No Mercy / No Malice: Churn

Patent Impact

Scott Galloway highlights the detrimental effects of board entrenchment on innovation, particularly in the realm of patents. Companies with long-serving directors tend to produce fewer patents, and those they do produce receive fewer citations, indicating lower R&D productivity 1. This stagnation is mirrored in the lack of CEO turnover in S&P 500 companies since 2020, suggesting a broader issue of resistance to change. Galloway argues that mandatory retirement ages could mitigate this problem, as age-related cognitive decline impacts decision-making capabilities:

Ageism is not politically correct, but neither is biology. Ours is the oldest government in US history.

--- Scott Galloway

He suggests that term limits could reduce entrenchment and foster a more dynamic, innovative environment 1.

   

Policy Parallels

Galloway draws parallels between corporate and political entrenchment, noting how both stifle innovation and progress. In politics, incumbents benefit from a system that favors the status quo, with a 95% reelection rate in the US House in 2020 2. This creates a leadership that struggles to adapt to new technologies and societal changes. Galloway argues for term limits to introduce fresh perspectives and reduce the influence of entrenched leaders:

We need more churn. We should impose term limits on our elected officials and judges.

--- Scott Galloway

He suggests that similar measures in business could also enhance innovation by breaking the cycle of entrenchment 2.