Decision-making failures at Nutrorim under CEO Don Rifkin

¶ … Wrong Moves" and analyzes the decision-making process of Nutrorim CEO Don Rifkin and his management team. The essay also makes recommendations regarding improvements, including changes to management styles and the use of decision tools.

Analysis of Key Issues

The key issues in the case involve deciding whether to recall ChargeUp after a health inspector made allegations that the drink was responsible for causing illness among 11 people. During the process of making this decision, other issues become apparent. CEO Don Rifkin had created a corporate climate that discouraged dissent and failed to optimally use his people's abilities. By trying to create a climate of inclusiveness, Rifkin has gone too far in the opposite direction and instead discourages his people's best efforts by stifling dissent and debate. Nutrorim's managers get bogged down in the decision-making process, with the result that they routinely make poor decisions, one after another.

Rifkin's management style was shaped fresh out of business school by an unfortunate incident with his former boss, a "dictatorial" CEO. The incident apparently traumatized Rifkin to the point that he put significant effort into making sure that he did not run Nutrorim in that fashion. Rifkin tried to develop a "happy, participatory, democratic culture," not realizing that such a management style would undercut his ability to be a successful leader. In the absence of conflict or challenges, Rifkin's inconsistent management style might be only slightly dysfunctional for day-to-day operations. But during times of crisis where difficult decisions needed to be analyzed, debated and resolved, Rifkin's approach was ineffective. He may have made a point of asking for input from as many people as possible, but he left his team with no clear, definitive process to optimize decision-making. By creating so much uncertainty, Rifkin set his team up for failure.

In addition to deciding specifically whether to recall ChargeUp or not, Rifkin needed to overhaul the decision-making Nutrorim process. Even though the ChargeUp recall was the most urgent, in the long run the need to fix their broken system was also a high priority. As long as they used a decision-by-committee approach, with Rifkin making arbitrary decisions in private and "offline," Nutrorim was subjecting itself to a series of disappointing results. Rifkin's decision to recall ChargeUp was actually a valid decision, but his handling of it undermined his authority.

Investing in Dipensit was another example of Rifkin and Nutrorim's failed approach to making important decisions. Some members of Rifkin's team had misgivings about the purchase of Dipensit stock, but Rifkin neither personally undertook the necessary research, nor did he take seriously the reports of the subcommittee that he delegated the responsibility to.

From failing to perform their due diligence in investing decisions, to not gathering enough information about the proposed ChargeUp recall, to hiring an indecisive consultant, Nutrorim stumbled through one ineffective decision after another. Nutrorim needed to put in place a system where Rifkin and his team asked the right questions and created an environment of accountability and responsibility. In particular, Rifkin needed to ask the right questions of his people and help them develop improved problem-solving techniques.

Recommendations

Rifkin needs to establish management process rules. These rules should include a decision-making protocol that defines criteria for the company's key decisions. This process should include transparent rules that keep the management team from being too aggressive, and from dismissing valid objections and ignoring risks.

Rifkin must also do a better job of selecting his subcommittee members. Because he wanted to avoid conflict, Rifkin chose people whose views did not conflict, but neither did they work well together as a team to make effective decisions. For Rifkin to get better recommendations from his people, he needed to do a better job of selecting balanced subcommittee members.

Rifkin himself should undertake management coaching to help him develop a more effective leadership style. Rifkin needed to be comfortable exercising authority, even in situations where he would prefer that everyone remained "Minnesota nice." By developing his own leadership skills, Rifkin would also be better able to develop his people. For example, Nora was clearly dissatisfied with being involved in "meetings about meetings." Rifkin's drafting her onto the subcommittee to review the consultant's recommendations was exactly what Nora did not need, nor did her involvement serve the team well either. Instead, Rifkin should give Nora practical, hands-on managerial tasks to perform.

Rifkin also needs to give his managers clear and specific direction about what is required from them. In particular, Rifkin should set clear goals for team behavior and conflict resolution. People like Steve Ford who feel strongly about the value of ChargeUp were all well and good, but they cannot be allowed to dominate discussions or exclude opposing viewpoints. Ford and others must understand their role as team players, and that includes respecting the opinions of others as well as supporting management decisions, even the ones he disagreed with. Along the same lines, Rifkin needs to listen to complaints like Nora Stern's about not having open debate and working out differences within the group.

Rifkin also needed to practice his newly developed management and leadership skills by taking advantage of the crisis that the recall created. Rifkin should use the opportunity to revamp the company's management rules. Rifkin should begin to develop trust within the management team by having open and honest discussions about the future direction of the company. All these steps taken together would improve Nutrorim's decision-making process.