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Larry Fink, co-founder and CEO of influential investment firm Blackrock may have just moved the goalposts. 
Writing in his annual letter to CEOs, Fink argued that companies think beyond shareholder maximisation, a maxim that has dominated investor thinking since the early 1970s. Companies need to determine their raison d'être, their reason for being, towards which all effort should be aligned. Fink could not have been more clear:
Without a sense of purpose, no company, either public or private, can achieve its full potential. Ultimately, it will provide subpar returns to the investors who depand on it to finance their retirement, home purchase, or higher education.
Fink directly associates strategy, board and purpose—and in so doing Blackrock's expectations are spelt out. Simply, boards need to take their responsibility to ensure the long-term performance of the companies they governs much more seriously. Specifically, the board should both determine and agree several things, namely, the reason for the company's existence (its purpose); how the purpose will be achieved (strategy); and, how the progress towards the agreed purpose and strategy will be monitored, verified and reported.
Together, this is corporate governance.
To have such an influential firm speak so boldly is wonderful. Mind you, I am rather biased: my research findings and experience working directly with boards over many years now is consistent with Fink's assertions. 
I commend the letter to all boards. Two rather obvious questions boards may wish to discuss having read it:
  • How might boards to put these above-mentioned assertions into practice? The mechanism-based model of corporate governance that I emerged from my work with high-growth company boards is one option. 
  • Will Fink's missive portend a new dawn for board practice and effective corporate governance? While it's a little too early to know, I certainly hope so. Every bit of pressure brought to bear helps.