Business Model Representation in Integrated Reporting: Best Practices and Guidelines

As business models become increasingly dynamic, responding to technological advancements, globalization, even climate change, it is no longer the case that defining your business model publicly is exceptional. In fact, nowadays, it is quickly becoming the norm. Stakeholders are demanding an insight into how an organization will face such changes to the way business is done globally and turn them into opportunities. This poses challenges. During a recent Training Course for an international business, everyone in the room was asked to write down what they thought their business model was. We didn’t get the same answer once. Everyone had written something that reflected their take on the business, linked to the role they play in it. What was missing, was integrated thinking. Understanding the organization’s value creation process as a whole and articulating it clearly enables everyone internally to understand the role they play. Externally it allows shareholders, those in the supply chain, and other stakeholders, to understand how a company can deliver value in the short, medium and long term. The business model is a vital aspect of the value creation process, it is the cog that turns the relationships and resources the business uses and affects into outputs and outcomes. Understandably, shareholders are increasingly interested in understanding the details of the value creation process, beyond the financial and manufactured inputs and outputs. They are looking for real insights into the other aspects that affect the business – natural, human, intellectual, social and relationship factors. Companies cannot be all things to all people. Through articulating your business model, you are offering credibility and building trust. It is about telling your unique story of value creation and this goes to the heart of what integrated reporting is. Often, the most daunting thing about integrated reporting is how to start. But from the thousands of conversations I have had with companies in the past, they always tell me that getting started is the biggest hurdle. Once you embark on the journey, the benefits that arise from the breaking down of silos, the new understanding of strategy, better relationships with stakeholders, and in designing a clear business model, dramatically outweigh any challenges implementation holds. Do not let the perfect be the enemy of the good – this is a journey and no one’s first integrated report is going to be perfect. I urge you to read guidance documents such as this and apply them to your own way of thinking and working. As the EU Non-financial Reporting Directive comes into effect across Europe I encourage you to be ahead of the curve, adopting integrated reporting, to meet the Directive’s requirements. The Directive is clear on the importance of integrating financial and non-financial information and as the evidence of the benefits of integration develop, the expectation in business to communicate a holistic story of value creation will only intensify. My thanks to everyone at the Network Italiano for Business Reporting for all they do in leading, supporting and guiding companies as the demand for integrated reporting grows. We have worked closely with Italian businesses over many years, as we developed, tested and implemented the Framework. They have embraced integrated thinking and recognized it as a crucial development to how strategies are developed, businesses are run, and shareholders are communicated with. I urge you to look over the case studies profiled in this report and take inspiration from their endeavours. There is a big picture to our work, after all, this has never just been about a report. Integrated reporting – articulating your business model – it is about the way business is done, the way we work internally and externally. How we build trust. If every business takes up this approach then our markets will be all the stronger for it.