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Anybody who is investing other people’s money should be able to do a better, less risky job than they could do for themselves.

Against this criterion, and against the certainty of the fast evolving digital economy, we hold up to scrutiny for plausibility the most recent annual reporting to shareholders of the largest players of the Australian Securities Exchange’s Listed Investment Company (LIC) company sector.

Because it offers the greatest certainty of comparing meaningful, most widely understood like with like, we focus only on those investing in Australian businesses, and our critique is based on the most recent annual reports of the 25 largest listed investment companies by capitalisation, according to Morningstar at January 2019.

And what we most want to know is also what gives us the most concern. It is how well these shareholder documents address these businesses’ likely learning-driven agility and responsiveness to change.

Nothing we have found in what follows suggests even an awareness of the changes afoot against the certainty of the coming digital, networked economy.

Network-driven organisational learning will transform everything in its path

We are now on the lip of the third, fully networked, industrial revolution. This is an economy in which no company yet has ever traded. In it, essentially, businesses of a scale sufficient to be ASX-listed that don’t find purposeful methods of learning to adapt to its new, digital ways of competing will fail, taking their shareholders’ investments with them. That is not unique to those in finance, it applies to everyone.

And, as every company contains, collectively, more intelligence and understanding than it ever puts to use – and because no single mind can imagine every outcome – each must learn to collaborate to apply more effectively its unique mix of smarts and experience of those on which their organisation is built.

To this point, that knowledge has been impossible to capture, but things have changed, and the means to address many of the unfolding age’s challenges is now already with us, obvious, and staring us in the face.

Post-Facebook, it exists in the pervasive, connected social internet literacy now accessible in every mind in every workplace. No longer does anyone have to be trained to use social technologies in order to contribute an opinion, what they know or have experienced.

In parallel with this literacy’s universal footprint, we also have in a great number of businesses the best private social technologies ever invented for capturing, developing and disseminating knowledge across any organisation, community or network.

Combining those users’ familiarity with these technologies with the impetus of businesses to get competitively smarter, those responsible for managing teams across a workplace are now presented with an entirely novel new resource, capability and opportunity.

They now need to act to put this to work, because as soon as they can figure out how to join the dots between this newly enabled human capacity and the available tools, those managers will gain access to, and be able to direct, unprecedented depths of hitherto unknown, unreachable and, hence, underused, but now wholly connected intelligence.

When they know how to make sense of it, those depths of knowledge and insight can now be applied to the problems and challenges in whichever business or society managers work, and now, in short, every company needs a plan to get smarter, relative to competitors.

And against this, when the ground rules for success will shift, whatever other choices it makes in its organisational development activities, every company will need to find a way to surface and organise its knowledge as a vehicle for learning and growth.

As learning is the ultimate competitive enabling platform capability, the better they bring order to that knowledge, the more quickly they can advance their transformations to the detriment of their rivals and for the benefit of their shareholders.

Learning locks in advantages

Network-driven “organisational learning” is a force that will change the world, if only because, against competition, when knowledge is not joined up, companies quickly leak money and value for their shareholders.

This is why this mix of technology and technique is so threatening to those businesses which have no agenda, understanding or strategy for how to use it for this purpose.

In this context, organisational learning also bears little relation to training, with which many still mistake it.

By contrast, true learning for the emerging, wholly digital economy is a undertaking altogether more existentially exacting and unrelenting as it requires an organisation constantly to identify and imagine what it must become and do next to survive in a context in which no company or its managers yet has any experience, and in which there are potential new competitors at every turn.

And hence emerges the challenge to the investors in every business and, ultimately, to the national interest.

What Australia’s top LICs are reporting on is setting their investors up for disappointment – and loss

If you are an investor, while you may back past performance, it is the behaviours and future growth of your shareholdings that will most interest you.

At a time of massive, fundamental structural change in the digitising economy, you will want to know that the companies you’ve invested in are fit for the future, and are ready and constantly preparing for whatever change comes at them next.

In the age of pervasive digitisation, there is no possible single array of “set and forget” positions, and all companies will now be on a constant path of adaptation and “becoming,” that necessitates persistent learning of how to sustain their capabilities and relevance.

Most importantly, in a learning economy, you will want to know that the management teams of those organisations have a strategy for learning, as, essentially, that is the nub of their agility and responsiveness.

That strategy should frame the context for all other behaviours, as it determines both its people processes and the ways in which those personnel are enabled to work together, anticipate, meet and outpace the competitive initiatives of (even unseen) rivals.

There may be many ways in which they plan to deliver that learning strategy, but if they can’t put up a plan that is, to your mind, plausible and defensible, you’d be best off placing your investment in a company that can, and in whose future agility and growth you have confidence.

And this is precisely why the declared learning performance of the LICs on this chart is so discouraging: they seem to be telling their investors they are geared up to learn nothing.

Essentially, what investors most need to know is what these companies are not reporting.

And we use LICs as the perfect model of learning economy dysfunction because they represent two levels of risk.

First, they take investors money on the pretext that they know more about the companies in which they invest because they have more professional knowledge, time and tools to expend on analysing them for you.

We should expect the knowledge of those investing professionally in the markets to lead not lag that of all others following them.

We should be doubly cautious, though, if their reporting doesn’t reflect their own learning. Almost by definition, if those companies investing in others on our behalf aren’t bragging of their own learning, by definition they aren’t holding evidence of the learning of others up as a barrier to investing in those others.

This is, then, the blind leading the blind.

Next, maybe the old forms of reporting are simply unsuited to this age, and here we put forward some ideas for ways in which future, learning economy shareholder reporting might take on a new shape, in both its format and its content.

Searching for evidence of learning-based shareholder reporting

Please bear in mind, however, we consider what follows only to be the beginning of a conversation, as in all else, in a learning economy a lot will change quickly, and there is constantly much up for grabs.

We’ve investigated what follows in two primary ways. First, via Google, we’ve searched the web for key learning indicators concerning the company in question. In this, we’ve looked for the existence of new forms of reporting in standalone documents dedicated to it, and for evidence of their hires to senior learning-management roles.

Next, we’ve drilled down into the reports of the companies above, based on keyword searches of their content.

Stage one: What we searched for as learning reporting on the web

As the notion of “organisational learning” is not yet common in daily business reporting, and may therefore not yet have penetrated the typical investor’s everyday consciousness, we are in early days in expecting companies to come up with a form of reporting that addresses it satisfactorily.

Nonetheless, anticipating a different future, before we begin to contrast companies on the published content of their existing annual reports, each of our appraisals begins with a web search to track down the existence of the following four possible new items of reporting.

Items one and two: A standalone learning report and/or learning statement

As a symbol of management fashion, many companies, and certainly all the banks and major financial institutions, issue a sustainability report.

We can be clear about this. Mostly these documents are worthless, meaningless, PR spin, barely deserving even of being confused as symbols of good corporate faith, as they contain little that investors need to know.

In their place, what investors should demand, and what we believe will undoubtedly be offered in future, is a standalone report detailing the outcomes a company’s learning undertakings and strategy is driving. Such documents will explain how these policies work in practice to defend and promote shareholder value, and how they are being evaluated.

This is information all investors need to know, as it separates the red meat from the dead meat.

In the context here, we propose that in the instance of an LIC, a corporate learning report might focus on the learning an organisation is doing for itself, about itself.

Such reports will also need to allow their readers to understand who is accountable for formulating that learning strategy, and to whom within that business those delivering it report.

For an LIC, its learning statement, however, probably a shorter document, might present a tabular summary of the known, validated learning undertakings of an investee company, or of a portfolio of such companies. In that sense, while the investee will have declared its undertakings to the LIC investor, which will therefore have a detailed knowledge of its organisation’s learning policies, the LIC may not wish to give space to disclosing anything more than a summary in its own reporting as a verifiable check for its own customers. This would nevertheless communicate that it knew something about its investments, rather than nothing, as is communicated at present.

Item three: An installed chief learning officer

Our search in their annual reports and on the web, via Google, revealed none of the LICs to employ anyone with this title. This is not really surprising, as in our prior searches, none of the far larger Australian banks nor AMP, for example, did either.

Perhaps this means it is far-fetched currently to expect an entity with likely many fewer employees to engage someone in this position, as, on account of the importance of this role, such a post is likely also an executive board member’s role.

All may have a human resources manager, someone even at a high, strategic level with some expressed responsibility for learning.

However, the role will be different now, as it entails crossing domains to unleash capabilities only accessible by understanding how to specify, direct and deliver the detail of nuanced cross-divisional network learning and digital collaboration.

If the intention is to lift the learning game across a whole organisation, communication must be deeply embedded in that strategy, otherwise it won’t matter what is going on upstream if it never reaches, engages nor motivates the participation of those at the essential coalface.

In someone in such an elevated position, this requires a new combination of insights, skills and experiences, and, yes, learning, as it is in large measure most likely also a communication discipline.

Currently, this position may be impossibly hard to promote from from within, as there may simply be no, or extremely few, suitably qualified candidates yet available.

Item four: A sustainability report

As we’ve suggested above, we think these are largely junk, driven principally by perceived face-saving, me-too corporate communication needs. Their one redeeming feature is they may at least suggest an effort to address an awareness that businesses have external impacts.

That aside, sustainability is simply not a natural state in modern business (as each at least needs electricity and some kind of working materials, even if only computers and stationery), and those materials must, for now, derive mostly from non-renewable natural resources.

To pretend any corporation can mitigate entirely its effects on the natural world is hogwash, and the demonstration of the will not to damage the environment, not to waste natural resources and not otherwise to pollute the social well is simply expected corporate hygiene, nothing more; it is just an entry requirement of the licence to operate at scale.

There is, however, maybe a different obligation for LICs.

If they do not audit their organisational learning, it may be a stretch for them to report on investees’ claims of sustainability.

However, if as a community we want a cleaner environment, it perhaps should be a requirement of receiving investment that either the investor or the investee reports on its own impacts on climate and environment as a condition of either granting or receiving money.

Certainly, in every business, there are matters of environmental sustainability to be addressed, even in turning on the lights, but if claims of progress on sustainability are to be authentic, learning is its natural precursor.

Sustainability is not a lucky accident. Just by turning attention to it and thinking happy thoughts, you don’t get any sustainability. In this regard, learning is not a feature of sustainability, it is central to it.

Sustainability itself, however, is commonly addressed in two often deliberately conflated reported forms.

First, there is that which protects the environment from the activities of the organisation for the benefit of those who don’t work in it.

Second, there is that which, from within, through its own practices, protects the survival of the organisation itself.

There are those who portray the latter as a social gain. However, the two, and their respective primary beneficiaries, should never be mixed or confused. And sustainability reporting, as simple public relations spin, may buy off critics but is never geared to the first of these objectives.

Stage two: Keyword searches of existing annual report content

This is where the rubber hits the road, as what companies claim to their existing shareholders should be the closest to corporate truth they are ever capable of producing.

Importantly, please note the numbers we’ve shown in the table above are produced in good faith, and that the counts we’ve listed refer to the number of pages on which a given word or expression appears in the named document, or, possibly, one it is combined with. (We apologise for, and — if pointed out, wish to rectify immediately — any errors or omissions in our calculations, so if you find one, please let us know.)

Please note, therefore, that these numbers are also only indicative, as in some instances, those we have attributed to a particular document may be boosted when accompanied by another document to form an aggregated “annual review” or similar.

Learning strategy

Despite this being the most important term of all, in our comparative keyword searches, not one of the reports we have studied to date includes this expression as a guide to how the target investment is developing its way of acquiring, sharing and building new, profit-generating knowledge.

If it is any good, and if the company wants to be competitive in attracting discerning, superior talent, being opaque about how it learns is a good way not to go about attaining that objective.

All shareholders should be wary of any company unwilling to declare its learning strategy in ways to them as ordinary readers they find comprehensible and plausible.

Regardless of its strategy, the human composition and learning potential of all companies is unique to them alone.

All, through learning, can come to understand better the talent they need, so the competitive risks of disclosing to shareholders how those strategies are put to work are likely low.

At best, those undertakings may be emulated but not replicated, and in each their results will be unique.

Unless it is enshrined in such an overarching, clearly articulated strategy, most “learning” will likely not be strategic at all, but ad hoc, piecemeal, undirected and unevenly focused. (Knowledge built without a strategy will also be hard to retain.)

It may be confused with training, which, as we have written elsewhere, is not organisational learning.

Worse, it may even be out of alignment with declared strategic business objectives.

Yet worse still, it may have unintended consequences. It may hold back the best talent a business has, and even force those people’s migration elsewhere to an organisation which does take its own learning seriously.

All shareholders should be wary of any company unwilling to declare its learning strategy in ways that to them as ordinary readers they find comprehensible and plausible.

There may also be a very good argument that whatever the organisation’s learning undertakings, for the purposes of objectivity, this should be monitored at a remove by its board, or even by a specially constructed, even invited, committee, and not by its executive.


In the reports we’ve inspected, if companies address transformation they do it as if theirs is the only business undertaking such change.

It would be more realistic if they would address this as a competitive imperative resulting from the fast-evolving context in which they operate, and describing the kinds of competitive initiatives taking place in their industry’s background each is attempting to pre-empt. We are on the lip of an existential change in the ways in which all businesses must learn to keep on making money, after all.

Plausibility is everything, no business is an island, each participates in an industry, and none operates alone.

Yet, few companies explicitly address transformation in these terms, and in no instance did we find any of the organisations’ reports surveyed tying the transformations of rivals to an intensive push in their own self-education.

A digital transformation without a dedicated prior learning initiative might produce some great data analysis and tools.

However, without a fully focused, collective organisational learning activity sensitising the organisation holistically through as many eyes as possible to what is really changing around it, can the technology deployed really be focused to do the optimal job?

Without a cohesive learning purpose and strategy, there is little point in capturing any particular data.

Be cautious. As an investor deserving an understanding of the pressures playing out on a business, it is up to you to discern and decide what is the closest to the truth you can obtain, and where it is omitted.


You can check this easily for yourself, but you might be amazed how rarely this single, critical key word comes up on its own in any of the reports we’ve studied. Just look at the chart.

For our part, apart from its management teams’ abilities to drive change, we’d want to see references to learning tied into everything, at every level of a company’s reporting undertakings, top to bottom, almost as mortar between its bricks.

Learning and development

Generally speaking, in searching on these headline items, we do so first on the single, critical word (here, of course, learning) and then on its appearance in a composite term.

In this instance, it’s hardly surprising, then, that when searching on “learning” yields little, a search on perhaps the more important, integrative “learning and development” showing how its intention of using the organisation’s learning to drive its future shape would yield little result.


If you believe the technology vendors, and their promotion of the proliferation of technologies in the market serving the need for people to work together more effectively, you’d be forgiven for believing that companies are falling over themselves to collaborate.

If so, and if they use these tools, and our guess is that this in reality hasn’t yet reached beyond the technology teams in most companies, there is still a long way to go for most organisations.

(As an aside, in our own experience of working for six months at the Commonwealth Bank, using best-of-breed social workplace collaboration tools, even the bank had no obvious handle on how to make its use of them a consistent, coherent practice, and even despite its annual $4 billion technology operation.)

As we’ve written elsewhere (just in case you read it twice, and wonder why), in no digital business transformation, is any single executive likely to be able to think through all potential competitive transformation developments, outcomes and scenarios, or be able to create and test any solution single-handedly.

Yet managing the art of collaboration is essential, and itself demands a dedicated communication strategy.

This is so not least because any worthwhile transformation is likely to cut across many dimensions in reconfiguring business models across a multiplicity of possible business processes and teams involved in delivering them.

It is more like directing a jazz ensemble than conducting a symphony orchestra.

It’s sad but true that in our research to this point, we’ve not come across even one instance to date of a company bragging in its annual report about how it uses practices of collaboration to advance its learning. Think about that: not one.

Yet, which company giving precedence to learning is going to try to do it successfully without growing its knowledge and without testing and sharing what it learns between its teams? If you’ve read this far, we will leave you to answer that for yourself.

And likewise, searching on “collaborative” elicits a similar lack of response.


Another simple, apparently critical word over-loaded with significance, this appears in search results more often within the word “acknowledge” and its derivatives, or in the disclaimers of auditors – as in, “to the best of our knowledge (we’ve found nothing untoward or crooked in the accounts of this company).”

This is why the counts in this column on our table appear disproportionately high, relative to the others.

Alternatively, it appears most frequently as a justification for the presence of a given member on its board for their distinctive industry know-how.

Yet, bizarrely, it almost never appears as a distinct virtue in its own right as something to be valued, protected, nurtured and actively multiplied to yield a competitive differential or advantage.

Knowledge management

A critical buzz expression of the early networked computing age, we’ve come across not even one company using this terminology in its reporting.

Indeed, even despite its rise as a key currency in the learning economy, oddly, other than lawyers, most companies seem rarely to use it at all.

Maybe, in those businesses, then, that make no mention of it, knowledge manages itself.

Yet, as we’ve written elsewhere, managing and creating new knowledge is key to competitive advantage as knowledge assets in the form of people, processes and technologies can make or break any business and apply a significant accelerant or retardant to its productivity and potential.

Those who currently write corporate reports of the type we are analysing either don’t seem to know this or perhaps can simply find no evidence of such learning-driven knowledge achievements to crow about within their own companies.


Capability is another fashionable HR expression of the moment, as businesses adapting to digitisation have had to cultivate new abilities to deal with this age. Yet, despite this, only three of the 25 reports here make mention of this simple term.

Capability development

Compounding the capability deficit, we’d have liked to come across even one appearance of this expression in any of the reports we’ve surveyed, but to date we haven’t, again, not even one.

Yet, isn’t this what learning and development is supposed to deliver? What are the people employed in this role doing if they don’t have something tangible to show and worth bragging about to their investors about the ways in which their businesses are becoming more capable, and more deserving of their money?

Continuous improvement

Across all the reports we’ve surveyed put out by financial services’ businesses listed on the ASX, only in three companies’ reports – those of Insurance Australia Group, Commonwealth Bank Of Australia and Bank Of Queensland, businesses likely at a different end of scale in the numbers of heads employed to the LICs we are discussing here – did we find mention of this expression.

Perhaps in others, this is now an historical accomplishment and those businesses have no further to travel, and nothing more to improve.

If so, if this, as a shareholder, is what you are reading, it’s probably time to jump.


Mentions of this simple expression are also vanishingly thin on the ground, as are those of “innovative.” Yet, where they occur, they also seem misplaced, or at best somewhat exaggerated.

Many companies seems want to claim some form of innovation, and many managers want to perceive themselves as some form of incipient Steve Jobs. (If you are in any doubt, the self-claims made on LinkedIn are where you will find all the evidence you will ever need to prove this latter assertion.)

Innovation is also an unduly impressive-sounding weasel word, as in what is new is where all business advances lie anyway, and mostly those forward moves claimed represent change, at best, in only minimal increments.

Shareholders of course want innovation’s upside, as it’s a straightforward equation: those that won’t explore won’t discover; those that won’t discover won’t invent; and those that won’t invent and improve will be disrupted.

Undertakings on learning to find and exploit the breakthroughs possible through discontinuous change underpin all significant innovation.

And no description of the exploration of the new and the stretch to conquer uncharted territory, either on the part of the LIC or its investee portfolio, connotes also the possibility of little deliberate, organised, structured, differentiating learning taking place in the companies on our table.


As our conclusions about “collaboration” above suggest, we’ve not come across a single report with a mention of this word, not one.

So, one might conclude that each organisation successful enough to be listed on the ASX is an aggregation of individual virtuosos, working in their single-person, inventor-innovator siloes.

As we’ve referenced elsewhere, Reid Hoffman, founder of LinkedIn and himself clearly no entrepreneurial slouch, says, “No matter how brilliant your mind or strategy, if you’re playing a solo game, you’ll always lose out to a team.”

Beware organisations that do not declare well-synchronised teamwork and team-learning as a virtue.

Again, as an investor, this is another clue that you might be better served by putting your money elsewhere.

Organisational development

Given the above, you won’t be surprised that for the purposes of our comparisons we’ve found only one mention of this term in all the reports we’ve surveyed so far, but not one by any of the companies on the table above.


We picked the LICs on our table above as illustrations because, as they were the biggest in class, according to Morningstar’s information, we thought their declared, published learning practices would distinguish them from their smaller competitors.

As it is, not one, to our disappointment, reports in any way that is satisfactory to the needs of those observing from the non-professional sidelines the quickly unfolding economy in which they will be competing, and in which every one the companies they invest in will also be players.

Therefore, in not one of these companies could we confidently put, and leave, our own money without wondering if we had done the right thing.

However, when one of these LICs, or its rivals, decides to break away in its reporting, it will tell the world it has also done so in its thinking. That simple decision will then send a very important and distinctive message, both to its industry but also to its investors, and the world will begin to change in its image.

In Australia, that may be exactly the move we need to see to invigorate our stock exchange and breathe the needed life into our learning economy.


The 25 LICs included in this list, in alphabetical order, are: Absolute Equity Performance Fund Limited (AEG), Acorn Capital Investment Fund Limited (ACQ), Amcil Limited (AMH), Argo Investments (ARG), Arowana Contrarian Value Fund Limited (AWQ), Australian Foundation Investment Company Limited (AFI), Australian United investment Company (AUI), Bailador Technology Investments Limited (BTI), BKI Investment Limited (BKI), Cadence Capital Limited (CDM), Carlton Investments Limited (CIN), Clime Capital Limited (CAM), Concentrated Leaders Fund Limited (CLF), Diversified United Investment Limited (DUI), Djerriwarrh Investments Limited (DJW), Future Generation Investment Fund Limited (FGX), Milton Corporation Limited (MLT), Mirrabooka Investments Limited (MIR), NAOS Small Cap Opportunities Company Limited (NSC), Ophir High Conviction Fund (OPH), Perpetual Equity Investment Company Limited (PIC), Plato Income Maximiser Limited (PL8), WAM Capital Limited (WAM), WAM Leaders Limited (WLE), Whitefield Limited (WHF)