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We must not tie down the thinkers

It may seem too early in the great corporate witch-hunt to pose the question, but I wonder whether there is now too great a risk that entrepreneurship will be crushed. Whatever the needs of the financial system and the wider economy, they can ill afford the extinguishing of the flames of innovation and ambition.

In a week marked by the first guilty plea from an Enron executive and the arrest of the chairman of one of its former UK subsidiaries on suspicion of trousering a £1m bung (an accusation strongly denied by the executive yesterday), the integrity of the world's corporate infrastructure remains squarely centre stage. There is no suggestion that the allegations made against Wessex Water's Colin Skellett are in any way related to the scandal at his company's erstwhile parent, but they are a wake-up call for those claiming Britain to be immune to the problems suffusing America.

Duffing up

We will never know the full extent of the criminality lurking in the boardroom, but only for the same mundane reason that we can't gauge it for society as a whole - there will never be the requisite resource and luck sufficient to unearth it. The current inquisitorial climate should broadly scope the problem. The authorities' hope is that, once scoped, its scale will prove reassuringly small.

Few, however innocent, enjoy being on the receiving end of the inquisition. Few, also, will have the resilience to come through the climate of suspicion with their management and business ideals unaltered. Challenge is a good thing; a gratuitous duffing up something different entirely.

If any chief executive has been slow to pay attention to his regulatory and fiduciary obligations, he will now be quick to wheel in the consultants to help him do so pretty damn quick. They are likely to shift him in only one direction on his personal riskometer.

Process and controls, their implementation and operation, will loom larger in his day-to-day working life, crowding out his precious minutes for creative thinking. It may be that I'm getting older and duller, but it seems to me that plc chief executives as a breed have become a duller bunch. I'm not sure whether the same sort of people are rising to the top as always have done - and are then constrained by today's stifling bureaucracies - or whether a different breed is now inheriting the keys to the executive washroom.

There will always be a coterie of chief executives deemed ever so slightly racy by the investment establishment - men whose hair is either too long or too short, whose lapels are too wide or too thin, whose tie collection stretches only to weddings and funerals. Often they do no more than provide journalists with welcome splashes of colour. Certainly, their existence has done little to shape the behaviour of the majority of corporations.

The best businesses don't need a T-shirt and ponytail culture to foster flair. What many haven't realised is that neither do they need a starched, box-ticking culture to ensure the highest standards of corporate governance. The risk is that over-engineered compliance will stifle innovation in whatever guise it chooses to rock up for work every morning.

The risks associated with life at the very top are asymmetrical. Succeed and you will be well rewarded. Fail and you may well find your fall cushioned by a mattress stuffed with tenners. While this environment often raises hackles, it should in theory ensure that CEOs are prepared to take chances on behalf of their shareholders. Fear of failure mustn't be the primary driving force.

Energy sapped

The average tenure of chief executives is short and getting shorter. Bear markets and anaemic economies raise failure rates. The increasing strictures of corporate life sap the energies of executives at an increasing pace. Do not be surprised, then, if risk avoidance replaces calculated risk taking as the primary characteristic of CEOs.

As corporate bureaucracies expand and CEO tenancies shorten, so business leaders become merely temporary stewards. They are like captains of supertankers forever circling the globe, helicoptered onto the bridge for their brief periods at the helm. Small changes in their charges' courses are all they can hope to achieve. Intended, of course, to avoid the rocks and icebergs of corporate disaster.

All of those stakeholders pressing down on executives' shoulders would do well to remember the generative role these individuals and the businesses at their command fulfil within the economy. Trust needs to be re-established on both sides. Too many constraints and it will be at a cost to capacity.

One solution may lie in a radical re-examination of the respective roles of chairmen and chief executives. The concept of the part-time, non-executive chairman is flawed. Far better for a full time chairman to assume all governance responsibilities and associated bureaucracies, freeing his chief executive to focus on all those decisions within a company that create value. In short, let one close down risk and the other embrace it.

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