The Handbook of Board Governance, 2nd Edition

33Agile Governance

Scott Koerwer

Vice President and Vice Dean for Graduate Education at Geisinger Commonwealth School of Medicine

Joseph Perfetti

Award-Winning Professor of Finance, Executive Speaker, and Entrepreneur

Introduction

The latter half of the last century saw a rash of “rock star” CEOs: Jack Welch, Bill Gates, Steve Jobs. Their names and images were as famous as any celebrity's. The cultural shift from competent to charismatic CEO was accompanied by another troubling trend: the rise of the rubber-stamp board. After all, if a company has a wizard at the wheel, what is a board to do but get out of his or her way? For several notable companies—GE and Apple most significantly—this worked for a time. Then, something happened to the business environment.

Jack Welch himself predicted the conditions of his own company's demise. “We've long believed that when the rate of change inside an institution becomes slower than the rate of change outside, the end is in sight. The only question is when,” he said in GE's 2000 annual report.¹ Today GE, once one of the most valuable and greatly admired companies in the world, is a shell of its former self. As of 2019, its market value has declined almost $500 billion from its peak in 2000. But GE is not alone—just over half of the Fortune 500 have disappeared since the year 2000.

According to Innosight, the average company lifespan on the S&P 500 index has gone from approximately 30 years in the mid-1990s to a projected 12 years by the ...