What’s good for General Motors isn’t necessarily good for the U.S.A. Recent corporate “scamdals” and the resulting Congressional prophylactic — Sarbanes-Oxley — teach us that corporate directors are supposed to be independent monitors and watchdogs, preventing executives’ excesses, indulgences, and optimism. But the last things entrepreneurs want are monitors telling them that their dream is imperfect and their optimism unjustified.
Entrepreneurs want directors who can and will help them build their business by expanding the company’s networks, opening doors, preventing unnecessary mistakes, and fixing them when already committed — all without splashing cold water on passionate dreams. Entrepreneurs can’t tolerate cautious naysayers. The entrepreneur lives by one of my favorite adages: “If you’re not up on it, then you have to be down on it.”
Sarbanes-Oxley may be right for the General Motors of the country — the jury’s still out on that. And while entrepreneurs’ attitudes about directors may violate the principles of Sarbanes-Oxley, they’re appropriate for their own segment, which creates more jobs and adds more to the national GDP each year than all the General Motors combined.
Lloyd E. Shefsky
Clinical Professor of Entrepreneurship and Co-Director, Center for Family Enterprises
Kellogg School of Management