Business

The cold January sky was just dawning gray over Minneapolis as Don Rifkin awoke. With every cell in his body, he longed to put a pillow over his head and sleep, but the alarm added insult to injury. Slapping the off button and pulling on his oversized Turkish bathrobe, he stole from the bedroom and quietly shut the door behind him, leaving his wife to sleep. He padded toward the kitchen and turned on the coffeemaker.

Sitting down at the kitchen table, Don sleepily clicked a few keys on his laptop and began glancing through his favorite stock chat. Scanning the list of senders, he saw a red exclamation point next to the name Stan with the headline “Bad news!” When he read the message, Don gasped:

Did anyone hear that Wally Cummings just resigned from Dipensit? Turns out he lied on his resume—never received that PhD from U.C. Berkeley as he’d claimed! The stock’s gonna drop fast once this hits the street.

Don felt slightly queasy. A year earlier, his own company, Nutrorim, had purchased a small stake in Dipensit. “Sheesh, I didn’t exactly trust that guy,” he grumbled.

He recalled how smoothly the whole decision process had seemed to go when Laurence Wiseman, the hard-driving CFO of Nutrorim, had championed the purchase of the Dipensit stock, insisting that the small company might make an excellent acquisition candidate in the future. A subcommittee had been formed to carefully review the purchase decision. Don vaguely remembered that there had been a few murmurs of concern—someone had even questioned the credentials of Cummings, the start-up’s CEO. But in the end, the subcommittee seemed to have addressed the concerns, and the senior team stood behind the decision.

Don cinched his bathrobe tighter. During the past year, Nutrorim had suffered from a spate of bad decisions. In fact, that’s what today’s meeting was about. A consultant, hired to review the company’s decision-making processes, was coming in that morning to present the results of his individual interviews...