Strategy should start in the boardroom

After five years of intense focus on compliance following the excesses of the 1990s, it is time for the boards of US companies to concentrate their attention where it belongs: on strategy. This means discussing strategy often and in depth and, crucially, repopulating boards with people who have real industry experience.

We find that chief executives and chairmen from other companies often make the most capable directors, particularly in their ability to provide strategic insights. Yet senior executives are increasingly unwilling or unable to take board seats. Corporate governance reforms such as the 2002 Sarbanes-Oxley Act have substantially increased the time that boards spend on inward-facing issues such as compliance. This, combined with a perceived increase in personal liability, has made directorship a less appealing prospect.

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