Leadership must provide orientation in an increasingly complex world and take into account the new awareness of values.

Stefan Kölbl

Stefan Koelbl
Chairman of the Board of Management of DEKRA e.V. and DEKRA SE

We spoke to Mr. Kölbl about #FutureGoodGovernance.
The interview was conducted before the outbreak of the Corona Pandemic.


 

A ship needs a captain. There is much talk about new leadership concepts, about participation and freedom. How much leadership will a company need in the future and how much agility will it tolerate? How do you envisage corporate management in the future?

In my opinion, leadership and agility are not mutually exclusive. Leadership in particular can make a significant contribution to a company being agile, i.e. faster, more adaptable and closer to the customer. It is clear that the way in which you lead will change. Leadership must provide orientation in an increasingly complex world and take into account the new awareness of values.

After all, companies and corporate management are always geared not only to market requirements but also to social values. An autocratic management style in companies has long been a thing of the past. The future world of work is and will be increasingly shaped by Generation Y, who are self-confidently demanding a more self-determined and collective way of working. They no longer see managers as mere decision-makers, but as framework providers, motivators and promoters. In the future, leadership models with a strongly cooperative and participatory character will thus become established. It will be more important to align individuals and teams according to their needs and abilities and to build internal and external networks in order to react quickly and innovatively to changes, for example in the course of digitalization. This will lead to less fixed hierarchical levels and increasingly to forms of temporary or collective leadership. In my opinion, however, the one will not completely replace the other. The concept of a DAO (decentralized autonomous organization) is also still a long way off. The world of business is too complex to be fully mapped using block chain technology/smart contracts.

In addition, it should not be forgotten that we are not starting out on a greenfield site with existing companies. At present, several worlds and cultures collide, as well as conflicting requirements regarding business models, structures and management in companies. Balancing out the resulting areas of tension is the central challenge facing corporate management in the coming years. And this means that qualities such as communication skills, creativity and courage will become more important for managers than pure professional competence. I even believe that management behavior in companies will represent a decisive competitive advantage in the coming years.


 

The world’s gretas have also drawn attention to companies and their fields of action. What challenges do you expect in terms of social responsibility and thus sustainability in the company?

Especially in Europe, many companies have now turned away from the doctrine of pure profit maximization or shareholder value. This is because companies are increasingly called upon to assume social responsibility.

For a noticeable change towards more social responsibility, a rethink in the measurement of value and thus the management of companies – away from purely financial key figures – is necessary. One of the central challenges is certainly to measure and present the value contribution of companies to the environment, society and the economy in a uniform manner. A first step in this direction is, for example, the value balancing alliance of eight international companies (value balancing alliance e. V.), which is working on a balance sheet consideration of positive and negative value contributions of companies.

One thing is clear: if a company wants to be successful, it must assert itself in global competition. It is difficult to go it alone in Germany or Europe, but individuals will have to make a start. In order to achieve a critical mass that will bring about the upheaval, society & politics must support and not just demand. Here, every individual is called upon to live up to his or her responsibility and, if necessary, adapt consumption and lifestyle. Because as soon as it goes to the own purse, whether with individuals, investors or enterprises, it becomes serious. Even if sustainability includes explicit economic factors in addition to ecological and social aspects, this change will not be in vain.


 

Trust is good, control is better. Today, it is still primarily about numbers and compliance. However, artificial intelligence is also changing perspectives 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?

In the future, many routine tasks and highly specialized activities will certainly be replaced by digitalization and artificial intelligence. Work that requires a high degree of emotional intelligence, creativity and flexibility will continue to be performed by humans. For me, these include managing and supervising a company, despite corresponding headlines from Hong Kong (“Vital”) and the USA (“Einstein”). Because in both of the cases mentioned, artificial intelligence (AI) also only has a supporting function through the analysis of large amounts of data, the decision including responsibility still lies with the human being. Particularly when one sees the trends towards collective leadership and social responsibility, the model of a supervisory board with representatives from the company, the economy and society is highly topical and could even become an international showcase model.

Of course, the composition and role of the Supervisory Board will adapt to the new framework conditions. In the future, monitoring will focus more on a balanced relationship between social, ecological and economic factors. The regular reporting to the Supervisory Board will develop into a continuous exchange of information in line with the digital possibilities and rapid decision-making requirements, supported by the highly equipped external service providers or AI you mentioned. It can be assumed that the work will increasingly take place in networks with other companies, freelancers, research institutes, etc. I find the idea exciting that the Supervisory Board will adapt to this development and will be more strongly organized in temporary network structures in the future.


 

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 for the employment and qualification of your employees?

On the one hand, we are confronted with the same challenges as the majority of companies:

  • Rapidly changing market requirements, especially in the course of digitalization
  • Balancing parallel worlds and conflicting goals (traditional and digital business models; cost and innovation pressure; work culture of the Baby Bommer generation, X, Y, Z)
  • Unpredictable market environment due to increased/new competition and unsettled global economy

DEKRA has stood for technical safety for over 90 years. Since safety is a basic human need, our corporate purpose will continue to exist in the future. But technological progress will change what, how and where we test. Some of our core testing services will no longer exist in their present form in 10 years’ time. The exciting question is how we test and certify networked systems, machines, products and vehicles when their behaviour can change at any time due to networking. Here we are dependent on politicians and regulators, who must create the right framework with regard to standards and data access (e.g. for autonomous vehicles). Currently, politics is lagging behind technological development in this area.

The fact is, you cannot rest on yesterday’s success. As a reaction to this, we further developed our organisational structure last year and founded DEKRA Digital GmbH. We are bundling our global competencies, creating new dedicated responsibilities and forms for innovation and holistic customer care. We also need to become faster and more agile in many areas; we need to try out more, evaluate and manage differently in digital business models. This also goes hand in hand with a cultural change.

As an expert organization with around 45,000 employees, we have a high proportion of very well trained specialists. It is exciting to bring them into new forms of work and more and more into the digitalized world of auditing. Especially as more and more technology and software is finding its way into the TIC industries. Our employees must be prepared to develop with the company and the market. This means a great willingness to change, lifelong learning/further training, new forms of leadership and cooperation. Change becomes the norm. With regard to qualifications, we are pursuing a two-pronged approach. On the one hand, we need our experts for our “traditional” services – here the following still applies: There are no experiments in technical safety (zero error tolerance). On the other hand, we need innovative, creative minds who develop new (digital, data-driven) business ideas and have the courage and freedom to try out new things.


 

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?

Many things will already change radically in the next 10 years; in 20 years networking and technology will lead to changes that will be partly incomprehensible. However, I am of the opinion that companies in the current sense – i.e. an economic, financial and legal entity that pursues a corporate purpose – will still exist in more than 20 years. It is questionable, however, whether the issue of profit maximization will continue to be seen as the primary goal. In addition, there will be fewer large group structures in order to be able to act faster. At the same time, a certain size will continue to make sense in certain areas in order to diversify and hedge and to achieve economies of scale and synergy effects. The company will therefore be organized more strongly in network structures and strategic partnerships. This will be accompanied by a reduction in fixed employee structures as we know them today.

The financing must follow the development of flexible, networked and partly virtual companies. Block chain technology will play a significant role here and will be able to change corporate financing. The classic bank loan will certainly lose importance or perhaps even be completely replaced by digital and alternative financing methods. These include the various forms of “swarm financing” (crowdfunding, crowd investing, crowdlending). The new financing options are often not only simpler, faster and cheaper; the investors also usually have a better understanding of the financing plans. Linked to this, of course, there is still the healthy requirement that investments must be worthwhile, successes and failures must remain measurable and appropriate monitoring by an independent party remains possible.


 

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 into? Will industries – as we know them today – still exist in ten years’ time? What will happen then?

At the end of the day, an industry is only a collective term for companies. Until the last few years, companies were classified according to their products/services. Currently, the trend is moving towards holistic solution concepts and the classification criterion is changing accordingly. We also no longer see ourselves as pure TIC[1]-Service provider, but as an expert in security. In the next 10 to 20 years, new customer types/profiles may come into focus. Based on the vast amounts of data that we will all generate every day in the future, explicit customer profiles and companies or network organizations specializing in them will emerge. These will then be the industries of the future.

1] TIC = Testing, Inspection and Certification


 

Today, corporate leaders are being asked by various parties about the purpose of the company or the specific mission of the company. How do you meet this challenge? What positive or critical lessons have you learned from this? What advice do you give a CEO from another industry on how best to approach this topic?

Our founding fathers gave us a specific mission almost 95 years ago: To provide security. And today – in the age of digitization and with an increased focus on sustainability – this mission is still highly topical.

It is important to always interpret one’s own corporate purpose in a contemporary way. In 2015, as part of our strategy and vision work, we have intensively examined our mission and translated it for the next 5 to 10 years. This was an important step for us – especially after a phase of strong international growth – towards a common corporate identity. In the end, the decisive factor is consistent implementation and thus our own credibility as a company.

My advice would therefore be to look both forward and back to the core and roots of the company. It must be a corporate purpose that fits the company and is supported by the employees. It should be concrete enough to give orientation (what we do, what we don’t do) and broad enough to be able to develop with the market requirements. What is decisive is the courage to rely on state-of-the-art technologies at an early stage in order to meet the future requirements of the customers.


 

The so-called stakeholders, in particular the (institutional) shareholders, are exercising their ownership rights and obligations much more than just a few years ago. It is therefore no longer sufficient to tick off the requirements of a code (“comply-or-explain”). Internationally, the intensive and permanent communication/interaction of stakeholders with corporate management is gaining ground (“apply-and-explain”). What trends do you see here and how do you assess them?

I see two main strands/trends:

On the one hand, the new awareness of values is making a decisive contribution to the change in the stakeholders’ expectations of companies. If society, customers, employees and investors want to make sure that the company meets their own demands, for example in the area of sustainability, it is no longer enough to have just a few key figures as in the past. The differentiation is made in the way they are implemented. To understand this, stakeholders must go one level deeper and companies must communicate more accordingly.

On the other hand, we see ourselves confronted with an ever increasing dynamic and complexity of many business areas. This requires a completely different, much closer interaction with the stakeholders on the part of the companies. In the future, decisions – supported by new technologies – will have to be made increasingly in “real-time/ad-hoc”. Greater transparency through real-time data and continuous communication will become a matter of course.

The general idea of the “apply-and-explain” principle is therefore only sensible and consistent. However, not in the manner most recently discussed in Germany in the context of an additional edition. We would be far from achieving a reasonable cost-benefit ratio if, in addition to any deviation from rules, compliance with each recommendation had to be documented and justified in detail. A more selective approach is needed here, in line with technological developments and while preserving entrepreneurial freedom.


 

#FutureGoodGovernance is currently still comparable to a crystal ball in many areas. Which future aspects of good governance are particularly important to you? What would you wish for if you had three wishes? Where do you see the political challenge? And what responsibilities will companies and their managers have in the future?

Companies must be beneficial to society, and this goes beyond mere profit maximization. DEKRA, for example, has always been socially relevant in its nature and orientation. For us it is a matter of course to make our expertise available to society and politics beyond the scope of our normal business activities and to make an active contribution to greater safety.

Managers have the responsibility to manage companies sustainably. In the future, the economic, ecological and social aspects will certainly have to be brought into closer harmony. A key aspect of this is to make companies fit for the future and to respond to the many upcoming changes in good time.

In my opinion, we are on the right track in Germany/Europe with regard to corporate social responsibility. However, it is important to maintain our competitiveness in the future. Future good governance, which means more bureaucracy and restrictions, would therefore be the wrong approach. Instead, a pragmatic framework with the right incentives must be created that takes account of the increasingly networked and dynamic corporate world and the new awareness of values. Here, politics, business and society must work hand in hand.

 

Thank you very much for the interview!