New York business solutions, governance, restructuring & bankruptcy attorney Martin Bienenstock of Proskauer Rose discusses how to avoid liability.
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Absolutely. Along the lines that we were discussing about putting on to the board agenda business principles that increase share value, there’s a wealth of information developed over the last 20 years by the greatest business thinkers of our times. Professor Clayton Christensen at Harvard Business School is one example. Jim Collin is another who publishes a lot; Great by Choice is I think his latest book. And they have developed based on studying empirically hundreds and thousands of corporations the recurrent themes for those corporations that seem to do better than the rest.
So one thing companies need to do and this is the greatest companies, is learn the teachings of Professor Christensen about disruptive innovation. You can lead an industry, you can be Kodak, you can be Bethlehem Steel, and then you can totally fail. And if you fail, it’s probably because something came along that you didn’t regard as important. Like the mini mill in the case of Bethlehem Steel or the digital camera in the case of Kodak that it actually invented but it wouldn’t let it get in the way of its film business. And you can be overtaken by other companies that pick these up and develop them and all of a sudden, you can’t catch up.
The other thing you have to do is look at risks. You have to have your management identify each internal and external risk of the corporation. And for each one you have to decide whether you can eliminate it on a cost beneficial basis, mitigate it, or just plan around it. And if you don’t identify the risks then you’re not going to be prepared to deal with them when they arise.