Finance & Governance filed the Six S for Success ™ method, an extraordinarily effective method of transformation and restructuring. Designed to initiate change in organisations, this methodology created by Finance & Governance plays on 6 levers: strategy, structure, systems, supervision, sociology and symbols.
S as Strategy
Strategy is the choice of repertoires of action that will enable the company to make the most of its assets within its environment. Strategy advisors are too often inclined to recommend positions that may prove impossible to achieve by the client company, as these recommendations stumble in their implementation into one or more obstacles inherent to the structures, information systems, controls, sociology or symbols. This is why many acquisitions fail to create the expected value, because the factors that should enable their success are not consistent with the strategy.
S as Structure
Structure embodies a company's answers to main governance issues: what ownership, what control, what balance between stakeholders, what system of governance? Indeed, it is from the governing body that the missions, values and goals of a company will be determined. The staff profile of directors will help to forge a unique identity for the company, including its prime risk. Agency costs, that is to say, the degree of confidence / trust of the shareholders to the directors' ability to effectively guide the actions of leaders, may also reduce the value of the company. Hence we consider that capital and assets must be structured according to the risk appetite and value creation by Directors.
S as Information Systems
In our view, information systems should not structure the activity but rather serve the realization of the strategy decided by the Board. Too often, directors are dependent on information provided by management. They can be embedded in streams of irrelevant information, whilst missing data needed for a strategic impact. In particular, leaders preferring an expansionist strategy and willing to extend by accumulating excessive goodwill at the expense of the equity of a company do not transmit data that would inform the crudely deteriorating situation. Too often, renovations of information systems are assigned to IT professionals who are not able to put up an IT architecture coherent with the strategic project. Most of the time, they would have the last word by saying: "What you ask can't be done." The strategic project runs short.
S as supervision
Supervision covers the aspects of control and compliance. This feature has a cost, hence it is necessary to correlate the extent and the variety of controls systems so they allow to effectively avoid offsets in terms of both objectives and principles, but do not tax too much time and resources that would otherwise go to the core business. The control functions should be relayed to the governing body independently of management, which in practice is very difficult to achieve. The audit plan must be approved by the governing body. Ethical issues must be arbitrated at the ultimate governing body backed by the Head of Internal Audit. These ethical tradeoffs must receive a strong symbolic treatment. Risk control is often wrongly associated with risk management, whilst it must be independent from the risk management in order to properly asses the efficiency of the risk management system, without conflict of interest.
S as sociology
Sociology reminds us that a firm is a social body, with its culture, its rules, hierarchy, etc ... The governing body must ensure that strategy and sociology are aligned and aimed towards company's goals. Disparity between the policies of the governing bodies, their implementation by the social body of the company, and their execution by the management, cannot be tolerated. Innovations often come from the field, since it is the main point of contact with the environment (customers and suppliers). They must be relayed and supported to enter into the corporate policies. The main sociological challenge faced by governing bodies is to create conditions where the whole is more than the sum of its parts, meaning that the organization allows its constituent parts to express their full potential and generate momentum.
S as Symbols
Symbols crystallize a company's values and culture. These are catchphrases, expressing the purpose of a brand, such as "BNP Paribas, the bank for a changing world", as well as elements of internal speech (aimed at the executives) or external discourse (investor presentation), elements of organizational aesthetics (e.g. the design of offices and their distribution amongst different corporate functions). These settings are unconsciously captured as implicit references and structure the vision of the different actors. If a Managing Director attaches great importance to prevention of risks, but assigns to the Risk Director an office of lesser prestige, at the farther end of the floor, employees will conclude that risk prevention is of little value in the eyes of leaders. It is therefore important to ensure that the symbolic messages are consistent with the culture and desired behaviors.