• Institute of Corporate Directors

Understanding Culture and Innovation

Updated: May 29

Q2 Distinguished Corporate Governance Speaker Series (DCGSS)

Philippine firms today are filled with a myriad of challenges. A new digital age and the prevalence of society-wide corruption threaten to stifle business growth and make some industries obsolete. However, rather than focusing on the hurdles, firms could also realign their thinking and see them as opportunities. On the 28th of June 2019, the speakers of ICD’s Distinguished Corporate Governance Speaker Series (DCGSS) presented to a large audience of board directors about two topics which are not only relevant but also staring everyone right in the face. Mr. Donald Lim, CEO of Dentsu Aegis Network Philippines, focused on the arrival of the new digital age while Prof. Robert Klitgaard of Claremont Graduate University addressed the problem of corruption and how the private sector is directly involved in solving the crisis.

Mr. Lim left a strong impression on every attendee of the DCGSS. Passionate, excited, and well-informed, he introduced the concept of the digital age and what it means to everyone in corporate governance. It was made very clear that the new digital age is not coming but is already here and has been for some time. Whether companies are ready or not, the world is not the same as it was two decades ago. Business practices that have been developed and mastered by many are outdated. Mr. Lim’s lecture focused on the following main points:

· Every company now needs to constantly innovate.

· There is no stability, only ‘permanent white water.’

· Everyone is going digital. Smartphones, tablets, laptops, and the apps in them are now all possible ways of doing business.

· New ways of doing businesses are not only just available but also are making old ones obsolete.

Talking about the future was a huge wakeup call for everyone in the DCGSS. But, rather than being intimidated, there was an atmosphere of excitement and interest from everyone.

After a session about the future, board directors were given another wakeup call – not about social media networks or robotics companies, but something closer to home: corruption. Prof. Robert Klitgaard stressed the importance of battling corruption in the Philippines. Citing examples from his experiences and studies in different countries from Sudan to Colombia, he states that how we approach the problem of corruption is just as important as directly battling it.

A common perception is that attitude leads to behavior and that corruption is ingrained in culture. Prof. Klitgaard challenges this perception, prompting everyone in attendance to rethink on how to address the issue. He proposes the following solution: rather than focusing on changing attitude and culture, we should instead focus on changing behavior.

It is difficult to reform culture and attitude as these factors have been ingrained in society for centuries. Instead, it would be a lot easier to change specific behavioral patterns as this would translate to a change in attitude. Simply put: enforce good ethics and a culture of good ethics would eventually follow. Finally, it is of prime importance that we start dealing with corruption in order to entice investors, both local and foreign, to the Philippines.

Key Takeaway

A Change in Behavior --------> Reform in Culture and Attitude

Firms have faced all kinds of challenges in the past. It is whether these firms can overcome the hurdles they encounter that will determine if they will prosper. Even with the oncoming new age of digital information and the lingering remnants of corrupt practices in our culture, the idea of facing these issues is not necessarily new to many of the board members in attendance of DCGSS. In the end, boards retain their responsibility of addressing and recognizing the opportunities presented by these challenges for their respective companies.

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