Chief Audit Executive Forum ‒ Perspectives on Internal Audit based on Shared Experiences - Session 1

Key Takeaways:

• Build strong networks internally and externally and be aware of the ‘curse of incumbency’
• Focus on how you can achieve success, not on what you need to avoid
• Think about the value you bring to your business, not just your job title and technical knowledge
• Challenge assumptions that businesses are built upon – takes time and debate
• Introduce changes in thinking deliberately, using games and making new connections

Don’t trust the future to anyone focused on the past

As one of very few external psychologists allowed by NASA to coach astronauts, as well as working with top racing drivers, fighter pilots and Ryder Cup winning golf teams, our speaker, Jamil, was well-placed to help business leaders become more resilient in the face of unexpected and stressful situations, as the pandemic has proven to introduce to so many organisations.

It’s important not to trust the future to anyone completely focused on the past, because so many good ideas come from different groups of people coming together and working out where the opportunities lie for their organisation and its networks.

For this reason, companies will no longer compete against other companies, but networks will compete against networks – with those most successful being able to learn faster than the others. This will mean building stronger alliances internally as well as externally, in order to access all of the knowledge inherent in the business. In fact, knowledge is the new asset class, which CAEs are in a great position to gather and share as part of their roles in governance, reporting and forecasting.

How to be a smart leader

Smart leaders understand that people think, feel then act, so it will be vital for them to inspire their teams with a collaborative approach rather than instruct them to ‘be more creative’ or ‘come up with innovations’, which doesn’t work. Instead, leaders should embrace the beauty that lies in the current chaos and identify new opportunities for the future outside the tramlines of past business thinking.

To do this, successful leaders are motivated by how they can succeed and what success looks like, rather than on what they are seeking to avoid. Of the world’s top golfers, not one will focus on what happens if they miss a putt, but all will be thinking about how they will win the game. 

Similarly, audit teams can focus on what strong governance can enable their organisations to achieve, instead of on the risks of non-compliance. People motivated by what they can achieve are more likely to think up creative business solutions, adopt new technologies and build mutually beneficial relationships that enable co-creation of ideas. This is especially true now that technical knowledge can be commoditised and is more accessible to all.

A growth mindset will also have a clear focus on the ‘reaction’ element of the formula event + reaction=outcome (E+R=O). No matter what the event happens to be, it is how we react to it that matters. In the current conditions, it’s all about learning to dance on the shifting carpet rather than allowing the rug to be pulled from under our feet.

Auditors as enablers

For audit leaders in particular, it may be difficult to move outside current thinking, which tends to be concerned with keeping the business safe. One way to change this is to make space in meetings and calls for discussions about future opportunities and collaborations. Another is for auditors to see their roles differently – as enablers that illuminate the possibilities of greater choices and options when running the business, not simply gatekeepers of risk management and control.

By focusing on what clients value, not on what they sell, organisations can reposition their status. Those who fail to do so are the ones that are most often caught out, as banks were by PayPal or the music business was by Spotify.

One attendee asked how he could break out from a transactional focus to think instead about purpose. The answer is to start out by building allies through lobbying and advocacy, creating a powerful movement for change that is driven by purpose, motivation and energy to make things better. Even small achievements can help to advance the change agenda, especially if they are celebrated. Companies that succeed in the coming decades will be either brave or dead, as innovation and change are happening so fast.

Another tactic is to concentrate on how you want an audience to feel in response to the meeting you are involved in, or a report you are delivering. Creating business energy by showing real opportunities for improvement mean people will be reassured, enthusiastic and confident.

Inspiring remote workers

Other attendees asked for advice on how to keep this energy going when many people are working from home. The first point is to call out team achievements and success secured through peoples’ characters and actions, rather than running through success or otherwise in individuals meeting transactional goals. An outcome could well have been secured through unusual collaborations between people that previously worked separately, for example, as has happened so often during the pandemic.

It’s also important to turn up the volume on the strengths of teams, and to ask different questions such as ‘what have you discovered this week’ or ‘what have you enjoyed this week’ rather than focus on the numbers.

There is a chance to construct something new and different, but leaders need to make sure that new connections are happening so that ‘serendipity moments’ can still take place, even when people are not in the same room. Inviting people to talk about something they are really skilled at, whether that’s playing piano or winning every game of Monopoly, opens up conversations that would not happen otherwise.

Another game is to ask everyone to imagine what would happen if everyone changed gender at the age of 30, or everyone in the world lived forever. Playing games is fun, but also breaks down barriers to thinking which can eventually lead to innovation in products or services that take the business forwards.

Finally, it is important for leaders to check in with their teams rather than check up on them. And there is no need to replicate pre-COVID habits, such as always having a sales team meeting on a Wednesday. 

So-called servitude leadership, where leaders ask what they can do for their teams, rather than vice versa, is becoming more widespread – enabling teams to think for themselves and reach their full potential.