WHAT KINSHASA ENTREPRENEURS CAN TEACH US.

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In his most recent National Geographic magazine article [September edition] entitled “Kinshasa, Urban Pulse of the Congo“, the author and photographer, Robert Draper, wrote that Kinshasa, the capital city of the Democratic Republic of the Congo, is a “marvel of dysfunction”.  A local author Lye Yoka that he interviewed quipped that “Kinshasa is a city where students do not study, workers do not work, and ministers do not administrate”.  Bribery and extortion are the key government funding mechanisms of choice.  In summation, Kinshasa governance is basically controlled chaos for a population of ten million residents.

So what does work in this mind-boggling dysfunctional system?  Mr. Draper concludes that the “miracle’ of Kinshasa is that it is full of “compulsive entrepreneurs” who make it work despite little government or authority to govern.  How do they do it? According to those he interviewed, the underlying strengths of Kinshasa entrepreneurs are their “creativity, improvisation, and passion”.  He concludes that “this is a city of frenzied entrepreneurship, where everyone is a salesman of whatever merchandise comes along, an uncertified specialist – self employed, self styled – a creator amid chaos, an artist in a shed”.

So is this true entrepreneurship in Kinshasa – or rather desperate people doing desperate things, in a desperate place, and what can we learn from it?  In the book  “The Illusions of Entrepreneurship”, the author – Professor Scott Shane – provides significant entrepreneurship research in America that debunks many commonly held myths that are important to correct first. Some highlights, generally speaking, are as follows:

1.            The typical entrepreneur in America is not young and special.  He is middle-aged person just trying to make a living.

2.             Psychological factors are not significantly different from an entrepreneur and a salaried employee other than that they didn’t want to work for someone else.

3.            Starting a new business is based more on what you know rather than who you know. The highest ranked centers for entrepreneurs is not places like Cambridge Massachusetts or Silicon Valley, CA but instead its Vermont.

4.            The majority of entrepreneurs are wrong about how to run a business so it is better not to follow a new business. But they often get better.  Starting a company is not linear but rather evolves over time.

5.            Over half of new businesses are a one-person operation that offer the same product or service that is already in existence so there is no competitive advantage.  Many entrepreneurs do fail – but many become successful as well.

Many entrepreneurs in America tend to lament that “if I just had more funding, I could be successful”.  But taking a page out of the Kinshasa entrepreneurs book, they may be better served by starting with their own “creativity, improvisation, and passion” skills to drive their business growth.  Why?  Creativity, improvisation, and passion are start-up resources that you don’t need to reach for outside, you simply need to reach inside yourself.  How?  As the old adage goes, “if you change the way you look at things, the things you look at change”.

Is Family Estate Planning a “SLOW IDEA”?

ImageIn his most recent article entitled “SLOW IDEAS”, the author and famous physician Atul Gawande addressed the issue of why some medical innovations were implemented quickly – and other innovations implemented only very slowly.  He looked at it in the context of several medical discoveries, all had phenomenal upside potential, but not all had quick implementation. Briefly, the simple question he asked was whether there was a common thread to those ideas that did not gain quick traction.  He researched the “barriers to change” and then looked at possible solutions. He eliminated traditional strategies [i.e. penalties versus incentives] as less than satisfactory for various reasons.  He then analogized the solution to the time honored salesperson touch mantra of the “rule of seven” [i.e. reaching out to a person at least seven times].  He then created a  “mentoring” program as the antidote to the less effective “turnkey” approach that he believes is the cultural norm today in America.

         So how may the SLOW IDEAS model apply to family estate planning by analogy?  Let’s start by identifying the “barriers to change”. Allow to me to suggest some recent empirical data from two brief.  First, I met a Fulbright scholar from India that was studying at MIT last year.  In our conversation I asked her what was a key difference between the culture of her country and the U.S.A. She told me that since she has lived here she observed how much Americans were preoccupied with “ownership” [i.e. accumulation of wealth].  She said, aside from basic necessities, she owned practically nothing – nor did she feel a need to own anything.  She did not understand why our culture was so focused on ownership.  The second conversation I had was with a very distinguished expert on the Democratic Republic of the Congo.  When discussing health care issues he stated to me that a big barrier to improving health care conditions was that many citizens of the DRC did not wish to discuss death.  For whatever reason, even though there was a prevalence of death due to war, disease, famine, etc., death was not a subject that a conversation would lend itself to even for the purpose of promoting health care. Why?

Statistics show that, despite very important reasons to do an estate plan, more families elect to not do so?  Could it be that we are all so focused on owning more stuff, as George Carlin’s skit “The Importance of Stuff” would suggest?  Could it be that we simply do not want to speak about the “D” word?  Or could be some other explanation, viz.; too expensive, too time consuming, or too complex?  No matter what reason we have for not wanting to deal with estate planning, what is a better framework to have a reasonable dialogue on the subject matter?

I think that the best way to start the conversation is to simply ask why you are not having the conversation. Why? As Dr. Atul Gawande, wrote in his article “[t]o create new norms you have to understand people’s existing norms and barriers to change.  You have to understand what is getting in their way.  . . .  Human interaction is the key force in overcoming resistance and speeding change”.  So if you have not asked – ask!  And if you have asked, and not had a satisfactory conversation, ask again until you understand the solution to the problem, or at the least the barriers that keep your family from creating an estate plan.

MID-YEAR PROGRESS OR MID-YEAR PIVOT?

Image     In his seminal book the author Mark Nepo quotes a well-known African saying “If you don’t know where you’re going, turn around and make sure you know where you’re coming from.” So where is your business coming from the last 6 months?  Here is a simple “look back” test that I call the “bad news test”.  Take some recent bad news at your company and carefully analyze how it was addressed at all levels. From the minute the bad news was learned ask the following questions: How did you get the bad news in the first place [e.g. customer, an employee, a report]? How did your organization handle the bad news initially?  After more information was uncovered, what bottom up system was enabled to address it specifically?  Was there also a top-down, high-level strategy to address this particular bad news in relation to other bad news throughout the year? Who was invited to those strategy sessions?  What was the follow-up to see if the specific fix was accomplished?  Finally, what overall new organizational system [“lesson learned”] was instituted to avoid a similar pattern.  Bad news is possibly the single most important front-line means to improve your company.  Why? You really can’t do quality strategic planning without looking back at your bad news data.

            Fourth of July holiday is an important holiday for many reasons.  Time to celebrate and recalibrate.  As Ron Heifetz and Marty Linsky say in their book “Leadership on the Line”, make time to get off the dance floor, and instead get on the balcony. Put another way, having just spent half a year working IN your company, you need to spend some time working ON your company.  A serious mid-year review provides the opportunity to look at your 2013 operational, organizational, financial, asset protection/estate and strategic/risk management plan.  How are doing so far this year?

So celebrate your successes, and search for objectives that have not tracked your mid-year goals. The good news is that there is still half a year left to make the corrections you need to achieve your annual goals. The bad news is that you realistically can’t delay any longer.  So really declare your independence by taking stock of where you are – and compare that data to where you want to be by year-end.  Ask “What are your mid-year top three [3] challenges”?  Then really make them a top priority by meeting with your team of trusted advisors.  Why? Your greatest risk is simply what you don’t know.  So start by simply asking strategic questions to your strategic teammates.

DARKNESS AND DECISION MAKING MODELS

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The famous psychologist Carl Jung once said that “enlightenment is not imagining figures of light but making the darkness conscious”.  So how can business people do that?  Every business decision is based on a model of projected facts and circumstances and then ultimately a strategy to resolve the matter.  But to create a great strategy requires a great decision-making model. Simply stated, decision models are designed to create a structure of thinking and dialogue so that you are better prepared to create a sustainable competitive strategy.  Have you ever heard of the expression “that’s a solution in search of a problem” or “we’re climbing the right ladder but up the wrong wall”?  These expressions come about because too often the decision-making model is not known, much less ever discussed.  So a critical decision model is replaced sometimes with such a superficial approach such as the “traditional” model of “that is the way we have always done it” to the “different” model of “its new and improved” – and every construct in between.  Yet, looking back, it’s the decision-making model itself that sets the course for the ensuing disastrous results [i.e. think Titanic].

So what are some of these key decision models.  Some of my preferred decision-models are the following:

1.  Johari- window

2.  Flow

3.  Long Tail

4.  Black Swan

5.  In-On Model

6.  Avoiding Practical Drift

7.  Mechanism Design Model

8.  Balcony – Dance Floor [or System 1 & 2]

9.  Deciding How to Decide

10. De Bono 6 Hat Model

It is important to know is that these are key tools to help you make decisions beyond what you are perhaps unconsciously using now.  So if you don’t know, don’t use, or don’t KNOW HOW to use, these various models, then you are perhaps accepting more risk by not taking advantage of some key tools that will allow you to make better decisions.  “So what” you may say?  Have you ever said to yourself “What happened”?  The more tools you have at your disposal, the less often you will need to ask the question.

Carl Jung would concur that decision-making requires one to shine the light on the darkness of the way you think.

Time To Rethink Your Critical Decision Meeting Process?

   Image      You need to make a critical decision so you call a meeting. Why?  Organizational behavior expert Chris Argys wrote that, at its fundamental level, “the value of a group is to maximize individual contribution”.  Fair enough.  The meeting has an agenda but it then devolves into what is called “rational ritualism” where everyone does a data and interpretation dance.  Decisions are made using the critical thinking methodology of deductive and inductive arguments. Why? “Because that is the only way we know how to do it [or have done it]” is the usual answer. You still have big problems but you still meet the same way over and over again.  So what is the solution?

            The well-known author and professor, Michael A. Roberto, in his Great Courses lecture series, presented a lecture entitled “Deciding How to Decide” on how to avoid making big mistakes by simply deciding first how to make a key decision.  He calls it simply “deciding how to decide”.  He used as a historical example what President John F. Kennedy learned from the failure of his Bay of Pigs disastrous decision to avoid it happening twice when he made his decision in the subsequent Cuban missile crisis. It worked. So how did the successful later decision making process work?  Professor Roberto’s research disclosed 4 key elements that he believes made the difference.  They are: [1] Composition: decide WHO should be involved in the decision-making process, [2] Context: decide WHAT type of environment in which to make the decision, [3] Communication: selecting the MEANS of dialogue amongst the participants, and [4] Control: deciding HOW to control the process. 

            The purpose of addressing the four points above is to avoid group-think which is the result of the failure to create “process-centric learning”. Too often leaders focus only on “content-centric learning” of gathering all the information available on the issue, but wholly fail to address creating a balanced approach to weighing the information.  The Bay of Pigs decision-making process was fatally flawed due to lack of candid debate, vested interests, and not inviting some key experts to the meetings.  This fiasco was avoided in the subsequent Cuban missile crisis decision-making process by President Kennedy by deciding first how to decide.

            So why do leaders routinely not create a decision-making process first?  Too much time? Too much effort? Too old a habit? Whatever the reason, if you want to start making better decisions every day of the week, ask yourself, have I spent as much time on the process as I have on the content?  If not, the author recommends using the four tools above to create a better model to address critical decisions. To rephrase what Albert Einstein once said, “problems cannot be solved by the same level of thinking [and meetings] that created them”. 

 

 

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Are You a Strategist for a Different Tomorrow?

The question that Cynthia Montgomery poses at the beginning of her Harvard University Entrepreneur, Owner, & President Program [“EOP”] for business owners and senior executives is simply “Are you a strategist”? Why? Her mission is to take her class of executives and show them, through the many case studies she has written about in her book “The Strategist – Be the Leader Your Business Needs”, how to create a sustainable strategy for you company.  So what is a strategist and why become one?

A strategist is not a “super manager” as the author calls it.   A super manager is an “action-oriented problem solver for whom difficulties are daunting but solvable challenges”. The biggest risk of believing in the myth of the “super manager” is that super managers “tend to focus on what they can control and ignore what they cannot control”.  Put another way, the Nobel Laureate Daniel Kahneman, in his book “Thinking Fast and Slow” may have called this the “inside view” – the tendency to ignore outside data to engage in independent decision-making.  Super managers choose to ignore fierce competitive outside forces as not as important as their management inside capabilities to overcome them.

So how do you “become” a strategist?  The author believes that you must first begin with creating a company’s “purpose . . . why it exists, the unique value it brings to the world, what sets it apart from other companies, and why and to whom it matters”?  At its core it’s your sustainable competitive advantage.  One way to determine if you have a core purpose is to ask yourself “if your company disappeared today, would the world be different tomorrow”?  Once you ascertain your core purpose you then must plug in each component of your company and ask yourself, in a binary fashion, does the specific business activity advance your purpose or does it detract from your purpose of creating a real system of value creation.  If it detracts from your purpose, stop doing it.

So how do you “own” your strategy? The author calls it the “strategy wheel”. It consists of your Products and Target Markets, Marketing and Service, Sales and Distribution, Manufacturing, Procurement, Human Resources, Information Systems, R&Ds, and Finance.  Each “system” needs to be impacted by the center of the wheel – your core purpose. To digress, your “purpose” answers the question of why you exist.  Your “strategy wheel” is HOW you are unique in each component.  Without a core purpose tied to each component of your strategy wheel activities, you will be ineffective.

To be a strategist you must be a leader.  At least once a year a company’s board of directors or LLC managers/members meet to look back at what happened over the past year, and then look forward to how it wants to operate the company next year.  Too often it is a mechanical exercise that involves reviewing the financial statements and tax considerations but not much else beyond asking how you can save money.  A good way to avoid this mechanical approach is to first ask yourself “are you the company strategist”?  If so, then ask what is your company strategy for a different tomorrow?

SPRINGGREEN

Why Green Hair is your Company’s best strategy?

The famous writer, business consultant, and anthropologist Angeles Arrien was quoted by Mark Nepo as saying that her grandparents told her to “never hide your green hair, they can see it anyway”.  So when a company starts a new plan for the year, a new project, or a new product, the question they need to ask is how does this improve the overall unique strategy of the company – the “green hair” so to speak – that makes each company different.

The problem is many companies ask the wrong question, and therein lies the biggest mistake they will ever make every time they do so.  What is it?  In the book “Understanding Michael Porter” by Joan Magretta [2011 – HBR Press]  Magretta interviews the famous Harvard University Professor and who responds that the “granddaddy of all mistakes” is confusing marketing plans or operational effectiveness [“OE”] plans with overall corporate strategy.  Why? Simply because trying to “be the best” by definition presumes you are providing goods or services the same as your competitors which ultimately results in what he considers a “race to the bottom”.  Strategy links your demand side with your supply side to create a sustainable competitive advantage.  “Strategy is about the whole enterprise, not the individual pieces” as Porter explains.  Put another way, “better” in strategy parlance means different or unique – your “green hair” so to speak.  There is no one path to success, just many interrelated activities that make your company unique.  The author cites many examples such as IKEA, Starbucks, Apple, etc.  All these companies practice the concept of overall company strategy, not just marketing strategy, not just OE strategy. Porter calls it a framework, not as linear as an economic model and not as specific as a case study.  Once you decide what your unique value proposition is, then you need to communicate and ultimately achieve alignment with your organization, both your inside team and your outside team.

So how do you do it?  Porter states that every 12 to 24 months all companies need to have a formal strategic planning process, with quarterly reviews. But don’t confuse your business model with your business strategy.  Your business model should ask the question how you will generate income and control your expenses, basically your P & L Statement that you review with your accountant [when you do your tax returns].  Your business model looks back and analyses your financial data.  Conversely, your corporate strategy looks forward.  It asks the question – what is your sustainable competitive advantage?  How do your relative prices and relative costs compare to your competitors? What value proposition and value chain can you tailor to make you different.  In a nutshell, Porter states that your business model is a basic “analyzing” step, but your strategy is the next level “forecasting” step that will make you viable.

So when do you do it? Each year the management of a company gets together to have an annual meeting to decide the strategy for that year. Each year has its own challenges and opportunities.  If all that these meetings produce is budgeting and growth rate projections than Porter says all you have achieved is a business model, but you have done no debate and decision-making on your competitive strategy.  Your competitive advantage  is already known by your customers -  that is why they picked you or not.  Your failure to leverage it will ultimately result in your competitors using it against you.  It’s that simple.  So sit down with your trusted advisors who can facilitate a dialogue to help you create a framework for your company strategy – you know – the one that starts with “Our company’s green hair is  . . . “

If you don’t, it’s the biggest mistake you will ever make, because your competitors are doing it – and they know what your green hair is.

Are You a Problem Solver or a Problem Finder?

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 In his book “Know What you Don’t Know”,  the author Michael Roberto quotes the noted psychiatrist Theodore Rubin who stated, “The problem is not that there are problems.  The problem is expecting otherwise and thinking that having problems is a problem”.  So what does he mean by this statement?  The answer is that successful business leaders don’t wait for the big problems to materialize – they actively seek out problems that others do not see or want to see.  They realize that if you wait for problems to find you then you have not managed your risk properly because you should have found the problem first. So here are 5 questions you need to ask yourself to get started.

“How” do you become a problem-finder?  The answer is simply that successful business leaders first recognize that what they do not know is the greatest area of risk that they need to focus on – so they spend a great deal of time learning what that is in their particular industry.

“Where” do you find these unknown problems?  Andy Grove of Intel, quoted by the author, uses the following metaphor to describe his model when he states: “Think of it this way: when spring rain comes, snow melts at the periphery, because that is where it is most exposed”.  Simply put, problem finding is about looking at the periphery of your company, where you will find the first signs of change, either positive or negative.

“Why” is it important to find problems first?  Solving problems is like being the first responder to an emergency situation.  As the old adage goes, “a firemen has basically two tools, an axe and a water hose”.  So what do you think your house will look like AFTER a big fire?  Easier and better to avoid the fire BEFORE it starts, and deploy many more tools to do so.  Business leaders need to be constantly searching at the periphery for problems that are not yet problems.

“When” do you start?  RIGHT NOW!  The answer, as many of us were taught in school, is often found right in the question.  Great questions beget great answers.  So start asking great questions.  Don’t be the person who says “if I had only seen it coming I could have avoided it”.  If you are, then YOU may be the biggest problem. 

SHOP TALK is TRADEMARK SPEAK

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Whether you like it or not, shopping is a national pastime.  Even consumers like me, who try to keep it to a minimum, there still is no way you can avoid what I call “shop talk” or “trademark speak”.  For retailers, depending on how well you executed on your marketing plan, Q4 shopping is all about whether your brand for quality gets rewarded by a sale of goods.  Then, in Q1 of the new year your pricing strategy gets rewarded by a follow up sale perhaps.  Either way, what the average consumers thinks of your brand [retail or otherwise] is essentially how your trademark translates into a metaphor.  For example, if I say STARBUCKS®, what image comes to your mind? When I go to buy some TYLENOL® surely I do not confuse that with EXCEDRIN®?  You may recall that in 1973 Paul Simon used the phrase “So Mama, don’t take my Kodachrome® away” in his song KODACHROME® (but only after some serious trademark rights negotiations with Eastman Kodak Company).

So how does trademark imagery become “trademark speak”?  Simple.  People like to abridge their sentences.  For example, texting is part information and part Haiku.  If I were to send a text that said “going to buy a pair of NIKES”, you would probably know what I am talking about. Likewise, if I texted you that I am “going to buy a pair of MICHELINS”, you would also know what I meant.  You understand my text despite the fact that the products are not listed and are completely different.  If so, marketeers feel the brand they created is working.  Trademark attorneys, on the other hand, will fret about how their clients’ trademark is being used as a noun and not an adjective.  So why the big rift between the two camps of advisors – when both have as their ultimate goal the success of the client?  The answer lies in how we characterize a trademark or service mark.

Simply put, the question is whether a trademark is a proper adjective or a proper noun.  If marks are considered as adjectives, as current trademark law so states, then we all know that an adjective needs to modify a noun so the noun MUST be inserted after the trademark adjective.  So, to use the example above, when I was texting I should have written that I was “going to buy a pair of NIKE® sneakers, and also “going to buy a pair of MICHELIN® tires.  But, in the fast paced world we live in, such usage requires more words.  But many folks think that is unnecessary – everyone knows what we are talking about. The purpose of trademark law is essentially to identify the source of the goods or services.  The purpose of language is to communicate with each other. Both texts above accomplish these dual goals. So if the purpose of trademark law is as a source identifier, and if the average consumer is using the marks as such in noun form, then as the famous WENDYS® advertisement stated “WHERE’S THE BEEF™”?

So can the world of trademark law co-exist with shop talk and who cares? Without getting into the complexity of trademark law nuances, and linquistical analysis of descriptive versus prescriptive language, [see “The Grammar of Trademarks” by Laura A. Heymann, 2010 for further information] a quick review of trademark history goes back to at least 3,000 B.C. when stone seals were used to indicate who made certain items.  Contrast that with today, according to the Brand Names Education Foundation, the average supermarket carries thousands of separate items most of which have brand names.  So if shoppers can identify the source of their purchase, and if trademark enforcers can ensure that the product is not a “knock-off”, then linguistic usage can and should live harmoniously with legal rights.  This would reduce the current conundrum of overly policing commercial speech.  Or to quote a famous Beatles song [ironical in that one of the more acrimonious multi-million dollar disputes in music trademark history was over the mark APPLE®] we should all just “LET IT BE”. Communication and risk management are in a WIN-WIN situation.

For more information on trademark protection, check out our free e-book on the subject. Please note that the marks above are the registered trademarks of their respective companies.

Corporate Governance vs. Management – Who is Keeping Score?

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Annual board of directors meeting season is just beginning for companies on a calendar year basis.  Some companies took the opportunity to look at how they do business.  Many small companies have what is referred to as their OPERATIONAL PLANS.  As it definition states, this is how they “operate” their daily business working IN their company as a W-2 employee. Congratulations, that is a good start but it is not a good finish unless you just wanted to create a job for yourself and others? If not then you need to work ON your company.  In fact, working ON your business is just as important because you want more than income, you also want profit and equity ["ROE"] which are the results of ownership work – not just employee work.

The biggest mistake you will make this year is equating working IN your company with working ON your company, according to the well-known author Michael Gerber of the book The E-Myth Revisited.  He states that P&Ls and tax data are static because they look backwards – not forward. Ownership work gets beyond Income only and into Profit and Equity [ROE] strategy. And isn’t that why you went into business in the first place – to go beyond income?  You simply can’t be effective long-term until you integrate what you do IN with what you do ON your company. So stepping back and doing some critical decision-making is the key. But that raises the question of who does it and how to do it?

So let’s answer the first question of who is responsible for governance?  In a corporation the board of directors sole job is to “govern” the company.  So HOW does a board “govern”?  The answer lies first in defining the difference between management and governance.  Most people have a good idea of what management is so I will restrict my remarks to governance issues.  Some top 10 good governance director practices are the following:

1.            Strategic Planning addressing sustainability, competitive advantage, etc.

2.            Corporate performance and valuation planning

3.            Risk and Crisis Oversight [e.g. data security]

4.            Oversight of company core principles, ethics and culture

5.            Oversight of human resources [e.g. management] and recruitment of directors

6.            Financial Oversight [e.g. review of P&L, Balance Sheet and Budgets]

7.            Oversight of sustainability matters and stakeholder relations

8.            Create/approve company-wide policies and procedures.

9.            Manage Board of Directors education, meeting processes, committees, etc.

10.             Oversight of corporate social responsibility

I recommend that these key governance issues be addressed by your directors.  (See also NACD Directorship Board Intelligence, survey report dtd 1/2011, p. 40).  Managers manage the company.  Directors govern [direct] managers. They are both important but very different.  The Massachusetts Business Corporation Act [“MBCA”], Section 8.30(a) defines the standard a director must comply with.  It states, in pertinent part, that a director must, generally speaking, act (i) in good faith, (ii) with the care that a person in a like position would reasonably believe appropriate under similar circumstances; and (iii) in a manner the director reasonably believes to be in the best interest of the corporation.

So how does a director comply with this legal standard?  The comment section to Section 8.3 provides advice by stating: “The process by which a director informs himself will vary but the duty of care requires every director to take steps to become informed about the background facts and circumstances before taking action on the matter at hand.   [However], a director may rely on information, opinions, reports, and statements prepared or presented by others as set forth in Section 8.30(b).”

So who are these “others” referred to?  Section 8.30(b) lists the individuals and groups (the “others”) that a director may rely on.  Generally speaking, they are as follows: (i) corporate officers or employees whom the director reasonably believes to be reliable and competent with respect to the information, opinions, reports or statements presented, (ii) professional advisors as to matters within their professional competence, and (iii) a committee of the board, where the director is not a member, if the director reasonably believes the committee merits confidence.

But there are two major caveats.  The first is that “a director so relying must be without knowledge concerning the matter in question that would cause his reliance to be unwarranted”.  The second is that “. . . in order to rely on a report, statement, opinion, or other matter, the director must have read the report or statement in question, or have taken other steps to become familiar with its contents.”

In summation, directors must become actively engaged in the governance of the company or else they should resign.  So take a look at the recommendations above and ask yourself “is your board living up to the legal standards of the laws in your state”?  If not, your company is at increased risk.  Haven’t started yet to address the governance issues of your company? I suggest you do so before a third-party discovers you are running a high risk business – and that high risk is your decision-making – or lack thereof!