Not the strongest, the smartest, or the cleverest survives. The one who can adapt best, survives. This is how it works in our close vicinity and this is also how it works on a much larger scale, in evolution. The odd thing is that adjustment means that you comply. You resign to a new situation and learn how to handle it effectively. But that is also temporary. Once you have gotten used to it, it has to be done differently again.
I remember that effect the best from when our children were young. When they cried at night, you felt as if it would be like that the rest of your life. Oh my God! If they were quiet for two weeks and you could finally sleep all night again, you prepare for a quiet future. And then they are teething and you are awake again… That is why I also think that some parents have trouble with their children in puberty. “Our Maria is no longer our Maria!” “I do not recognize her anymore as she is now!” Well, you better believe it. She has become two years older and is not a ten-year-old anymore. Only you as a father don’t know it yet!
It’s no different in the boardroom. In fact, most policies are made exclusively based on past experiences. There is a reason why they say that generals always fight the previous war. That is quite logical, for there is your experience and your benchmark. Yet, it is essential for a good future to always find the right rhythm. You would think that finding the right rhythm would not be so difficult in our country: dancing is in our blood (well, not in mine…). But as it turns out, it is not that simple.
Some companies, such as KLM, propagate the strategy of a ’smart follower’ for themselves. This means that you are not the frontrunner in new developments, but that you want to wait and see in a ’smart way’. Once the competition has successfully introduced a certain innovation or renovation, then you follow the market. Not sooner. The advantage of this approach is that it is relatively risk-free. If you introduce a ’new’ concept, it is almost certainly a success. The disadvantage is that the market does not perceive you as innovative, but rather as the boring average. Perhaps sometimes even old-fashioned. For some markets this is not that bad, for instance for financial institutions. In that area you do not need reckless guys. You need reliability. For other markets, being languid can be disastrous.
Exactly these types of things have to be considered in a boardroom. The Supervisory Board has to ask the Management Board to come up with a strategic vision: how innovative is our company and how innovative should it be? We are quite often hindered by what psychologists technically call the reminiscence effect (what memories last longest): your benchmark and your assessment of what is good and what is not, is mainly determined in a fixed period in your life. For most people, it is the time between age fourteen and age twenty-one. The music you listened to then, is still your favorite music at age sixty. The books of those days are still in your top ten. The girl or boy you were then in love with, wow!
The reminiscence effect can obstruct a good development of a company. It may cause you to continue to think in old patterns too long. Adjusting to new times means that you have to dare let go of your old ways of thinking. And there you see the difference between real entrepreneurs and pseudo entrepreneurs. What is the role of the Supervisory Board in this? It has to indicate the beat for this tango. It has to warn when the tempo becomes too fast and also when it becomes too slow. But you must have rhythm!
Do you have a question about corporate governance yourself? Please e-mail it to firstname.lastname@example.org and perhaps your question will be discussed in the next blogpost.