allen morgan has an interesting post about how entrepreneur/ceo's should manage boards which i will excerpt below. (these are 10 commandments from a guy he knows named john kernan). i have to admit that these sound like very good advice but also have to admit that this is why i really dont like being a ceo and working for a board. (not sure we're supposed to admit this but most every entrepreneur i know would agree too.)
i know running companies isnt supposed to be about having fun, but i also know it's really hard to keep at a job if it isnt and doing all this political crap to 'manage' my board is almost a fulltime job in itself. i have always approached board meetings as a time to help me do my job. i figure i should be using this collective wisdom to help me work on hard decisions, mostly around strategy, rarely around operations and people. i've been idealistic about boards, imagining them as a group of partners sharing common goals to win which also entails a lot of these rules. however, i've almost always been dead wrong. politics do creep into it and ignoring them just means that you arent positioned well to sell the answer you know is best. net result, we entrepreneurs believe we're above the politics and we end up shooting ourselves in the foot (often the head too) by doing the 80% work to identify the bold winning path then failing to do the 20% (ok feels like 80% too:) to sell this into our boards.
in my perfect world...who am i kidding, in my perfect world i'm richard branson or rupert murdoch or better, larry or sergei, and i own a controlling share and dont waste any time buttering up board members! until then, i'll toil as a mere mortal.
allen's rules...
1. NEVER have the board meetng "at" the board meeting. ALWAYS call every director a few days before the meeting and run every important issue by them to get their input, Also update them on company performance, especially the bad news, and let them "beat you up" privately. That way, the meeting can focus in a constructive fashion on problem-solving and building the Company for the future.
2. Maximum Powerpoint show is four slides from any presenter, especially yourself. This should be the limit of director interest in detail.
3. Provide complete access for the board to everyone and everything in the Company. They will rarely use it, but it's a great comfort to them to know you are not trying to hide anything.
4. Have your key team members do almost all the presentations. It gives them exposure and allows you to make sage comments along with the rest of the board. A perfect board meeting is when 10% of the talking is done by the CEO, 60% by the team, and 30% by the directors.
5. Carefully consider every director's input and take good notes at the meeting. These people have lots of experience and many great contacts. But you make the final decisions (and if you don't, they will start to look for someone who will).
6. Give the Directors projects in their areas of expertise. It's free consulting and they usually do a good job.
7. Get in front of the board on tough decisions like top management changes, including changes to your own role. If it's going to happen, make it your idea.
8. For VC directors, try to picture how they are describing your Company to their partners, and what questions their partners are asking. Your job is to make each director a hero to their partners (or corporate boss).
9. Remember it's Company first, team second, you last. You win when everybody wins, not when just you win.
10. Make a friend of every board member. Send them interesting deal ideas you turn up, learn about their interests, make the board a "look forward to" experience for everyone.
If you work hard, always act in good faith and in the best interest of the Company -- and if you follow these 10 rules -- most VC's will still be interested in financing your next deal, even if the Company tanks.
And if the Company is a success, they will be throwing money at you!
All very good and reasonable comments by Allen, and I am pretty diligent about most of these although item #2 is my definite weak spot – my board meetings tend to run three plus hours.
To your point on board management, I completely agree with your take on running the board meetings with idealism in seeking leverage and shining a light on harsh reality and hard strategic decisions.
That said, I have definitely had VERY mixed results in terms of the objectives and mindset of my boards. The best boards I have had allow and encourage the process to be akin to sausage making, especially when dealing with the relatively early stages of a company (Series A-B) where every week/month/quarter is a revelation. As often as not, however, the emphasis is on how “packaged up” the board meeting is as a reflection of how crisply the business is run. At least in terms of how I strive to operate, this is exactly the wrong environment for facilitating straw man discussion on strategy, known risks and unknown blind curves.
That said, VC’s are the ultimate thin-slicers so nature of best when taking that type of money.
Posted by: Mark Sigal | June 28, 2005 at 12:44 PM