As an investor, I spend a lot of time coaching CEOs on the critical and essential talent of managing their board of directors. I am amazed how many otherwise brilliant CEOs get this wrong. They make errors that undermine the board’s confidence or even lead them to question the CEO’s competence, and this happens all the time. I know. When I was an entrepreneur, I made many of the same boneheaded mistakes.
Whether you are CEO of a new start-up, an emerging growth company or one about to go public, it is essential to master the care and feeding of your board. For an entrepreneur, it is the mother of all managing up techniques. Remember the following:
Be totally open with directors. But remember they are not your friend. Venture-backed companies usually have several investors on their board. These folks bring loads of experience from the many boards they have served over the years. Never feel like you have to protect them from the sausage making of your business. You should, in fact, feel the very opposite and be an open book about everything
But always keep in mind that they are also there to watch over their money. They are unique in that they have a dual fiduciary repsonsibility, one to your company and another to their fund. Be sensitive to their swings between utter panic and giddy greed. These swings track their confidence in your ability to lead.
Board meetings are an opportunity, not a chore. They give you a rare chance to get out of the weeds and scrutinize your business. Your entire senior team should participate.
The most important metric of a growing business is the team’s ability to project the company’s performance and then manage to those expectations. Young businesses are notoriously unpredictable. The board understands this and can help you navigate the choppy waters if you give them good information.
Your board meetings should be the focal point where you articulate your conclusions about the state of your business, having internally evaluated your progress and synthesized what is going on. Your board can then weigh in with perspective and advice. This process is instrumental to making the course corrections that can prevent outright crisis.
Make sure you leave enough time in your process to get materials to the board in advance. Nothing signals “out-of-control” more then when you screech to the curb with your board materials an hour before the meeting. Just sayin’.
ASS - Acronyms. Suppress. Simplicity. Every sector develops its own jargon. Techies in particular just love to make people feel stupid with their own recipes of alphabet soup. While acronyms may be necessary shorthand in your day-to-day business, keep them out of your board presentations. Your directors will likely not be as up to speed on the latest inside mumbo-jumbo so just keep things simple and spell them out. This will enable more precise discussion and faster feedback.
Boards are not made to be spun. The one thing your board wants from you above all: transparency. Almost every board meeting at growing companies includes a big “But.” CEOs have an uncanny ability to present all of the things that are going well while saving the negative for last. It’s almost as if you hope the board will be so intoxicated by all of the great new ideas that they won’t notice you will be out of cash two quarters sooner than you projected. Trust me, they will. The junk-in-the-trunk won’t be go unnoticed.
Inevitably, you will be reporting something that is off-plan and you should do it right upfront. I personally like when there is a direct summary at the beginning of a board package that highlights both the positives and negatives with clarity. Accept that at times you will disappoint. It’s ok, what matters is how you handle it.
Transparency is a sign of maturity. If you find yourself developing talking points for your board meetings, you're in trouble.
Have a consigliore. Being CEO is a lonely job. You must always exhibit the utmost confidence to your team while having command and control of your board. So whom can you confide in? Develop a board member who can be your mentor, confidante and sometimes shrink. Chose someone who has deep experience, nerves of steel and a compatible personality and style. Break bread with them. When you develop real rapport you will be able to rely on them for insights into what your board is thinking and how to pilot through turbulence.
There should never be surprises. Ever. Conflict avoidance is one of the deadliest sins I see; yet it is a sin CEOs commit repeatedly. No one likes to deliver bad news. It’s human nature. But you must develop the skill to deal with bad news head on. Never, ever surprise your board members at the official board meeting. If you missed plan (which happens to the best of companies), give each board member a heads-up via phone call (and puhleez never via text).
You should also use pre-meeting calls to brief board members on other important matters as well. Remember that they aren’t as immersed in the day-to-day as you are, so give them time to digest any important news in advance. If you need board approval for a complex problem, don’t spring the problem on them at the meeting and expect a quick decision. That is simply unrealistic. Clear the runway ahead of time.
Managing the board is good practice for managing “The Street.” If your aspiration is to go big, you will need a great board--one that will challenge you, hold you accountable and, most important, help you avoid costly mistakes. It’s never too early to run your board with rigor. Those skills will transfer well when--knock wood--you are managing Wall Street’s expectations as a public company.