Reckless conservatism
February 16, 2009
Another example of “reckless conservatism” comes from our own experience. We were invited at a pension fund’s yearly investment event. We were asked to initiate a discussion on paradigm shifts that would potentially impact the investment universe. There was not much appreciation for our attempts to discuss the potential of bottom of the pyramid developments and the emergence of new multinationals from BRIC countries. The investors were all very pleased and confident about their procedures and approaches. Basically they were too big to miss an opportunity –they claimed. What was the point of our discussion? Less than 18 months later all their brains and procedures could not have prevented them from being hit by a loss of asset value of many billions of euros.
I do not want to pretend that a better reception of our ideas would have prevented them from losses in last year’s terrible market. But I was unpleasantly surprised by the conservatism of our audience. The attitude in the meeting was one of over-confidence, of unlimited belief in their qualities, procedures and uncompromised reliance on their own mindset.
Reckless conservatism is a huge obstacle for the transition towards more sustainable economic models. One of the priorities of any board is testing the organisation all the time on their openness to new ideas and opportunities, to assess the agility of the company and the access to innovative market opportunities. In challenging economic times, in an environment were resources get scarce and reputations tainted, some humbleness is crucial and reckless conservatism should be terminated. Famous Dutch entrepreneur Paul Fentener van Vlissingen has said: “When things go too well at companies, the wisdom of doubt can turn into the arrogance of knowing it all.” As we are in a transition to a more sustainable economic model, no executive or organisation can afford to think to know it all. The hard lessons of the recent past will have hammered in this message, hopefully….
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