The Way it was: 1992.

Ready To Be Surprised

What is happening, right now, in global business is both worrisome and exhilarating. Today, one new management axiom is that the most powerful threats and opportunities for a company do not come from within normal business but from outside -- as complete surprises. By definition the businessman cannot plan for surprises. A surprise foreseen is an oxymoron. So, being unable to know what may occur, the businessman or businesswoman must try and make the company ready to meet whatever comes. The solution is not to make changes in the company but to completely transform the company to make it able to constantly change.

Robert Horton, chairman and CEO of British Petroleum Co. PLC, in "'Surprise' Governance" [Spring 1992]. He resigned in June 1992.

The Focus Now: Real Economic Issues

Five years ago, institutional activism began as a reaction to the excesses of the takeover era. The agenda was entirely governance and process-oriented, and often seemed divorced from value considerations. Now, with the virtual disappearance of takeovers -- and also as a consequence of a concentrated learning experience on the part of major institutions -- activism is changing. Institutions have recognized that in the long term, the focus of their efforts must be on ensuring good corporate performance. The goals and tactics of institutions will continue to evolve to focus on real economic issues and on poorly performing corporations.

Lilli Gordon, president of the Gordon Group, and John Pound, Harvard professor, in "The Challenge of Governing for Value" [Spring 1992].

The Perennial Challenges

As recent initiatives by the boards of General Motors and several other major corporations [to remove the CEO] have demonstrated, directors already have very significant, if often latent, powers. Efforts to strengthen corporate governance must start by recognizing a fundamental, albeit circular, reality: Namely, a board will be as effective as top management, and specifically the CEO, wants it to be -- and top management will be as effective as a board insists that it be. More specifically:

* If a CEO wants strong board members, he will get them.

* If a CEO wants the board involved, it will be.

* If the CEO feels the board role includes tough-minded evaluation of his own performance, the board will oblige.

* And if the board chooses, evaluates, and rewards a CEO on the basis of shareholder value, the directors will get a CEO who puts shareholder value first.

In other words, the fundamental challenges of corporate governance remain what they were more than 20 years ago, when I was invited to become chief executive of FMC Corp. These challenges are, first, to select an effective board and, second, to ensure that a board aggressively and...