Issue #28                                                                                                 May 2021
Changing while keeping the substance: The role of governance
by Professor Josep Tàpies

Two basic functions of any board of directors are to project the business in the long term and ensure its sustainability.

In an environment such as ours now – in which so many external variables condition the future of companies and put their business models to test, such as the COVID-19 pandemic, digital transformation, globalization questioned by supply chain interruptions, the emergence of artificial intelligence (AI), the importance of carbon footprint, the impact of environmental and social factors, and others – boards of directors have to ask themselves questions such as: Will our business model be affected? How should we change? What about our organization? How will we adapt while maintaining the purpose of our company and its system of values?

The boards of directors of resilient companies understand that without change there is no future; that is why they can change and adapt while remaining true to their fundamental values.

Already back in the 1990s, James C. Collins and Jerry I. Porras stated in Built to Last that “a visionary company almost religiously preserves its core ideology.” Moreover, core values constitute a solid foundation much like a rock, and for this reason do not fluctuate with fleeting trends. In some cases, they may remain intact for more than a century, as the examples described in 100 Families That Changed the World: Family Companies and Industrialization.

Family-owned businesses that are long-lived are those that have innovated, but at the same time, known how to keep their conservative spirit intact. In fact, it's precisely this desire for survival that favors and stimulates innovation. It may seem contradictory, but it's not. The adjective conservative does not have to be pejorative, although when talking about companies, especially if they are family firms, it sometimes has this connotation.

These are companies that have a spirit of adapting to change in their genes. And they manage to ensure that employees experience this through the culture of the organization. The culture of an organization is the deepest level of everything that is assumed as essential; it is entwined with the beliefs shared by the members of a company. These operate unconsciously and define, in their basic interpretation, the vision that the company has of itself and its environment. They comprise a set of basic, defined assumptions, which are discovered or developed while learning and confronting problems of external adaptation and internal integration. And they have exerted enough influence to be taught to the new members of the organization as the correct way to perceive, think and feel those problems. The board of directors plays an important role in fostering and maintaining this culture.

The 100 companies that changed the world have one characteristic in common: early on, they knew how to equip themselves with a corporate governance system, separating the ownership from the governance and the management of the company. Some have kept family members running the company, while others have completely externalized the management of the company. This is a critical decision when thinking about corporate governance in family businesses.

Values are the fundamental pillars of a company. They are like the wind: they are not seen, but felt, in the words of José Luís Simões, president of Grupo Simões, featured in the study Values and Communication in the Family Business and published by IESE’s Chair of Family Business in 2016.

It is here, in all of these intangibles, where companies that are resilient stand out from those are based only on a business model with an unknown foundation and, as a result, don’t know where to turn when the winds of change blow.

I conclude by once again paraphrasing Collins and Porras. Values are like a fixed star on the horizon that can serve as a compass over centuries. And it is the board of directors that must safeguard a company’s purpose and values as it seeks to project the company in the long run.


​​​​​Josep Tàpies 
Professor of Strategic Management
IESE Center for Corporate Governance

Corporate Governance News

Brussels’ sustainable corporate governance plan deemed flawed
In a letter published by Financial Times, six chief executives of the Nordic Confederations of Industries expressed their disapproval of the European Commission’s sustainable corporate governance initiative that pivots on the contested Study on directors’ duties and sustainable corporate governance… read more ​​(subscriber content)
SPAC boom faces new SEC threat with accounting crackdown
U.S. Securities and Exchange Commission (the “SEC”) is increasingly focused on SPAC oversight. The SEC stated on April 12, 2021 that it will begin to examine the accounting principles that SPACs have used to classify their warrants… read more
Legal reform in Spain to introduce new changes in corporate governance
The Spanish Parliament has approved an Act by which the Consolidated Text of the Spanish Companies Act will be amended to promote shareholders’ long-term involvement in listed companies as well new changes in the area of governance… read more ​​​​​
Company directors can’t serve two masters: What went wrong at Australia Post
According to Corporate Law Prof. Jason Harris, directors’ responsibilities are to the company, not the owners, even if those owners happen to be the government… read more ​​​​​
Building a nature-positive economy
Investors often chase short-term profits instead of using environmental, social, and governance criteria –alongside financial performance– to measure a company’s value. There’ll be no saving the planet from the ravages of climate change and biodiversity loss unless this definition of business success changes… read more ​​​​​

In Case You're Interested...

Stakeholder Capitalism: A Conversation with Vivian Hunt and Paul Polman

Business leaders talk about serving their customers, employees, suppliers, and many others in the communities they touch. But job one is serving up profits to shareholders. That’s starting to change. In this episode of The McKinsey Podcast, McKinsey senior partner Dame Vivian Hunt and former Unilever CEO Paul Polman, now cofounder and cochair of IMAGINE, talk about the growing need for stakeholder capitalism—and how building long-term value for everyone is increasingly good for the bottom line... listen here ​​​​​

The Cultural Revolution Hitting Boardrooms

With the occasion of her last book How Boards Work, and How They Can Work Better in a Chaotic World, Dambisa Moyo, in an interview with Worth, discusses how corporate boards can work better in our tumultuous world… read more ​​​​​

For Culture Change, Think “Renovate,” Not “Transform”

Forbes contributor Rodger Dean Duncan speaks with the CEO and co-founder of the Institute for Corporate Productivity Kevin Oakes, who has invested a career in studying and measuring the role culture plays in organizational success. This article gathers key insights from that conversation on corporate culture and company performance… read more ​​​​​

Helping Shareholders Vote Their Values

Proxy Preview 2021 has been released by As You Sow, Sustainable Investments Institute, and Proxy Impact. The report offers a comprehensive look at hundreds of shareholder resolutions about environmental, social, and sustainable governance (ESG) issues. Of the 435 resolutions already filed, about 300 are headed for votes at spring corporate annual meetings… read more ​​​​​

Public Benefit Corporations and the SPAC Surge

Mintz’s recent article Public Benefit Corporations are Going Public anticipated that, as Special Purpose Acquisition Companies (“SPACs”) reemerge as an alternative to initial public offerings (“IPOs”), Public Benefit Corporations (“PBCs”) would start going public through the SPAC process. Not surprisingly, two PBCs have recently done just that, and it seems certain that more PBCs will follow. It is important to note, however, that regulators like the SEC are increasingly focused on SPAC oversight, which may slow the frequency of SPAC transactions as regulators issue new guidance and enforcement measures. This article delves into the matter… read more ​​​​​

Restoring Trust in Audit and Corporate Governance 

The U.K.’s Department for Business, Energy & Industrial Strategy (BEIS) has recently published a consultation paper titled Restoring trust in audit and corporate governance, proposing substantial and long-awaited reforms to the U.K. audit and corporate governance rules… read more ​​​​​

IESE's Recent Research on Corporate Governance 

“Alliance Governance Mechanisms in the Face of Disruption”

Journal article (March 2021)

Authors: Arne Keller, Fabrice Lumineau, Thomas Mellewigt, Africa Ariño
Journal: Organization Science
Read more

“Research on the Competitive Consequences of Common Ownership: A Methodological Critique”

Journal article (January 2021)

Authors: Azar, J., Schmalz, M. C., Tecu, I. 
Journal: The Antitrust Bulletin
Read more

“Ingka in 2020. Corporate Governance, Purpose and Transformation”

Case-study (2021)

Authors: Masclans, R., Canals, J.
Journal: IESE, SM-1698-E
Read more

IESE CCG-ECGI Corporate Governance Conference


In the context of the current shareholder vs. stakeholder debate, the IESE Center for Corporate Governance (IESE CCG) and the European Corporate Governance Institute (ECGI) organized the “Can Purpose Deliver Better Corporate Governance?” Conference, which took place on October 28-30, 2020

Leading scholars together with prominent CEOs and board directors, delved into some of the pressing issues surrounding corporate purpose and governance. Over 1,900 people participated in the conference. 

The conference sessions are now available for viewing and you can download the conference report. Find all the papers and presentations on the conference website under the tab "Program & Papers". 

Upcoming Program

Executive Program: “Value Creation Through Effective Boards”

Date: May 24-27, 2021

Location: IESE, Barcelona Campus

Visit the program website
A Way to Learn. A Mark to Make. A World to Change
Barcelona    |     Madrid     |     New York     |     Munich     |     Sao Paulo