Governance best practice meets corporate renewal; That was the Textron story: a venerable company on a crash course to retool for survival, armed with a strong CEO-board relationship to see it through.

• Author: Campbell, Lewis B.
• Position: ORGANIZATIONAL LEADERSHIP

SHORTLY AFTER I assumed responsibility as CEO of Textron Inc. in 1998, it became clear that there was much to learn from the company's storied past and much to apply from my 24 years of management experience at General Motors. At first, I thought the traditional conglomerate business model would continue to provide growth in shareholder returns. And, in fact, we did see the stock appreciate quite a bit (more than 20 percent) during that first year.

When we began to experience a rapid, unexplainable decline in our share price while continuing to deliver mid-double-digit EPS growth, I realized my window for developing a truly transformational vision for Textron would be quite brief. I'd seen how rapid global economic and technological change could wreak havoc with business models and with CEO-board relationships.

Fortunately, I had had the opportunity to work closely with a number of Textron's board members from the time I joined the company in the fall of 1992, and I respected the board's authority. In fact, I had already sought the help of several board members in addressing various business challenges. These occasions, though awkward at times, were among some of my most worthwhile learning experiences.

A board's rising concern

From nearly the first day of my tenure as CEO, our board allowed me to admit my mistakes--sometimes before I even had a solution. They must have realized early on that immediate knowledge of a situation, good or bad, is almost always desirable ... provided the messenger didn't get shot. That never happened.

If we did not move aggressively and successfully to manage change and transform the enterprise I now was heading, I would not get many second chances. After many quarters of exceptional results, our company's performance began to lag, and then to seriously erode, and our stock was slipping. In addition, the board had expressed rising concern about the viability of Textron's operating model and strategic direction. The board was demanding more from me in the form of a clear, passionate, and open commitment to vital change, along with a reasoned list of "action items."

Frankly, our board demonstrated a great deal of courage in allowing our team to abandon, in essence, the very heritage of our company's business model. I'd always believed that if our efforts to transform the company failed, I would be expected to turn in the keys to my office. And I was fully prepared to do just that.

Let's put this into context. Textron has an 80-year-plus tradition of engagement and understanding between management and the board--with the occasional ups and downs that mark any dynamic organization. Our visionary founder, Royal Little, interacted openly with the company's original board, formed in the early...