111. Survival is not the same as good governance

Organizations that survive for a long time - generations, even - are really impressive, but it doesn't mean they have good governance.

Background music is Of the Stars by KC Roberts & the Live Revolution

SCRIPT:

I contributed to a paper a few years back that found over a 50 year period that family-controlled listed companies were significantly more likely to survive for the entire stretch than non-family firms. Cool finding, right! The problem is that it’s not all that clear to me that survival is always a good thing. I can imagine myself being a founder or business owner who, for example, resists an offer to buy my company – one that might be in the best interests of my organization and its stakeholders – just because I want to stay in control or keep my name on the door. There’s nothing wrong with that – as the owner, it’s my prerogative. I can kinda do what I want. But in this case surviving – aka not getting absorbed by another company – is clearly not the same as good governance. Of course there may be cases where survival *is* indicative of good governance. A company that survives and thrives over a long time probably didn’t succeed in spite of bad decisions. I think the point here is similar to a couple of episodes back where I argued that good financial performance isn’t the same as good governance. It can be pretty tempting to look at a company that has survived for a long time – generations, even – and think that just because it continues to exist it must have great leaders and effective governance. But if we take a moment, we can all imagine how an organization might survive despite awful governance, maybe on the fumes of what was once a great idea. Sure, it’s surviving, but is it “living”? Is it “thriving”?