William Dunk's 1994 Annual Report On Annual Reports
REEINGINEERING, REINVENTION, AND REVENUE
Once a year (for more than 10 years) William Dunk, a management consultant in Dallas and New York, reviews major editorial trends in corporate annual reports. Once head of Corporate Annual Reports, then the largest preparer of Fortune 100 annual reports, he now focuses on strategic, management development, and corporate reputation issues for companies in North America and Europe.
At William Dunk Partners, we have discovered that content analysis of annual reports can (a) help predict which companies will do well investment-wise for the ensuing 18 months and (b) uncover competitive thinking that should drive global strategic shifts in forward-thinking organizations. For instance, the 93 reports reveal a broad change in how major thoughtful organizations communicate externally and internally. They now see grim competition in global markets for the decade to come and are preparing employees and investors for relentless competition, relentless austerity, relentless striving--for a decade of economic war in business.
In our 1993 review (of 1992 reports), we said reports were design-poor and word-rich. The exceptionally wordy 1992 reports either were full of business schooltype essays or slogan-heavy language calculated to show that corporate leaders had mastered the science of management or the rhetoric of leadership. The 93 crop is about reengineering, revenue, and reform. Last year was theory; this year deals more realistically with the practical difficulties of business transformation.
The present business mood is best summarized by George B.
Bennett, the chairman of Symmetrix, the nation's most creative reengineering firm,
"We've done wonders in corporate divisions or in re-doing some business processes.
But now we're up against the tough one--trying to transform whole corporations in the
context of troubled, flat markets in North America, Japan, and Europe. And instead of
realigning the behavior and attitudes of 1,000 people, we're trying to reach 25,000 or
125,000 or 250,000 people. How do you scale up reengineering technology to reach across
the globe to affect vast numbers of people operating in very different but universally
John Welch of General Electric has been dealing with reengineering themes for several years in his annual reports letters. He's at it again this year, dwelling on the kind of consciousness it takes to produce a reprocessed corporation--"Boundaryless, Speed, Stretch putting this all together: boundaryless people, excited by speed and inspired by stretch dreams, have an absolutely infinite capacity to improve everything."
And Nation's Bank, North Carolina's regional banking juggernaut, includes this year an essay on "Model Banking: A New Way of Doing Business," where it talks about the way it has redesigned its business process in response to intense non-banking competition. It has needed a goad to reengineer itself, and it has found the prod--outside banking.
Revenues, not expense-cutting, are moving to center stage as the key focus for business as we move towards 1995. We would suggest that investors will be paying more attention to top-line growth, less to bottom-line results. It is from Emerson's first two initiatives for growth--new product introductions and global growth--that most companies expect to fuel their expansion.
In this new competitive landscape of reengineering and hard-won revenue growth, a paradox arises. We are trying to achieve revenue growth even as we are shrinking our employee population, and sometimes, our capital base. How do you grow with less horsepower? This atmosphere is so demanding that corporations are literally seeking to reform the character and behavior of their employee populations.
In this vein, AT&T--the other outstanding annual report of 1993--is remarkable not for what's inside its cover, but for what's outside its covers. On its rear cover appears a statement about values and ethics--"We commit to these values to guide our decisions and behavior." More than most large companies, AT&T is making an attempt to make its values very, very apparent to its constituencies--values which neatly link to its current positioning statement: "Bringing People Together Anytime Anywhere." To accomplish its business goals, AT&T (and other companies) is linking the accomplishment of its business objectives to moral commitment and intensely cooperative behavior on the part of its employees.
John Welch of GE is even more explicit about the fact that he expects radically different behavior out of his managers in order to move mountains with too few shovels:
Utter dedication to the enterprise. Hyper performance in a team setting. And one other element is part of the corporate formula for navigating through the 1990's perpetual dissatisfaction. Lewis Platt of Hewlett Packard, who had a big earnings leap, moans, "Despite these gains, we didn't improve profit margins as we had hoped." Lawrence Bossidy of Allied Signal berates Allied's "layers of bureaucracy," lack of customer orientation, and "stagnant sales." Chrysler, as we noted above, pridefully announces it is building a culture of "dissatisfaction."
At William Dunk Partners, our ethics practice has been soaring. In part this is a response of business leaders to managers and workers whom they find to be fractious and divided. But most of all, it appears to be an attempt to put the Protestant Ethic back in business. The work ethic. Austerity. Guilt. Dissatisfaction with the status quo. A Reformation is sensed to be the critical ingredient in creating reengineered growth companies.
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