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Today's most prominent public companies operate on an unprecedented scale and with great complexity. The boards of directors of firms like Alphabet or J.P. Morgan face an impossible task. As seen from the outside, the dozen or so members of such a board cannot conceivably carry out their collective mission. And yet they do.

But the governance of the firms that shape our lives should not depend on people doing the impossible, and governance failures are on the rise, resulting in enormous financial and human costs. Substantial, structural changes are needed, not only in the way boards operate but also in the behavior of investors, the ways management teams interact with their boards, and the public's approach to companies and their boards. These changes will require many years, but some actions can be taken now, not only to initiate the reform process but also to simplify the board's job.

The discussion that follows draws heavily on the author's experience at Tapestry Networks. This firm conducts confidential meetings, individual discussions, and small group conversations with hundreds of directors each year, most of whom serve on the boards of major global companies in North America and across Europe. Tapestry led the first of these meetings in 2003, after the passage of the US Sarbanes-Oxley Act; from the start, the focus was not on teaching directors or providing 'best practices' but on learning how boards and directors operate, especially in highly ambiguous situations. None of what follows represents a consensus view of the directors. Any errors are the author's own.

Repeated failures of governance
The last decade has witnessed a remarkable set of governance failures. Boeing was once hailed as a global standard of engineering and safety excellence. However, after two of its 737 MAX aircraft crashed in 2018 and 2019, investigations revealed that the board had neglected safety oversight, prioritizing production schedules and competition with Airbus. They also demonstrated that the board lacked mechanisms for receiving internal safety complaints.

Johnson & Johnson, famous for its speedy and principled recall of Tylenol after a criminal spiked containers of the best-selling pain reliever with cyanide, faced shareholder lawsuits in 2022 and 2023. At issue was the firm's handling of litigation around talc-based baby powder, alleged to cause ovarian cancer, with claims that the board had failed to provide adequate oversight of product safety.

Intel, widely hailed as a market leader and an influential innovator, suffered a decline in its reputation as it made a series of strategic mistakes. Shareholders attacked its board not only for poor decision-making but also for errors regarding the development of the semiconductor business. Between 2020 and 2025, five different people, including a pair of interim co-CEOs, took the top position at Intel. More broadly, 2024 marked a record 327 departures of public company CEOs.

Governance failures are not limited to US public companies or businesses. European boards have made headlines for governance flaws: notable examples include Crédit Suisse, Volkswagen, Wirecard, and Unilever. Major universities have fired presidents or faced sharp criticism from public scandals and controversies.

The problem is structural. Our models of corporate governance were formed in the early 20th century, when even the largest businesses were far smaller than today's giants. Firms were primarily focused on physical assets, and a single corporate entity could own and control, and over which a board might conceivably have exercised strong governance.

Contemporary public companies are large and highly complex. Walmart went public on the New York Stock Exchange in 1970. It had 1,500 employees at the time; today, Walmart has 2.5 million employees operating in 19 countries. However, the shape of its board remains unchanged: twelve people, most of whom are part-time.

Ford Motor Company once owned not only its factories, but also the steel plants that supplied them and the iron ore mines that supplied the plants. It made glass for its windshields and owned rubber plantations to supply its tyre-making operation. Dissatisfied with the healthcare provided to employees, Ford established a hospital, which is still in operation. In many ways, the model was simple. Henry Ford himself could act as an autocrat: "Anyone who does not like to work in our way may always leave."

In contrast, today's large companies, including Ford, operate in complex, rapidly changing, global networks of suppliers, partners, and distributors, many of which are not owned by the firms they work with. Governing and controlling these systems is far from simple.

However, problems with governance cannot be attributed solely to scale and complexity. The conceptual models we use for boards often differ significantly from the ways companies are governed. The map is a poor reflection of the territory.

Directors manage the business of the company..
In statutory law, a statutory party corporation is run by its board of directors. Management is scarcely mentioned; the language in the 1948 UK Companies Act requires companies to have at least two directors, but clearly states that managers are optional. The Act's language is direct: "The business of the company shall be managed by the directors, who may … exercise all such powers of the company as are not, by the Act or by these regulations, required to be exercised by the company in general meeting."

The current (2006) form of the Act, substantially changed from its earlier versions, neither defines nor requires a CEO, though every public company has one. CEOs began to appear in formal governance codes in 1992, not as statutory requirements, but as 'comply or explain' rules established by regulatory bodies and stock exchanges. The US moved earlier than the UK to formally recognize managers in statutes such as the Delaware General Corporation Law (DGCL). Still, even there, management did not appear in the DGCL until its 1967 revision. The current form of the law does not prescribe specific management roles or titles, but simply requires companies to have officers with duties that the board defines. Later US legislation, such as the Sarbanes-Oxley Act (2002) and the Dodd-Frank Act (2010), acknowledges the existence of CEOs and CFOs, requiring them to certify financial statements, but does not define their broader roles.

The letter of the law thus assigns very substantial responsibility to the board, and case law in both the UK and the US assigns full responsibility to the board in situations where a CEO or management team is unable to act or performs poorly.

In contrast, there is a large body of 'governance advice' in circulation, setting out how boards and managers should operate together. Some of this has regulatory force, for example, as it becomes incorporated in exchange listing rules. However, most of it is simply advice, much of which is simplistic. "Boards are the bedrock of corporate governance," says a recent article, "and their role is often summed up by the phrase "noses in, fingers out". Other writers speak of a "bright line" and make much of the distinction between governance and management, even though this appears nowhere in written US or UK corporate legislation. Another article, for example, asserts that "directors should not cross the line to interfere with management's responsibilities."

The wording of corporate law seems to be at odds with widely disseminated governance advice. And this can put corporate directors in a "double bind", where contradictory messages create unresolvable dilemmas, but with no way to opt out. Some researchers view such double binds as one driver of mental health disorders.

Dynamically adjusting responsibilities
If the directors of large companies cannot intellectually resolve their ultimate responsibility for the company with "noses in, fingers out", they find practical ways around the contradiction. They create a more dynamic relationship between 'outside' board members, particularly the chair, and 'inside' executives, particularly the CEO. In many cases, CEOs and board chairs meet frequently, sometimes daily, to divide up issues, such as an activist intervention, an accusation of fraud within top management, or a rapid decline in a business unit's performance.

Generally, boards and directors address longer-term, day-to-day issues. But this is simply a matter of good practice. In many situations, a board director with specific expertise in cybersecurity, for example, or the behavior of a particular corporate activist, will engage intensively with management, sometimes for many weeks at a time.

A call option on the board director's time
Someone who joins a public company board of directors is, effectively, selling the company a call option on her time. In normal circumstances, director time may be limited to scheduled meetings. However, an emergency, such as a major cyberattack, a takeover bid, or a scandal involving the CEO, may demand immediate and unlimited attention. A director's duties of care and loyalty do not pause between board meetings.

As with the writer of a financial call option, a director's upside is limited, and board pay is almost always fixed or capped. The downside risk can be substantial, particularly when the value of a director's time is factored in. Audit committee chairs have described being called unexpectedly about a financial scandal in one case, summoned out of an evening film showing, and then plunged into weeks or months of intense work to sort out the problem and direct the rebuilding of control systems. Many have ruefully reflected that, after such an incident, their hourly financial compensation proved inadequate.

Beyond compensation, we know that many directors operate without much support, either for the analytical work of understanding company financial performance, or for building skills and confidence in new areas emerging technology, as a first instance, but also topics such as geopolitics, the needs of younger employees, and the dynamics of social media. Even the logistical support that many directors had when they were executives is often lacking, leaving directors not only to manage their travel but also to set up their personal information technology.

Trust vs. intrusive oversight
Directors and governance experts agree that trust between the board and management is essential. Almost every public company charter empowers a board to take intrusive measures, such as demanding information, interviewing employees without other management present, and retaining outside advisors. Yet experienced directors are reluctant to do this. Mutual suspicion puts a board at a disadvantage compared to a management team, which has far more information, people, and other capabilities. A few top executives have said, in confidence, that they don't want their directors to receive extensive outside training or counsel, as this can lead to time-consuming questions from the board.

A European director offered an analogy: "Suppose you believe that your teenagers are keeping drugs in their bedrooms. You can conduct a surprise search. You may or may not find the drugs, but you can be sure that the next time you inspect, you won't find them."

But other directors speak of the need for "intrusive oversight", more rigorous questioning, and direct board access to outside advisors, especially in light of accounting and disclosure scandals at companies such as Wirecard and GE.

What's the way forward?
There are no simple fixes for a governance system that is no longer fit for the companies and markets it operates in. We can appreciate the insight, persistence, and plain hard work of the women and men who serve on large company boards. At the same time, we can expect continued governance problems. Reform may take decades.

New thinking and action are needed on at least three fronts.

First, we need more explicit statements about what investors, regulators, and the public can and cannot expect from the boards of directors of large public companies.

What can boards be held accountable for delivering? How does this vary by industry? For example, does the board of a large global bank have a fundamentally different job than that of a retailer operating in two European countries? What about companies that are technically very complex, or where performance is difficult to inspect and measure, as in health care? How do our expectations of boards change in the "two-tier" model? Do two-tier unions have a direct role?

Second, what do we expect of an individual director? How should directors be selected and motivated? What standards should we apply when assessing a particular director's performance?

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Individual directors, for the most part, have seen few penalties for failing to perform their governance duties. Successful Caremark claims, where a shareholder."

Claims that a director has failed in the duty of oversight are rare; the Delaware Court of Chancery even wrote that a Caremark claim is "possibly the most difficult theory in corporation law upon which a plaintiff might hope to win a judgment."

But the scope of these claims is widening, and more are surviving pleas for dismissal. Standards for the competence of an individual director are slowly emerging. In the UK, a candidate for the board of a major bank or insurance company goes through an intricate vetting process, not only including background checks but also involving an interview with regulators, effectively a difficult oral exam, covering such topics as the macroeconomic environment affecting the firm, the firm's liquidity position, and the board's role in determining its risk appetite.

Finally, what support are companies and the broader governance system providing to boards and individual directors? Where are boards being provided with internal or external staff to do more than manage the logistics of meetings, for example, performing analyses of control systems in competitive companies? Are boards and individual directors being given the time that they need to do their work well? Again, financial institutions may be at the forefront. In some cases, their board chairs and leading directors (e.g., audit committee chairs) are contracted for service that is full-time or nearly full-time. Such arrangements are far rarer in other industries.

Experts in law, economics, assurance (auditing), technology, business, and finance all need to contribute to building better models of corporate governance, as do investment executives and communication/media leaders, since boards and their members are much more in the public eye than they were even a few decades ago.

Reform will necessarily be slow. But the current moment of global political uncertainty may be a moment of "unfreezing" and an appropriate time to begin.