โ Scribed by Ram Charan
No coin nor oath required. For personal study only.
EOs today need a strong, active board-not to appease shareholders (though they must) but to improve their own performance. The fact is, good boards C help the company and the CEO perform better.
The need for an active board has never been greater. When WorldCom and MCI announced their merger plans last November, the speed and magnitude of the move stunned the telecommunications industry-a reminder of the radical discontinuities and major opportunities every CEO must be prepared to face. Most boards today are well prepared to help. Stacked with experienced, intelligent directors who want the CEO and the company to succeed, their collective wisdom and experience is a valuable intellectual resource that can help a CEO meet the challenges.
CEOs must get the board engaged. The board's independent judgments about the company's strategic direction, key people, and even the CEO's performance are valueadding. When the CEO helps the board do what it should-ask incisive questions, probe the underlying assumptions, and provide a different perspective-the company and the CEO benefit. The board can help management identify new trends, prepare for unexpected contingencies, seize important opportunities, and provide the realitychecking and coaching a CEO needs. Of course a board cannot guarantee the conipany's success, but it can ensure that the thinking at the top is tough and clear. Consider the following contributions boards have made:
In January 1995, Consolidated Natural Gas was facing rising costs, flat earnings, and coming deregulation. Management presented a four-year plan to turn the company around, but the board knew shareholders wouldn't wait. At the board's urgmg and know- ing that the board would support a more radical approach, management revised the plan to include aggressive write-offs and other tough actions early on. The following year,
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