ONE MORE TIME. WHAT IS THE VALUE PROPOSITION FOR A STRONG BOARD
DOMINATED BY OUTSIDERS?
Put the legal requirements for a Board to one side for a
moment. Put Sarbanes Oxley to one side for a moment.
From a business perspective, why do you need competent
Boards dominated by strong outsiders?
The argument goes like this:
1. Good CEOs are champions.
Champions are bred to have hubris. If they did not
have believe in themselves, they would not be aggressive CEOs.
2. In the absence of a
strong counterveiling force, some CEO Champtions will rigidily hold on
to a once successful business model that ought to be thrown away. In
the absence of a strong counterveiling force, some CEO Champions will
foolishly rush into M&A activities that defy both logic and statistical
probability.
3. This strong counterviling force
is called the Board of Directors.
For a summary of a Stanford University study that supports
this perspective, please click HERE.
