Governance or Government?

If I could step into the president’s shoes for one day to address the nation’s corporate leaders, I would ask the same question. But my answer would be different.

The president and Congress are riding a populist backlash against the breakdown of the economy, so naturally their solution is to create systems that give more control to the federal government. History has proven that the inevitable byproduct of crisis is legislative and regulatory “solutions” intended to ensure that the crisis will never be repeated.

However, our government is learning the wrong lessons from the current crisis and, as a result, pushing the wrong medicine. Many in Congress believe that the central cause of the economic crisis was a widespread failure of corporate governance. This is just plain wrong. While there is plenty of blame to go around—greedy shareholders, inept regulators, slick Wall Street robbers with their derivatives, and others associated with the mortgage industry—no evidence of widespread corporate governance failure is apparent.

There is a huge disconnect between the facts leading to our current crisis and the legislation proposed to prevent it from happening again.

So, what’s my solution? Well, it’s in line with what you’d expect from someone who’s had a long career as an NYSE-listed-company executive, corporate director, small-business owner, entrepreneur, and adviser: self-regulation by business leaders who are willing to establish and protect good corporate values, fair pay, transparency, and innovation.

If we don’t demonstrate this leadership now, the government will take the reins and eventually stifle American innovation. There is no argument that too much emphasis was placed recently on achieving short-term gains, with little or no understanding of risk management. The most deep-seated problem facing our country is not a lack of capable corporate management; rather, it’s management capable of neglecting to perform with integrity.