The best defense: going on offense.

At long last, it seems the cycle is turning. Both Lucent and Cisco, those key barometers, have reported good quarters. Semiconductor sales are up. The stock markets are up, and Google is heading for an initial public offering. Economic growth isn't sustainable at 7 percent, hut 25 to 4 percent seems realistic for 2004. Our own polling of CEOs suggests they are 40 percent more confident today than they were last October and are planning to expand their work forces in 2004. (See CEO Confidence Index, page 10.)

Already, you can hear the chatter from economists and Wall Street mavens suggesting that happy days are here again. You can sense the pull of euphoria. It's in the air.

The challenge for CEOs is to maintain an emotional even keel and not be swept up in false expectations on the upside any more than they jumped off cliffs when earnings tanked.

A lot of very tough challenges remain, as our CEO Agenda 2004 notes, starting on page 27. The global climate is still a major question mark, and politics in a presidential election year at home could be tricky. Spurring global economic growth and getting corporate top-line growth both remain challenges.

And look at some of the industry-specific challenges: Although General Motors in particular seems to be making headway, Detroit as a whole faces brutal global pressures. Eastman Kodak hasn't made a convincing turn for the better, while Motorola seems to be still looking for direction. Some major tech players, such as Sun Microsystems, face worlds of hurt. The major airlines can't seem to break out of their woes and Boeing seems at risk of losing its leadership role in aircraft manufacturing to Airbus, which once would have been unthinkable.

But challenges aside, we at Chief Executive do think it is time for CEOs to take a slightly higher risk in terms of investing in research and plant and equipment, not to mention rebuilding their work forces. Aside from making more money, we think that increased leadership of this sort will help ease the bunker mentality that has beset so many CEOs. After all the scandals and reform efforts, CEOs have been on the defensive. That has created a cycle of diminished risk-taking, which in turn results in less economic growth and a further souring of the public image of companies and their leaders. That's a vicious cycle. No one wins.

Without falling prey to any euphoric temptations, it's time to go back on offense. We think an economy that's growing and generating jobs will go a long way toward overcoming the current obsession with holding management and boards accountable to the false standards of Sarbanes-Oxley. Let's create some real, sustained growth and start a positive cycle. All it takes is solid, long-term leadership.