Two things kill fast-growth companies: cash flow and dysfunctional boards. No visionary and entrepreneurial journey is ever easy, especially if you embark on tackling a challenge that has never been solved before.
When the time is right to select your chairperson and appoint a board of directors or advisory board for your startup, you must get it right. The wrong appointments can quickly lead to poor strategic decisions, negatively impact the culture, and doom your business to failure.
As a tech startup, when you choose your board members and chairperson, remember it is good to have legal, finance, product, marketing and sales experience, but the key ingredient you are looking for is wisdom. You want board members who can advise you when navigating challenging business situations. You don’t want board members that are often wrong but never in doubt.
The CEO/founder’s relationship with the chairperson is crucial
As a CEO, it’s critical to invest in the relationship with the chairperson. If that relationship turns sour or never works, business failure is almost inevitable. If the CEO feels the board is not there to help, the dysfunctional rot starts to creep in.
A chairperson’s role goes far beyond effective corporate governance and managing the board. A CEO/founder can feel lonely and exposed, and a good chairperson will provide a solid sounding board and support, removed from the day-to-day operational activities.
CIM’s chairman, David Wright, has been an amazing support to me since his appointment four years ago. When the pandemic started in early 2020, the first six weeks were hard, and my board members were pivotal in giving me lots of advice around managing finances. They worked with the senior executive team and me to create a “shield and spears” strategy for CIM’s customer champions, to equip our customers with strategies to communicate CIM’s value proposition internally.
Respect, trust and candour are crucial. Your board should be able to give you frank advice in a helpful way. There will be times when board members will present divergent views and opinions from yours as the CEO/founder. When the relationship between the board and CEO/founder is based on mutual respect and trust, it’s possible to have hard conversations that allow everyone to present their view openly and in a constructive rather than combative way.
Timing is everything
Early-stage startups need to laser focus on the product and build a team, not overcomplicating things while building a revenue base. Founders who come from big businesses tend to focus too much on boards and appoint them too early in the journey, wasting time and resources that would be better spent on building solutions. Many startups also fall into the trap of creating boards that are too large and overemphasise governance and status over value creation, culture and sustainability. Governance is critical, but too much governance can stifle innovation.
When the time is right to appoint a board of directors, the focus must be on adding value. The chairperson should be a good manager of meetings and ensure board members don’t get side-tracked down rabbit holes. The board must be strategic and able to react to emerging situations with wisdom and balance.
Boards need to evolve over time, and CIM’s board understands and has experience scaling up businesses. At each point in time, each board member should have something to contribute that is relevant to the stage your company is in.
The skills your board members bring are far more valuable and important than being rich, famous or connected. Focus on who is right for the moment and keep it agile as you progress through different stages of growth.
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