No 'perfect play'.

• Author: Kristie, James
• Position: Editor's Note - Corporate governance

PAST DIRECTORS & BOARDS author Michael Useem, a professor at the Wharton School of the University of Pennsylvania, was kind enough to invite me to contribute an essay to the Wharton Leadership Digest online newsletter (http://leadership.wharton.upenn.edu/digest/index.shtml). Here are a few thoughts that I offered to the newsletter's audience (10,000 strong!). I'm pleased to share them with you.

In February, The Wall Street Journal published a special supplement on corporate governance, themed "How To Fix a Broken System." I disagree with that premise. The U.S. corporate governance system is not broken. It is in probably the soundest shape it has ever been in.

Granted, the system is in stress. What is lost in the wailing over the current crisis of confidence in boards is that governance is subject to a process of continual improvement. As with any business process -- strategic planning, budgeting, recruitment, leadership succession, M&A -- governance in theory and practice is always being refined and will never achieve a state of perfect play.

In my quarter of a century as a business journalist and close observer of boards at work, I have seen the governance system face prior episodes of unprecedented challenge:

* In the mid-1970s, as we wrestled with the financial scandal of that era -- the widespread undisclosed payments of bribes to foreign agents by the cream of American companies -- cries of "Where was the board?" were heard throughout the land. Boards responded by tightening up their audit supervision and opening up their membership to a higher percentage of outside directors.

* In the mid-1980s, M&A-instigated...