A Cheat Sheet for First-Time CEOs: How to Build and Manage a Board
Early on in my time at Eco-Products, a company we grew from <$1M to $80M in 9 years, I spent a considerable amount of time learning how to build and manage the company’s first Board.
The problem was, I had never built or managed a Board before so I had to figure out how the hell to do it.
I was able to drum up meetings with numerous CEOs and professional board members (many of those people have since become part of my Personal Board of Advisors). I wanted to learn from experts how exactly a company builds a board, manages a group like that, and gets the most out of them.
I soaked up knowledge from the brains of some of the best CEOs in Colorado. It was incredible. I then had some opportunities to sit on a couple of boards myself which allowed me to further improve my board management skills.
Being a first-time CEO is hard. Really freaking hard. While I don’t claim to be an expert on the topic of board management, this post is a knowledge-share of some of the things I’ve learned over the years. I hope it helps make this one area of your job a little easier.
For First-Time CEOs
One of the many reasons why it’s important to manage your board well: How you manage your board is a perceived reflection of how you manage your company.
To do it well, there are three things I suggest:
1) Read as much as you can on the topic. At the end of this post, I recommend a book to read on this topic by Brad Feld called Startup Boards. It’s brilliant. And feel free to email me (luke.vernon [at] rangelightllc [dot] com) if you have specific questions I can be helpful with.
2) Find experts you can learn from. Sit down with CEOs of other companies and ask them how they manage their board (engagement, communication, meeting management, etc.). Sit down with people who are professional board members or who sit on lots of boards. Get a sense for what they think works and doesn’t work. What are the “must do’s” and “watch outs”?
3) Find a board to sit on yourself. This could be an advisory board or a formal board. Heck, it could even be a non-profit board I suppose. But find a board in which you can engage as a board member to see what it’s like to be on the receiver end. The reason this is so important is because you will better learn what works and doesn’t work. This is one of the best ways to learn this stuff.
Tips for Building and Managing a Board
- Prior to asking someone to be on your board, do an assessment of what experience/background you want to surround yourself with. Do you want someone who is sales leadership guru, an expert marketing strategist, or someone who is a global supply chain whiz? Would it be helpful to have a board member who is currently a CEO of a fast-growing company or do you need a board member who has big company experience? Figure out exactly what skills and experience you have to have on your dream team in order to achieve your vision and then search for people based on that matrix.
- Don’t underestimate the value of having someone on your board who is from a completely different industry. Outside perspectives can be extremely valuable. I was involved in a board in which the single highest value-add member was someone from a completely different industry who hardly knew anything at the time about how the company’s industry worked. He was a quick learner and had exceptional experience scaling businesses very rapidly. He ended up being a coach to executives and he asked the toughest questions. His value was immense even though he didn’t have industry experience initially.
- Board members aren’t for PR value; they are for strategic value. Don’t ask someone to be on your board because he/she has an influential name. That doesn’t usually generate the value you hope. Ask them to be on your board because they can add strategic value. You’ll get a lot more out of them because you’ll be better at engaging them.
- Similarly, don’t ask someone to be on your board just because you think he/she has a deep rolodex. I’ve been on a board with someone who I would have thought could have opened up every customer door imaginable. It didn’t happen. That person was helpful, but the perceived value didn’t equal the real value. To the contrary, I’ve seen people who were perceived as having a small directly-relevant rolodex open up very big doors.
- If you’re a startup, bandwidth is equally as important as experience. You need someone who can commit the amount of time that you need them to commit. Align those expectations from the start of the engagement.
- Securing a board member is like dating. A relationship needs to be built before asking someone to put their name behind your company. There have been a handful of times I’ve been asked in a first meeting with a startup if I would be on their advisory board. It was WAY too premature. I want to see how founders think and operate, as well as get comfortable with how they’ll engage me and if I think their business is personally interesting and has good prospects before I agree to spend time as an advisor.
- It takes time and effort to manage a board and it needs to be prioritized as a key part of your job. As mentioned, how you manage your board is perceived as a reflection of how you manage your company. Do it well.
- Relationships with the individuals on your board are equally as important as relationships with the group as a whole. Don’t just engage the group. Engage board members separately too.
- Remember, advisors and directors want to apply their experience to help you, so don’t be afraid to ask them for their input. They will push back or you’ll see signs if it’s too much.
- To that end, be mindful about not dragging them into the weeds unless they want to go there. Too much detail often leads to more inquiries about detail from some board members. Then it will make it harder for you to manage. Stay strategic. Over-engagement will burn out board members and drain your time.
- Don’t show up to board meetings with surprises of bad news. Surprises are never good. Never.
- Continuous engagement is key. Remember, they aren’t working in your business and industry everyday like you, so think about how you can keep them up to speed on the business, competitive landscape, etc. at the right cadence.
- Schedule a full year’s worth of board meetings in advance so they are on everyone’s calendar at the beginning of the year. This will prevent calendar issues.
- If you have an Advisory Board rather than a Board of Directors, get everyone in the same room just as if they were your Board of Directors. I’ve met founders who only do individual interaction with Advisors. That derives sub-par results and, frankly, it doesn’t work out that well for the advisors – they don’t know how other advisors are thinking about topics, there is no group think, etc. An Advisory Board will add a lot more value if you get everyone in the same room so they can feed off of each other.
A Primer on Board Engagement, Communication and Frequency
- Checkout the Kauffman Foundation’s Founders School modules on this topic written by Brad Feld: http://www.entrepreneurship.org/Founders-School/Startup-Boards/
- Read Brad Feld’s book Startup Boards which is a very quick read
Building and managing a board can be a really powerful tool to help accelerate your business (through improving your focus on key issues, making you a better leader, helping with strategic decisions, etc.). It can also be a huge distraction if you don’t get the right people around the table and if you don’t manage those people well.
I hope this post will help you keep it from being a distraction. Good luck.