From Angry Voicemails To A Dog’s Death, These Students Grapple With A Leadership Crisis

FRIDAY MORNING: A JITTERY PRESENTATION BEFORE THE BOARD OF DIRECTORS

On Friday morning, the Challenge moves from the business school to Michigan’s Jack Roth Stadium to better accommodate the 15 boards composed of Ross alumni. In luxury suite 536, overlooking the end zone, a half dozen board members get ready for the first of four presentations. It’s an impressive group of alums, including Ford Motor Treasurer Dave Webb, McDonald’s Chief People Officer Tiffanie Boyd, Sangita Woerner, a senior vice president at Alaska Airlines, Eric Remer, chairman and CEO of EverCommerce, Bryan Pritchard, founder and CEO of tricap investments, and Lindy Greer, the director of the Sanger Leadership Center. Two executives, Webb and Remer, have directly dealt with security breaches in the past, while Woerner was involved in a recent high-profile crisis caused when a door panel blew out of a Boeing jet being flown by Alaska.

Webb, who has been through this drill before, counsels his colleagues before the first of the four teams they will assess arrives in the room.  “Don’t let them off easy,” advises Webb. “This should be a real-life board meeting.”

At exactly 9 a.m., Team 41 stoically marches into a room to face the music. The seven students awkwardly line up against the far wall, noticeably uneasy about the whole exercise. They have just five minutes for their presentation which will be followed by 15 minutes of board questioning. The board members will evaluate each team on four metrics, using a one-to-six scale, with six reflecting the best score possible. They will judge students on their response strategy, communication skills, collaboration with each other, and finally their analysis of the financial and legal consequences of the crisis. Team 41 is composed of a trio of full-time MBAs, one online MBA student, a weekend MBA, and two graduate students from Michigan’s Ford School of Public Policy. “It was a real pressure cooker,” says Sarah Cohen, one of the full-time MBA students, describing the evening’s flurry of social posts and messages.

“We have worked all night on this issue,” opens CEO Mariam Koblianidze, a former consultant from Tbilisi, Georgia, who interned at Adobe over the summer, In her second year of Ross’ full-time MBA program, she smartly announces that the senior leadership team is eager to seek advice from the board. After a brief intro, she tosses the ball to several of her team members who explain what happened and how they responded to the crisis. The team immediately severed all user accounts and set up a special team to impose security measures. The students say they called in a cybersecurity specialist, hired a group of ethical hackers, and issued a news release to be “completely transparent.”

‘HOW WERE WE NOT PREPARED FOR THIS CRISIS?’

The student playing the chief financial officer, Kostas Boutsikakis, who expects to graduate with an MBA and a master’s in data science in 2025. “We put a lot of resources and time into the launch and the upcoming IPO,” he tells the board. “We have some strong recommendations. We think the IPO should be postponed, and we believe that there would be a considerable amount of expense the incident will cause. ”

The five minutes go by in a flash, preventing the team from doing an actual wrap-up. And then the questions come fast and furious.

“On a core level, what broke down?”

“How were we not prepared for this?”

“Given the fact that the cybersecurity team did not recognize the issue in the first place, what gives you confidence the team can fix it?”

“At what point do you shift your strategy if this goes on for another day, or two days, or a week?”

‘OUR BRAND IS AT STAKE!’

“This is absolutely a crisis of confidence. Our brand is at stake! Getting in front of it to secure the brand is important. But have we reached out to the investors? They are the only game in town and we are on a relatively short fuse. You only have $5.5 million in cash on hand.”

The students handle the questions relatively well, with just a stumble here and there. But as the directors drill down, they discover that the CEO failed to directly call the university president or the other two universities who may sign similar partnerships with the company.

“How much is this going to cost us?.” asks a board member.

CFO Boutsikakis steps forward. “We are asking for $250 million which is the estimate from our consulting firm,” he says. “That includes $20 million in losses from the university and one year of funding. We will need to fund another year of operations before we can get back on track.”

“What impact will that have on your valuation?” asks a board member.

 “This is an extremely difficult situation we are facing, and we are taking the correct actions,” responds Boutsikaki. ” We know there is value in the product. We have been growing revenue every single year.

‘WE ARE GOING TO BURN THROUGH $250 MILLION NEXT YEAR’ 

 “I own a third of this company,” the board chair says forcefully. “We are going to burn $250 million next year. It doesn’t seem that we can manage the crisis and burn the capital we are burning.”

The team says it will call investors and ask them for a bailout, reduce expenses by laying off some staffers, particularly in product development, and restructure its cybersecurity team. Asked what the team communicated to the public, a student says, “We do acknowledge what happened and we are telling them we take this very seriously.” 

“Are you taking responsibility?” asks Greer.

“Yes, partially. We are treading carefully there because of liability. Internally we think we should have done more. But at the same time, we are making sure this will never happen again”

When the time is up, the students leave the room to get immediate feedback from the communications coach in the room. Huddled together in a circle, Ross’s lecturer and coach Lisa Pawlik asks, “How do you feel?”

“We got through it,” says Boutsikakis.

‘BE CAREFUL NOT TO SMILE’

Pawlik commends the group for setting a tone of seriousness in the opening and making clear they were there to receive the board’s feedback.

“Sometimes you smiled a little bit, and in this situation, you have to be careful not to smile because it may look like you are not taking the issue as seriously as you should,” she adds.

“You were a little stiffer,” Pawlik tells one team member,  “but as you got going you became more natural. In your initial response, you could have had more eye contact. It almost looked like you were looking over the board.”

The coach also observed that one team member preceded his answer by telling the board member that he had a “great question.” 

“You need to be careful about that because some may think the other questions weren’t as good,” the coach explained. “The question was why should investors stay with you? You also said at one point,’ my opinion.’ It should be our view as a leadership team, not your personal opinion.”

“Ultimately,” she counseled, “you want to leave them with we are the right team to deal with the crisis.”

‘IT’S REAL LIFE AND THIS IS HOW IT FEELS’

The team then returns to the makeshift boardroom for a candid feedback session from the directors. 

They don’t sugarcoat it. The board felt the presentation wasn’t as clear or specific as it needed to be.

“Everyone of your stakeholders is a partner in the solution,” Webb told the team. “All of their perspectives should be clear. With the communication strategy, when you lay it out, you need to say: ‘Here is what we are doing with the press, with the investors, with the university. Hit it methodically. That would give the board more confidence. We didn’t quite get the level of specifics on what you were communicating. 

The student CEO, who went out of her way to delegate during the presentation, was told to take charge of the meeting more fully.

“As the CEO, you need to take control of the situation,” advised a board member. “You are the kingpin. You will delegate but it felt like all of you were equal yet the board is looking at you. We want the confidence that you are in control of it. Own it.”

Adds Webb, “It’s real-life and this is how it feels. It’s super, super hard and there is not always a right answer. Be willing to say we don’t have all the answers yet.”.

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