There are already a variety of regulatory reform proposals on the table and a broad spectrum of policy actions ready to be implemented by different nations in an effort to address the widespread feeling of discontent flowing from the recent financial crisis. There is an alternative path, however, that may prove to be a more productive and powerful force of change—one that is driven by the corporate sector itself. Progressive companies are taking the opportunity to “lead by example,” promoting the key tenets and principles that will help restore investor confidence. In effect, their day-to-day interactions with all stakeholders demonstrate how to live the right values and ethics.

The starting point for this journey is the board of directors. Collectively, the board has the responsibility for the future direction of the enterprise, its impact on stakeholders and society at large. The board     directly influences the critical management actions to drive short-term financial results, incent long-term value creation and develop strategies and plans that will ensure sustainable growth.

After the recent holiday break, a dozen Fortune 500 directors were asked for their thoughts on the biggest changes they see on the horizon and the implications for the boardroom. Common themes included greater globalization pressures, additional regulatory intervention and the potential rise of national protectionism. Many thought the current flashpoint issue of executive compensation must be addressed quickly to begin restoring investor confidence and credibility on Main Street.

The directors shared the view that a possible long-term, slow growth economic environment, combined with the aforementioned external forces, would challenge boards to become more transparent with key stakeholders on the major decisions that affect the enterprise. They see stake- holders continually “raising the bar” on board performance and taking a more proactive role in influencing the board through enhanced proxy access and more targeted advisory votes.

The fundamental issue to be addressed is how best to rapidly propagate the hallmarks of highly effective boards across the broadest group of companies while promoting the right governance principles and values. When one looks back on the prior decade, from Enron at the beginning, to Bear Sterns and Lehman Brothers at the end, it is easy to conclude that the core    enablers of boardroom change are already taking shape—a large pool of engaged, qualified directors; more shareholder-friendly director election processes; and a viral 24/7 communication cycle that ruthlessly disseminates information on any type of misstep or egregious behavior.

What is still needed is a common forum that brings together the best ideas, innovative practices and new approaches in a non-threatening environment that encourages collaboration and action across boardrooms.

One idea currently building momentum involves creating a closely linked global network of corporate chairmen and lead directors to serve as the primary conduit to more rapidly exchange current best practices, practical insights and actionable ideas. Its mission would help accelerate the development of highly effective boards and promote more progressive shareholder relations and corporate responsibility agendas. As one of the survey respondents concluded, “If I could wave a magic wand today, I would create a self-policing entity that would watch over the large public-company boards and help ensure no one went off the tracks, not the Securities and Exchange Commission, not Institutional Shareholder Services, but a group of practicing chairman and other board members who are fighting the good fight every day, with the goal of looking back in ten years to see a continuous improvement in corporate values, ethics, incentive systems, sustainable business growth and the impact on the global community.”

Keith Meyer is a vice chairman of Heidrick & Struggles and global managing partner of the firm’s Board Consulting Services Practice. Contact him at kmeyer@heidrick.com.

Just as capitalism thrives through the collective efforts of its individual participants, getting the economy back on track will require business leaders of all stripes to put their shoulders to the wheel. To be sure, the future will look a lot different than the recent past, as regulators and business leaders alike create mechanisms to avoid making the same mistakes. In a sense we are not simply rebuilding the economy; we are renovating it. With this innovation-friendly attitude in mind, these three new titles (and one classic) provide sound fundamental advice for executives and directors looking to recover from and renovate the shaken economic landscape.

On the Road to Recovery
In times of uncertainty and confusion, there is no shame in appealing to the wisdom of greater minds for guidance. Given the challenges presented by the unstable market, this principle is “by itself good reason to reflect on the careers of Warren Buffett, George Soros, and Paul Volcker,” says Charles R. Morris, author of The Sages: Warren Buffett, George Soros, Paul Volcker, and the Maelstrom of Markets. Morris’s book examines in depth the careers and fundamental market beliefs of these three powerful economic thinkers and points out what their principles can teach us about the current rough waters of the global marketplace. Morris examines each man’s approach to the free market, drawing out in detail their individual opinions on such topics as financial regulation, market movements, the current presidential administration, and sound governance. Buffett, for example, speaks of the delicate interpersonal balance that accompanies the compensation debate in typical Buffett fashion: “When the compensation committee—armed, as always, with a report from a highly paid consultant—reports on a mega grant of options to the CEO, it would be like belching at a dinner table for a director to suggest that the committee reconsider.”

Morris allows his subjects to speak for themselves, quoting at length a broad selection of speeches and texts by each. While his analysis of the men’s approaches is relatively thin—most of the book is presentation rather than critique—he does provide a substantial postscript that explains “how much has gone wrong and how fast it happened.” As Morris is a respected voice in the business community, his own musings are worth a look, but, ultimately, it’s his three wise men who deliver a much-needed helping of sage advice.

Leading by Example
Looking for an economic mind closer to the boardroom than to the stock ticker? Then you will find plenty to like in David Magee’s Jeff Immelt and the New GE Way: Innovation, Transformation, and Winning in the 21st Century, a comprehensive profile of the chief executive’s revolutionary tenure at General Electric. Immelt, who had a tough act to follow when he succeeded GE icon Jack Welch in 2001, quickly silenced doubters by leading a campaign of overwhelming innovation throughout the company, boosting revenues and shareholder gains, and making a name for himself that rivaled that of his predecessor.

Although GE’s stock has languished recently and some of the gleam of Immelt’s tenure has dulled, his three core principles of integrity, performance, and change remain as relevant as ever. In his conversations with Magee, Immelt stresses the importance of continual innovation, and the dangers of inertia, emphasizing that his company “teaches its people how to perform, problem-solve, and drive change, regardless of the circumstances.” Indeed, no matter the challenges posed by a difficult market climate, business leaders should look to forge an active course based on innovation and a refusal to succumb to adversity.

Magee’s recounting of Immelt’s successes at GE is comprehensive, including Immelt’s major decisions as well as his day-to-day management of the company’s 300,000-plus employees. Magee structures his book in 15 individual “lessons” that explain Immelt’s approach to leadership while describing the company’s history over the last eight years. The lessons gleaned from Immelt’s experience will be invaluable to managers looking to pull themselves out of the recessionary deep.

New Rules
Professional leadership consultant Ram Charan, whose résumé includes behind-the-curtain stints at GE, Bank of America, Dell, and a host of other Fortune 500 firms, knows well that it’s easier to dispense advice on sunny days than in the midst of an economic storm, but his latest offering seeks to accomplish the more difficult of the two. Leadership in the Era of Economic Uncertainty: Managing in a Downturn is a primer for executives looking to keep their businesses strong in the midst of tremendous economic challenges.

As is his custom, Charan emphasizes strong, confident leadership coming out of the recession, but he also advises executives to take an unprecedented command of their companies’ day-to-day operations, what Charan labels “management intensity,” or “hands on, head in.” For boards, Charan stresses the importance of risk management, healthy shareholder relations, and wise compensation policies. Like most of Charan’s books, Leadership is more specifically geared toward executives, directors, and other upper-level managers, but business leaders on all levels stand to benefit from the world-class consultant’s sound advice.

Simple Advice for Complicated Times
Just as the classics of literature resonate no less powerfully in the minds of each generation, the lessons of classic business management guides can be applied to the challenges faced by today’s executives. Case in point: Robert Townsend’s Up the Organization: How to Stop the Corporation from Stifling People and Strangling Profits, which, almost 40 years after its debut, is still one of the most admired resources for management that exists, and certainly one of the more accessible. Structured in a no-nonsense, easy-to-read format, the book takes to task classic assumptions about organization, labor, and day-to-day leadership challenges, offering a pragmatic, often wickedly funny outlook on successfully managing a company.

Townsend’s attitude may be mistaken for cavalier, but at heart his advice is sound and cogent. With topics ranging from “Conflict Within the Organization” to “P.R. Department, Abolition Of,” Up the Organization is as valuable to managers as it is enjoyable. And though it doesn’t offer anything specifically relevant to the crisis at hand—a section on “Mortgage-Backed Derivatives Packages” wouldn’t have meant much in 1970—it is a solid grounding point for managers looking to disentangle their organizations from the bureaucracies and over-complexities wrought during the first decade of the 21st century.