JANUARY 2016 / NO. 2
TAGS: BIG BOYS BIG EGOS, CEO, ROYAL IMTECH, CFO, IT, ABNAMRO, CENTRAL BANK, MERGERS & ACQUISITIONS

Too often the Egos of CEOs are too Big

“Adjusting a company in the midst of the whirlwind of decline is like trying to turn a tanker around in an iceberg field”, Trojan Horses of Decline
In 2015, a high-technological corporation in the Netherlands, Royal Imtech, with some 22,000 employees, active in infrastructure, building & construction, maintenance & control, ran into financial trouble. The main causes of this bankruptcy were the inflated egos of the former CEO and CFO, who had both held positions from 2002 till February 2013, acting like ‘sun-kings’, and a lack of monitoring and control. The company’s headquarters had no idea what was happening in the divisions and in the subsidiaries: the numerous acquisitions made from 2002 to 2012 all kept their own ICT-systems as well as their own finance & administration systems.
Former top management was driven by growth by means of acquisitions: € 1.5 billion in 2002, € 5 billion in 2015 and an aim of € 8 billion in 2020. Only one analyst at ABNAmro began asking critical questions in fall of 2012, but the ‘messenger was shot’. Nobody at all, whether analysts at banks, unions, or institutes like the Authority Financial Markets, or the Dutch Central Bank and others were critical. In December 2012, the Dutch financial world had their yearly party in Amsterdam to choose the best M&A director, the best M&A advisor, the best M&A banker and another “24 best in ……. Functions”. At this party Royal Imtech’s CFO was chosen as the best director in M&A. Yet just four weeks later he was forced to resign due to extreme bad governance, fraud and many other failures.

Strategic intelligence

The only way to create the necessary countervailing power to top management, boards of management and boards of directors, is to establish the office of Strategic Intelligence on a par with other functions that report directly to senior management.
“Strategic Intelligence prevents top management of looking like fools a few years down the road”
Dont miss out on our Intelligence Briefings. Subscribe to these free Intelligence Briefings by clicking HERE.
If you like to read our previously published Intelligence Briefings, please click here.