The Sunday before last I wrote about my failings as a board member and I concluded that an independent director had an impossible job. It is not easy to penetrate a company, and one way to do it is to become an insider, as I did when I became a consultant, but that, of course, means that one ceases to be 'independent'. Hence, I ended on a pessimistic note about the prospects for corporate governance within the present structure of capitalism.This Sunday I shall take a stab at a few solutions, some of which are being avidly debated around the world. Clearly, it is not feasible, nor desirable to make directors into consultants. Mine was a very personal solution to keep own my juices flowing while I contributed to the companies' marketing side, but it had the unexpected side effect of letting me penetrate into their darkest corners.

The answer to governance, I think, must begin by making the boss accountable and separating the roles of chief executive and chairman of the board. I don't have Indian data but in America, three out of four companies (in the S&P 500) combine the two jobs; in Britain they usually do not. This separation will allow someone other than the CEO to set the board's agenda and steer the flow of information. Until separation is achieved, I would designate a lead director to represent the outside directors, someone who can influence the agenda and takeover in a crisis. Board members are like fireman; they are not needed everyday, but they are crucial when there is trouble.

I have noticed that companies with a majority of independent directors are more likely to have dissent and open discussion in a board meeting. But the most powerful signal of board independence, I think, is for non-executive directors to hold regular meetings without the CEO and company management present. In this meeting directors ought to discuss if the board receives enough information and if the CEO answers their questions transparently. This idea is being actively discussed in the U.S and it has many CEOs worried.

Successful boards, I find, appraise their own performance formally and dispassionately, as well as the CEO's performance. They take the time and trouble to meet and discuss not only how the CEO is doing but how the board is faring in its governance function. Like any organisation, boards need knowledge, power, motivation and time. The last two are the least appreciated, because board members are busy, and board governance like any job needs commitment and time. Hence, I suggest limiting an individual to five directorships, but simultaneously raise the director's remuneration.

It always helps to have a large investor on the board, someone who gets hurt personally when the company does something stupid. Warren Buffet is such a legendary director. Kay Graham, the owner of the Washington Post, tells us in her charming autobiography that Buffet owned 20 percent of the newspaper, and he was committed to see it succeed; he invariably did his homework, was on the phone to the company between meetings, and often saved the management from making stupid decisions like getting into the cable business.

Enough has been written and said about the role of auditors and the enhanced power of the audit committee and I agree with it. What is less well known is the link between good governance and high performance. The Economist reports that Paul Gompers and two others at Harvard Business School examined 1500 companies, and found that those most responsive to shareholders gave 8.5 percent higher annual returns in the 1990s versus management dictatorships.

At the end of the day, however, corporate governance is not something that can be just legislated and I worry that we all look to SEBI to come out with yet another law. I fret because too many rules might discourage risk-taking and innovation. Remember, an independent attitude is something we learn from our mothers when we are young and no amount of legislation will necessarily bring it about.