Wharton@Work

November 2025 | 

Boards That Lead: Redefining the Role of Directors

Boards That Lead: Redefining the Role of Directors

A dozen years ago, Wharton Professor Mike Useem and co-authors Ram Charan and Dennis Carey issued a call to action. For too long, many corporate boards played ceremonial roles: prestigious appointments that conferred status but offered little day-to-day influence on the organization. In their book Boards That Lead, they argued that this was no longer tenable. The growing complexity of global business, heightened scrutiny from regulators and investors, and mounting pressure for accountability required boards to evolve. Directors would need to move beyond symbolic oversight and become active partners — and sometimes leaders — in shaping strategy and succession.

That argument resonated widely and became the foundation of Wharton’s Executive Education program Boards that Lead: Corporate Governance that Builds Value. Today, Useem believes the shift he and his co-authors anticipated has largely taken hold, at least in the United States. “Boards that once provided prestige but little guidance have become tougher, more hands-on in monitoring, and more willing to act when a company’s direction falters,” he says.

From Oversight to Leadership

Traditional monitoring remains a vital part of the board’s job. Scandals like those involving Enron and WorldCom, followed by regulatory reforms and activist pressure, pushed directors to become more rigorous in ensuring the right leadership is in place and that risks are contained.

But modern boards have gone further. Many now act as strategic partners, bringing their own hard-won experience to decisions with long-term impact. When Procter & Gamble considered acquiring Gillette in a $44 billion deal, its CEO turned to a board stacked with current and former CEOs who had executed their own major acquisitions. Their candid, seasoned advice helped shape the decision.

And in rare but defining moments, boards have stepped forward to lead outright. Useem cites Apple’s directors bringing back Steve Jobs in the 1990s and Disney’s board recalling Bob Iger when his successor struggled. In both cases, non-executive directors made consequential leadership calls that changed the trajectory of their companies. “It’s no longer just ‘monitor and advise,’” Useem says. “When it matters most, they step out in front and make the tough decisions.”

Drawing the Line

This expansion of responsibility raises a delicate challenge: how far should boards go? Many directors acknowledge the danger of overstepping into management’s territory. As one veteran put it, the role should be “eyes on, hands off” — stay alert to performance without trying to run the business.

Some companies formalize boundaries through a delegation of authority, a document clarifying which decisions require board approval and which remain in management’s hands. A threshold might specify, for example, that acquisitions above $25 million must go to the board while smaller ones do not.

Even more important, says Useem, is the relationship between the CEO and the board chair. “The best CEOs and chairs spend time aligning in advance,” he explains. “That ensures both sides know what goes upstairs and what stays below.”

When the Board Must Act

Despite those guardrails, there are times when boards must act decisively. Succession is one of the most visible. In recent years, several high-profile companies — including Starbucks, which brought back Howard Schultz yet again — have turned to former CEOs when successors struggled. These “boomerang” moments highlight both the risks of getting succession wrong and the responsibility boards bear to correct course quickly.

Directors themselves often describe the challenge through metaphors. One likened it to spelling the word banana: the key is knowing when to stop. Useem compares it to Mississippi: too many extra letters ruin the word. Both point to the same lesson: directors must be deeply engaged without drifting into operational weeds.

Practical Lessons for Leaders

For executives preparing to work more closely with boards, and for directors seeking to sharpen their influence, these are not abstract debates. They are practical challenges with real consequences for strategy, succession, and shareholder value.

Participants in the Boards that Lead program examine these issues through real-world cases and research-based frameworks. They grapple with questions such as:

  • How can boards remain vigilant without micromanaging?
  • What distinguishes effective partnerships between CEOs and directors?
  • When does a board’s responsibility to shareholders require it to lead?

The answers are not simple checklists, but they provide a playbook for leaders facing high-stakes governance decisions.

Useem sums up the central lesson this way: “If you’re on a board, or will be, you want to have in reserve the power to make a difference when management cannot. It doesn’t happen often, but when it does, the future of the enterprise may depend on it.”