The Director's & Officer's Guide to Advisory Boards

By Robert K. Mueller | Go to book overview
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2
DRIVING FORCES

Two strong forces are creating a new wave of corporate interest in advisory boards. The more acute force is the D&O liability insurance crisis discussed later in this chapter. Complexity of doing business, a chronic trend, is increasingly significant and is forcing companies to seek outside counsel. While reignited interest in corporate advice squads is driven by these current pressures, many of the boardroom issues are old. Before examining the recent liability insurance issue, the impact and nature of the basic issues need to be reviewed in their current context.

During the 1900s, environmental challenges increased substantially. Technological turbulence, saturation of first-generation industries, emergence of new industries, multinational markets, government markets, leisure markets and technology-created industries challenged traditional ways of doing business. Late in the twentieth century, sociopolitical impacts, developing world markets, loss of control over the environment and socialist markets became issues of primary concern. 1 These trends are further explored in Chapter 7. These environmental and contextual changes and the resulting turbulence increased the need for corporations to be more aware of external forces. The governance role embraced linkages with and sensitivity to these outside forces. Outsider advice has, indeed, become more relevant and necessary. This need for external perspective impacted boardrooms by changing criteria for directorship.

The Korn/Ferry International Thirteenth Annual Board of Directors Study ( February 1986) revealed some disturbing facts in the 592 responses it received from United States companies in a wide array

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