We’ve updated “Perfecting the Art of the Deal,” a working paper that applies our research to potential mergers and acquisitions. Read the introduction below and click to download the entire article in PDF form.

As we mentioned in an earlier post about the challenges being faced by the board of directors at Bank of America, we have an article in the First Quarter 2009 issue of Directors & Boards. That issue is now available and we’ve posted the final text below. As always, we welcome your comments.

Change the Dialogue with Management
In looking for approaches to head off embarrassing strategic errors, we found that this is the key.

If the blame game goes as it usually does, criticism about the mistakes that led to the current recession and to poor performance at so many companies won’t stop with the CEO. Aspersions will be tossed at boards, too. To see how this might look, read the withering complaints about the Lehman Brothers board that failed to stop the CEO from running the company out of existence.

The recent attacks on the Bank of America board, related to the ill-fated decision to buy Merrill Lynch, underscore the need for boards to change the dialogue with management.

A New York Times piece on BofA focuses, as many articles do, on the clubby nature of many boardrooms–you serve on my board, I serve on yours, and we make nice with each other. But the issue is broader than that. Even if you have a truly independent board with lots of diverse viewpoints, the CEO will still carry the day almost every time. He has all the information and controls how it’s presented to the board. He makes the decisions, while the board pretty much is limited to deciding whether he gets to continue in the job or whether he should be replaced–a call that boards seldom make unless the situation is dire.

Traditionally, before the Catholic church declared someone a saint, it appointed a “devil’s advocate.” That person’s role was to take a skeptical view, laying out every argument he could for why the prospective saint should be denied recognition. (Pope John Paul II abolished the office in 1983, after it had been in place for nearly […]