When I was a student, I was a blood donor. One day in March, I reported for the regular donation. There were two nurses behind the counter working on a file. I heard one say to the other, “Can you help this man please?”. I turned around in a reflex. Was there a man behind me? I did not realize she was talking about me. I was 22, but I did not feel like a ’man’ at all. I actually still felt like a young man until I was almost thirty. At this moment, I still feel at least twenty years younger than my actual age. This is a well-known phenomenon to psychologists. Almost everyone has it. Yet, you irrevocably age as a human being and eventually you cannot continue your life.
What does this have to do with governance? A company also has a life cycle, just like a human being. A company can also feel younger than it actually is. However, there is a major difference. A company can continue to rejuvenate. A human being cannot, despite all the facelifts and total makeovers you get. A company does not have to disappear, as a human being eventually does. In principle, a company can live forever. Still, companies often die or go bankrupt. They shrivel and disappear. And that is interesting. Because, how does this happen if it actually is not necessary?
A well-known statement of Darwin is that if you want to survive in nature it does not matter whether you are the strongest or the smartest, but whether you are able to adjust. This also applies to companies. A fascinating example is Lego. Everyone knows these small brightly colored blocks. The first Lego was produced in the late forties of the previous century. Millions of children played with Lego in those days. Many adults still do. At the end of the last century, the future did not seem so bright for Lego. The computer era was a fact. What child still wants to play with blocks when you have a computer to play games? Lego rejuvenated by returning to the core business -manufacturing blocks- and combining it with modern themes. Lego now has its own YouTube channel with more than one billion viewers. One of the most popular computer games, Minecraft, is based on Lego. Lego has meanwhile become one of the largest family businesses in the world. The profit has risen by 25% up to over one billion euros in the past year (2015)! Good job!
But as management board and supervisor we can all do that. In fact, it is our most important duty. The problem is that we are often not sufficiently aware of it. We are so consumed by the daily hustle and bustle and nonsense, that we do not really look around and realize what we need to do to adjust the company to the continuously changing circumstances. And then the company is actually already deteriorating. We at the top of the business community always think that our reflexes and reactions that were perfect several years ago will still be perfect now and in the future. We think a company does not age. But it does. However, you can do something about it that is more effective than a facelift. Wake up. The company will then live on.
Do you have a question about corporate governance yourself? Please e-mail it to governance@vaneps.com and perhaps your question will be discussed in the next blogpost.
