Welcome to the December 2014 edition of The Director’s Dilemma. To read this email in your browser, go to www.mclellan.com.au/newsletter.html and click on ‘read the current issue’.
As the year draws to a close there is much to reflect upon that has changed in the director’s world. I hope you had a great year and are looking forward to an even better one in 2015. Read to the end of the newsletter for an inspiring quote from Henry Ford, news of a great book for directors and executives who want to succeed in the boardroom, and information about my upcoming series of ‘Presenting to Boards’ workshops.
This month our dilemma focuses on what to do to build support at board level for much-needed innovation. Consider: If Nils were your friend, what advice would you offer him?
Nils is the managing director of his family business, a position he was promoted into when his father, the company founder, became chairman of the board. He was previously the marketing director. The company manufactures a wide range of food products from its base south west of Sydney. These are mostly sold under home brand packaging to large retail chains and a distribution company.
The other directors on the board are all longstanding advisors to his father and, as his father says, have kept the company from making many potentially costly mistakes, by providing prudent advice over the years.
Nils has conducted research and identified what he thinks is a great opportunity for the company to manufacture a branded product which it would initially sell through specialty stores and chemists to establish the brand before offering to the major supermarket chains. He is confident that the project can be funded from cash-flow and will not cannibalise the existing business. The bank has offered to increase the company’s line of credit to allow for working capital increases and possible cash flow timing issues.
Nils developed a proposal for the board and eagerly presented this under the title ‘new opportunity’ at the recent strategy retreat attended by the board and management. The board were horrified. They could only see risk in entering new distribution chains, possibly competing with their current customers, and investing in developing a branded product. Nils sees those risks and believes he has a strategy to counter them.
How can Nils encourage his board to be more innovative??