A few golden rules for a great Board relationship

Working with a Board of Directors can be, well, scary.  Why?  Because they ultimately have the responsibility to hire and fire you.  That’s really one of their only jobs.  You say you don’t have a Board?  A Board might be a group of people or maybe just an individual to whom you are responsible to report on your job results.  If you think about it like that, we all have a Board.  

Many people have asked how I ensured a successful Board relationship at Vontu.  To be honest, I tried to keep it simple and follow a few golden rules:

1. Keep your expectations in check
2. Pick your board wisely
3. Tell them what you are going to do and do it
4. Communicate, communicate and communicate

Keep your expectations in check
After our first round of funding at Connectify, my second startup, I sat down with each of the board members and asked what were their expectations of me and what I should expect of them. The board consisted of two venture capitalists, two outside “operating executives”, one of my co-founders and myself. The most interesting feedback was from one of the investors who said,

If you don’t expect more than money, then you will be happy.

Needless to say, this was a surprise.  I expected to hear how they would help us to recruit the team, find our customers, get publicity, and on and on.  If you read many of the venture capital websites, that is what they promise.  Yet his advice was quite sage because the reality is, especially with investors, they typically have 6-10 (if not more!) investments and are constantly looking for new ones.  The model for venture capital is one of a portfolio of investments in which the few very successful companies deliver the lion share of the investment returns.  And at the end of the day, they are investors relying on you to deliver the results.  Does that mean that they don’t help?  No.  Great board members help but you should expect that the help will be somewhat sporadic and usually only on the really big stuff.  I was lucky to have a great board but at the end of the day, it was my job to deliver the results.

Pick your board wisely
If you are afforded the luxury of being a founder, adding board members is as important as anyone else on your team.  And you should “interview” them and be sure that you are comfortable that you will work well together.  Board dynamics are tough enough without having people whose personalities clash.  If you have the smartest people in the room, but they don’t have the right “relational competencies” (see previous post, It’s the people, stupid part II) then it’s likely the board will be ineffective.  You say you can’t choose your Board?  Well, if your board is your job, then sometimes finding a new job with a great manager is the right answer.  

Additionally, especially for startups, it’s really important to have a balanced board that includes part of the management team, some of the investors (but not all if there are lots of them) and some outside board members.  That way the discussion is balanced across all the constituents.

Tell them what you are going to do, and do it
This is such a simple idea for a successful board relationship.  Actually it’s a great idea for any relationship. Your boss. Your team. Your spouse. Your friends. By setting the right expectations and achieving them, you build trust. If you are a math junkie, its a simple formula:

Success equals Results less Expectations

And to have success, it starts with the Expectations or plan.  As discussed in the post “If you don’t know where you’re going, well, you’re lost“, you should make sure the Board agrees with your Wildly Important Goals and the Objectives for measuring their success.  They can be consulted on the strategy for how you achieve them but that is ultimately your decision.  And try to keep the discussions away from the day to day tactics.  Without an agreed upon set of Wildly Important Goals and Objectives, well, the relationship will likely go awry.

Communicate, communicate and communicate
As in most any relationship, communications is another key ingredient.  For our Board, we established a rhythm of meeting approximately once a month.  During those meetings we would use our Wildly Important Goals and Objectives as the template for how we gave the board updates.  And each person on the executive team would review the results from the previous month focusing on top 3 success and top 3 challenges.  This way the board always knew how we were doing at any given moment.  

This works great for the normal updates, but anything important, typically bad news should be communicated early and often and never wait for a formal meeting.  Bad news early and being honest is always the best policy. I remember when we were about to close a $10 million round of funding and weeks before the contracts were signed and the money was wired, I realized we would both miss our sales targets and we needed to let go of a senior executive.  I could have waited until after we had the money to tell everyone so as not to risk the funding, but that was not the right way to work.  Instead I called the investors, swallowed hard, and told them what was happening.  Maybe not so surprisingly the response was one of support.  Generally the investors said that by being honest about a short term issue and putting the funding at risk, it made them more comfortable to invest.  Granted overall things were going well, but needless to say it made a big impression on the new investors.

In summary, if you keep your expectations low, choose the board thinking about relational competencies, tell them what you are going to do and do it, and constantly communicate, then over time, the board will  develop an ever increasing level of trust. This trust means more focused board meetings, support for management’s decisions, and generally less stress.  And again, these not only work for a “real” board of directors, but for anyone to whom you are responsible for delivering results whether in your job, community or relationships.  

Let me know what you think and feel free to subscribe to receive updates as I post new entries.  I promise, no spam.  Thanks.

Your email: