The Curse of Legacy
Recent insider corporate battles are front and center of the pink papers. We are talking about India’s biggest corporations going through public spats based on ideological differences.
This article is not about who is right or wrong but only questioning the reasons why Chairmen voluntarily step out of running their companies. One would believe it could be for the following reasons: To give way to younger professionals, an evolving environment or the want to pursue alternate interests. These, I believe are the broad determinants.
These retirees are influenced by the curse of their own legacies. Their own creations. The standard Father-Son moment, “Son, you don’t know how it’s done, I made this company and brought it so far, you don’t know what you are doing. You are ruining my name.”
In the Western world, retirement is retirement, and shareholder value is all that matters. Indian founders talk about legacy, culture, governance. These companies already have boards that oversee management and governance. If the boards don’t oversee then fire them. Public displays of disaffection are not the answer.
They have problems with CEO salaries, capital allocation, and decision-making. These promoters should not have given up control, and continued to run day-to-day ops or at least sit on their boards as active members. Public armchair macro-management is bad for shareholders, promoters, employees, and the overall sentiment.
Behemoth companies simply cannot pivot to market needs, alternate consumer behavior or digitization. It’s the human emotion that is biologically averse to change combined with a fear of the unknown. It’s as simple as this. “We made a lot of money this way. Any other way will not work, it’s too risky.” How many times have these words been spoken in the boardrooms of Fortune 500 companies.
It’s because of legacy that Walmart took so long to add “.com” and allowed a garage size online bookseller to become a 100-billion dollar retailer. Similarly, legacy centenarians GM, Mercedes, and Ford, never believed Tesla would become anything. They went low with cheap electric cars while he went high, and is winning!
Today, start-ups are approaching old problems with clean lenses. Unburdened by any past knowledge of how it was done but equipped with a ravenous appetite for transformational technologies that will and have already started changing the world.
My start-up is challenging a 100-year-old, trillion dollar business model that has never deviated in any form. If I had a million dollars every time someone told me “it can’t be done” or “it’s too good to be true” or “how come no one else thought of this?” or my favorite “why can’t Reliance/Walmart/Amazon do this?” then we would be a unicorn already! Well, the short answer is this. They didn’t.
Legacy is a warm blanket, precedent is a teddy bear. Ask any banker or fund manager, he will tell you risk is for crazy people. Unless it pays off. Then you are a “visionary” and you get on the cover of TIME.