A few months ago I took part in a session that was pushing independent
governance for hi-tech, hi-growth businesses. Speaking at the event was a very
experienced board member with a bunch of independent directorships to his name.
I asked a question around domain knowledge and his reply was interesting;
I know business, I don’t need to know the business I direct. I have a
computer, I think it’s a PC, someone told me I should get an Apple because
they’re better or something
This is a guy who (really) has a PA write emails and manage his Outlook
calendar. It reminds me of a story Zoli told me about his past days at a big
blue IT company where an executive he dealt with would have his PA fax printouts
of emails to a hotel so that he could hand write a reply, fax them back and have
his PA transcribe them back into email.
But getting back to the governance and management issue – how much domain
knowledge is necessary for a board member? It’s an issue that cam up in a recent
post which specifically looked at technical knowledge for web
start-up founders. The answers from that post were kind of as expected –
basically you can get away without in-depth technical knowledge but;
regardless of which path you choose, don’t abdicate responsibility for the
product. 1) It’s your vision, and you should make sure it’s realized
correctly. 2) Programming isn’t magic–it’s common sense. And whomever you work
with should be able to explain their thinking to you. 3) Choose good people to
work with. At some point, times will get tough, and you’ll want someone you can
trust in the foxhole with you.
I sit on a bunch of different boards – both formal and advisory. If I look at
my board involvement, and my skill set, I contend there are three distinct areas
of competence;
- Specific operational knowledge (yeah I can create a .NET product with the
best of them) - Domain knowledge (I understand the area within which you work and comprehend
the broad issues) - Governance knowledge (I have no clue what you actually do but God do I know
business inside out!)
My descriptors for the three areas will give an insight into the one area
that I give little credence to. I agree that hi-growth businesses need board
members with connections, who understand scaling issues, have well developed
networks and have been through the process before but I contend that if those
people have no domain or operational knowledge their utility is severely
hampered.
Similarly I believe there is no pressing need for in-depth operational
knowledge. Again if I look at my own situation, in all cases I can claim a
pretty good domain knowledge for all my board positions, but relatively few of
them would I consider myself an expert in – indeed I would contend that the time
and effort required to be operationally excellent in any one area could well
limit ones ability to gain the business and general skills that a board actually
needs.
Keen to hear the thoughts of others – founders, advisors and high level
execs.
Ben,
Good discussion prompt. Having been involved in my own technology company but not in a technical role and having been involved in discussions with many other founders and CEO’s, I would list things in this order of importance; domain knowledge, specific operational knowledge and governance knowledge.
Very quickly,
Domain Knowledge – is an absolute because you must understand that problem that you are trying to solve or you will not be able to win the customers and deliver on the promise.
Specific operational knowledge – you must understand the tools that are available for you to solve the problem in the case of technical companies it can be a serious challenge if for example the CEO or an adviser does not have sufficient understanding of the technical environment as you can make a series of poor decisions along the way that mean the product is never correct and never scalable etc.
Governance knowledge – this is interesting but really only applies if you have become successful and for the most part this knowledge can be bought based on the success of the first two.
Overall I have generally not found that a lack of governance knowledge was the reason for the failure of an emerging technology company but rather a lack of technical vision and success in problem solving for the domain.
Ed Loessi
Faulkner Technologies
I’m discovering that Governance Knowledge can quickly become cumbersome if it isn’t Domain specific, or if it’s not properly proportioned to the stage and size of the startup.
My future bets will be placed on Domain Knowledge — on its own, or as a validating pre-requisite for Governance Knowledge.