Hierarchical crisis

When it comes down to it, it’s the Board of Directors that calls the shots for an organisation. Therefore, its members should be appointed based on the value they can provide for the company, based on the world we currently live in.

We usually assume that the Board of Directors is the highest attainable position in an organisation, and that’s where the most experienced and intelligent managers belong; an age-old hierarchical tradition that’s always worked well for us. And other species use it too.

But in a world that changes and innovates more rapidly than ever, isn’t this hierarchical tradition undergoing erosion? Is it really still true that the most valuable managers are the most experienced and knowledgeable ones?

During the ’30s, being listed in the S&P 500 — the list of the 500 American companies with the highest market value — meant your company would survive for 90 years on average.

Nowadays, not even a full century later, having your company on that list is not so promising any more: an S&P 500 corporation now won’t even make it to its silver jubilee any more, having an average life expectancy of just 18 years.

It’s becoming painfully clear that oil tankers that are too slow to adapt will be blown out of the water by the more manoeuvrable and innovative speed boats — particularly the ones that are driven by technology, and it’s strikingly often younger people at the wheel.

Google, Apple and Microsoft were all founded by people in their twenties. But there’s also Twitter — which made its first official step toward a stock market launch the day before yesterday — and Netflix, the TV version of Spotify, which was first launched in the Netherlands earlier this week; both of them were led by people in their thirties when they first saw the light of day. For that matter, Spotify had someone in their twenties in charge too.

In order to keep up, then, large enterprises should appoint more younger people for their Boards of Directors, and make it easier for talented young adults to ascend to positions of influence.

Not because younger people make the best managers, or because they are more knowledgeable about the ways the world has worked up until now, but because they are better at understanding the world of tomorrow.

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