen käännöstä ”disruptiolle” ja kai nykyään vahvasti vieraskielinen sana kelpaa sellaisenaan arkikieleen. Itse haluan viestiä tämän ilmiön omassa työssäni, osana strategista uudistumista, eräänlaisena positiivisena oppimisprosessina.

Onko meillä muutosvalmiutta?

KPMG julkaisi juuri ennen kesää kattavan CEO Outlook -tutkimuksen, ja mielenkiintoisena yksityiskohtana nousi esille, että erityisesti pohjoismaiset toimitusjohtajat ovat huolissaan kilpailussa mukana pysymisestä: globaaleissa tuloksissa alle puolet (45 %) esitti kilpailun tuoman paineen erityisenä huolenaiheenaan, kun taas pohjoismaisista toimitusjohtajista jopa kolme neljästä vastasi näin. Toivon, ettei tämä johdu siitä, että meillä Pohjoismaissa ei olisi muutosvalmiutta, halua oppia ja hyödyntää uutta.

Tämän vuoden tuloksissa mielenkiintoista oli myös, että edelliseen vuoteen verrattuna entistä useampi toimitusjohtaja mainitsee yrityksen maine- ja brändiriskin yhä suurempana huolenaiheena. Tämä nousi kolmanneksi tärkeimmäksi riskiksi, vaikka vuonna 2016 sitä ei nostettu kymmenen merkittävämmän riskitekijän joukkoon. Löydöstä tukee se, että tutkimuksen mukaan myös kolme neljästä toimitusjohtajasta kertoo organisaationsa panostavan aiempaa enemmän luottamukseen, arvoihin ja kulttuuriin.

Maine ja brändi rakennetaan pitkäjänteisellä työllä, mutta disruptioiden maailmassa myös valmius ja uskallus nopeisiin suunnanmuutoksiin ratkaisevat. Onko meillä muutosvalmiutta, opimmeko jatkuvasti uutta ja onko meillä sellainen organisaatiokulttuuri, jossa uskalletaan kokeilla uusia toimintatapoja? Kyse ei ole yksittäisiin disruptioihin heittäytymisestä, vaan muutoksen mahdollistavasta kulttuurista.

Disruptiot osaksi strategiaa

Häiriöiden vaikutukset liiketoimintaan ovat jatkuvasti esillä keskusteluissa ja erityisesti niiden moninaisuus lisää toki myös epävarmuutta tulevaisuudesta. Tästä puhumme huomenna tiistaina KPMG:n järjestämässä Strategy Forumissa. Tapahtumassa suomalainen yritysjohto kuulee inspiroivan kattauksen näkökulmia organisaatiokulttuurista automaatioon ja strategisiin suunnanmuutoksiin.

Osana omaa muutostamme halusimme palvella asiakkaita paremmin strategiapalveluissa ja vastata erilaisten yritysten strategisiin ja operatiivisiin haasteisiin globaalissa kilpailussa. KPMG:n Global Strategy Group toimii nyt 37 maassa 1300 henkilön voimin ja Suomessa meillä työskentelee tällä hetkellä lähes 30 asiaansa omistautunutta asiantuntijaa.

Disruption takana piileskelee aina mahdollisuus. Otetaan ne yhdessä haltuun!

Kimmo Antonen on Suomen KPMG:n toimitusjohtaja.