Editor's page.

Companies, as we all know, have a primary raison d'etre: profitable growth. While that may have been glossed over in the dot-com bubble, it has been reasserted forcefully in recent years. In our cover story, Scott Blanchard writes that the strong leaders needed to drive strategy and operations also must be highly focused on customers--and on taking care of the employees who serve those customers--to drive that growth.

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In our annual articles on the incoming chairs of FEI and FEI Canada, we profile M. Alexis Dow and Louis O'Brien, respectively. Both are long-term members with deep feelings about FEI and firm ideas about near-term priorities.

Christopher Cox, chairman of the Securities and Exchange Commission, has been faced with relatively little room for policy maneuvering, says writer Stephen Barlas in his profile on page 22. But Barlas argues that Cox's apparent predilection is for striking a balance and finding consensus, and that he has hewed close to the median on many of the issues facing the commission.

Those looking for sturm und drang in the recent proxy season have largely been disappointed, writes attorney H. Bryan Brewer 3rd. Perhaps the closest thing has been narrow majority or near-majority votes on "say on pay" resolutions governing executive compensation--but those are non-binding. Brewer looks at these and other issues that arose in the latest round of proxies and predicts which ones will carry over into future years.

Corporate cost reduction is too often treated like a crash diet, write three consultants from Booz Allen Hamilton. Instead, they say, companies need to focus on four fundamental building blocks of "organizational DNA" that can provide clues to help eliminate the root causes of corporate bloat.

Many business professionals, especially those in the finance arena, tend to discount behavioral explanations for fraud, write two consultants from Grant Thornton. But as the incidence of fraud continues to grow, placing the spotlight on behavioral factors may be an important approach to not only fraud detection, but to deterrence.

There's good news on the Sarbanes-Oxley Section 404 compliance front: total average costs in the third year dropped 23 percent, according to an FEI survey. Financial Executives Research Foundation, which analyzed the data, concluded that many companies have successfully reduced the number of key controls to be tested. Still, most respondents said the cost of 404 compliance has exceeded the benefits.

Robert H. Herz, chairman of the Financial Accounting Standards Board (FASB), is just starting his second five-year term. He tells Executive Editor Ellen M. Heffes in an interview that FASB has realized a series of objectives and is committed to "codification" of accounting standards that would put all the disparate literature on a single subject matter in one place.

I'm delighted to note that our year-long series of articles last year on the issues that faced financial executives during the past 75 years--which we called FEI@75--is a finalist for a national award in the feature series category in the annual contest run by the American Society of Business Publication Editors. Creating and producing the series was a long and complicated effort, and much of the credit belongs to Ellen Heffes, who lined up many of the writers and did much of the initial editing. For more on the award, see the FEI News section on page 69.