With TT and the region averaging a GDP rate of under two per cent, corporate and state company boards must drive local growth, former National Gas Co Ltd (NGC) chairman Gerry Brooks said yesterday.
“TT needs it. We cannot continue to grow at one per cent. The region needs it,” he said at the Caribbean Corporate Governance Conference 2019 at the Hyatt Regency, Port of Spain.
“In TT, we have drifted along at less than one per cent growth. We have come out from a period of six or seven years of negative growth. And if we are on boards in the private sector, public sector, state sector, one of our responsibilities is, we have got to drive local growth.”
He said with the global environment, including Brexit, there are implications for local growth. Brooks said in the region, GDP growth rates are substantially less than many rates in global epicentres, including Asia, where it is six per cent, and Latin America, where it is more than three per cent.
“When you take a lot of the Caribbean, outside of Guyana, many of our economies are growing at less than two per cent. So, if we are on boards, one of the things we’ve got to do, as architects of the board, is to say, ‘How are we going to inspire organisations to grow?’ That is an important imperative for all of us.”
He said this raised the issue that business models must change, and boards have to either disrupt or be disrupted.
“It is not business as usual for us on boards. It is not a ceremonial position. We have to have a different mindset in the new norm.”
He said Disney used to be a company of “slides and rides,” but has bought Pixar, Marvel Studios and Star Wars.
“And we see Disney churning out movies after movies and changing their business model. If I am on a board, what am I doing in terms of disruptive thinking…and challenging the business model?”
Brooks, who was bestowed an honorary professorship in innovation and entrepreneurship by the University of the West Indies, last year, said great boards are enablers, architects of process and futurists. He stressed that if a business is growing at one or two per cent and inflation is running at four or five per cent, it was losing shareholder value.
He said boards must look at how to position their business three years from now.
Brooks also said frequently, company effectiveness is confused with management effectiveness, and he called on boards to ask questions of themselves. He encouraged board members to assess their board and see how they can take it to where it is developed, advanced and strategic.
He said those on state-run boards must be prepared to engage with the public, and cautioned about the pitfalls of collusion with management, blurring lines between shareholder and the board, and state-sector political interference. He advised those present they must learn the business, or “management is going to play you,” and also said having the same person as CEO and chairman should be avoided.
“We are not a glorified rubber stamp.”
Brooks said conflicts of interest are one of the biggest challenges for boards and these must be declared. He also said there can be conflicts between shareholders and between the company and the community.
He spoke of the importance of corporate governance, saying there have been hosts of meltdowns and reputational damage to international companies, like Fox, and local incidents, like Clico, which cost the Caribbean $18-20 billion and “which have wrecked lives at the most inopportune moments.”
“And the question arises, ‘Where were boards at that stage?’ Could boards have prevented the occurrence? How could we boards prevent a recurrence?”
He said boards have to think globally and locally as well and needed to practise disruptive competitiveness.
He pointed out Netflix went from selling DVDs to streaming and developing its own content, becoming a competitor for cable.
“What are we doing in our business to set new benchmarks in performance and innovation?”
Brooks, who had retired as chief operations officer of the Ansa McAl Group of Companies, before joining NGC in 2015 until he resigned from the state energy company in June, also said boards have to be guided by a higher purpose and are not just about making money.