Chief Executive Officer of Drägerwerk AG & Co. KGaA
We spoke with Mr. Dräger about #FutureGoodGovernance.
A ship needs a captain. There is a lot of talk about new leadership concepts, about participation and freedom. How much leadership will a company still need in the future and how much agility can it tolerate? How do you envision corporate leadership in the future?
Yes, a ship needs a captain. In an airplane, on the other hand, the time constants for processing information are much shorter, and that’s why there’s a team in the cockpit. In a company, it’s not just the team in the cockpit that counts, but each individual. Future corporate management must keep an eye on the entire system. And be able to take the satellite perspective just as regularly as to ground it. And communicate with all levels and at all levels. Especially with customers, too.
The Gretas of the world have also turned their attention to companies and their fields of action. What challenges do you anticipate regarding social responsibility and thus sustainability in the company?
The challenge is communication. In the end, it’s not a question of what’s good and bad for the climate, but how it’s seen in society. It’s a constant battle of facts and opinions. As the world becomes more complex, increasing intolerance of ambiguity is a growing threat, a breeding ground for populism. It has led this country and the world to ruin before.
Trust is good, control is better. Today, it is still primarily about numbers and compliance. Artificial intelligence, however, is changing perspectives and thinking here, too. How can you imagine a future system for monitoring the management board? Will a supervisory board still watch over the management in the near future, or will ‘monitoring’ soon be replaced by a technically highly equipped external service provider?
If I may say so, I cannot imagine monitoring by artificial intelligence. In principle, that would be a bad idea, because it is always based on mass. And the impact of a board of directors is based on creativity, for better or worse. Humans are better at judging that. What machines can do better today are full-scale mass audits. Where every single transaction is looked at. This was unthinkable a short time ago, and our technically highly equipped service providers are already doing it today as part of their audit activities.
Companies are subject to a constant process of change. What challenges do you expect your company to face in the next 10 years? How will they change your company? What will change in terms of employment and employee qualifications?
Diversity is increasing. Not everyone is comfortable with that. You have to like it. And you have to like people. With all their unpredictability and creativity. It will be less and less the case that a person is only qualified for a job if he or she can prove that he or she has the appropriate certificate after passing an exam. That is too slow. We already have many new subjects for which there is no training and no proven experts. So we just have to try how to do it and who can do it.
There is a lot of debate about centrality vs. decentrality, agility, and core competency in organizations. Will there even be companies in today’s sense 20 years from now? What changes in terms of business organization and finance do you expect or would you like to see?
Yes, absolutely they will still exist in today’s sense. This has to do with trust. Trust reduces complexity and the associated costs. In other words, it increases efficiency. But who can you trust? This can be natural persons, or organizations like companies, or even systems. In any case, however, it needs repeated experience, i.e. consistency. If this cannot be established, trust cannot be built up and the resulting advantages cannot be exploited.
Car manufacturers are becoming mobility service providers, food manufacturers are becoming lifestyle providers, media companies are becoming data science companies. Where will your industry go? Will industries – as we know them today – even exist in ten years? What will come then?
Yes, industries will continue to exist, and raw materials will continue to have their importance, as will hardware, because nothing works without that. Our company, Dräger, is not active in a single industry, but in a great variety of markets, each of which has bright prospects for the future. That is why I am not afraid of the future, and the diversity makes it even more exciting. And safer too, because we never need to lift the whole company, turn it ninety degrees in the air, and set it back down on the ground without dropping it and risking a total loss. Because we just don’t have all our eggs in one basket, and change can happen piece by piece, market by market.
Today, corporate leaders are asked from various sides about the company’s purpose or its specific mission. How do you meet this demand? What positive or critical lessons have you learned? What advice would you give to a CEO in another industry on how best to approach this issue.
We make technology for life. That gives great deep meaning to our work. And it has since our founding, for over 130 years. We test ourselves against this claim every day. It can’t be duplicated. And we are very proud of it and feel very lucky to be able to serve such a good cause. It also makes a lot of commercial sense, because these markets, as I said, all have bright futures in their own right.
The so-called stakeholders, especially the (institutional) shareholders, are much more aware of their ownership rights and obligations than they were just a few years ago. It is therefore no longer enough to simply tick off the requirements of a code (“comply-or-explain”). Internationally, the intensive and permanent communication/interaction of stakeholders with company management is on the rise (“apply-and-explain”). What trends do you see here and how do you assess them?
This is not new. In the 1980s, there was the shareholder value discussion, which, in retrospect, was a misguided approach. In the U.S., there is currently an initiative by well-known companies that is a clear rejection of pure shareholder value thinking. Stakeholder thinking has deep roots in European social ethics and I am glad to see that there are signs of a change in thinking here. Moreover, well-intentioned shareholder protection laws and regulations have led to the emergence of predatory shareholders. Who have been able to push their special interests at the expense of other stakeholders, such as customers and employees. This is not sustainable. As far as code systems are concerned, I see the challenge of defending our tried and tested two-tier system and not overburdening the role of the supervisory board. An old boys’ network is basically poison for successful corporate development. However, it is also difficult to deal with this with the Code. From the owner’s point of view, I would say that this is simply stupid. And there is no cure for stupidity
At present, #FutureGoodGovernance is still comparable to a crystal ball in many areas. What future aspects of good governance are you most concerned about? What would you wish for if you had three wishes free? Where do you see a challenge for politics? And what responsibilities will companies and their managers have in the future?
Oh, that’s a lot of questions at once. Politics sets the framework conditions. Entrepreneurs can adapt to just about anything. The only bad thing is when the system changes unexpectedly, i.e. when politicians no longer feel bound by the promises made by their predecessors in office and break promises and contracts. A special issue that regularly leads to mismanagement in my eyes is the accounting of goodwill, which arose from the supposed protective interest of the shareholders and the concern that the profit that should be distributed could disappear through depreciation. The current practice regularly leads to the overvaluation of acquisitions that in reality only destroy value. The responsibility of entrepreneurs and executives in the future will be to take a stand even when it is uncomfortable.