Managing your board the ten commandments - part 1
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1) Founders should provide timely, accurate information to the board without surprises and establish two-way communication. They should view the board as a resource to help address problems and enhance the relationship. 2) When selecting a board, founders should look for shared interests but also differences, and leverage directors' networks. They should have the humility to listen to advice but also push back respectfully when needed. 3) Founders should build rapport with at least one director, have a clear plan and metrics to measure performance, and openly declare failures to the board for help addressing issues. They should communicate frequently to maintain an effective relationship and gain the board's confidence.
Managing your board the ten commandments - part 1
- 1. Managing your Board - The Ten Commandments As an angel investor, I serve on the Board of quite a few startups. Being a Director sounds sexy, but can be surprisingly painful, especially because so many founders have no idea to how to handle board meetings. Here are some suggestions as to what entrepreneurs need to learn to better handle their Board. Some of this is basic, but hopefully these tips will help first-time founders ! Here are some basic principles. 1. Understand the board's focus and expectations. Try to be empathetic and understand that they are busy people who have lots of outside interests; but they do also have a fiduciary responsibility and need to make sure you are doing a good job ! 2. Provide timely, accurate, and relevant information to your directors. The secret is to over- communicate – there should be no surprises. When the Board doesn’t hear from you, they wonder if you are hiding stuff and if all is going well. The truth maybe that you are so focused on making sure the company is performing properly , that you want to prioritise execution over communication, but not sharing information with the board can be a huge error. 3. Establish effective two-way communication with the board , and with individual directors. While the Board is a team, it is made up of individuals, each of whom will have quirks and idiosyncrasies you need to learn to manage 4. Develop a feedback process. This has to be a two-way street – and you should be smart enough to be able to tap into their wisdom. 5. Use change as an opportunity to enhance your relationship with your board. When things are going well, there’s little a board needs to do. It’s especially when things aren’t going well and you find that you are out of your depth that a board can help you to move forward. Of course, the irony is that this is the time when you least want to interact with your board, because you don’t want them to think of you as being incompetent and unable to manage. Share both your highlights and your lowlights, so you can form a constructive partnership with your board. If you help them to manage you, you will be far more productive and effective ! These are 10 commandments of managing your Board. 1.) Stick to the basics The best way to manage your board is to do a great job managing your company. Never forget, the success of the company is the most important goal and the one that both you and the board care about the most. If you are doing well, the Board will give you a free hand 2.) Build a great board
- 2. Board members should be people who you believe can really help you. Look for shared interests and philosophies, but embrace differences as well. Don’t stuff your board with friends who will go along with everything you say. Know your weaknesses and select board members who will help guide you in those areas. When you raise money, you may not have much of a choice as to who the funder will appoint as a member, and you will find ( sometimes the hard way) that the board member who comes with the money is as important as the money. 3) Learn to use your Board intelligently. Use the resources of your directors’ ecosystems ( hiring, PR, training, banking). This is one of the great benefits, beyond capital, that a VC firm brings to an early-stage company – their network. Be totally open with directors, but remember they are not your friends. They have loads of experience – and while you may know much more about the technical minutiae of running your business, they can provide a “big-picture” perspective which can be very valuable. Many Board members have “been there, done that” because they have served on the Boards of other startups . It’s quite likely that they have helped other founders to deal with the problems which are giving you sleepless nights – help them to help you as well ! You may feel frustrated when you think that they don’t understand your dreams, and you are likely to be upset when they refuse to give you the additional money you need to ramp up. However, directors are human as well, and you need to be sensitive to their feelings. If they have lost confidence in your ability to lead, you will need to earn this back. Do remember that the very fact that they backed you with their money and helped you to startup means they did believe in you and your vision. They are as invested in the success of your company as you are , and your interests are aligned, so you need to remember and remind them about this. 4.) Push Back – but do so nicely. Sometimes directors have stupid ideas and give bad advice. Be open to different perspectives, but have the guts to push back, and do so, when it makes sense. However, do have the humility to remember that the director may be right, so please listen respectfully ! 5.) Build a personal relationship with at least one director While you cannot expect to like everyone, find one member where the chemistry between the two of you is right. Trusted alliances are crucial. Ensure you have at least one director who has your back, and in whom you can confide in, during the crises you will have to navigate . 6.) Have a plan , and measure your performance against it Have a plan, demonstrate how you’ll measure performance, and then do it. You are the domain expert, and this is your company, and a good Board will give you the freedom to set your own goals. However, directors have memories, so execute well, and demonstrate performance on a regular basis.
- 3. 7.) When you fail, declare it quickly Directors are big boys, and they understand the inherent risks of investing in a startup. If a challenge appears, don’t try to tackle it alone or attempt to cover it up . The Board is on your side, and by acting as a sounding board, they can help you develop an action plan and execute it, to avoid failure – but only if you have the maturity to ask for help. 8.) Be passionate You are running a start-up because you’re passionate . Show the board the fire in your belly – after all, this is why they invested in you, and it always helps to show that you are committed to the cause ! 9.) Gain their Confidence Founders are worried that the Board will start meddling in their day to day operations. The time this happens is when they have a lack of confidence in your ability to successfully manage the organization. Board members are busy and have other things to do ! They are quite happy to let you run your company your way if you can show them that you are doing a good job and know what you are doing. 10.) Over communicate It's your responsibility to create and maintain an effective working relationship with your Board . It’s far better to share more, rather than less. Many founders assume that board members are busy, and they shouldn’t burden them with their problems. However, the purpose of the board is to help you when you are in trouble, so learn to make use of them. The trick to creating a good relationship with your board members is to communicate frequently, so they feel valued. If you are a first time founder, you may view this as a waste of time, but you need to learn how to extract value from your board. The odds that you “don’t need oversight because you know what you’re doing and it’s “your” company are zero. The one thing your board wants from you above all is transparency. The Bonus Commandment 11.) Ask for feedback. Not only will this help your Directors to feel valued and respected, if you make good use of this, you will be able to become a better CEO ! Develop a high-level of understanding as to what is important to the Board and become a source of information, insight and input. Yes, it is your company, but it’s also the Board’s responsibility to make sure that you are running it properly . Help them to do their job properly, and they’ll help you to do yours . Managing your Board is a valuable skill – and it’s worth spending time and energy in learning to do this well !