Dr. Jürgen Reinert
Chairman of the Managing Board at SMA Solar Technology AG
We spoke with Dr. Jürgen Reinert about #FutureGoodGovernance.
A ship needs a captain. There is a lot of 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?
The old but still practiced approach of “boss knows everything best and decides” is no longer successful.
Leadership means giving people confidence in their abilities and in their actions. In this sense, leadership is a support function to the employees. The employees of a company know best how to solve problems and handle tasks. This is why they were hired. They can therefore expect managers to take responsibility for the fulfilment of their tasks and to be supported in doing so. For their part, managers should provide the necessary resources and create a framework in which employees can work together successfully. For this reason, leadership and agility are not opposites. Leadership means rather to give an orientation and to create the possibilities to be successful together. This form of leadership places – higher demands on managers.
The world’s Greta’s have also directed their attention to companies and their fields of action. What challenges do you expect in terms of social responsibility and thus sustainability in the company?
In our industry, we and our employees expressly support the “Greetas of the World”. We live sustainability and consider a careful and far-sighted use of resources to be necessary. If we didn’t act in a thoroughly sustainable manner in all aspects, we would lose credibility as a company in the renewable energy sector. We were aware from the very beginning that it is not enough to produce solutions for renewable energies, but that these products must already be produced sustainably. The aspect of sustainability in society and also in the economic consideration of companies is becoming increasingly necessary and relevant. Companies that do not act sustainably at all or only superficially, i.e. that engage in “greenwashing”, will not be successful in the long term.
The social responsibility of companies, like that of other stakeholders in a community, has always been there. It is only perceived to varying degrees. We at SMA understood the expansion of renewable energies in this sense very early on (and in recent years also against noticeable resistance from politicians). But we are also learning more every day and see new potential for more sustainable action, which we want to use.
Trust is good, control is better. Today it is still primarily about figures and compliance. However, artificial intelligence is also changing perspectives and thinking here. How can you imagine a future system for monitoring the Executive Board? 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?
There will continue to be a supervisory board that is staffed with people. After all, the supervisory board is not just about control in the sense of a target-performance comparison. This view would completely neglect the advisory task of the supervisory board – e.g. in drawing up corporate strategy. Certainly, an IT-supported control or even modelling of future scenarios will produce considerably more information on the basis of which a management board or supervisory board must form an opinion. A supervisory board will also have to deal with new technologies in order to fulfil its task. In order to do justice to these tasks with creativity and innovation, I believe that a diverse supervisory board is needed to accompany and challenge the management of the company. However, it is and will remain part of a public limited company in a way that an external service provider or machine cannot become.
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?
In the future, there will be an even greater struggle between companies for the necessary skills and employees. All companies want open-minded, agile employees for their digitization strategy. The companies will not only differ in terms of salary and freedom, it is the “purpose” of the company that makes the difference for the employees. People increasingly see their purpose in life not only in work and the accumulation of assets. They therefore expect more from companies in return for their work than just adequate remuneration. On the one hand, they want to feel that you make a difference and, on the other hand, that a company accepts and supports their demands for independent life and development.
One of the major challenges for companies and society is the ever-increasing speed of change in technology and life. The way we work and cooperate will change completely. Work will become more agile, mobile, communicative and automated. Employees therefore need the ability to learn new things within short time intervals and to face completely changing tasks. Companies may also have to realign employees at all levels several times over a 10-year period, as current skills will no longer be needed in five years’ time. To do this, we are forced to produce high-tech in a high-wage country. This means the need for well and broadly educated people. The ability to constantly engage, reflect and change is a key qualification for the future. However, this challenge does not only start in the companies but already starts in kindergartens and schools.
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?
Companies will undergo major changes. Large corporations are often too slow in a complex, networked world. We will experience a development towards decentralized networked organizational structures in which small, agile units work flexibly with partners. Core competencies will be positioned centrally in this network and integrated into the network. In addition, the question of the legal forms of the individual units and their financing will be a recurring issue and will have to be answered individually. Against this background, entrepreneurship in companies is becoming increasingly important, both as part of the companies and as a partner in the network.
A separation of “thinking” at management level and “working” at employee level is far too slow for future (product) developments. This makes “leadership” much more challenging in the future. Employees will also demand much more “effectiveness” in the future. Employees will no longer see themselves as executors of instructions. The organisation in companies will therefore be clearly geared to the tasks in the company and will not create a “department” as a home for the employees, but will offer changing assignments. This also calls into question our current patterns of thinking in terms of labour and works constitution law. The financing of companies will continue to fall apart into two basic camps. One sees an investment as an opportunity to increase their assets. Here, the idea behind a company is only interesting as a building block for the company value. The others invest to advance an idea as such. The increase in assets is more likely to be the result. With regard to the social responsibility of companies (and the investors?) already mentioned, the second are the more sustainable ones.
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?
The industries will certainly still exist. However, there will be increasing cross-industry cooperation and only those companies will survive that adapt quickly to the new challenges and, above all, opportunities and know how to use them. In our industry, the change is particularly rapid and fundamental: We are currently experiencing the global transformation of energy supply structures from a centralized system with large fossil and nuclear power plants to a decentralized supply by small units that generate clean electricity on the basis of renewable energies. In addition, in the new energy world, all sectors, such as power supply, heating and cooling, e-mobility and stationary electrical consumers and storage are being linked and intelligently controlled. Progressive digitalisation is further accelerating this development, as it offers producers and consumers completely new opportunities. Against this background, SMA is also changing from a component manufacturer to a supplier of complete systems and solutions for power generation and storage as well as for cross-sector energy management. We are constantly developing our solutions in close cooperation with a constantly growing network of partners from other industries so that our customers can take advantage of new opportunities and business models that are constantly emerging.
Today, corporate leaders are asked by various parties about the company’s purpose 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 from another industry on how best to approach this topic?
Perhaps this will become clear from the interview so far. A company becomes valuable if it advances its vision of the future, its idea of the essential, and implements this consistently and credibly in all areas. Then it can also make its mark in a social sense. Microsoft or Apple may be an example here, but SMA is also an example. A corporate leader who can only approach such an idea “professionally” is in the end only an administrator, but not a driver. He lacks the intrinsic motivation.
The so-called stakeholders, in particular the (institutional) shareholders, are exercising their ownership rights and duties much more than just a few years ago. It is therefore no longer enough 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?
Investors’ desire to understand exactly how a company operates is certainly on the rise. The information gained in this way is often part of the investor analysis. Continuous stakeholder dialogue is important and desirable. It can provide valuable impulses for the orientation of the company. At the same time, it is important for both sides to understand that the complexity of digitally networked structures in the economy makes it increasingly difficult to make a simple assessment of the situation. There are often no answers in the categories right and wrong, but both.
#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 politicians’ demands? And what responsibilities will companies and their managers have in the future?
I think that the dual model with a corporate management board and an accompanying supervisory board has proven its worth. The increasing number of non-financial issues that companies are now actively addressing also shows that the answer to the question of a well-managed company goes far beyond making a profit. The value of a company can be measured not only in material terms, but also in terms of its contribution to better social development. This is sometimes a little short. But you can also measure the value of these issues by the diesel scandal, which has done considerable damage to the credibility of the companies concerned, but also of politicians. Promoting these non-financial issues and taking them as a real yardstick is a joint task for all sections of society.