While that hierarchical reporting relationship is necessary and constructive, it is far from sufficient for a company to succeed in a dynamic, ever-changing emerging growth environment. My view has always been that venture investors (and Boards more generally) need to get “on the same side of the table” with entrepreneurs and work with entrepreneurs (shoulder to shoulder) to create value. The burden of making this work is clearly on Board members, but there is much a CEO can do as well. As my Partner Jack Tankersley is fond of saying,
The CEO has to give each Board member a job.
It is my experience that Boards are often left unmanaged by CEOs and that an unmanaged Board is a dangerous Board. When smart people (the kind you typically find on venture-backed boards) are left unmanaged, they manufacture activity, because they don’t know what else to do. They create their own “job definition” whether it is aligned with the needs of the company or not. The risk for a CEO is that an unmanaged board can run roughshod over an entrepreneur. What is a CEO to do?
First, a CEO must view his/her Board as a set of tools to utilize. This starts with understanding the skills, capabilities, and relationships your Board has. Identify the strengths and weaknesses of each board member and figure out how to use their strengths to the Company’s advantage.
With an understanding of those resources in mind, a CEO can then give each Board member a job. In other words, define the Board members job and make it a job that they are both likely to enjoy and succeed at on your behalf. Here are a couple of examples:
- A Board member with a deep Rolodex with potential strategic partners can be assigned to work with the Company’s business development team to generate new biz dev activity.
- A Board member with a penchant for strategy and planning can be given the responsibility to help the Company prepare for an annual strategic planning exercise.
- A Board member with a skill in shaping discussion might be assigned to facilitating Board level discussion.
Think about it this way; would you hire an employee without telling them what their job responsibilities are? Of course not! So apply the same management discipline you apply to your employees to your Board. The effects can be really constructive. By assigning tasks, Board members become accountable to the Company. They are forced to work with and for the CEO to help accomplish a task, ensuring alignment. This also sets boundaries for each Board member. By signaling what you want to them to work on, you also signal what you don’t want them to work on.
So if you are a CEO having a difficult time managing your Board, take this simple advice: Give each Board member a job. Your Board will be much more productive as a result, your Board members will be happier because they will know how to contribute, and your Company will be better off.
(Cross-posted @ Non-Linear VC)