Tag: Board of Directors
I had two similar experiences last week where I heard from employees of two different companies that I’m on the board of. In each case, a senior exec said something like “I heard the board wants us to do blah.”
I was in each board meeting and the board most definitely did not say “we want the company to do blah.” Rather, in each case there was a discussion about the topic in question. In one of the cases consensus was reached quickly; in the other there was a robust discussion since two of the board members disagreed and the CEO wasn’t sure what he wanted to do. Ultimately in that case as well there was consensus.
In each case I asked the executive what he’d heard back from the CEO. I got two versions of “the board had a discussion, there was a lot of disagreement, but the board wanted us to do blah.” I then asked, as non-politically as I could, “Do you think CEO wants to do that?” In both cases, the answer was “I’m not sure, but he knows the board wants that.”
I think this is a brutal communication mistake on the part of each of the CEOs. I’ve seen this many times over the past sixteen years since I stopped being a CEO and started being a board member. In each case the CEO is abdicating some responsibility for the decision. In the worst situation, the CEO is blaming the board for a decision and ultimately setting up a very negative context if the decision is an incorrect one – as in “see – I didn’t want to do this but the board did – so it’s not my fault.”
I’ve come to believe that the only real operating decision that a board makes is to fire the CEO. Sure, the board – and individual board members – are often involved in many operational decisions, but the ultimate decision is (and should be) the CEO’s. If the CEO is not in a position to be the ultimate decision maker, he shouldn’t be the CEO. And if board members don’t trust the CEO to make the decision, they should take one of two actions available to them – leave the board or replace the CEO.
In one of the cases, I asked the executive “if I told you the CEO was strongly in favor of the decision, would that impact you.” The response was a simple one: “yes – I’d be much more motivated to make sure we did it right.” I smiled and reinforced that the CEO was in fact supportive, which I think was a relief (and motivator) to this particular executive.
In my leadership experience, people really value when a leader takes responsibility for a decision, even if it turns out to be an incorrect one. CEO’s – don’t be the guy who says “the board made me do it.”
I had a board update call recently that inspired me to write the first of my Reinventing the Board Meeting posts.
The call was for a company that is doing great, is extremely well managed, and extraordinarily transparent. Two days before the call a very detailed update package was sent around to the board. It covered the operating characteristics of the business extensively and in a format that is consistent with all of the other reports. It was clear and unambiguous.
The company does a very nice job with the board update call. They don’t force the board to sit through a page by page discussion of the package. Instead, there’s a short overview for each section followed by any Q&A that board members have. This is a pretty good approach. After about an hour of this we spent another 30 minutes on a handful of governance and board related issues. Overall, the call lasted two hours.
When I reflect on the call, we didn’t cover any strategic issues, nor did we discuss anything that would materially impact the company. In addition, there was nothing discussed that couldn’t be handled in email back and forth or flagged for a deeper discussion at the next board meeting.
This board meeting update call is an artifact and is typical of the many board update calls I’ve been doing since I joined my first board (other than my own company) in 1994. I don’t even want to think of the number of hours of my life (which is probably cumulatively measured in years at this point) hanging on the end of the phone trying to stay intellectually engaged in a board update call.
I’ve come to believe that the board update call is worthless. There tend to be three parts – all which are easily separable:
- Business Update: At the minimum, this can be a monthly report that goes out to the full board. Assuming that all of the board members can read and are capable of writing an email, any questions can be surfaced via email. The best companies I’m involved in actually do this weekly and, if you follow Steve Blank’s “Boardroom as Bits” hypothesis, you can turn this into real time info where the board is incorporated into the information stream of the company.
- Business / Strategy Issues: For whatever reason, the vast majority of board update calls don’t have a deep discussion on any substantive issues. They are often flagged along with a shallow conversation but then deferred either to the next in person board meeting, left for interactions between individual board members and the CEO, or dropped on the floor and quickly forgotten.
- Legal / Governance Issues: Inevitably there are minutes to approve, options to approve, and other legal / governance issues to deal with. These almost always can be handled at the next in-person board meeting or by a UWC (“unanimous written consent” sent around by email.)
There were a dozen people on the call I was on including management team members. That’s a full person day of time spent on something that didn’t need to happen. Expensive.
CEO’s – reconsider how you are doing this. And to my fellow board members – challenge the CEOs and the boards you are on to engage in a more effective, continuous way. And to the CEO for every board I’m on – I’m happy to work with you to abolish the board meeting update call if you’d like.
I hate board meetings. I probably have 100 per year which means I’ve gone to well over 1,500 of the past 15 years (I’m sure the number is much higher). The vast majority are excruciatingly inefficient – three to four hours that could be handled in 45 minutes. And even then, it’s unclear that the information covered was particularly useful to the entrepreneurs and management, who are the ones the board meetings should be useful for in the first place. And they don’t merely waste three hours – they burn a day in advance “getting ready” and who knows how much time after following up on random things generated by me and my fellow board members. Toss in travel (since we invest all over the country, I lose a lot of time to traveling) and it just sucks.
Recently, Steve Blank, one of the founders of the Lean Startup concept, wrote two provocative posts about board meetings. Both are really good – go read them – I’ll wait:
Now, I’m lucky. I’ve been railing about board meetings for a while and a number of CEOs of the companies that I’m an investor in have dramatically upped their game around board meetings. I have a handful of single slide board meetings inspired by the early board meetings we had at Zynga. Almost all send out their materials in advance and spend no time in the actual meeting going through them and instead focus on the discussion. And others simply focus the meeting on a handful of specific questions.
Regardless, when I reflect on the amount of my time that I spend in board meetings that I think is generally worthless, I’ve decided I’m going to completely change how I approach this. The tempo is all wrong (I don’t need monthly board meetings for anything as I spend much more real time interacting with the entrepreneurs I’ve invested in). The focus is all wrong (I can read the financials in a few minutes – I don’t need to sit through an extended discussion of them). The discussion context is inefficient (I’m as much a problem as a victim here as I’m sure my other board members get tired of listening to me bloviate.)
It’s time to reinvent the private company board meeting. I’m going to give it a shot.
I find three hour “reporting board meetings” where everyone sits around and goes through a 50 page PowerPoint deck to be tedious. When I first started investing in 1994, this was the norm. I put up with it even though it wasn’t my style because (a) I didn’t know better and (b) I didn’t have any better ideas.
27,351 board meetings later, I know there is a better way. I’ve encouraged everyone I work with to try different approaches. I’ve written about some of my favorites in the past, such as doing an entire board meeting off of one slide with a list of “top of mind” items that the CEO has (this assumes that all the board material – appropriate data about the business, financials, and any department updates, have been previously circulated and consumed by all board members.)
Another one of my favorites is to start a board meeting off with a demo. Today, we had the Orbotix board meeting at our office. We spend the first 15 minutes playing with Sphero, the robotic ball that is Orbotix first product (and available for pre-order now.) We then spent the rest of the board meeting talking about the key issues. Paul Berberian, the CEO, had an agenda which we generally covered, but we were able to have real discussions about real things, rather than just a bunch of “arm crossed people starting at a PowerPoint presentation on the wall.”
This stood out in contrast to another board meeting I had later in the day. I attended this one by phone. It was for a company that is doing superbly, but was a very old school style meeting. 54 slides later the meeting ended. There was plenty of information covered and the management team presented everything really well (as usual – it’s a gang that has their act together), but there were only a few parts of the meeting where we had space jams (think of the Grateful Dead on a 25 minute riff that is the best part of the concert.)
Yup – there are plenty of different ways to skin a cat. Or play with a robotic smart ball. If you are a CEO, don’t be afraid to try different things. And, if you want to see who the real fan of a robotic smart ball is, take a look at the video below (and if you like it, vote it up on LOLDogs.)
Over the weekend, Mark Suster wrote a great post titled How To Communicate with your Investors between Board Meetings. Mark continues to just tear it up with great advice for entrepreneurs. However, he left out one thing from the post – which is one of my favorite pieces of advice for entrepreneurs.
Give your venture capitalists (and board members) assignments
Mark alludes to this in many of his suggestions but he never comes out and says it. And, amazingly to me, many entrepreneurs either don’t ever think of this or don’t feel comfortable doing it. They should.
Most VCs will quickly say that they want to help the companies they invest in to success. Some will go further and say things like “I’ll do anything I can to help my companies.” Rarely have I heard a VC say something like “My plan is to just hang around, go to board meetings, ask a few nonsensical, low insight, rhetorical questions, eat the crummy food, and then disappear until the next board meeting.” However, as any entrepreneur who has ever worked with multiple VCs knows, the statements a VC makes (or doesn’t make) doesn’t necessarily correspond to his behavior.
I think you can break this cycle early in the life of your relationship with your VCs by giving them assignments. At the end of the first board meeting, spend some time talking about your expectations for your board members (including your VCs), ask if they are reasonable, and then go around the table and ask each board member what they’d like to specifically help with between now and the next board meeting. Explain that you want to develop a cycle of accountability for each board member to the company and use this to (a) develop deep engagement from each board member between meetings, (b) benefit from the experience and wisdom of each board member on a continual basis, and (c) set a strong tone for the leadership team (and the company) that everyone has functional responsibilities that they are held accountable to. Acknowledge that it will take a few board meetings to get into a good rhythm with this, but be clear that you’ll spend a little time at the next board meeting going through individual assignments, what was done, and what the new assignments are until the next board meeting.
The assignments should be specific – if they are general (such as “help with strategy” or “help with the financing”) they will be useless. Make sure the assignments play to the individual board members strengths and interests. They should provide leverage for the leadership team; not create make work. They should be impactful, but not mission critical.
In companies where the CEO hands out regular assignments, I’ve experienced an awesome tempo after about six months. The board members begin holding themselves accountable and the management team is much more comfortable working directly with the individual board members. Over time assignments become less “stiff” and the regimen of passing them out and reviewing them at the board meeting will fade away over time as everyone gets used to being held responsible for what they sign up for.
I’ve been involved in helping start a number of non-profits. One of them – National Center for Women & Information Technology – has surpassed my wildest expectations. Lucy Sanders and her team have done an awesome job of building a coalition of over 170 prominent corporations, academic institutions, government agencies, and nonprofits working to improve U.S. innovation, competitiveness, and workforce sustainability by increasing women’s participation in IT.
I’ve been chairman of NCWIT since its early days. As with most of the non-profits I’ve been involved in helping start, the board of directors evolves over time. Unlike for-profit companies, each stage feels like a step function as you add new board members who bring a new set of capabilities, range, and diversity to the board.
Stage 1 for NCWIT’s board was a group of early board members who simply helped get things going. There was a lot of evangelism for NCWIT, a lot of ad hoc help, and plenty of ambiguity about roles and responsibilities. The board members were extremely enthusiastic and supportive – we wouldn’t have made much progress without them.
Stage 2 for NCWIT’s board was an effort to build some formality into the board. We included several members from our larger investment partners, a handful of folks that played specific functional roles, and began to organize around a set of board committees. Some of these committees were effective; some weren’t. The consistency of board communication increased and while there was still plenty of ad hoc activity, in general things were more organized.
Stage 3 for NCWIT’s board has just been launched. We just announced the appointment of eight new board members.
- Thaddeus Arroyo, Chief Information Officer, AT&T Services, Inc.
- Phillip Bond, President and Chief Executive Officer, Information Technology Association of America (ITAA)
- Dr. Rodney Brooks, Founder, Heartland Robotics, Inc. and iRobot Corp., and the Panasonic Professor of Robotics at Massachusetts Institute of Technology (MIT)
- Lisa Brummel, Senior Vice President of Human Resources, Microsoft
- Carol Mosely, Senior Vice President of Information Systems, Wal-Mart Stores, Inc.
- Nancy Phillips, Chief Operating Officer and Co-founder, ViaWest
- Merle Waterman, Chief Financial Officer, OneRiot
- Emily White, Senior Director, Asia Pacific and Latin America Online Sales and Operations, Google
It’s an incredible set of people that cross the boundaries between entrepreneurship, academia, and established technology companies. They are joining a well established board that has a great working tempo. I’m really psyched about the next stage of NCWIT.