Integrated reporting is based on two premises:
- That organisations behave like living beings (biological premise).
That living beings exist holistically (holistic premise). - Taken together, these two premises limit the possibilities of organisational philosophy, explanation, design, governance, control, risk management, and reporting.
Disclaimer
Do not look for the above two premises of IR on the Integrated Reporting Council’s official site. Although IR mentions integrated thinking as one of the five key principles of integrated reporting, you will not find a more in-depth explanation of why it is so essential for an organisation to think of itself as an integral whole. The term holism is absent from the methodology of IR and the surrounding materials, which includes no allusion to organisations as living organisms.
Those who have read at least a few posts on this blog know that it is about sustainability and how to survive in a complex living world. You can’t talk about sustainability without understanding the context of sustainability. And the most basic context of sustainability is life itself. Understanding the evolution of life in the Darwinian sense, both at the genetic and memetic levels is the first step to understanding organisational sustainability. And since IR has been established as a methodology to enable organisations to be as sustainable as possible, a major shortcoming of the otherwise excellent IR methodology is that it does not delve deeper into life’s biology.
Loose grip
In my book Brandlife, I devoted a lot of space to the question of how to manage organisations as living beings. Successful managers sense (know) when to tighten their leadership grip and when to loosen their grip. Power only comes when the leadership grip is loosened. Every golfer knows how difficult it is to hit long shots accurately with as loose a grip as possible because a tight grip not only shortens the flight distance of the ball but often kills the shot altogether. You have to establish strict rules (in operation) to loosen your grip over management to “let it go” as explained in said book.
You could find similar examples in risk management. Risk management is the best example of a loose grip theory. If one can manage with a tight grip in theory (and therefore underperform), it is impossible in practice to manage a crisis arising from risks in this way. An event is only a crisis if it happens so quickly that you cannot control it. If you are in control of the situation, it is not a crisis event. So when a crisis occurs, no manager is in control of the situation. It’s up to everyone involved to react “intuitively” according to the plans that were previously planted in our “muscle brains” (crisis plans that came from risk assessment). The crisis is the definitive proof that the organisation lives as a memetic entity precisely because it is completely removed from the manager. Every cell becomes the unconscious memetic manager, just as every cell in our body is the ultimate manager for us humans.
Dual nature of life and reporting
But then we must ask the question of reporting. Reporting is a management activity, but it is also a written result. With that, I pointed out the double meaning of integrated reporting (actually, there is nothing else like integrated reporting!). Reporting is:
- Management activity (complex, dynamic, fluid, holistic, integrated, analogue).
- Reporting output (one-dimensional, static, frozen, digital).
As management activity, it is part of memetic organisation creation, re-creation and reproduction. As a reporting outcome, it is part of the internal feedback system and external stakeholder relationships that provide fodder for their actions.
The attentive reader will notice here that this IR reflects our lives’ dual nature that is also represented in branding theory. There, we speak of brands (complex, analogue) on the one hand and brands (frozen, digital) on the other.
It is not surprising, then, that branding provides tools to integrate reporting.
Branding as integration
Existing theory on integrated reporting is relatively weak at the level of integration. All available sources point to the need for integration and the drivers of integrated thinking within the organisation. Still, no one explains how to achieve integration in practice and what the tools for such integration are. Fortunately, the answer is quite simple: organisational integration is based on branding and branding principles. As explained in Standard Branding Model ©, it provides managers with tools for integration processes in the organisation. The standard branding model provides a blueprint for actions to achieve the first step in IR, integrated thinking. As explained in many places, the brand is also an integral (core) part of the business model. And the business model not only explains the value engine but at the same time also provides the index (digitisation) of the integrated report that freezes the second part of IR. Such an index can be further broken down into KPI’s.
The story of IR seems complicated but becomes completely transparent when we understand organisations as living memetic entities. Brands are the agents that integrate organisations, and thus brands and trademarks are just tools for integrated thinking within Integrated Reporting.
