In recent weeks, we’ve seen how concentrated power and a lack of diverse perspectives on corporate boards can cause systemic blind spots in organizations and lead them into avoidable crises.
Facebook, for instance, is currently in the crosshairs of regulators, business partners and users afterdamning reports came to light about its reaction to a drumbeat of bad news. Carlos Ghosn’s devastating fall from the upper echelons at Nissan has thrown both the auto maker and its longtime partner Renault into crisis, and has cast doubts on the structure ofcorporate governance in Japan.
And his behavior as an “imperial CEO” led to Jeff Immelt parting ways with GE, heralding a corporate meltdown of epic proportions. These are just some of the most recent and visible examples of how power — particularly absolute power with few checks and balances — can presage a crisis.
Practices such as having the same person serve as chairman and CEO, failing to give decision making power to truly independent directors, and selecting directors from the same tired pool of contenders, are all likely to increase the chances that corporate leadership will miss something important in the external environment.