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``Fiduciary duty''

Over-cautious managements often rationalise their fear of change by appealing to their fiduciary duty as custodians of the company's assets. Deploying the company's resources, redirecting priorities, and taking actions which might have adverse short term consequences are claimed to violate the trust they exercise in the name of the shareholders.

Yet is not the duty of a fiduciary to manage the assets entrusted to him ``as a prudent man would dispose of his own assets?'' What is ``prudent'' for a bank trust officer or pension fund manager may constitute a freeway to oblivion for the management of a company that leads an industry in the midst of a technological revolution--especially if that management has signed up to deliver compounded exponential growth in sales and profits for the foreseeable future.

It's easy to become obsessed with fiduciary duty when guarding $140 million. But it's essential to never lose sight of the fact that the most fundamental and profound fiduciary duty--the ultimate act of the prudent man--is to use that money, when necessary, to protect the future of the company that earned it. Fiduciary duty is often cited as a excuse not to act.

Yet when change is required, the prudent man adapts.

Editor: John Walker