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Is Your Board of Directors Considering the Right CEO Strategic Business Priorities?

February 2013 Corporate

In his famous 1987 book, Swim with the Sharks Without Being Eaten Alive: Outsell, Outmanage, Outmotivate, and Outnegotiate Your Competition, business guru Harvey Mackay stated, “The Japanese have a very simple way of describing the typical American marketing plan: READY?  FIRE!  AIM.”

Sadly little has changed in American business since keynote speaker Harvey Mackay, whom I’ve interviewed previously, wrote these all-too-true words a quarter century ago.  This is a major reason why the American economy is in constant crisis, and obsolete marketing departments built on late twentieth-century dogma now resemble the spending habits of Communist central planning: disconnected from reality, economically inefficient and lacking accountability to the right things.

As Peter Drucker once stated, “Efficiency is doing things right, effectiveness is doing the right things.”  Right now the majority of American business leaders are sleepwalking through the digital age and missing the opportunity to transform their business strategy and organization.  It is unfortunate that the relationship between the average firm’s CEO, its board of directors, and its marketing department verges on nonexistent.  When it does exist it tends to focus on efficiency.  Most organizational processes need to be reconsidered fully to become truly effective.

The dysfunction is made worse by the following factors: Chief Marketing Officers often come from creative backgrounds with little or no business acumen; Chief Executive Officers typically have not studied marketing best practices in decades; and Chief Financial Officers with little or no understanding of the marketing processes for which they hold corporate governance responsibility. Put simply, strategic marketing is everyone’s business.  Most retained executive search firms lack the required capacities to properly assess the needed business acumen and new skill sets that they need to rewrite the job specifications and build unique hiring processes to successfully select and bring in the right leaders who will lead organizational restructuring efforts that will increase top-line revenue while removing toxic elements of culture.

Joseph R. Trendl, President of Trendl Associates Ltd, a retained executive search firm, states it this way, “The true value in engaging an executive search firm is to avail oneself of the breadth and depth of knowledge provided by the years of experience, not only on the fulfillment of position requirements but also on our ability to credibly discern corporate culture and source candidates with proven abilities to change stagnant cultures or help further drive companies with progressive forward looking cultures seeking to improve business results.”

Speaking of Peter Drucker, one of the companies he consulted for extensively was Herman Miller Inc. (NASDAQ : MLHR).  Former CEO Max De Pree retained Peter Drucker as he knew the organization needed superior business acumen to complement the heavy design and engineering focus of the workforce.  Prior to Max, his brother and former CEO Hugh De Pree hired Carl Frost, a change management guru that was well known for challenging management with difficult questions.  Max De Pree later wrote excellent books on leadership that clearly demonstrated Drucker’s impact on him.  Currently, there appears to be no advisor of the caliber of Peter Drucker or Carl Frost properly advising the board and CEO on the important issues of our times.  The five-year stock price graph from shareholder.com tells the story of their performance:

Herman Miller

The company is currently ripe for a private equity firm or other takeover, yet the company also has significant opportunities to align itself to the realities of the digital and search-engine-age economy and become a growth company again.  Instead it travels a meandering path with layers of unnecessary brand marketers with little or no connection to current market demand or the principles that the De Pree family CEOs, Carl Frost or Peter Drucker instilled in company employees in its glory years.  My book proposal research has brought these best practices of yesteryear into intense focus and they lead me to ask, “How do companies lose track of the values and activities that made them successful?”

This was once a high-performing company that was a role model to other businesses.  Why has Herman Miller fallen from grace?  Where is the sense of urgency to turn it around?  Why isn’t the board of directors taking action due to the lack of corporate action?

The Herman Miller Inc. Board of Directors Responsibilities state the following:

The Board’s detailed responsibilities, some of which are conducted through Committees of the Board, include:

(c) Reviewing and, where appropriate, approving the company’s major financial objectives, strategic and operating plans and actions;

(d) Overseeing the conduct of the company’s business to evaluate whether the business is being properly managed;

By almost any measure, Herman Miller is currently an underperforming organization that has lost touch with what once made it great.  Based on the Board Responsibilities, it is my opinion that the following questions need to be asked:

  • Why isn’t the marketing department managing their work according to the principles of Max De Pree and Peter Drucker?
  • Why is Herman Miller not transforming itself to reflect the realities of changing customer segmentation in the marketplace?
  • Why is CEO Brian C. Walker not taking appropriate action on the critical issues above?
  • Why is the Board of Directors not addressing these emerging issues of risk to the ongoing business operations and growth of the company more vigilantly with the CEO?
  • Why isn’t the company diversifying from a heavy reliance on U.S. government sector purchases?
  • Do boards of directors across the nation have directors with the right sets of experiences and skills to assess what is needed to meet the responsibilities, risks, and challenges of the future of business?
  • Why isn’t American business press like CNBC covering these issues instead of focusing on daily stock movements?

 

I do not yet know the answers to these questions as I’ve never met these individuals in person.  I do know that the company seems to have lost touch with the principles of Max De Pree and Peter Drucker, causing underperformance and risking the potential of further erosion of enterprise.  I strongly urge Herman Miller’s Board of Directors (Mary Vermeer Andringa, David Brandon, Douglas D. French, J. Barry Griswell, John R. Hoke III, James R. Kackley, Lisa Kro, Dorothy A. Terrell, David O. Ulrich and Michael A. Volkema) to consider taking immediate and significant action on these issues.

“Diversity in types of business acumen, emerging digital skill sets and Generation X representation are becoming required for Board of Directors to make forward progress with these hidden opportunities.  Most senior management teams need to acquire people with these emerging skill sets and perspectives.  Awareness is the first step of longer conversation that can create the foundation for needed corrective action,” says Patrick Prout, President and CEO of The Prout Group, a boutique retained executive search firm specializing in CEO and board of directors placements.

To be clear, Herman Miller is only one of many American companies whose organizations need to redefine business strategy direction with refreshed boards of directors and management teams. Herman Miller happens to be one I’m intimately familiar with having recently read all of the books Hugh De Pree and Max De Pree wrote over their lifetimes as a part of my ongoing book research.

To improve corporate performance, corporations and boards need to install new board members and C-level leaders with Generation X leaders who have a unique and rare combination of the following: traditional education; business acumen refreshed with a deep understanding of how digital marketing strategically impacts the revenue, cash flow, and market share of the business; experience in a transformational culture; and the know-how to enable transformation of the organization strategically.  Anyone seeking more details on these issues may contact me privately as this is only a high-level summary of my research and emerging thought process on the future of business organizations.

 

Additionally:  Watch David Dalka’s interview of John Mackey, Co-CEO of Whole Foods Market and author of Conscious Capitalism