Managing your board of directors

Business DevelopmentLeadership DevelopmentBusiness Management

May 3

In my 15 years as a VC backed CEO, I worked with many different board permutations, and nearly two dozen different board members. Many were highly functional teams that amplified our goals as a company and helped me grow as a leader, and a few were a mess. A chaotic tail wagging the dog of our organization.

Much of the difference was the board members themselves, to be sure. But a surprising amount of it was due, I learned in time, to how I was managing the board.

Most boards, I’ve learned through my work as a coach, are relatively ineffective, in large part because most founders have limited experience in manage a board of directors.

Today, we’re going to talk about the skill of board management, and how to transition your board from babysitters-by-committee, into the highest leverage team in your company.

Managing your Board of Directors

One of the biggest wastes of startup potential is a board that only serves in an oversight capacity and does not contribute to execution.

This is, unfortunately, far too many startup boards.

Oversight is all about making sure the CEO and management team spend capital wisely and execute to a certain standard, while execution sits at the nexus of governance, strategic planning, corporate development, business development, marketing, and more.

Oversight is backward looking. Did the company dot all its i’s and cross all its t’s? Did it achieve what it set out to?

Execution is forward looking. What are the opportunities in front of the company, and how can we go about achieving its goals more quickly and efficiently?

Oversight is important, but execution is where the magic happens. It is one of the most powerful, highest leverage tools at a company’s disposal.

Whether your board is high functioning and effective as a result of recruiting execution-oriented people to your board from the start, or you do the hard work of shifting members from oversight to execution over time, it is up to you as the CEO to drive the culture, and performance, of your board.

Today we’re going to talk about how to do both kinds of work.

Why are boards often oversight heavy?

When a company raises money, it almost always, unknowingly, installs a board which is primarily concerned with oversight.

It typically goes like this: company accepts first significant investment, and the investor demands a board seat and information rights as a part of the raise. Makes sense, right? The investor wants to know how their money is being spent, and the founder feels obliged to spend transparently. This oversight is natural, but is often complicated because of the new power dynamics that are also created at this time: if the founder doesn’t fulfill their obligations, the board can now fire them.

This is such an existential change for a founder that they can easily convolute the investor’s desire to be informed with the personal threat of losing their job, which can complicate their entire relationship, and the culture of the new board.

And, if these new power dynamics do grow to define the culture of the board, they lead to an enormous waste of time, money, energy, and resources, all in the name of oversight. The founder finds herself doing two jobs: growing the company and managing the investor’s perception of her and the business. It’s easy for her to get so caught up in her dual set of responsibilities that she never sees the broader opportunity of the board.

The best investors take pains to prevent this dynamic from the beginning. But alas, most don’t.

What does a healthy board look like?

Without a doubt, oversight is part of a healthy board, but in healthy boards every decision about how to actually run the company rests with the management team. The board’s top responsibility is neither decision making, nor babysitting. It is to support the growth of the CEO and the management team in every possible way, until and unless they decide that the CEO is not a fit for the role.

Consider the strong investor board member. They’ve been in the trenches. They’ve seen companies go through similar situations, so they have the ability to pattern match at a level that no founder can match. Strong investor board members use their unique perspective to challenge the founder, helping them consider different perspectives, but once their perspective has been voiced and considered, critically, they support the founder in whatever decision they make.

Strong investors also live and breathe the obtuse and nepotistic capital markets, so they can help a founder navigate them when it comes time to raise additional money, both by helping them run a strategic fundraising process and actively introducing them to investor friends.

Independent board members can also be invaluable coaches and advisors. Sometimes coaching is easier to accept from someone who’s been where they want to go, so these board members have an important role in helping the CEO recognize what “great” looks like, and challenging them to reach higher than they otherwise might.

And when it comes to reaching those heights, those current or former CEOs with operational backgrounds are often connected to the market at a level which would take the company years to attain organically, so they can be a literal cheat code when it comes to customer acquisition. By way of example, at my last venture backed startup, Hap Klopp made sure I avoided a mutiny by helping me facilitate a series of alignment exercises on behalf of the company. And we never would have landed Reebok and JJ Watt without the help of Walker Jacobs actively greasing the skids from his perch atop the media landscape.

The best board members do much more than invest. They do much more than provide oversight. The best board members make the CEO, and by extension the entire team, better. The best board members amplify the reach of the company into all the various rooms where it happens. The best board members put in WORK. The kind of work that nobody else in the organization can.

When possible, work with the right people from the outset

At the risk of stating the obvious, when it comes to board composition an ounce of prevention is worth a pound of cure. The most effective way to ensure that your board is of the functional, productive variety is to vet prospective investors prior to closing any investment.

Talk with them about their views on board management and interview their portfolio companies (particularly those that didn’t go smoothly). Get a sense of who you’re dealing with. Easier to do with independent directors than investors, I know, given the shotgun marriages created by the VC industrial complex. But nonetheless profoundly true in either case.

90% of boardroom problems, and indeed all problems, can be avoided by simply following the golden rule of business: don’t work with assholes.

Beyond that, if you have the opportunity to choose between two potential investors who are each good humans, interview them on how they will help your company achieve its goals in the same way you would a member of your senior leadership team. Ask them about follow-on investors they might know and about potential strategic partners in their portfolio.

With the possible exception of cofounders, there is no more important relationship than that between a founder and her lead investor, so when vetting, hold investors, and indeed any board member, to the same bar that you would a member of your inner circle.

“But what if I already have a board?” you’re asking. “What if we’re already stuck in an oversight relationship? How do I change things?”

Shifting an existing board from oversight to execution

After working with dozens of founders to develop a productive relationship with their boards, I’ve seen that the primary blocker for most founders when it comes to making this shift is fear.

Fear that their board might realize they don’t have it all figured out.
Fear that their board might disagree with them on how to manage the company.
Fear that their board might think less of them if they asked for help.
Fear that their board might get too involved.
Ultimately, fear that their board might fire them.

Some amount of fear is a natural response to the power dynamics discussed earlier. But that fear can become unhealthy when it causes the founder to prioritize their board’s approval over making the best decisions for the company.

Ultimately, the fear you feel is the price you pay for bringing something novel into an ambiguous world. It’s a privilege, and fully inhabiting your seat as the leader of your board requires you to confront that fear and act in the best interests of your company, no matter how (un)popular the necessary actions may be.

The first key to shifting your board from oversight to execution is to overcome your fear of being disliked by your board, and fully step into your responsibility as its Chairman.

As CEO, unless you’ve appointed a separate Chairman of the board, you are the leader of the board. Not your lead investor, not your independent directors. You. This means it’s up to you to get the most from your board, by helping its members bring the best of themselves in support of your company.

It’s easy to think that your board wants you to do what they say. But they don’t. They want you to maximize the odds of a successful outcome.

It might feel safer to defer to the consensus of the board, even when your gut says otherwise. But it’s not. Remember that CEOs are the ones who get fired for making the wrong decisions, whether or not everyone else agreed to the decision they made.

It’s natural to feel some fear as the CEO of a venture backed startup. Your success in that role has a lot to do with how you work with that fear.

The second key to shifting your board from oversight to execution is to communicate.

Actually, to overcommunicate. To communicate so well (not the same thing as so much) that the board trusts and relies on you to satisfy their oversight responsibilities, opening space in their minds to focus on execution.

So what does it look like to communicate that well to a board?

First, you must be excellent at guiding their attention to the right things. Recognize that every board member spends less than 10% of the amount of time you spend on your company, so when they do engage with you, they need to be brought up to speed quickly and effectively, and their attention should be directed to the areas in which they can be most helpful. When they feel out of the loop, their Spidey Sense kicks in and they’ll start asking probing (read: oversight-related) questions, which, because they’re so much less informed than you are on what’s important, can quickly get you off track and waste a ton of time (they don’t want this, even if they’re the ones asking the questions).

And second, you must proactively set expectations for your communication and then consistently meet/exceed them. Work with your board to agree on a cadence and process by which you will communicate the status of the company and key initiatives. Agree on what information will be included based on what’s most important to the company, at a volume that satisfies their need for information, and at a frequency that doesn’t overwhelm your team. Then prioritize that communication. Don’t skip it. If you’re missing metrics or the company is otherwise underperforming, plan to communicate even more as your board will be paying closer attention. Even if it feels like extra work, make time for it. Founders who regularly communicate in this way not only have more productive (read: execution-focused) boards which more than make up for the time spent keeping them informed, but most report that the very act of compiling and organizing information in this way clarifies their thinking, even if they never send it.

Cool. Donezo. Right?

Not yet.

Once you’ve stepped into your seat as the Chairman of the board, and you’ve established effective communication processes and cadences, you’ve cleared the decks for an execution focused board to emerge. But there’s one more step to take:

The third key to shifting your board from oversight to execution is to ask them for what you want. Specifically, and without apology.

Your board members will not always know how they can be most helpful to your company. So you need to take responsibility for understanding what they bring to the table, and how those capacities can be most helpful to your company’s goals, both day-to-day and long term.

Think of this like a matching game in which your job is to connect the needs of your company to the capacities of your board members. Once you have a match, you must ask, specifically, for what you need. Investor introductions, advice, help recruiting or vetting new teammates, help acquiring new customers or even potential acquirers. Even wacky self-referential things like help in navigating tough board dynamics. Each investor board member has their own skills, connections, and capacity to help. It’s up to you to understand those assets and ask each individual to use their unique skills in support of your company.

A productive board member is responsible for contributing something valuable to the company after most, if not every, board meeting. Healthy boards are full of these kinds of members. But they don’t happen by accident.

And they don’t happen if you don’t ask.

An exercise to begin the transition process

As in any new relationship, both you and your lead investor will enter into your relationship with assumptions. Many of these assumptions are incorrect, which is not in itself a problem. But when assumptions are both incorrect and undiscussed, they usually lead to misaligned expectations.

If you’re ready to take your seat as the leader of your board, one great place to start is to consciously air out all the assumptions both you and your board are making, and discuss them.

The simplest way to do this is to distribute a survey to each board member. Use the following questions or create your own.

What are my expectations for this board? How do we know we’re doing a good job?
What are my fears about this board? How might things go wrong?
What does a well run board meeting look like?
In my role as ________, what is my job description? How will my impact in that role be measured?
What is the job description of each additional (current) board member? How will their impact be measured?
Where do we have holes in our board’s makeup?
How often do I expect to hear updates about company performance? What information should be included? What should not be?
Anything else?

Once everyone has completed the survey, synthesize all the answers and schedule a meeting to discuss, and align, on each one. It can be helpful to enlist the help of a neutral third party to facilitate this conversation (or a particularly strong independent board member), to allow you as CEO to fully participate.

The discussions that ensue are the process of consciously crafting the culture of your board, and taking your seat as its Chairman.

Want to dive deeper?

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Executive Coaching for Entrepreneurs

There’s a reason every elite athlete in the world works with a coach. You need more than one perspective to see your best work.

I’m an executive coach and the founder of Inside-Out Leadership, a boutique leadership development agency that supports entrepreneurs to step fully into their lives, and transform their companies into their masterpieces.

Leveraging 15-years as a founder/CEO, along with deep training in mindfulness, psychology, Neurolinguistic Programming, psychedelic integration and more, I have helped leaders from some of the fastest growing companies and VC funds in the world design a more conscious life and make key changes to improve their performance and satisfaction.

I coach leaders how I want to be coached: