When I first started building my board of directors, I still owned 100% of the company. Many people were surprised that I was willing to subject myself to the headache of having to answer to outside directors.
When I raised my first capital, I heard horror story after horror story about boards gone awry. If you ask ten CEOs about their boardroom experience, it seems that at least seven of them have a story about how horrible the experience was or is.
I’ve been lucky to have the opposite experience. I consider my board high performing. It is an accelerator for my business.
Here are five tips that I’ve learned through the School of Hard Knocks that will help you have the same fortune. Trust me: it’s much better to be one of the three CEOs who doesn’t have the boardroom horror story to share.
Build your board proactively, not reactively.
I built my board before I had to. I figured, if I couldn’t convince three smart and experienced people that I respected that my ideas were the right ones, that I should probably listen to their experience. This turned out to be more powerful than I ever realized it would be.
Not only did I have guidance and help in the early days as I navigated the treacherous waters of an unfunded startup, I also learned how to manage a board, was able to take my time in finding the right board members, and focus on pulling together a team that truly bought in to the vision of the company. By creating my board proactively, I’m convinced that I was able to avoid common growing pains that others have experienced as they scramble to pull together a board because they have (or are about to) taken on financing.
Attract true experts, not big names.
Yes, there’s some marketing value to having the big name go out in a press release, but, I have seen first hand how true expertise, experience, and alignment with the rest of the board can pay huge dividends. The power of a name can be very fleeting, or, it can add incremental value, but, the value of relevant experience and most importantly the alignment of the board is so much more powerful.
Manage your business, not your board.
As CEO your job is to lead your company, not manage your board. Focus your efforts on doing the right thing for the company and use those efforts to guide your interactions with the board. Too many people spend hours managing a board. They generate new reports, new KPIs, and new presentations for the board. If they are not useful for the company, then they should be irrelevant to the board.
If you find yourself falling into this trap you have one of two problems. Either, you are not managing the business by the appropriate means, or, you are placating your board and wasting time. Figure out which one it is and fix it. Neither is a good situation.
Leverage your board for value, not just governance.
Your board should be an accelerator, not just a governing body. Expect the board to engage in strategic discussions and help validate your strategy and performance. Your board is not a rubber stamp and it doesn’t exist to simply hold you accountable. Your board should be a sounding board and your partner in business. Expect them to add value – strategic advice, experience when you’re in a situation that you haven’t experienced before, and introductions to key people within the industry.
Build a team of mentors, not just board members.
Your board should be made up of more than just members with experience. Look for people who have differing perspectives and experiences but share common values. It’s important that a board be neither a rubber stamp nor a fighting body. You want them to work together for the benefit of the organization. Seek people who you respect and genuinely want to work with. Seek out people who you want to learn from.
Boards have bad names in many circles, but if you proactively build your board you can increase the likelihood that yours will help you accelerate success, rather than add to your headaches or lead to your demise.