Damian Judge, CFO of Trellidor Holdings Limited, shared his views on the concept of integrated thinking by responding to a series of exploratory questions in support of SAICA’s integrated thinking project.
How do you define or understand ‘integrated thinking’ as it applies to your company?
We look at it as ‘how does the company interact with people and the environment?’ Is the way we are interacting adding value to those two groups and is that value-add sustainable? To achieve this way of thinking, we need to involve influences across the company so that we can truly integrate the thinking across the organisation. To this end, we have established a working group with representatives from each of our key departments (production, procurement, sales, finance, HR, etc). This group sets the strategy and implementation programme for key integrated projects.
What is your view on how ‘integrated thinking’ supports or does not support ‘value creation’?
We have put ‘value creation’ at the centre of our strategies over the next three to five years − in other words, creating value in the entire eco-system of the business and for our people. If you can align value creation as the main driver within your organisation, it will drive the sustainability of your business.
In creating value, you have to incorporate sustainable development as not only will that create value within your operations but, more importantly, include your people, who are key to driving value creation.
What does value creation mean for Trellidor?
We look at from a monetary and a self-value perspective. The majority of stakeholders − suppliers, people and shareholders − will always align a portion of value creation to a monetary indicator. Our challenge is: how can we show the value in integrated thinking? By linking to growing self-value in your people, the monetary value becomes a by-product. If our people are aligned to creating value through sustainable means, they will deliver solutions that create value for all stakeholders.
How do you view your stakeholder engagement in relation to ‘integrated thinking’ and/or ‘value creation’?
In our view, at the right stakeholder level, it needs to be inclusive and we need active input from active stakeholders. For example, a value creation journey within a manufacturing environment will need active engagement with suppliers, employees and labour unions. Key management and the board of directors will play an active role in shaping the strategy and assessing the results.
For the more passive stakeholders, like shareholders, our value creation strategies and results need to be adequately communicated and critically assessed by our shareholder base.
Our stakeholders take many shapes and forms, and the right approach needs to be tailored for the category of stakeholder.
Which roles or functions within your company are enablers for integrated thinking / value creation? Why?
It starts at executive and management level. Management needs to create an enabling environment for value creation and allow that culture to take route in the rest of the business. Once it is in place, the watering and nurturing needs to take place. It’s an ongoing strategy that takes work.
There are potential stumbling blocks, and a key block will be financial performance. The balance or trade-off of actively pursuing value creation strategies may have negative implications on financial performance in the short-term. Unfortunately, the public space doesn’t price in medium- to long-term strategies. The idea of holding an asset for long-term value is not ‘sexy’ enough and the markets punish the here and now.
That is the nature of the beast and unless there is a mass uprising of the long-term investors, it won’t change.
Do you think integrated thinking is reflected in integrated/corporate reports? Why?
There has been an improvement, but I think the disconnect between the actual financial statements of the company and a separate report makes it a challenge to truly show integration. Integrated thinking would mean including a note under inventory how suppliers have been changed to be more environmentally- friendly. Or a section under employee benefits which details training interventions or counselling programmes.
We need to integrate at the financial statement level not in a separate report. For example, Edcon won awards for in 2015 and now longer exists – how sustainable was the business really?
Damian Judge CA(SA), Group CFO, Trellidor Holdings Limited