Author Name: Devin Jopp
Email: [email protected]
Using the fictional story of a healthcare technology company, Coppryx, Seven Deadly Sins of Corporate Boards tells the story of a struggling organization with eroding market share and a paralyzed board. Poorly defined roles and responsibilities and constant infighting and conflict prevent the Coppryx board members from properly leading the company. Ron James, the newest director, sees a company rapidly moving towards its own self-destruction and mentors the board to transformation and success.
Length of Sample (in words): 7,085
SEVEN DEADLY SINS OF CORPORATE BOARDS
Chapter 1: Another Board Meeting
It was October and time for the last Board meeting of the year for Coppryx. As the light broke through at the start of the day, the Board of Directors gathered in a conference room at a built hotel outside of Washington, DC. Kevin was feeling confident as ever, he had long held a great winning streak since the founding of Coppryx and this Board meeting represented his 10th year in a row of double digit revenue growth.
Tina, who had served as chair for the past four years, would only be serving for 4 more months before her term would come to an end. Secretly, she was relieved to be at the end of her tenure with Coppryx. Being chair for the company wasn’t really a hard job for her, it was mainly ceremonial at this point as she would preside over the compensation plan, the annual financial audit and the re-election process of the Board of Directors. Tina trusted Kevin implicitly and would boast to fellow directors that “Coppryx was run on auto-pilot” practically.
However, Tina was always uncomfortable managing the strong personalities of the Board and tried to avoid conflict whenever possible. She felt that the board tended to get mired in details that it probably didn’t need to get involved with, but with the organization running smoothly, she once again preferred to avoid addressing such issues as it wasn’t “broke”.
One of the first agenda items for the fall Board meeting was devoted to reviewing the company’s strategic plan. Every year at this time, Tina would lead the board in reviewing the document. She referenced the strategic plan that had been included in the Board packet, as the shuffle of page turning could be heard as all of the members turned to it in their Board binders.
Tina knew that most, if not everyone had not read their packets, which was the norm at Coppryx, so she read the strategic plan headers off and the top three key strategies under each of the five focus areas. At the end, she asked: “Does anyone have any changes?”
Everyone just shook their head and within 30 minutes the strategic planning review was once again complete. Tina truly believed that the strategic plan was actually quite perfunctory at this point given the immense growth the organization had enjoyed. She whispered to Kevin: “Why mess with a winning formula?”
Another order of business for the day was the appointment of committee chairs as part of the annual fall board meeting ritual. There were only three standing committees of the board, including the executive, finance and audit committee, and nominating and governance committee. Each year the board would appoint committee chairs. As Chair of the Board, Tina would lead the executive committee along with Jerry as treasurer leading the finance and audit committee, and VJ would serve as the chair for the nominating and governance committee. Together, with Tina, they would form the executive committee of the larger board with Paul as an appointed ad hoc member of the executive committee.
As VJ heard his name called out as the new chair for the nominating and governance committee, he had a sinking feeling in his stomach. He knew that the board had a long standing problem of electing the same individuals and had a challenge in attracting new talent. He wasn’t very excited about serving as chair of committee that acted like a “toothless dog,” as VJ put it. Nonetheless, he did accept the position hoping to try to advance things a bit further over the next year, but in reality he didn’t hold out hope for significant change at this point given the board’s long-standing opposition to structural changes.
Tina yielded the floor over to VJ to provide his first nominating committee update. As VJ got up to present his report, he thought that this would look like the exact same speech he had heard at almost every board meeting for the past ten years, which included an overview of the recruiting process and a call to the board of directors to refer candidates for consideration.
In the midst of his report on the board activities, Jerry Rooper interrupted him: “VJ, you know our nominating process has been garbage for years, and yet here we are again talking about using the same process.” VJ knew Jerry very well over the years and was fully aware that he was the type of character that tended to always attack things just to see how someone would react.
“Yes, I’m familiar with our challenge here, Jerry,” VJ responded. “But short of us wholesale changing our recruiting process mid-stream, I don’t see us making a change this year. What we can do now is start the discussion for next year.”
Jerry shook his head in discontent. “VJ, that’s a no-go. We need to do something different this year as the outcome always is the same.” While Jerry was difficult at times, some would say all the time, he did have a point.
Before VJ could step back in to lob another volley, Tina stopped the feud: “Jerry, we have a lot of material to get through here today. Can we just table this till the February retreat?”
Jerry grudgingly accepted as blood seemed to drain red into his face. Clearly he was disappointed that the board would not take immediate action to fix the process.
VJ, noting the tension in the air, decided to take a consensus approach and suggested: “Perhaps the nominating committee could look at what options we could take on and then report back at our board retreat, so we would not start from ground zero?”
Tina nodded in agreement and concurred with VJ to move forward, however, not before Jerry interrupted again and offered, “Just make sure I’m on that group, VJ. I have some ideas that I want to make sure they don’t get wiped under the rug.”
VJ resented the notion that he would ever do such a thing but begrudgingly wrote down Jerry’s name. He thought to himself that Jerry always seemed to be injecting himself into processes in such a manner and while he makes grand statements, usually his participation would just slow things down.
Sitting next to VJ was Melanie Netfrit, who whispered to him: “That Jerry is such a pain in the ass, he’s always talking over everyone and dragging out this meeting needlessly.” VJ nodded in agreement.
He thought very highly of Melanie but knew she had a propensity to be catty and would take anything you said and later use it in conversations with other Board members. VJ was always careful when talking to Melanie, even when agreeing with her. He recalled one time when he made a comment to her about concerns he had about a new product launch, which ended up getting back to the chair courtesy of Melanie. In that case, she had gone back to Tina after speaking with VJ and told her that he was leading resistance against the new product launch. Of course, she didn’t bother mentioning the fact that she had previously told VJ she also felt the same way. After that experience, he avoided entanglements with Melanie the much he could.
The Board meeting concluded after reviewing several other pieces of business and was set to convene again over winter in order to pick up their annual retreat.
With the conclusion of the meeting done, Melanie came over to VJ.
“I really want to be on that little group you’re putting together,” Melanie offered.
Reluctantly, VJ agreed to add Melanie to the group as he figured better to have her on the group rather than not.
“Thank you so much VJ for the hard work you’re putting into the nominating committee. I’m really looking forward to helping out and identifying some concrete actions we can take,” she said.
After VJ left the room, Melanie walked over to Jerry who was packing up his black leather suitcase. “Jerry, I really think you’re onto something here. The whole nominating committee process is broken and I think VJ really needs our leadership to pull this off.”
Jerry nodded in agreement and was always happy to have someone agree with him.
“Next week I’ll give you a call, Jerry, right after I get back so that you and I can get on the same page before we get on the call with VJ.”
Jerry agreed with her proposal and left quickly to catch his noon flight out of Washington-Dulles airport.
Melanie glanced over at Tina, who was finishing up some notes from the meeting, and said: “Tina, I know VJ is going to do a great job putting this team together, but I did want to make sure you knew that I really don’t see what problem we are trying to fix here exactly. I know Jerry thinks it’s broken, but I want to make sure that whatever we do, we don’t make any changes that will impact the current directors; I’ve been on this board almost since the beginning and any kind of changes shouldn’t impact those of us who have the most wisdom and tenure.”
Tina listened intently to Melanie and replied: “Let’s wait and see when the report comes back, but I hear what you’re saying.”
Having said that, Melanie walked out of the room with Tina still chatting about the weather and what their respective plans were for the long weekend ahead. As Tina came out of the board meeting, she ran into Kevin at the elevator.
“Kevin, Melanie isn’t thrilled about what we’re doing here on the nominating committee.”
Kevin gave an understanding nod and responded: “If it follows the path these conversations always take, I’m not sure there is anything to worry about, Tina.”
Kevin, for his part, really didn’t feel strongly either way about it, but did have a feeling that there were more than a few members of the board of directors that didn’t really contribute on a regular basis. He felt Melanie was one of those. He thought that she seemed to be present at the meetings but wasn’t very involved between them, so he was a little bit suspicious about her desire to take part in this issue, assuming it was just a defense strategy.
“Yes, we’ll see where this all goes but I do share your optimism,” she smiled back at Kevin.
Readying the Pitch
With the Board meeting behind them, the holiday season was quickly approaching and VJ wanted to schedule the nominating committee teleconference quickly so as to not lose momentum. As Melanie read the meeting invitation email, she was dialing Jerry to coordinate their messaging. “Jerry, this is Melanie, so great to chat with you. How is your family doing?”
Jerry proceeded to fill Melanie in over the phone on his recent divorce and all of the rest struggles in his personal life. It didn’t take much for Jerry to want to talk about his woes and Melanie knew that it would make for a great icebreaker to serve as a therapist for a few minutes.
Finally, Melanie broke into the conversation: “We need to make sure that VJ receives some leadership from us on this issue of recruiting new board directors.”
“You know, Melanie, we just need to blow up this whole recruiting process and start over. It’s totally useless, it’s a rubber stamped process,” replied Jerry.
Melanie listened intently and knew that Jerry needed to get the “steam out of his engine”. She swiveled in her leatherback executive chair and put her legs up on her glass desk. “Jerry, why don’t we come up with a checklist of desired attributes and traits that we want for the new board of directors? Let’s just start with that, at least as a down payment for future changes that we all agree need to be made.”
“That’s not good enough alone, Melanie,” retorted Jerry back. “We need to get the folks that aren’t doing anything off the board as soon as possible and make room for those that actually want to contribute”.
Melanie thought about Jerry’s point for a moment but was still concerned that any move to change the board’s composition would mean she would lose her seat. “Think about it for a minute, Jerry”, she responded. “I really believe we need to be more strategic here and try not to tick off the entire board by suggesting they all shouldn’t have their seats. How about we consider doing something at the end of the terms of the board, since we are staggered?”
Melanie knew that she was just elected to a new three-year term, so she would be one of the last ones to be subjected to whatever new criteria would be developed. Besides, she considered if history was a predictor, she didn’t believe at all that the issue was going anywhere.
After some further debate, Jerry agreed with Melanie’s phased-in approach proposal that they push for a meaningful change in the recruiting process. With the call ended, the table was now set for the nominating committee’s taskforce call the following Monday.
Nothing Beats Mondays
“Nothing like a nominating committee call first thing Monday morning”, VJ thought to himself as he took a sip of coffee from his Washington Nationals mug. VJ felt a little bit apprehensive about the call as he himself had seen this same effort implode many times prior and didn’t want to be the one to preside over the latest brawl.
Melanie, Jerry, and Tina joined the call first and later Tim joined them, which surprised about everyone given the usual lack of participation. Kevin also decided to hop on the call in order to keep tabs on the way the discussion proceeded.
VJ opened the meeting and welcomed the participants. First, he noted the long-standing challenge that the board severally faced in the past, namely how to structure it and the kind of candidates the board wanted for the upcoming year. VJ emphasized that the nominating committee’s priority should be the immediate recruiting process for new candidates, noting that they traditionally put out a call for new nominations in early summer in order to be able to solicit interest. He also reminded them that the proper procedure should be kept, both the filled out questionnaire and candidate’s current CV should be returned back. The nominating committee would then review the applicants and present them to the Board for selection.
True to form, Jerry broke in over top of VJ: “I’m personally tired of members of the rubber stamping process we go through here to vet new candidates that just take up oxygen.” Jerry continued his diatribe: “VJ, it’s your turn at bat here to firmly make a stand and fix these problems. We need this nominating committee to make the hard decisions here on these candidates before they go to the Board and make sure the basic criteria are met.”
VJ gave Jerry a few minutes and tried to reign him in a bit, but it wasn’t terribly effective. Finally, he caught a break: “Listen Jerry, I agree, but we need to step into this and design something everyone can live with.”
VJ knew that Jerry was right but always got agitated when he went offensive, as he always tended to do. VJ tried to think about the best strategy to try to walk away with some sort of progress on this call, when Tina broke in: “Jerry, you act like we have a ton of board candidates beating our door down and that’s just not the case.”
VJ sat back and waited for the next volleys to come as Tina had just pitched a hand grenade into the conversation. Tim tried to say something but was suddenly cut off by Jerry, whose blood pressure could literally be felt through the phone.
“Tina, that’s because we think that the right Board candidates will just come to our door,” replied Jerry, “Maybe that’s why we have a 20/80 problem – 20% of the board does 80% of the work. Frankly, the boards I know do most of this through recruiting individuals they know personally and don’t even play around with a call for nomination.”
The lines in the sand were now clearly drawn and Melanie had waited for the dust to clear before wading into the fray, “I’ve been silently sitting here listening to the points being made and I think Jerry is really onto something here, but we need to be cautious not to implement change too quickly. I think for now, we should develop a criteria set of what we want out of the new board directors and send that out in our nominating process. That way, the individuals can see the requirements that we need before submitting their nominations. The nominating committee can then review the applicants to see if they fit the criteria set.”
Silence filled the gap in the conversation for a moment, but not for long. Jerry couldn’t be contained any further.
“If we want to just move the ball five yards down the field, we can do that, or we can just change this nominating process to make it meaningful,” Jerry proposed.
VJ watched from the sidelines trying to figure out the best method to advance the conversation. Trying to move anything forward at this point via a teleconference call he thought would be rather impractical. VJ weighed in: “So, given the challenge with the Board not being able to meet in person and the need to hit our annual recruiting timeframe, let’s move forward with the changes.”
“Maybe then we re-visit this at our next meeting in order to see if we can make more substantial changes for the next year,” Melanie suggested.
VJ knew he was shutting down the discussion. He needed to get this call over within an hour and still had the hairy issue of board composition unaddressed. Everyone including Jerry fell silent. VJ was aware of the fact that he had just sucked the life out of the conversation but wanted to move ahead and try to salvage something from the call.
“We have a second issue that we need to discuss as well,” continued VJ. ”We need to figure out what the optimum board composition should look like. We all know that as the Board has evolved, we don’t get a lot of participation from folks on the board and many of those aren’t business development types or hold rolodexes that could help Coppryx.”
VJ didn’t get through his last sentence without Melanie drowning out the end of his thoughts. Melanie thought about her discussion with Jerry but decided to make a calculated play to slow down the discussion: “VJ, I don’t think changing the existing Board is really an issue we can tackle today. We really should focus on the recruiting process for new Board Directors and leave this for some other time in the future.”
Jerry was furious. He thought Melanie agreed on their pre-call to push for changes at the end of each term for board directors. “Melanie, that’s totally wrong – we need to get some real workhorses on this Board and come up with a plan on how to do it,” Jerry responded.
“We have workhorses on this Board, Jerry,” Tina chimed in again, “and you’re talking to them right now,” she said with a chuckle.
Jerry wasn’t amused at all and continued his frontal assault: “I think we need to scrap the existing board and just start over.”
Kevin remained fairly quiet during the heated exchange trying to maintain objectivity in the discussion as the CEO, but he was pleased that Jerry was being unreasonable.
“I agree with you, Jerry,” Melanie jumped in, “that there are things that we can do differently with our Board appointments. I just think we have to pace ourselves and honor the great work we have done, before we throw it all away. How about we discuss this at the February Board meeting? We could come up with a recommendation to make changes based on when the terms of Board directors expire, so that it doesn’t impact everyone at once.”
Jerry was pleased to see Melanie back their earlier agreement and decided to not push the point given that their hour was up for the call.
VJ moved in quickly to wrap up the meeting, clearly exhausted but was somewhat content that there was at least some semblance of a path forward.
Immediately after the call-conference, he picked up the phone and contacted the CEO: “Kevin, I don’t see any way that we’re really going to get meaningful change to board composition next year. We’re just going to have to try to chip away at this problem by raising the bar for new board members.”
Kevin had been down this road many times and he agreed with VJ that the election process would remain largely the same. “How about you work up a strawman for the new desired traits of board directors,’ Kevin replied back, “and later we can present a strawman to the board for them to review at the next meeting?”
VJ and Kevin would spend the next two months working on a sample board job description, which included desired traits and skills that they hoped would be approved at the next meeting.
As the Christmas holiday approached, Kevin sat at his desk going over the latest quarterly financial reports that his CFO, Jimmy Rollins, had prepared for him.
“Jimmy, something is extremely wrong here,” Kevin said with his face turning slightly red as he peered up at Jimmy who was standing next to his desk. “Do you have any idea why this is happening?” Kevin asked after regaining his composure.
“I can’t be certain, as that’s marketing function. The new sales revenue numbers are way off target, representing a drop of 35% compared to last year,” Jimmy explained.
Kevin was now standing. “What! Do you mean you can’t be certain, Jimmy? It’s your job to be on top of these things,” he said.
“I’m just the messenger and am telling you the numbers. I’m not your marketing vice president,” Jimmy replied with a hint of sarcasm.
Kevin thought he sounded like the medical doctor (Bones) from Star Trek telling the captain that he was a doctor, not a bricklayer. Jimmy had a panache for being snarky, which Kevin chalked it up to a personality deficiency he earned by studying credits and debits for a living. However, at this moment, he literally wanted to wring his neck.
Soon enough, Kevin regained his composure and called on Vanessa to join them to discuss the variance further. Vanessa came into the office, lacking her normal sense of self-confidence.
“I’m sure you know why I asked you to join us,” he said in an ominous tone.
“I just read the latest financials this morning,” Vanessa responded.
“How come we didn’t see this coming?” Kevin asked. “In just one quarter we managed to lose 35% of our sales volume and somehow I wasn’t given any kind of warning about this.”
Vanessa had never seen Kevin so angry, but she knew herself that she wasn’t quite sure either why the numbers had plummeted so fast recently. But she had a clue of who they were losing ground to.
“This isn’t just a sales problem, Kevin,” Vanessa leveled with him. “I think there is a bigger problem with our technology. It is outdated and we can’t convince the clients when they see NecroTech’s product and ours side-by-side. Even the best sales people in the world can’t sell a product if it’s obviously inferior,” Vanessa concluded.
Kevin was pretty sure that he was about to burst an artery and clutched the edge of his desk, leaving finger nail marks on the side of the dark mahogany surface. “Maybe the problem here is that you’re not confident in our products, Vanessa?” Kevin retorted. Sure, he wasn’t being fair to Vanessa, but his anger had overwhelmed him at this point.
“You need to get our sales team in gear, Vanessa. We have one quarter to get these numbers back in line before I report the numbers at the next board meeting.”
Kevin was nervous about delivering bad news back to the board at this time and didn’t want to alarm anyone yet, at least not until he was absolutely sure that there was a trend.
“And why don’t we have any intelligence on our pipeline, Vanessa? Kevin continued impatiently. “It’s like we’re always flying blind around here. We’ve been lucky so far, but our luck has run out obviously. ”Kevin brought the meeting to a close as Vanessa and Jimmy both slinked out of the room. The last thing he wanted to be is an alarmist, but at the same time he needed to give Tina a heads-up and penned a note to her and the executive officers about the “downturn in the fourth quarter financials”.
Over the next week, through a number of meetings with various internal team members, Kevin started to piece together what was happening and learned that a new competitor, NecroTech, had entered the market a few months prior and was cannibalizing their new client prospects.
Kevin knew his competitor well. The current company’s CEO worked as the director of product development for a number of years for Coppryx. Actually he never took NecroTech seriously as he had thought that their market lead was insurmountable. But the numbers weren’t lying, they were now hemorrhaging sales and sinking fast.
As Kevin sat on his sofa that evening, he cupped his hands together and placed his head in hands, wondering how in the world he could solve the problem. He needed to come up with a solution, and fast. He remembered how hard they all had worked in the beginning to launch the product and differentiate themselves early on. And now, everything he worked for was simply being taken away from him seemingly overnight.
Kevin poured a rather healthy glass of merlot as he paced the living room. He took a slow lingering sip and grabbed his cell phone off the coffee table next to him. It was time to call Tina: “Tina, we have a big problem on our hands.” Kevin proceeded to fill Tina in on the dire situation and the “loss of traction in the marketplace” over the past quarter.
Tina fell silent on the line and finally responded, “So what do you think we should do to get things back on track, Kevin? And what do we tell the rest of the board?”
“We’re working it out at the moment Tina,” Kevin responded. “I just don’t have answers yet. I will work with the staff to develop a comprehensive plan for the board’s consideration, but for now, I think we should just tell the Board what is happening and our intention to submit a plan.”
Tina agreed and suggested that the executive committee convene in the short term to discuss the issue, and at same time the Board meeting should be extended to a two-day event in order to make sure everyone understands what is going on.”
After Kevin agreed with the suggestion, Tina promised to get the notice out before ending the call. She hung up the phone wondering what was going to happen now. All she wanted was a peaceful exit from the chair position and now is presiding over the decline of the organization. Tina knew the next meeting was going to be contentious, there was no escaping it. “It had been so easy to lead for the past several years,” Tina thought to herself, but the real test for her leadership may very well lay ahead.
The Wind Up
The February board meeting was being held this year at the historical Willard Hotel in downtown DC. A beautiful old hotel that traced its roots back to 1818 and had hosted every president since the 14th president in 1853.
As Kevin walked in, he was struck how the rather sedate sandstone exterior of the hotel suddenly gave way to an incredibly ornate lobby with white and tan swirled marble columns, highly polished white and black checkered marble floors, and intricate inlaid tray ceilings.
Kevin, Jimmy and Vanessa were the first to arrive into the lobby and checked into the hotel.
“Jimmy, Vanessa, please make sure you get the backup together for our discussion tomorrow so we could discuss the marketing pipeline and financials around all of this,” Kevin ordered.
Both nodded in agreement and took the elevators upstairs to their rooms to continue with their meeting preparation. Kevin quickly dropped his bag off in his room and came back down to meet with Tina and VJ for cocktails at the lobby.
As Kevin walked into the Round Robin bar, he was struck by just how unique this place actually was. The bar was relatively small, completely round in shape with the walls as dark as holly tree leaves with mahogany wood accents. The center of the room boasted a round mahogany bar with a black marble bar top and black leather stools. Small tables encircled the bar. Kevin grabbed one of the small side tables and pulled up an extra chair. Then, without hesitation he ordered his favorite drink – a gin gimlet with fresh squeezed lime juice.
VJ, Paul and Tina came into the bar shortly afterwards, greeted each other and ordered a round of cocktails. A few moments later, Ron came into the bar having just arrived and was going to order dinner for himself before being beckoned over by Tina to join them. After exchanging the usual pleasantries, Tina started in: “Boy, we do have our work cut out for us here, don’t we, Kevin?”
Kevin proceeded to provide context for tomorrow’s meeting and explained how their market share was evaporating seemingly overnight. Paul pressed him, “So? What’s the play on this, Kevin? Do you have an idea of what to do here?”
Kevin nervously tapped his fingers on his knee as he took a sip from his cocktail and placed it back on the glass top. “I’ve wracked my brain on this for the past couple of weeks and as I see it, we have no other choice but to go back and redesign our medical devices from the ground floor up. I hate to admit it but we’re just not competitive right now.”
With a clear look of concern on his brow, VJ quizzed Kevin further: “Are you saying we need to go back and rewrite the systems or redesign the hardware units? Either way that’s cost prohibitive.”
“I’m not sure yet to what extent but we’re going to have to make an investment to break the cycle here,” Kevin responded. “I don’t see how we can make a change without doing so.”
Tina listened intently and knew the board would not react well to a proposal to invest millions of dollars into a ground up re-do and they certainly aren’t going to approve it now. Especially given the fact there was no effort made to try to “pre-sell” such a concept before this board meeting.
“This may be a multi-step process, Kevin,” she said, “as I don’t think we have the votes to push this through tomorrow.”
“We can’t take a quarter to study this one, Tina,” Kevin noted. “I think we really need to move ahead on this.”
“I hate to ask this question,” suddenly Paul broke into the conversation, “but do we even know why we are not being selected? Do we know what our customers really want from us?”
Ron had been sitting silently listening to the exchange, took a sip from his drink and finally spoke up: “I think this is just one of the seven deadly sins.”
A noticeable pause in the conversation filled the air. Tina took the bait first.
“Alright Ron, what in the hell are you talking about?” she asked with a smile.
“While we all tend to believe that each board is unique, and they are to some extent, there are many things that are pretty similar across every board of directors,” Ron replied. “I remember learning a while back about seven deadly sins that corporate boards tend to make. You all know that over the years, I’ve had the opportunity to serve on multiple boards. I’ve seen almost every board make one or more of those sins.”
“You mean like thou shalt not kill thy neighbor’s board members?” Paul erupted with a huge grin on his face.
“Not quite, Paul,” Ron laughed. “I think that one is a given. I’m rather talking about mistakes that boards make which have significant impact on the function of the organization for which they are charged with leading. For example, over drinks here we are talking about our competitor eating into our market share, but the fact that there is a new competitor on the scene isn’t really our key problem, is it?”
“Maybe not,” Tina responded.
“I think it’s our biggest problem,” Kevin laughed.
Paul broke up the silence and offered another wisecrack: “So, do you mean we need to go confess our sins?”
“Sort of, Paul,” Ron smiled, “but we need to face up to the things that we haven’t done right in the past, and then correct them. That’s the hard part – understanding what’s really wrong and then finding a way to fix it. These sins tend to infest the souls of boards and eat them from the inside out. As a board, usually we are inclined to focus on the symptoms and not deal with the root cause.”
Sensing where this was going, Kevin spoke up: “So what are you suggesting, Ron?”
“I’m suggesting that if all we do at this board meeting is to wring our hands about NecroTech and talk about our sales strategy at the next board meeting, in reality we will not be helping you to solve anything at all, Kevin.”
Kevin sat silently, not really sure if he agreed with where Ron was heading with all of this.
“Ron, I’m not sure I’m with you on this,” Paul broke in. “We’re going to talk about everything except our sales strategy?”
“I think the sales strategy falls out of this, Paul,” Ron followed up. “But if my hunch is right, we are going to find out that there are several things contributing to our most recent decline in sales.”
Tina sat silent and agreed with Paul. She didn’t really know where Ron was heading trying to make his point, but also thought they needed a framework to guide the discussion for the board meeting the next day, otherwise there was a real risk the meeting turning into a free-for-all.
Tina finished munching on the last handful of bar nuts and said: “Alright, Ron, we’ll give you the ball to take down the field.”
With that, the evening concluded and everyone retired for the evening in advance of the next day’s meeting.
The next morning all members of the board convened in the conference room located on the first floor of the hotel. The room was cavernous for such a small group, but a large U-shaped table filled the middle of the room.
Before the room, Ron walked over to Tina and said: “Tina, I’d like to ask if you would mind moving the committee reports to the end of the meeting.”
“Why?” Tina asked.
“I want to use our horsepower for the “seven deadly sins” rather than listening to board reports first”, he smiled.
Tina was skeptical about the need to change up the agenda but agreed with Ron’s request. And so the day began with the board of directors milling in close to the eight o’clock witching hour. As everyone arrived, they exchanged greetings as they grabbed cups of coffee and took their time to set up their laptops.
As everyone took their seats, Tina opened the meeting. She dispensed with the normal pleasantries and set the tone right from the start: “I wish I had better news for everyone but as you have heard, we suffered a pretty big financial blow this past quarter with the entrance of a new competitor and the significant decline in our sales. I’ve decided to dispense with all non-essential reports and will be moving all committee reports to the end of this meeting.”
Jerry cocked his head to the side and gave Tina a questioning look, but decided to leave it alone for now.
Kevin then took over and set the stage for the conversation: “As you all know, we’ve had an incredible journey here over the past ten years. But now we have a real crisis on our hands with a sales slump of 35% in the last quarter and our pipeline of prospective sales targets falling off at an alarming rate. We initially thought that perhaps it was a holiday slump, but the drop off is too steep. At this rate we will dip into our reserves within the next quarter at our existing staffing levels. Subsequently we would be out of reserves within two years at the current burn rate.”
Silence fell over the Board and a sense of panic was evident from the look on several of the directors’ faces, as Kevin completed his background presentation showing a series of PowerPoint charts that painted the grim picture. Of course, everyone knew from the board materials and the grapevine that Coppryx had problems, but they had no idea just how bad it was.
Tina opened up the floor for questions for Kevin. However, instead of questions, a series of board directors fired off their comments and concerns.
“The real problem here,” Paul led the charge, “is that we rested on our laurels over the past ten years and didn’t invest enough back into our product. We’re paying the piper on this and it’s going to take real work for us to get back on track.”
“Well Paul, it’s a day late and a dollar short to start worrying about that now. Look, we built up a great reserve over the years so we can weather this storm.”
Paul didn’t buy into the argument that the healthy reserve was worth the current problem that they were facing. However, before he could respond, Melanie pressed forward: “How do we know this all isn’t just a seasonal thing that we can outlive? Maybe we need to watch this for a while rather than jumping headfirst and squandering our savings.”
“Melanie makes a really good point here,” Rachel spoke up in support of her position. ”Maybe this is just seasonal.”
“I don’t think seasonality explains a 35% drop-off really,” VJ weighed in. “There’s something amiss here.”
“Listen folks, we don’t have a full answer here yet, Kevin tried to wrest control of the discussion. “Taking potshots isn’t going to get us anywhere.”
However, the potshots continued until Tina intervened: “We need a path forward for our meeting. Before the meeting Ron approached me about how to frame the discussion and how we can set up our approach to solve this and some other challenges that we are facing. I’d like for us to try it out.” With that, Tina turned the floor over to Ron.
He gave her a nod of appreciation, stood up and walked up to the front of the table with a large whiteboard and four flipcharts.
“Several years ago,” Ron started, “I attended a seminar and learned about the “seven deadly sins” that boards of directors tend to make. I must say it was a real eye opener for me. This concept helped to explain many of the challenges I encountered with various boards I served on and enabled me to make sense of the problems and how to solve them. The reality of being in any organization is that it’s quite easy to get lost in the trees and to lose sight of the forest. I think that’s what’s happening to us right now. Even just being here for a relatively short time, I’ve already seen a number of signs that have concerned me about the future of this organization.”
A nervous look fell over several of the directors who felt like the “new guy” was taking potshots. Ron felt the nervousness and pressed ahead: “What I’m going to explain to you is not easy to hear, I know. It will make us extremely uncomfortable. But if we want to be thriving ten years from now, we’re going to need to ask those hard questions. The sales slump is terrible but it is only the tip of the iceberg. We have to make sure that we are addressing real root causes and not just symptoms”.
“So, these sins are like the ones I carry around in my everyday life, huh?” Jerry cut in cynically, which created a laugh through the board.
“Hang in there with me, Jerry,” Ron continued. “Like children that grow into adolescents and adults, so, too are boards. They develop and change over time. Problems that we encounter at one time, like learning to walk, we solve easily, and yet others are newer later on in life, like paying off a mortgage. My point is that boards also face different challenges in their development. However, I have found that every board at some time crosses at least one and often times several of the seven deadly sins. Left unaddressed, they lead to poor board performance, can cause organizational dysfunction at best and destruction at worst.”
Ron made a short pause and Melanie immediately took the opportunity to challenge him: “So why do we need to know about “seven deadly sins” right now, when we really need to fix this problem with our sales slump?”
“If we only talked about the sales slump,” Ron responded, ‘there’s a good chance we are going to miss what is causing the slump and get too single-focused on solving a symptom rather than the actual cause. Also bear in mind, some problems are so intertwined that you cannot fix one without addressing another first. We have to be willing to peel back the onion and look beneath.”
Jerry hated cliffhangers and broke in: “Alright, Ron, enough stalling. Let’s stop talking about onions and start talking about what are these seven sins.”
“Great! You hung in there with me, Jerry,” Ron smiled. ”Let’s dive in and start at the beginning.”
Projects or Proposals Offered:
None but proposals have been submitted to several agents who are considering them.
Excerpts from Reviews or References:
Vision, Strategy and Passion come to mind when I think about Devin’s tenure. Devin worked hard to help challenge WEDI to dream bigger and grow as an organization. During Devin’s time at WEDI, he significantly grew the visibility and influence of WEDI, as a trade association- McKesson
Dr. Jopp serves as the CEO of Future Focus Leadership, an organization focused on helping companies reach their full potential through strategic consulting services.
Prior, Dr. Jopp served as the Chief Executive Officer for the Workgroup for Electronic Data Interchange (WEDI), a nonprofit advisor to the Secretary of Health and Human Services.
Dr. Jopp also served as Chief Operating Officer for SCORE, a leading national nonprofit that provides mentoring and training to over 400,000 American entrepreneurs per year.
Dr. Jopp holds a doctorate of education (Ed.D.) from George Washington University’s executive leadership program in human and organizational studies.