Dr. Theodor Weimer
Chief Executive Officer of Deutsche Börse AG
We spoke with Dr. Weimer about #FutureGoodGovernance.
A ship needs a captain. There is much talk about new management concepts, about participation and freedom. How much leadership will a company still need in the future and how much agility will it tolerate? How do you envisage corporate management in the future?
On the one hand, there is a lot of talk about democratic leadership, on the other hand, the “tone from the top” is called for. Every era has its own fashions and catchwords. But the current Corona crisis clearly reminds us that without clear leadership – without direction – it is not possible. Especially in phases of great uncertainty. Be it in the political environment or in business. Leadership that provides orientation is virtually demanded.
In my opinion, participation and freedom are important in day-to-day management. Participation means that a senior leadership team leads, takes responsibility and involves the employees in the decision-making processes. Freedom is a structural trend in humanity: modern and increasingly better educated people do not want to be led in “command and control” mode. We see the latest development in the “home office”. A development that has been given a huge boost by Corona. We are all learning – and we are delighted about it – that productivity in the home office is obviously in many areas as high or even higher than productivity in the classic workplace. This trend will continue after Corona. Free space is a prerequisite for creativity and often also productivity.
On the subject of targets and agility: Leadership must always start with goals that must be supported and understood as broadly as possible. Layers of clay must be broken up. And agility must be allowed and sometimes even demanded in daily work. Because speed – or time to market – is becoming increasingly important.
Trust is good, control is better. Today, it’s still primarily about numbers and compliance. Artificial intelligence, however, is changing perspective and thinking. How can you imagine a future system for monitoring the board of directors? Will there still be a supervisory board watching over the management or will the ‘monitoring’ be replaced by a technically highly equipped external service provider?
The Lenin quote seems to me to be somewhat outdated. I am completely convinced that good and effective management and supervisory boards do not think and act in the categories “control” and “mistrust”. Good supervisory boards force the discussion with the board of directors – exercising control over a board and its actions should not be the main focus. If a supervisory board believes that a board of directors should be closely monitored, then it would be better to replace it. Supervisory boards come from the breadth of their experience and bring different perspectives to the table. Are a sounding board for the executive board, through questions that come “from the side”.
Artificial intelligence will undoubtedly gain more and more importance in corporate management. It will facilitate and improve the work of auditors in particular. In essence, AI (Artificial Intelligence) will improve the predictive power and quality of decisions. However, this is more the responsibility of the management – i.e. the board of directors. I do not see this as an instrument of the supervisory board in the medium term. And I am increasingly skeptical about outsourcing to an external service provider. After all, the quality of a supervisory board’s work lives precisely from the interaction of the experience and expertise of individuals. Of course, this can be supported by technology, but this function cannot and should not be outsourced.
Companies are subject to a constant process of change. What challenges do you expect for your company in the next 10 years? How will they change your company? What will change in terms of employment and employee qualifications?
The challenges Deutsche Börse will face in the coming years can be outlined as follows: How can we continue to achieve above-average growth? In which areas? Where and how can we complement our organic growth through acquisitions? Which technologies are the most promising for our business? How do we prioritize growth opportunities and the technologies – in other words: where do we invest and how much? Because we cannot afford to make every investment. Strategy also means saying what you don’t do.
Companies are constantly changing. No matter whether they have to restructure or how we can grow. On the employee side, we still need people who are well trained and open to new ideas. Employees who are “burning” for our stock market. We are looking for people with an inner passion for markets. We need people with an affinity for technology and data-driven business models. We will become even more global as a company – accordingly we are looking for employees who operate globally. We are a growing company. This requires a type of person who is not afraid of growth, but who likes to seize opportunities.
There is much debate about centrality vs. decentralization, agility and core competence in organizations. Will there still be companies in today’s sense of the term in 20 years’ time? What changes in terms of corporate organization and financing do you expect or would you like to see?
Whether a company sets itself up centrally or decentrally depends on the industry, the life cycle of the company and its strategic positioning. It also depends on where a company is culturally anchored. For us, this is clearly decided: We are pushing decentralization in our business – we promote decentralized responsibility. In the control functions – finance, compliance, etc. – we have a clear focus on the – we manage in a disciplined manner using centrally defined processes and regulations. The degree of centralisation is also high in IT.
Of course there will still be organizations in 20 years. Especially in the current Corona era, we are experiencing that employees long for belonging, even to an organization. I also experience this at Deutsche Börse. I am quite sure that if someone were to destroy all companies today, there would be people tomorrow – real entrepreneurs and designers – who would build a company. There are people with ideas who want to create something. That is the nature of human beings. And even if there were millions of mini-entrepreneurs in home offices, there would be enough creative minds to organize those mini-entrepreneurs again.
In the future, companies will undoubtedly become even more feminine in their management, generally more diverse. In Germany – hopefully – much more international in the committees. And finally, I expect that the shareholder value concept will also develop further in the direction of stakeholder value. We can already see this in the discussion on ESG. The “S” – in other words, the social component – will become more important in the coming years after Corona. As important as the “E” – i.e. the environment, especially climate protection.
In terms of corporate financing, I would like to see “reasonable” interest rates again.
Car manufacturers are becoming mobility service providers, food producers are becoming lifestyle providers, media houses are becoming data science companies. Where will your industry develop? Will industries – as we know them today – still exist in ten years’ time? What will happen then?
Basically, I am of the opinion that disruptions are also part of the development of societies and companies. There are phases – mainly due to technology – which are simply very revolutionary. And in such phases the following applies: Holding on to old technology, to outdated business models is mercilessly punished by the markets. Markets reward future growth and profit expectations.
Our industry has been in upheaval for some time now. We are considered one of the sectors in which pre-trade data business – such as index business – has now left traditional cash trading far behind. We are benefiting from several trends, namely the digitalization of markets, the fact that OTC (over-the-counter) markets are increasingly drawn to stock exchanges, and also the “futurization” of markets – because markets are increasingly mapping future developments.
The media and investors are increasingly expressing worrying admiration for ultimately monopolistic companies – in other words, the Winner-Takes-It-All companies. But I still believe that politicians, regulators and also society as a whole prefer deeply rooted polypolistic or at least oligopolistic structures. These simply correspond more to a basic democratic understanding and the mentality of the post-material enlightenment. Industries will remain – but they too are changing, converging, differentiating.
Today, corporate leaders are asked from various quarters about the purpose of the company or the specific mission of the company. How do you meet this demand? What positive or critical lessons have you learned from this? What advice do you give a CEO of a different industry on how best to approach this topic?
I belong to the group of those who are convinced that companies must stand for more than just “making money”. Companies are part of society – even if sometimes, especially in Germany, hardly anyone seems to notice. Accordingly, we have thought about our corporate purpose. In this process, we have also asked our employees to tell us what they see as our corporate purpose. With overwhelming letters – with statements, videos, etc. With this input, we formulated our purpose as follows: “At Deutsche Börse, we create confidence in the markets of today and tomorrow This purpose, co-developed by our employees, supports and encourages us.
The positive lesson is obvious: a bottom-up approach to developing the purpose of the company works and releases forces. We have tapped into the creativity of our employees, with wonderful results. The negative lesson: we should have done it earlier.
Thank you very much for the interview!