Thinking Beyond Science

The last two decades of business history are littered with examples of challenged and even disgraced companies. Boeing, Enron, General Electric, Kmart, PG&E, Theranos, the Weinstein Company, WeWork, and WorldCom represent just a handful of corporations left in ill repute, their financial value decimated and the reputations of their leaders indelibly stained. This phenomenon extends beyond individual companies—whole industries like the US auto sector, banking, and technology during the dot-com crash have been severely damaged.

While stark differences exist between criminal acts at Enron, Theranos, and WorldCom and the managerial ineptitude in most other cases, many scandals share a common thread: responsibility often rests not just with management, but with boards of directors.

Corporate Leadership Structure and Accountability
Most large global companies follow a standard leadership model. The C-suite—chief executive officer (CEO), chief financial officer (CFO), and chief operating officer (COO)—holds ultimate accountability to a board of roughly a dozen directors. This board oversees and guides the organization toward future success.

When companies falter, workers, investors, and the public rightly question what management and the board could have done differently. Amid widespread anti-corporate sentiment from politicians, pundits, employees, investors, customers, and society, some criticism is justified. Yet for every headline-grabbing failure, countless companies quietly thrive, delivering goods and services with remarkable consistency—think of a drug company producing a million error-free doses of penicillin daily. We rarely celebrate these successes, but their absence would be keenly felt.

Why Strong Corporations Benefit Society
Strong, successful corporations serve society’s best interests, driving human progress in ways once taken as articles of faith. They create jobs, bolstering livelihoods and combating poverty. Corporations fuel innovation through massive R&D investments, as seen in Fast Company’s annual “World’s 50 Most Innovative Companies” list, transforming communication, travel, disease treatment, and literacy.

They partner with governments on education, health care, pensions, and infrastructure, while championing reforms in environmental change, diversity, and inclusion. During global crises like the 2020 pandemic, corporations led the charge: pharmaceutical giants developed vaccines and treatments, suppliers kept essential goods flowing, and industrial firms produced masks, respirators, and ventilators.

The fates of corporations and society are intertwined. Corporate success lifts economies, GDP, tax revenues, and innovation; failures threaten stability. Some anti-corporate voices even cheer corporate destruction, ignoring the fallout: economic contraction, plummeting innovation, job losses, vanishing pensions and health benefits, and collapsing living standards.

The Evolving Challenges for Boards
The ideal of an effective board—leaving companies more prosperous, or at least thriving—has grown harder amid shifting notions of shareholder value and social responsibility. Twenty-first-century companies face unprecedented headwinds: post-pandemic recessions, slowing growth, de-globalization via tariffs, capital controls, and immigration barriers. As nations drift from liberal democracy and market capitalism, operations grow tougher.

Talent shortages loom—two-thirds of America’s workforce holds only a high school diploma or less—while competition intensifies from tech-savvy rivals and strong local players in developing markets. Though CEOs bear much responsibility, boards exist to support management. These complexities demand boards reexamine businesses through fresh lenses, becoming more assertive and adaptable.

Unless boards evolve with the times, the companies they guide will struggle to keep pace.

Source : How Boards Work: And How They Can Work Better in a Chaotic World by Dambisa Moyo

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