Canadian businessman and professor David R. Beatty He is considered one of the great specialists in corporate governance in the world – with a long academic and business career that earned him the decoration of the Order of Canada, he is currently Professor of Strategy at the Rotman School of Management at the University of Toronto and President of the Center for Innovation in Governance Sharon & David Johnson. Beatty has focused his work on helping businesses move forward with digital governance.

The professor was in Brazil for the 23rd congress of the IBGC, where he spoke about the “digital tsunami”: the changes that are happening at high speed in companies, and which require adaptation before being “carried by the wave” .

Although it is difficult to predict the future, certain paths can be adopted by companies to be in the process, such as including young people accustomed to dealing with technology in their boards of directors, having innovation laboratories, analyze how the digital scenario can affect issues such as supply chains, procurement or marketing and, if necessary, quickly copy innovations from other companies.

In an interview with Stadium after his speech, Beatty explains the concept, talks about the cultural differences between councils in different countries, and shows distrust of the concepts ESG🇧🇷

Can you explain what the digital tsunami is?

Did you come here by Uber? What happened to the local taxi companies? New technologies, new ways of providing a service, more efficient and more personalized, have made taxi companies disappear all over the world. There are a ton of cases, I can’t think of them clearly at the moment, but Uber is one, Airbnb is another. O [Hotel] Marriott of Toronto, thought, “What are they doing, how much business have we lost to Airbnb and why?” What are the things that attract customers there? What things are not attractive here and can we work to improve them? It’s still a work in progress, but learning about Airbnb, its mechanics, and its ins and outs is an important part of its future.

What advice would you give to businesses to avoid being swept away by the tsunami?

They have to get young directors, they have to have directors who are experts in the digital tsunami, they have to think about creating “venture capital” companies, and I think they have to do something, anything. Just start and go, don’t wait. Otherwise, they will be defeated. So get started. Some boards started out as bank boards in Canada, and bank boards are incredibly bureaucratic. And they have a structure above to make sure decisions are sound. It is truly a compliance-driven organization. The head of one organization took directors to Silicon Valley three times to “bang their heads against the wall” to change the mindset of the entire company. 🇧🇷[O pensamento era] That may be true, but I want you to see what’s going on there” – and took them three times.

How do each country’s cultural issues affect corporate leadership?

Countries have their own cultures for their advice. The United States differs from Canada, from the United Kingdom; Germany is completely different. There’s no point in going to Saudi Arabia and talking about what’s going on in Dubai or Qatar. They are different worlds. Each nation tends to place its structures in companies, councils and legislation, depending on its culture.

Can you give some examples?

In Germany, there are two levels of councils: supervisory and management. We [no Canadá] we only have one, that of the directors. In Germany, the supervisory board must consist of 20 members, it cannot be eight, ten, 12 or 15. According to the law, it must be 20, and ten of them must come from the trade unions. In America, if you put someone from a union on the board, they’ll say, “Come on, be serious. That’s quite a big difference. In Saudi Arabia, most businesses are family owned. Public companies have family councils. You look at the names and ask, “Is he related to anyone?” and they say it’s somebody’s nephew. There is always a way to get back to the family. They are very family oriented. In China, it’s oriented towards the Communist Party, you can’t do anything without the party representative giving his blessing.

Do you know a peculiarity of Brazilian companies?

I don’t know enough about business in Brazil, but I know the IBGC has a very aggressive eye. So I came here at their invitation to talk to them about something that I really think can transform everyone. I would say the IBGC is very active. One small difference is that in Canada, if a good thing is done in Toronto, there will be other directors on that board that will lead to other companies, and the good idea tends to migrate on its own to across Canada. In America, they’ll say, “I don’t care what they do, it’s their problem.” It’s much more “let’s do it our way”. An example: in the S&P 500 index, 40% of companies have the same CEO and director. It does not exist elsewhere. People said, “You can’t let the fox guard the chicken coop. There are significant differences from country to country.

What is your opinion on the ESG agenda?

It lasts. ESG is a good backdrop to do when hiring, but it doesn’t work in the long run. It’s just too complicated. There are, if I am not mistaken, 185 American CEOs of listed companies who signed a document called “The Business Roundtable Declaration” two years ago. They said companies should be more mindful of customers, supply chains, communities and people. Harvard professor Lucian Bebchuk looked at the statement, what they actually said, and in the end it was nothing. In Canada, natives talk about non-natives: they say one thing but do another. There’s a lot of activity on that front, but it’s a “lighthouse on the hill” that doesn’t have much implementation at the end. The digital tsunami and ESG are completely different topics.

When can companies move forward in the relationship with stakeholders?

A large number of companies have failed to have experienced professional auditors on board. Every company should have someone who has worked in risk management, who knows what it is, and that person should sit on the board and lead the risk committee. This presence on the Board of Directors continues to grow.

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