By Carey, Dennis C.; Mittelstaedt, Robert E., Jr.
Chief Executive (U.S.) , No. 142
Asking the right questions is one of the most important contributions a director can make. In order to know the right questions, however, directors must be exposed to a wide array of issues, more than they are likely to encounter within the relatively narrow window of their own experience.
When we sat down to create a program for directors, we considered the many new issues and responsibilities boards are facing today, and how we could broaden their perspectives and best equip them to meet these challenges. Issues we wished to address-of critical importance and which many boards were struggling with-included:
* M&A due diligence;
* CEO succession planning;
* Director, CEO, and top-executive performance evaluation and compensation;
* Risk management and the role of the audit committee
* Effective use of outside resources;
* Efficient board structures.
We wrestled a bit with the structure and format such a program should have. The traditional lecture-style approach did not seem suitable either for the high level of executive we would be attracting or for the range of experience of directors, from first-time to seasoned.
Moreover, our goal was not to develop an academic exercise, but a realistic executive program that would mirror, as closely as possible, what actually goes on in the boardroom. After considering a number of possibilities, we agreed that a "living" case was the best vehicle to expose participants to the widest range of issues in the most true-to-life setting possible. We also recognized that, with the caliber of savvy business connoisseurs we would be inviting to participate, our living case was going to have to be extremely realistic in order to encourage them to suspend their own disbelief-at least temporarily.
To date, the Directors' Institute-now five years old-has held 10 sessions in the U.S. (and five in the U.K.), during which role-playing executives debate the future of MegaMicro, Inc. (MMI), the fictitious company that forms the basis of the living case. MMI divides its products and services into three separate divisions: MegaMicro Controls is a leader in the field of computer control systems; Plains View Engines produces large engines for trucks and small engines for snowmobiles, off-road sports vehicles, lawn mowers, and other recreational machines; and MegaMicro Services maintains and services small engines (including all Plains View Engine products) and provides environmental planning and disposal services to transportation companies.
Headquartered in Hackensack, NJ, MegaMicro was founded in 1897 as Metropolitan Chemists, and adopted its current name in 1954. The company has an international presence as well, with more than 7,500 employees and offices in 12 countries around the world. (In London, where the program has been named the Directors, Forum, MegaMicro, Inc., is Mega Micro plc.)
Just as they do with real companies, MegaMicro's changing board members have ongoing strategic decisions to make regarding all manner of company activities. In 1996, for example, MMI acquired Jentronix Smart Systems; the decision to do so was made by the executives role-playing as its directors at the time. Early in MegMicro's case, U.S. board participants chose to sell off one of its poorly performing units; when confronted with the same choice, participants in MegaMicro plc chose to keep the troubled unit and try to fix it, illustrating the divergent paths participants pursue in this living case.
Our participants have told us they find the living case approach-where they make real decisions that have a concrete and measurable impact on a company-particularly instructive. …