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 / Summer 2003 / Issue 31(originally published by Booz & Company)


Delphi Builds a Board

Several board members, including Patricia Sueltz, an executive vice president with Sun Microsystems Inc., have experience in the electronics or telecommunications industries, both of which are targets as Delphi seeks to expand its product lines into nonautomotive business. And Mr. Opie offers first-hand knowledge of the management practices at General Electric, the company that Mr. Battenberg considers a model for leadership development and succession planning.

Outside the Glass Tower
Delphi’s governance structure is designed both to give its directors maximum exposure to employees and the workings of the company, and to utilize their skills as effectively as possible. Board involvement in the company is embedded in a series of formal and informal communications channels. Delphi convenes seven board meetings each year; data collected by the executive search firm Spencer Stuart on the frequency of board meetings suggests this is about the norm for large U.S. companies. Board members also participate in an annual three-and-a-half-day strategy retreat together with 30 line executives.

The board’s involvement in strategy making is, governance experts say, highly unusual. “This is one of the most interesting and unique things about the board of Delphi,” says Jay Lorsch, a Harvard Business School professor who has written a case study on Delphi with his Harvard colleague Rakesh Khurana. “Most boards have a great deal of difficulty getting constructively engaged in the dialogue about strategy — by that I mean the goals a company is going to pursue and how it will pursue those goals. The board at Delphi is engaged in a constant dialogue.”

The dialogue begins at the three-and-a-half-day strategy meeting. “They continue to talk about the strategic issues at all the board meetings, so that sets up an agenda of issues,” explains Professor Lorsch. “The retreat is just the starting point of an ongoing dialogue. It’s a continuous process.” It continues throughout the year as board members are in various degrees of communication with Delphi’s executive leaders and managers.

That iterative communications process takes board members across the full range of issues the company faces, including finding new markets, identifying future leaders, and ferreting out — and solving — key technological challenges. During the retreat, “we spend the time reviewing the business, looking at the operations and the market, and setting the strategy for the next year,” says Mr. Opie, who says he’s in touch with someone at Delphi almost every day. “At board meetings, we have updates on specific parts of the strategy. So the board is involved in the development of strategy and stays close to its execution.”

Board members have many opportunities to get to know a wide variety of Delphi personnel. “We have reviews and committee meetings and dinners,” says Ms. Sueltz, who has served on the Delphi board for three years. “Even the dinners aren’t just for us to glad-hand each other; they’re set up with the thought of bringing in folks who aren’t necessarily only the top executives so we can interact with them. Then, we’ll hear them pitch in operational or strategic reviews. That causes lots of interactions to blossom.”

Unlike most board members, who are confined to the glass-and-chrome tower of the head office, Delphi’s board members are accessible outside the retreats and special events. In fact, the company strongly encourages employees and board members to seek one another out via informal channels and in the course of regular business. That’s how Nancy Glenn, a systems architect who works on semiconductor technology for Delphi’s Delco Electronics division in Kokomo, Ind., came together with Ms. Sueltz just one month after she had joined the board in 2000.

The two women met at a Java software conference in San Francisco in June of that year. At the time, Ms. Glenn was trying to apply Java software to the development of a system for error-proofing semiconductor fabrication, and was looking for “outside validation” of the system architecture and the technology choices that her team was using. Ms. Glenn and her colleagues were bemoaning the fact that finding software engineers who use Java for manufacturing applications — as opposed to Internet or entertainment applications — was like searching for a needle in a haystack.

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  1. Art Kleiner, “The Cult of Three Cultures,” s+b, Third Quarter 2001; Click here. 
  2. Paul F. Kocourek, Christian Burger, and Bill Birchard, “Corporate Governance: Hard Facts about Soft Behaviors,” s+b, Spring 2003; Click here. 
  3. “The Way We Govern Now,” The Economist, January 11, 2003
  4. Andrea Gabor, “Challenging a Corporate Addiction to Outsiders,” New York Times, November 17, 2002
  5. Corporate Governance, The Wall Street Journal Reports, February 24, 2003
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