Buhlmann's Corner
The nature of things – learning how to run always wearing new shoes
Companies begin to develop negative market worth and absorb it into the fabric of their market capital when instead of attacking markets or competitors the actions they pursue cause harm to their own shareholders.
With few small variations the basic pattern is always the same.
The Supervisory Board has little authority over the management board and is weak and irresolute towards it, providing no supervision or strategy in power and counter-power a vacuum.
The management board gets hijacked by one, or sometimes two or three of its members who, characteristically, are unable to shake off the dust of their feet or, worse still, can’t even feel it’s there.
The absence of commitments that a healthy Supervisory Board ought to perform grants the CEO room to appoint people to the management board in de facto cooption. Naturally any candidate with savvy would never be considered in the first place. Competitors, instead, entice the middle management into their trap, getting them increasingly embroiled as market share falls and the profitability of the whole company fades away, in the end even before the eyes of the impassable directors.
The death rattle is expressed in visionary programmes supposed to revive fortune and profit when the contracts have expired, even though the results were promised for today, or even yesterday.
In addition to the absence of leadership and the loss of touch with reality, there is a certain kind of seniority common amongst the model/directors. The “visibility” factor grows bigger by the day and it affects the halo hovering just above their heads as well as the appearance in the distant future of the income that just today has been swallowed up by a black hole. “The sooner Mr Hainer passes the baton to a successor, the better”, comments Ingo Speich, Union Investment in Frankfurt.
Yes, I do know of one exception. Of himself, he says “as a rule, candidates tend to seek election to a Supervisory Board before they’re 70 and I’m the exception that proves that rule” (Ferdinand Piech). Despite his unsurpassed arrogance Piech has succeeded in creating major success stories from the dust of reality. With undisputable authority he achieved results with Porsche, Audi and Volkswagen as unprecedented as they were unimaginable.
Adidas lacks a grandeur of this calibre (see also Financial Times, Reuters, Format online, Manager Magazin and Die Welt); Its CEO has been in office for more than ten years, drafting five year plans that promise unparalleled results in turnover and profitability; when the Supervisory Board girds up its loins, it is always for its own ends, the market is moving but it’s far ahead of Adidas. Speculators invest hoping for a profit that could materialize from the early resignation of the company leadership The company leadership, in the meantime take the shareholders’ money to defend and protect themselves, with much noise and to do, and with the help of consultants (what on earth can be the purpose of all these people be?) against the shareholders themselves.
Who can protect the capital from precisely this kind of protection if not an efficient and functioning Supervisory Board. Right?
If only the shareholders had voted for it in time. Things would have been much better and two or three of them would have already retired.
Who’s coming after Adidas?