Ever since my grandmother made her first batch of “Constant Comment”® tea in the kitchen of her New York City brownstone in 1945 and started Bigelow on the path to transforming the way America drinks tea, there had been this understanding in the ranks of management: my family knew what we were doing and thus, to be honest, didn't feel a need for advice from an outside board of directors.
Not only did we believe we had the formula for success, we did something that was progressive in business, family or otherwise: we listened to the people who worked for us, and we listened to our customers. This, we believed, was an enlightened view that gave us all the insight we needed.
A decade ago, as a family business that had 60 years of experience, we were doing well. We had an internal board that met once each year for about an hour, so one could easily ask, “Why would we need outsiders to tell us what to do?” But to me that is exactly what I believed we did need to ensure we remained a successful family business for future generations. That is why, 10 years ago, I decided to create a board at Bigelow Tea that included members from outside our family organization.
Three Generations of Leadership
I'm the third-generation president and CEO of America's largest family-owned tea business and the U.S. market leader of specialty teas. The company employs some 350 people across three manufacturing facilities and today produces more than 1.7 billion tea bags annually.
After I graduated from Boston College with a B.S. degree in marketing, I received my M.B.A. in finance and marketing from Kellogg School of Management at Northwestern University. While we studied many things that served me well in my career, the need for a family business to have a board of directors was not one of the topics to which I paid much attention.
In 1986, I started full-time at the family company as the cost accountant and then, after two years, joined with a team of co-workers that implemented a comprehensive ERP system. In fact, before assuming the role of president and CEO in 2005, I spent 20 years in almost all areas of the business, which my grandmother Ruth Campbell Bigelow started and which my parents, the next generation, would grow five-fold over their 30 years of leadership.
Why Name a Board?
So why create an outside board? Despite my familiarity with all areas of the company, I clearly recognized the need for professional advice and counsel, and realized that a group of knowledgeable professionals with outside experiences would add value to our current approach.
Most everyone in the company thought boards were for other businesses that didn't have the level of accountability we had and didn't have the repository of talent we developed over the decades. However, when I took over as president and CEO, I began to realize we could do even better if we benefited from the insights and experiences of other people with diverse backgrounds.
I had discussed the idea of creating a more formal board with my parents and top management. It was an alien concept to them for several reasons. Things were going well. They trusted me and my ability to move the company to the next level. Furthermore, they were apprehensive because they thought that naming a board would mean strangers would come in and challenge the culture and nuances of the business we all worked so hard to achieve.
My response was simple. That's exactly what we want; we need diversity of opinion.
How I Arrived at this Decision
What brought me to this conclusion? My thinking had begun to evolve as a result of my service on several nonprofit boards and because of my work with the University of New Haven's Family Business Center, where I had the opportunity to attend seminars on the challenges of confronting the obstacles that present themselves in growing a family business and in passing down a family business from one generation to another.
Even with all those available resources, I sensed I needed outside help as CEO because, quite simply, running a successful and growing business is more than a one-person show. So regardless of how good we were, I knew that in the face of changing market conditions, consumer tastes, and technologies for managing operations efficiently, I needed help.
With growth comes change and the challenges become more complex — so complex that I wanted to be sure my decisions were being critically analyzed. Areas like strategic planning can be particularly daunting. The old saying about it being lonely at the top certainly applies. I also believe that remaining insulated can thwart growth, and having a board of outside accomplished professionals who are respected sends an encouraging signal to employees and executives about the company's future.
When you are leading an organization you have to ensure the best ideas are being brought forward. As the leader, you need to make sure you are being challenged. And it is not uncommon for people who report to you to sometimes find it difficult to challenge your position or your vision. You have to watch out for that common problem of trying to “please the boss.” It's a fact of life in the workplace, and certainly it happens in the executive suite. No matter how much you solicit different viewpoints, some people have a tendency to avoid tough and challenging conversations about your ideas.
The Selection Process
Once the decision was made to create a board, I set out to pick the most diverse and knowledgeable directors I could find. It was a mission that took months of study, discussion and research. And I had to get it right because my family had worked so hard over the years to build this successful company, one that was respected for its products and business practices. I did not want to do anything that could negatively affect the strong and successful business they had built.
That the responsibility of the company was now mine was a significant realization. Even though I was good at what I did, I needed strong and sound advice to make sure I stayed on track. Everyone does.
In simple terms, I knew it was imperative to put the mission of the company before my personal ego. I wanted the best board I could find, so I set out to handpick men and women I consider great professionals — individuals who demonstrated strength of character, sterling records of achievement and extensive business acumen, along with one other characteristic. They had to be people who would challenge me on the big issues, and, yes, on the small ones, too.
In 2006, after a year of much preparation and a year after I became president and CEO, I held my first board meeting that included outside professionals. We would meet for a day and a half, twice a year.
The Candidates I Chose and Why
I actually started building the board slowly, first adding retired executives and a CEO from another beverage organization. About every year or two after that, I would add another outside professional.
Two members were recruited from my graduate program at Kellogg School of Business: one a CEO of a family business in Connecticut; the other, a former CEO of Guinness who also worked for McKinsey & Company, developing strategies for corporations and business units. Another member is renowned in the coffee industry and CEO of her own business. My newest member is an executive in a large, publicly held company, experienced in logistics and supply chain management. I chose each of them because they bring fresh views and expertise in key areas for my company: strategy, operations, supply chain, sales and marketing. Today, in addition to three family members, our board consists of legal counsel, three retired Bigelow Tea executives, and four top C-suite executives.
The selection process took months and even years. I typically began considering a candidate a year or two in advance before I would approach them. Once I was assured they understood my mission for the board and its members, we would agree on a start date. In one case, I needed to wait two years until she came off another board.
Beneficial? A Resounding ‘Yes'
Was it worth it? Has the company benefited? The answer to both questions is a resounding “yes”! After 10 years, I can say our family members and executives truly understand the need for our board. They regularly engage in dialogue and healthy debate. For their part, the board members have taken the time to become intimate with Bigelow's business operations, and they're not afraid to ask rich questions — or challenge us on key issues.
Sometimes our board meetings can get a little heated, and I have to step in to ensure all parties are listening to one another. But that is only because of everyone's level of passion and dedication to our company. Topics can get quite challenging; however, that's exactly what I wanted when I began this quest.
The areas in which we have benefitted from these meetings include topics as diverse as improving budget control, better defining our marketing spend, and developing new ways to forecast. The board offers a much-needed perspective in so many areas. In addition, it serves as a sounding board for me when I want to explore new initiatives and need an independent assessment.
Having a board has also challenged my executive team in ways that have improved their game. They have learned to articulate their strategic thinking, crystalize their game plan in concise presentations and defend their positions. And since my executive members know how much importance I place in the board's experience and opinions, they're always sure to put on their A game when the time comes to present. Our executives prepare for weeks.
Another benefit to our meetings is there's an ongoing “course-correction” philosophy. After each board meeting, we regroup as a team to review what we have learned, how we feel about the outcome, and assess how we can do things better the next time. We spend a lot of time post-meeting to ensure our next meeting will be even more effective and valuable.
An Essential Decision
I could not be happier with that decision 10 years ago to form an outside board. It was, indeed, an essential decision. It was the right time for us to move in this direction. As the CEO of a family business, having a board has challenged us to do better and push the limits of success.
Thanks to this demanding group, I have learned more, improved much and pushed myself to new levels. I owe that to the 350 families that work for us and I owe that to our loyal customers and I owe that to myself.
So does a privately held company really need a board of directors? Today I can say I could never imagine not having one. Our board is surely one of the best things I have brought to my family tea company. I need to be constantly working at being the best leader I can be. â–