AUGUST 2017 / NO. 1
TAGS: CYCLES, BIG EGOS, COST-CUTTING, AKZONOBEL, UNILEVER, POSTNL, LAYING-OFF, PETER DRUCKER

Are multinationals at the end of their Company Life-Cycle?

Question: “Why have three Dutch multinationals – PostNL, Unilever and AkzoNobel – been targets for hostile takeovers?”
Answer: “Because those companies, as well as many other multinationals, are at the end of their Company Life-Cycle”, Professor Dr. Jaap Koelewijn, Nyenrode University
The potential hostile takeovers of Unilever and AkzoNobel were a wake-up call for their respective boards of management and boards of directors, providing a reason for both companies to act, however, both moved in the wrong direction, by selling-off parts of their companies, and of course via cost-cutting. Two easily-implemented actions which helped improve shareholder value. The Big Egos at the top were no doubt very proud of themselves to have made a decision. Together with my co-author, Dr. Antoinette Rijsenbilt, we described those too Big Egos in numerous cases in our 2015 book “Big Boys Big Egos and Strategic Intelligence”.

Wrong actions

The actions of selling-off parts of the company, cost-cutting and laying-off people are the relatively easy things to do, at least in the short-term. In the longer term, management ongoing focus must be on revenues, unmet customer needs, non-customers, effectiveness and innovation, with the aim of becoming more competitive. Things might get even worse if some of the ‘old boys’, like AkzoNobel’s former CEO, Hans Wijers, succeed in convincing Dutch politicians to adopt new protective governance measures against hostile takeovers. This would make the boards of those companies even more lazy, and these companies would look like ‘lame ducks’. In June 2017, Professor Jaap Koelewijn of Nyenrode University stated that companies like PostNL, Unilever, AkzoNobel are in the last phase of their company life-cycle, because these companies are inefficient, ineffective, not innovative, and unable to become leaders in their competitive arenas. New potential targets of hostile takeovers are AholdDelhaize US, Dutch Royal Philips and Swiss Nestle. Goldman Sachs stated that divestment, namely selling-off parts of the company, made hostile takeovers even easier.

Overage executives

Peter Drucker, quoted in 1986, was very clear about overage executives. “The basic rule, and one that should be clearly established, is that people who are no longer in their sixties should ease out of positions with major responsibilities. It is a sensible rule for everyone, and not only executives, to stay away from decisions if one won’t be around to help bail out the company when those decisions cause trouble a few years down the road, as most of them do.”
“The aim of Strategic Intelligence is to prevent senior management from looking like fools a few years down the road, because they took the wrong decisions”
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