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This essay sketches out the case for a new model for public company boards: Board 3.0. The now-dominant public board model is an organizational experiment begun approximately 40 years ago, which replaced a prior organizational form that had fallen short. The current model, the “monitoring board,” is dominated by part-time independent directors who are dependent on company management for information and are otherwise heavily influenced by stock market prices as the measure of managerial performance. We have seen a recurrent pattern of monitoring boards composed of talented people that fail to effectively monitor. Nevertheless, when companies fall short in business acumen or legal obligation, we have also seen a recurrent response: place even greater demands on the very boards whose structural inadequacies gave rise to the monitoring failure, most systematically, the millennium accounting scandals that gave rise to Sarbanes-Oxley and the 2008 financial crisis that gave rise to Dodd-Frank.

The problem we see is the inability of the monitoring board model to keep up with changes in the business of the corporations that board structure was supposed to monitor. It simply does not scale.


Business Organizations Law | Law | Law and Economics


Ira M. Millstein Center for Global Markets and Corporate Ownership