Over the past two decades, globalization, technology disruption, the 2008 financial crisis, activist shareholders and more recently, climate change, Covid-19 and new geopolitical risks have unleashed several earthquakes with deep and lasting effects on the business world and society. For most of the twentieth century, companies were institutions that helped create wealth, innovation and jobs, and raised the standards of living for many people. In a stable international context, firms played a key role in spreading economic growth and prosperity around the world. Unfortunately, the rising uncertainty unleashed by those trends has made the role of boards of directors in governing companies extremely complex.

In Chapter 6, I argue that the new generation of boards needs to go beyond monitoring senior managers to work harmoniously as a team capable of addressing the firm’s challenges. The process of turning individual board directors into a high-performance team is complex. This chapter explores how the collegial dimension of the board’s efforts can translate into effective teamwork and team development, concurrently strengthening the impact of the team as whole and contributions from individual members. Moreover, the very nature of boards of directors’ role – limited dedication, diverse backgrounds and sporadic meetings – requires boards to work collaboratively with the CEO and the top management team. The board of directors appoints the CEO and, depending on the firm’s statutes, confirms the key executive appointments the CEO wants to make. This decision should be founded on professionalism and trust. A constructive and highly professional relationship between the board of directors and the CEO is essential.

In Chapter 2 I discuss how boards can work on the company’s purpose and shift their attention from profit maximization alone to become a purpose-driven organization. A corporate purpose offers a concise explanation of why a company exists and what it intends to do for customers, employees and society in a sustainable way. It provides a frame for shareholder and stakeholder expectations. With the growing emphasis on sustainability and ESG dimensions, firms need to develop an overall purpose-driven framework to ensure these pieces fit together and are well integrated into the firm’s strategy. Boards should learn how to work with the firm’s purpose, make it consistent with the firm’s strategy and understand how their work can reinforce or erode corporate purpose.

Chapter 10 presents a summary of the reflections and learnings stemming from the clinical studies and the model of the board as the firm's steward. It also examines its implications on how to develop the board of directors of the future and the functions that it should embrace to govern companies effectively.

In the face of disruptive challenges, companies need to change. Chapter 4 explores the board’s role in the corporate transformation process when the pressure to change is intense, with particular emphasis on sustainability and digital transformation as two important drivers of major disruption. In many industries, climate change, the global pandemic and other potential natural disasters and growing geopolitical tensions add to this pressure to adapt and compel CEOs and senior managers to rethink their company’s strategy. Using the recent evidence of corporate transformations, I illustrate the unique role boards play in helping firms navigate this process, in collaboration with the CEO.

Effective boards should assess the overall economic and social impact of their companies. In Chapter 9, I discuss how boards should set goals and policies and regularly disclose information about the firm’s financial and nonfinancial performance. In particular, boards should make sure that corporate purpose, as well as environmental and social dimensions, are well defined and coherently integrated into the firm’s strategy, business model, culture and people development policies. Financial and nonfinancial information should be disclosed and presented in a holistic and connected way. In this way, shareholders and stakeholders will have a deeper appreciation of the firm’s progress toward fulfilling its goals and purpose. At present, there is a heated debate on how to define standards for nonfinancial information and environmental, social and governance (ESG) factors. Effective boards should take regulation into account, while making efforts to establish their own ESG objectives that are consistent with their strategy and business model, and disclose them in a clear manner.

Chapter 5 examines the critical challenge of the CEO’s appointment, development and succession plan. It also analyzes the role of the board in leadership development. Many corporate crises derive from a poorly managed CEO transition process. Boards that aspire to promote respected companies should focus on leadership development, talent management and succession plans. The ability to attract and develop stellar talent is a cornerstone of good governance and driver of superior performance. This is a vital responsibility for board members and one that requires professionalism, dedication and deep knowledge of the firm and its people.

In Chapter 8, the spotlight is shareholder and stakeholder engagement. Boards that govern for the long term should actively engage shareholders – or oversee the interaction with them – learn from their suggestions and assure that the company has an adequate shareholder structure to carry out its activities and purpose. Boards should also understand how key stakeholders interact and create joint-value with the company, and how it can learn from them. Among the board’s responsibilities is to ensure the company has the right type of shareholders to pursue its purpose. A major assumption in many corporate governance studies is that shareholders are homogeneous and have the same preferences. The evidence indicates the contrary: Shareholders are heterogeneous. There is a wide variety of shareholders: family offices, pension funds, passive investors, private equity firm, hedge funds or governments, among others. Each shareholder is unique, with distinct time horizons and motivations. The board of directors needs to consider this diversity.

In Chapter 3, I argue that boards of directors should develop their own perspective on the future of the firm in collaboration with the CEO, and design a strategy road map. In most industries, companies are experiencing disruptions as a result of technology, protectionism, climate change, geopolitical risks and new consumer preferences. The strategy road map should include various dimensions: what makes the firm unique, its value proposition for customers, the required capabilities and resources to compete, specific strategic choices to sustainably create economic value and the type of firm the board would like to develop in the long term. The board of directors should provide a context where members can effectively reflect, discuss and approve the company’s strategy. The board should not only approve the firm’s strategy: It should offer an effective context for discussion and reflection on the strategy, business model and key decisions.

Chapter 1 offers an overview of recent corporate crises and their relationship with the dominant model of boards of directors. I also present a brief historical review of boards of directors and explore why the current generation of boards that was born in the 1990s has fallen short of its expectations. Understanding why the current model has not been effective is relevant. In parallel, a close-up view of the inner workings of some boards sheds additional light on a conundrum overlooked by large-sample statistical studies. A board should understand the company’s business and the industry in which it operates, make sure its long-term orientation is sound and expand their scope beyond simple shareholder value maximization.

Effective boards should evolve from their emphasis from compliance and box-ticking to promoting a healthy corporate culture that underpins individual and corporate behavior. This is the theme examined in Chapter 7. Corporate culture can serve as a driver of employee engagement, inspiration and creativity and competitive advantage. This is a delicate issue: The board does not define corporate culture, yet can still enhance and protect it, and ensure the company possesses a culture that fosters collaboration, customer orientation, initiative, accountability, transparency, diversity, inclusiveness and integrity, all of them qualities that help develop the organization for the long term.