I co-founded Essential Ingredients, a wholesale chemical distribution company, in May 1996. My co-founder and myself were both coming out of commercial roles in the chemical industry and both had a vision and passion to do some things differently from what we had seen and experienced. We envisioned a company with a strong purpose that was manifested in a sense of genuine care for our employees, customers, suppliers and communities. A company committed to do things differently and setting a new standard of excellence and care. We have been at this now for 29 years and our board has gone through several phases of evolution, from start-up to functional board, and now to a board with a high-level strategic focus.
Only two short years into our young life as a company we hit our first major hurdle when we were terminated by our largest supplier via certified mail on December 26. Literally half of our gross profit was disappearing in 5 days and we had no contingency plans. My co-founder and I called the most respected business mentors we had at the time, who happened to be our fathers-in-law, and both agreed to come to the office to help navigate a path through this dark period. Little did I know it, but on reflection this was our first board meeting. These two wise men went on to serve us for 12 more years, challenging us to think more deeply about our mission, core values and purpose as we worked to grow this young start-up. This early phase culminated in a 100% ESOP transaction in 2011.
In 2014, it became clear that, while the company was performing well, we were missing some expertise on the board. At that time, our chief operating officer was also acting as our CFO (with no formal training) as well as our director of human resources. And now, as an ESOP company, we had a lot at stake from a fiduciary perspective. We had reached the point where it was necessary to augment the blind spots we had as an executive team with board expertise. We identified a seasoned ESOP CFO, a former ESOP attorney, a former HR executive and an industry executive to join the board. I often envisioned this team as a group of superheroes with specialized talents in a narrow range but, when together, they could conquer any challenge. In the absence of a mature executive team, this board worked to fill those gaps, allowing us to scale the business to our current holding company model and further refine our purpose as a company.
During this season of the company, we also focused on building out our executive team and hired a full-time CFO, a chief people officer, and several commercial leaders who could help us consider our current and future needs for talent and succession. As this team grew, it became clear that the functional needs the board once filled were now being addressed by our growing executive team and the time had come for our next evolution of the board. We are now in the middle of that evolution. The primary goal is to have a board comprised primarily of generalists (think CEOs) rather than specialists, allowing our executives to tackle matters appropriate for management while the board remains focused on governance, long-term strategy and its fiduciary duties. As an ESOP and a company focused on being “People First,” we plan to maintain a small number of specialists on the board, but for the other seats, the needs of the business have evolved. I have read several articles and continue to track the implications of the AI revolution. My hope, with a business of our size, is to tackle these needs with consultants as opposed to board members, but this is an area we will watch.
I am very pleased with the efforts, clarity and alignment we have as a board and our nom/gov chair has been immensely helpful and supportive in helping to map out all of these changes, both ongoing and in the future. I am confident that our latest evolution will serve us well for the foreseeable future, but we remain ready to pivot as the needs of the business continue to grow with the ever-changing business environment we all operate in.
There is a time for a board with start-up capabilities, functional strength and big-picture strategic focus. Recognizing these stages and taking action to evolve the board to match the needs of the business is hard work. But it is absolutely necessary for a thriving enterprise.