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


Delphi Builds a Board

Nancy Glenn found her needle while listening to Ms. Sueltz, who is responsible for all Java technology at Sun, give the keynote address at the San Francisco conference. During her address, Ms. Sueltz happened to mention the hotel where she was staying in the city. After the speech, Ms. Glenn went there unannounced, telephoned Ms. Sueltz’s room, and asked for an appointment. “Pat didn’t know who I was, only that I worked for Delphi,” recalls Ms. Glenn. “She was very useful in putting us in touch with some Sun Java architects who were working with the auto industry in Dearborn.”

A few weeks after the conference, Ms. Glenn and her colleagues drove from Kokomo to Dearborn for two half-day brainstorming sessions with a roomful of Sun architects. The sessions were followed by a series of e-mail interactions. “This speaks of the Delphi culture — the openness that J.T. encourages and the idea that the board is a resource,” says Ms. Sueltz. “When J.T. was recruiting me, he said, ‘We want our folks to be able to approach you.’ What they are pushing for us to do is not only be independent board members but active and involved board members.” Indeed, Ms. Sueltz has played an advisory role to a number of businesses inside Delphi that are trying to expand their nonautomotive business. For example, she has given advice on expanding Delphi’s XM SKYFi satellite radio products into consumer markets.

Similarly, following a board presentation last December by Ray Johnson, Delphi’s executive in charge of compressors and new markets, Ms. Sueltz helped connect Mr. Johnson’s team with Sun experts in thermal technology. Delphi wants to use its expertise in climate control and powertrain cooling systems to develop products for the electronics industry. One potentially lucrative market: systems that cool hot spots inside cabinets that contain such electronic equipment as computer servers. Sun experts helped Mr. Johnson’s team understand the technical requirements for these so-called enclosure blowers. Ms. Sueltz insists that she recuses herself from any decisions involving sales to or from Sun. However, Delphi hopes this technological dialogue with Sun’s electronics experts might one day turn into sales.

Inside the Operations
Perhaps no board member exemplifies the hands-on nature of Delphi’s board — and Mr. Battenberg’s desire to bring the expertise of directors to bear on the company’s most critical strategies — more than Mr. Irimajiri. Mr. Battenberg spent much of his career as an auto engineer fighting against the flood of innovative Japanese imports, and trying to learn the stubbornly elusive secrets of such Japanese innovations as lean engineering, the concept the Japanese apply to everything from manufacturing to product development, to improve efficiency and design without adding costs.

Two years ago, Mr. Battenberg gave Mr. Irimajiri what was, for a company director, an atypical assignment: to conduct a yearlong, in-depth study of Delphi’s manufacturing, engineering, and product development processes. (As required by the Securities and Exchange Commission, the consulting agreement, under which Mr. Irimajiri was paid about $800,000, was disclosed in the company’s proxy statement.) Mr. Irimajiri’s task was to help Delphi identify and make improvements on the weaknesses that stood in the way of achieving what Mr. Irimajiri calls Operation Mt. Fuji. (What was the Japanese code name for Pearl Harbor is, at Delphi, the moniker for the company’s campaign to grab a larger share of the Japanese auto parts industry.)

Much of Mr. Irimajiri’s focus was on bringing to Delphi lean-engineering concepts implemented by such companies as Toyota and Honda, which many U.S. companies have tried to learn, with little success. At the most basic level, lean-engineering concepts rely on broad communication across disciplines so that, for example, design engineers, manufacturing experts, and suppliers all communicate and cooperate in an effort to optimize design and slash costs. Delphi has successfully applied the concepts to such manufacturing challenges as just-in-time inventory controls and teamwork on the plant floor. But applying lean engineering to design and product development also involves a continual learning process; the knowledge that goes into perfecting everything from processes to parts must be codified and institutionalized in the company’s managerial culture and engineering toolkit, so it can be used as a building block for future projects.

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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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