RIG recently hosted a CEO roundtable dinner to explore what it takes to make a board work.
The discussion revealed that only one of the CEOs had ever had a board that had functioned well and pushed the company forward. Overall the level of dissatisfaction with boards was high.
The main sources of dissatisfaction for the CEOs present were:
- Not having a board that could contribute or challenge them sufficiently on strategic issues
- Particularly for first time entrepreneurs, having a board made up mainly of executives/founders, making it difficult to switch out of operational mode into a more strategic mindset
- Finding that board meetings had become reporting sessions to professional investors. While the financial rigour of professional investors was valued, it tended to take precedence over strategic discussion and the investors often expected to be treated as first among equals
So what kind of capabilities and composition would they like to have (or have had) for their boards?
- At early stage, people with contacts – essentially high-level salespeople or door-openers
- Closer to exit, a board that can spot and generate exit opportunities
- At all times: people who have done it before – who can challenge and whose experience can be leaned on.
There was much lamentation in particular at the lack of sales experience among virtually all the boards – it was felt by all that this is an essential part of the balance that is generally missing.
Above all, there was agreement that a board has to have a clear purpose that fits with the needs of the company at its stage of development. Because the early stage environment is one of change, the composition of the board may need to change more regularly than would be the case for a more mature company.
How then to put together a board that is a good fit?
- Understand the needs of the company at each stage – this should determine the purpose of the board
- Select board members accordingly: try to strike a balance between externally facing board capability (sales, marketing, PR) and internally facing (strategy, operations, planning)
- Decide what the board and its members should be spending their time on
- Choose performance criteria against which to measure the board and its members
- Give voice to the founder executives without needing necessarily to have all on them on the board
- Recognise when the company’s needs are changing and see whether the board needs to change and adapt to better serve them