Brett Scott is a journalist, campaigner and former derivatives broker. He is the author of The Heretic’s Guide to Global Finance: Hacking the Future of Money (2013, Pluto Press). He has worked with diverse groups such as Action Aid, World Development Movement, OpenOil, and MoveYourMoney UK. He has written for The Guardian, New Scientist, Wired Magazine, Aeon and CNN .com, and provides commentary on financial reform and cryptocurrencies on media channels such as BBC and Arte. He is also a fellow of the Finance Innovation Lab and helps facilitate a course on power and design at the University of the Arts London.follow brett
A corporation is an artificial ‘legal person’, not a living and breathing real person. Its face is a logo, and its personality is a brand. You cannot sit and talk to a corporation like you can talk to a friend in a pub. There are of course people behind the brand, but do you really know them? In reality, we only know a corporation and the people behind it through one of three channels. There are the official statements a company makes about itself via its marketing department, PR team or investor relations team. Then there are investigations, reports and reviews channelled via journalists, media and word of mouth. Finally, you can draw upon your own personal experiences of using its products or working for the company.
There is, of course, an established regime of corporate reporting, disclosures that large companies are either required to make or disclosures that they want to make in order to attract investment and business. This realm of selective disclosure sits within a broader system of the corporate investigation undertaken by civil society groups, journalists and business intelligence analysts who search for undisclosed information that companies may try to conceal or obfuscate. Any discussion of the ‘future of reporting’ needs to closely consider these existing politics of reporting. What are the purpose and power dynamics of company communication?
From the perspective of most companies, the purpose of communication is commercial. The company will seek to promote its ongoing business activities by strategically releasing information to specific stakeholders. At the core, a business must raise money from investors, who will be targeted with prepared financial reports. Companies must attract and manage employees, who will be recipients of targeted communications. Companies must then sell the products produced by employees to customers, who will be targeted through advertising. At a minimum, then, companies are communicating to investors, employees and customers through a range of channels, from official reports to private internal memos to public advertising. Additionally, they are required to release information to authorities that set the rules of markets, or that provide the baseline infrastructure of markets – the regulators, tax authorities and state inspectors.
The parties that are least likely to get information are those that are not of commercial interest to a company, and that also lack the political power to demand it, such as journalists. Companies see value in the media, but only if they can control the narrative. They thus often actively hide certain information from the press whilst attempting to manage them through curated press releases. This is part of their broader public relations efforts. Unlike advertising, which is very explicitly about selling, PR is more subtle, the objective being to condition general public perceptions and cast doubt about negative reports on a company.
When we think about ‘innovation’ in corporate reporting, we can either go deep or shallow. Shallower changes are those that do not fundamentally challenge the existing purpose of reporting or the power balances between stakeholders. For example, we could run an entire innovation programme thinking about how to implement real-time reporting, rather than periodical reporting, such that investors could get frequent updates on the state of a company. This might be exciting and important for some, but – arguably – doesn’t represent a deep change in the philosophy or politics of reporting. Similarly, we could explore different mediums of communication, such as video and audio reporting, visualisations and multimedia websites to explore a company, but this is often merely a case of making the same information more accessible or interesting to interact with.
Deep level innovation, though, starts only when we take a frank look at the existing state of reporting and deeply question its most fundamental philosophical tenets. Should we be using monetary proxies? Why are the accounts of a multinational company with hundreds of subsidiaries consolidated? Who gets to curate the information and who most benefits from the presentation? Is the presentation truly holistic? How can we increase the authenticity of reporting? Is it possible to have a conversation with a company in the way we can with a trusted friend?
The frank truth about modern corporate communications – of which financial reporting is one part – is that it involves extensive obfuscation, one-sided presentations of a company designed to further its commercial interest. People are not naïve. They sense this. Investors know that financial reports don’t give a holistic picture, just like we all know that the advertising we see is creatively spinning the truth to a point where it is misleading. And when you hear a formal, robotic-sounding company press statement responding to a negative news story about it do you really feel they are addressing the issue? While it is true that people are accustomed to this general climate of disconnected communication by companies, it doesn’t lead to true trust.
The deep question, then, is whether we could ever imagine a world in which corporate reporting and communications actually accurately reflects reality, increases our trust in them, and feels authentic. To do this, we need to think about both the content provided in reports, and the format and style they are presented in. What follows here are ideas for us to consider and explore, some of which could be radical.
For analysts, journalists and investigators, one of the biggest grievances is the way financial information is presented in aggregated consolidated terms. A multi-national company operates in many countries, but we seldom get disaggregated data by country. Aggregated information may be convenient for certain investors who only care about bottom-line return, but for anyone wishing for a more nuanced picture aggregated information is essentially a denial of the distributed reality of corporations. Can we build efficient ways to open up and present disaggregated financial information in future?
The deepest unquestioned paradigm in financial reporting is the priority placed on monetary metrics. This is so taken for granted nowadays that many people cannot even conceptualise any other way to do it. This, however, is a historical choice, not a natural law. A company is a heterogeneous assemblage of people, assets, machines, ideas, reputation and interactions, only some of which are directly related to monetary exchange on markets. The idea that all of these can be reduced to a homogenous monetary metric is profoundly strange, and yet we accept it as normal. We seldom hear about the actual tonnage of coal sold, or the number of cars bought, the hours worked by employees and the emotional energy expended by them. We get numbers that represent money as if this is supposed to reveal everything you need to know. The use of monetary proxies also begins to creep into the valuation of things that are not even on markets, and that thus are not even subject to being sold for money. This fixation on monetary measurement is narrowly useful, but does it obscure more than it reveals? What would non-monetary reporting look like?
Companies do provide us with some narrative descriptions from management about what the company does and its strategy, but in general, these descriptions are either aspirational – where we would like to get to – or functional – what the purpose of the decision or operation is. There are very few structural behind-the-scenes descriptions of how the company does what it does. We get some top-level structures – the departments, the major subsidiaries, the management structure – but very little beyond that. The atmosphere is one of a company guarding commercial secrets, unwilling to share. Is there scope for companies to reveal internal snapshots of their actual day-to-day operations to cut through the distant, vague, aggregated and abstracted information that we are used to?
Above all, corporate reports seem to emanate from a disembodied institution rather than an embodied person. Everything is top-level and distant, focusing on abstract statistics, numerical trends and broad descriptions. They exude a sense of scale and bureaucracy, rather than conveying any sense of the lived experience of anyone who actually works for the organisation or experiences it in any way. While there are humans writing the reports, none of their personal voice is heard. The words sound like they’ve been passed through several layers of filter than strip out politics, emotion, contradiction, messiness, or for that matter, anything truly human at all. The process of packaging the information and curating it is designed to neutralise anything contentious. Could we imagine a company that was bold enough to include, for example, un-curated and randomly selected customer comments into their reports, randomly drawn from complaints dockets? Could we imagine a company including randomly selected staff workplace reviews from sites like Glassdoor.com?
Above all, corporate reporting and communication in all its forms comes across as inauthentic. And it often seems that this is inescapable. For example, Innocent Smoothies pioneered a style of communication that has become known as wackaging – wacky packaging – in which the company covers its products with banter that has a ‘cutesy and overly familiar tone’ that many feel is infantilising. Originally intended as a contrast to stiffer, more formal corporate communication, wackaging now illicit groans from customers.
Why do we sense that inauthenticity? One core problem, it seems, is the fundamental tension between the private profit goals of a company and its appeals to the positive public and personal impact. When the overarching priority is to make private profit, appeals to some public good that will stem from the product seem to be suspect. We’d probably feel less patronised if the packaging just said ‘This is a fruit smoothie and we hope that you will purchase it so we can turn a profit’, but whether it is Innocent Smoothies or BP, the companies always seem intent on presenting a face, a smiling face, a respectable face, but an inscrutable face. It is not the face of a friend who is just telling you what is really going on in their life. It is the face of someone trying to persuade you, or manipulate your behaviour, or divert your attention, or impress you.
Apart from the profit motive, another source of this inauthenticity is the sheer scale of many commercial institutions. A small Italian delicatessen might have a profit motive, but the personal connection between the owners, employees and customers means that authentic relationships develop. On the other hand, a large Italian restaurant chain, where the owners do not know or really care about the employees, and the employees do not know or really care about the customers, is far more likely to exude a detached and standardised fakeness in their communications. It is with these organisations that you really begin to feel you are dealing with an artificial legal person – a legal company structure – rather than a human.
This may sound extreme, but artificial legal persons that have the main goal of maximising profit tend towards displaying sociopathic qualities: a company – in its purest form – will mimic human emotion in order to manipulate people to further its own ends. The thing that stops this fully expressing itself is the actual people who show real human emotional qualities within these organisations, the McDonalds employee who will briefly tell us how they’re really feeling, or the boss who occasionally drops his institutional face and tells us what’s really going on. In other cases, it can be mitigated by a company that is honest about its intentions. Companies like Ryanair, for example, see their customers primarily as objects to be pushed through their system on mass, pulling people in through economies of scale and generating profit by that throughput. They do not pretend that it is not like this, and pretty much state it upfront. We don’t care about you individually, but we will offer you good deals – take it or leave it. In a strange way, it has a type of honesty.
These are the deep questions that we must grapple with when thinking about the future of reporting. Everything else is just cosmetic.
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Rev Andrew Baughen’s keynote at the 2017 Innovation Summit on the Future of ReportingRead more
On 11 July 2017, we hosted an innovation summit on the future of reporting with the FRCRead more