Comment & Analysis
In response to those kind enough to respond to my earlier post “When is the right time to build an advisory board” and perhaps with a nod to the recently released Kalifa Report and the impending updates to the Chancellor’s “Future Fund”, I have been asked many times recently “What is the ideal profile and DNA needed to build a great scale up board”?
Many founders, even when they have accepted the principle of a board, find it difficult to choose candidates as they are suggested, either with in or outside their own network. “The timing’s not quite right: if I choose one, it narrows my options for the future, so I’ll wait until the investor(s)force my hand”, i.e. when it’s a necessary evil, the price of taking their money, something to manage, but not embrace. (The Founder-CEO succession is a story to be addressed another day).
There is of course no standard or static specification for an individual board member, just as there is no perfect alignment between the Executive team and Board that suits all situations and funding stages and avoids misalignment and problems.
Boards also need to adapt (sometimes quickly) to the maturity and growth stage most relevant. It would be wrong to assume that the skills and wisdom needed during the start-up stage remain valid later in the journey.
Nevertheless, there are some “Rules of the Road” which can minimise founders’ and investors’ risks. Sticking with the driving analogy, I would recommend those interested refer to Reid Hoffman’s (LinkedIn founder)analysis, who stresses that an ideal board adviser needs to be there to support the driver (the founder/CEO), but who equally knows to stay firmly in the passenger seat; to help the driver successfully tackle the bends in the road (“sharp left coming”, “road’s in the shadow – look out for ice”, “here’s the straight –time to floor the accelerator”), but crucially knows not to grab the steering wheel, nor reach for the handbrake at the first sign of trouble. It goes without saying that no one likes aback seat driver. It may be a stretch to picture one of your in-laws map-reading (as you grip the wheel ever tighter); but it is analogous to having friends and family on your board.
Hopefully, we can leave that particular image behind but, sticking with our motoring analogy, let’s not forget the mechanics who put the car on the road and engineers who fine-tuned the engine. A smooth-running garage is as important as the driver and the co-driver(s). A board is the same and it can make or break your company.
The board is not a collection of individuals; it needs to be a team, with some better in qualifying than racing (and vice versa), with mutual respect and a dynamic understanding when to speak (and when not) if the engine misfires.
Even if as the founder you are probably an amateur driver in your first race, some alignment and balance in your garage is as important as choosing the best individual mechanic. This is considered in depth in Noam Wasserman’s bible on the subject – The Founder’s Dilemmas – who points to the inter connectivity of Relationships – Roles – Rewards.
Meanwhile our founder driver is now getting a feel for the car and the road. It’s Lap 1 of a 4 Lap race but the stats don’t look great – over 20% of first-time drivers crash on Lap 1, 30% by the end of Lap 2, 50% by the end of Lap 3 and 70% by the finish of the race.
On Lap 1 you and your team are simply aiming to keep on the track and not crash (hopefully you don’t stall when the lights turned green). Your navigator is checking which way is up on the map, and the mechanic is wondering whether the single bolt he found on the garage floor is important. Quick question: has anyone in the garage driven this circuit before?
But by the first corner, if you have picked wisely, the intercom is working and instructions are coming clearly. The windscreen is clean and the track ahead isclear. How hard can it be?
In the same way, your board has helped you assess your start-up’s market potential (what are we solving for? Is there a market and a price?); they have helped to consider the competitive landscape (what does the field look like and what are the barriers to entry); and there is a clear action plan for delivery (the perfect product versus risk of a competitor being first to market).
On Lap 2 you know the car works and you’re keeping up, hopefully near the front of the race. This is the point when you would welcome some advice on the best racing line (perhaps pivot the business model?), earlier acceleration (blitzscale?) and/or later braking(you need to think about the safety of your passengers/employees and stakeholders: so call the garage – just how far dare we push this?).
When you get to Lap 3 the team has grown. New faces in the pits helped with a wheel change and refuel, but the question now becomes “do we really think we can win or should we be ready to settle for a safe third?” (or perhaps accept new sponsorship - meaning new additions to the engine; but probably another backseat driver). It’s no longer only your call. There are suddenly a lot of people now filling up the garage and they depend on you for a living. Then there’s all the people in the supply chain bringing tyres and spare parts. “Anybody know about supply chain management? Someone said we should change the plugs”. Who knows about risk?)
So finally you’re on Lap 4, still on the track with the finish in sight. As a company you are now either listed or operating as if you were. The risk/return balance has shifted, the car is cruising, the garage is preoccupied with preventing engine failure before the finish line: the company board is focused on risk management, rather than looking at new strategies and products.
So the crucial characteristics of what make an effective board member aren’t driven exclusively by the stage of a company’s growth: the car and the circuit didn’t change in my example. Rather there are “rules of the road” and the board member profiles (and board dynamics and composition around that) will be determined by the challenges and opportunities presented at that time.
I finish with another superlative from Read Hoffman on the need for diversity on the board: the parable of the blind man and the elephant.“One feels the trunk and concludes that elephants are like snakes. Another feels a leg and concludes that elephants are like trees. The independent board member can see the entire elephant, and while acknowledging the perspectives of both management and investors, can help them see the whole picture as well”.
Happy driving and may all your roads be straight and true!
Comment & Analysis
Comment & Analysis
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