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Over the past year, I’ve been systematically trying to change the way the board meetings work for the companies that I’m on the boards of. I’ve done a bunch of experiments and continue to learn what works and what doesn’t work.
Ever since I started investing in the mid-1990′s I’ve been exposed to a concept called “board observer rights.” When we did investments at Mobius Venture Capital, in addition to a board seat, we always got board observer rights. This was a way for us to bring another person to the board meeting other than the board member (usually an associate or a principal but sometimes another partner), or have someone sit in for the board member if the board member wasn’t available.
Early in the life of a company, this often seems manageable. But after several rounds of financings with new investors, I’ve often found myself in board meetings with ten or more people. I think the most I’ve ever seen was about 25 people in the room for a board that had five board members. As you’d expect, there was very little critical thinking or real discussion in these board meetings; instead, the management team just presented to the mass of people in the room. And, in this context, the board members rarely formed a tight and effective working relationship.
Over the last few years, I’ve become very anti-board observer. I’ve been on several boards where the CEO didn’t allow board observers in the meeting. I’ve been on several boards where there were observers in the room, but they weren’t allowed to sit at the board table and could only “observe”. In both cases, the quality and level of discussion in the board meeting was dramatically higher.
I’ve come to believe that formal board observer rights shouldn’t exist. Instead, they should be voluntary and controlled by the CEO. In some cases, the CEO will want observers at the meeting; in other cases he won’t. But it should be up to him.
The best board meetings I’ve been at have been ones that only have the board members and select participants from the management team in the room. Casual discussion, either through dinner the night before or lunch after the board meeting, with an extended group including people from the management team and any other investors, is an effective way to engage everyone else. But the 25 person board meeting is rarely effective.
I spend all of my working time in the domain of software, Internet, and entrepreneurship. Over the past few years I’ve gotten increasingly involved in a handful of political situations – local, state, and national – that directly impact companies either in the ecosystem I’m part of or that I’ve invested in. Many of these political situations stifle entrepreneurship, innovation, or opportunities for these companies.
I’ve come to appreciate the importance of organizations of like-minded individuals working together to advocate clear positions and help acceleration entrepreneurship and innovation. Historically I’ve been very reticent to formally join anything, preferring to help as much as I can as an individual contributor. Recently, I’ve stepped up my involvement in some non-profits, adding Startup Weekend and Startup Colorado to the list of non-profits I’m working with in addition to my longstanding role as chair of the National Center for Women & Information Technology.
When my long time friend Don Dodge reached out and asked me to join the board of the Application Developers Alliance, I said yes. Developers are at the heart of the universe I work in and central to many of the things I do. Making sure they have a voice in the rapidly evolving software / Internet ecosystem on a global scale is important to me. Hopefully I can be helpful.
I had two similar experiences last week where I heard from employees of two different companies that I’m on the board of. In each case, a senior exec said something like “I heard the board wants us to do blah.”
I was in each board meeting and the board most definitely did not say “we want the company to do blah.” Rather, in each case there was a discussion about the topic in question. In one of the cases consensus was reached quickly; in the other there was a robust discussion since two of the board members disagreed and the CEO wasn’t sure what he wanted to do. Ultimately in that case as well there was consensus.
In each case I asked the executive what he’d heard back from the CEO. I got two versions of “the board had a discussion, there was a lot of disagreement, but the board wanted us to do blah.” I then asked, as non-politically as I could, “Do you think CEO wants to do that?” In both cases, the answer was “I’m not sure, but he knows the board wants that.”
I think this is a brutal communication mistake on the part of each of the CEOs. I’ve seen this many times over the past sixteen years since I stopped being a CEO and started being a board member. In each case the CEO is abdicating some responsibility for the decision. In the worst situation, the CEO is blaming the board for a decision and ultimately setting up a very negative context if the decision is an incorrect one – as in “see – I didn’t want to do this but the board did – so it’s not my fault.”
I’ve come to believe that the only real operating decision that a board makes is to fire the CEO. Sure, the board – and individual board members – are often involved in many operational decisions, but the ultimate decision is (and should be) the CEO’s. If the CEO is not in a position to be the ultimate decision maker, he shouldn’t be the CEO. And if board members don’t trust the CEO to make the decision, they should take one of two actions available to them – leave the board or replace the CEO.
In one of the cases, I asked the executive “if I told you the CEO was strongly in favor of the decision, would that impact you.” The response was a simple one: “yes – I’d be much more motivated to make sure we did it right.” I smiled and reinforced that the CEO was in fact supportive, which I think was a relief (and motivator) to this particular executive.
In my leadership experience, people really value when a leader takes responsibility for a decision, even if it turns out to be an incorrect one. CEO’s – don’t be the guy who says “the board made me do it.”
I find three hour “reporting board meetings” where everyone sits around and goes through a 50 page PowerPoint deck to be tedious. When I first started investing in 1994, this was the norm. I put up with it even though it wasn’t my style because (a) I didn’t know better and (b) I didn’t have any better ideas.
27,351 board meetings later, I know there is a better way. I’ve encouraged everyone I work with to try different approaches. I’ve written about some of my favorites in the past, such as doing an entire board meeting off of one slide with a list of “top of mind” items that the CEO has (this assumes that all the board material – appropriate data about the business, financials, and any department updates, have been previously circulated and consumed by all board members.)
Another one of my favorites is to start a board meeting off with a demo. Today, we had the Orbotix board meeting at our office. We spend the first 15 minutes playing with Sphero, the robotic ball that is Orbotix first product (and available for pre-order now.) We then spent the rest of the board meeting talking about the key issues. Paul Berberian, the CEO, had an agenda which we generally covered, but we were able to have real discussions about real things, rather than just a bunch of “arm crossed people starting at a PowerPoint presentation on the wall.”
This stood out in contrast to another board meeting I had later in the day. I attended this one by phone. It was for a company that is doing superbly, but was a very old school style meeting. 54 slides later the meeting ended. There was plenty of information covered and the management team presented everything really well (as usual – it’s a gang that has their act together), but there were only a few parts of the meeting where we had space jams (think of the Grateful Dead on a 25 minute riff that is the best part of the concert.)
Yup – there are plenty of different ways to skin a cat. Or play with a robotic smart ball. If you are a CEO, don’t be afraid to try different things. And, if you want to see who the real fan of a robotic smart ball is, take a look at the video below (and if you like it, vote it up on LOLDogs.)
My amazing day at the Supreme Court continued to bounce around in the back of my mind all day yesterday. I was at a board meeting for a company that I’ve been on the board of for almost a decade – it was the best (as in most productive) board meeting we’ve had in a long time.
I’ve written about The Best Board Meetings in the past. One element of the best board meetings is a prepared mind. This is the powerful lesson from the Supreme Court. On Monday (at the Supreme Court), I saw eleven very smart people participate in a very complex discussion that they were extremely prepared for. In one hour they covered an amazing amount of ground. I attribute this to the work they did in advance of the meeting.
In many board meetings, the material shows up at the meeting, or the board members haven’t read the material in advance, or the board material is not very detailed, or the board material is too detailed. Basically, either the board members don’t have the material to have a prepared mind in advance of the meeting, or they don’t take the time to do the work to be prepared.
Then, unlike the Supreme Court session where you can dive into substance immediately, the board members and management spend a long portion of the meeting “getting up to speed”. That’s a total waste of time for everyone in the room.
In my strong board meeting yesterday, everyone was prepared. The board material was comprehensive, but not overly so. It came in advance of the meeting (only 24 hours, but still enough time for everyone to read it). And, rather than go through the material page by page, we picked a handful of key themes and discussed them. For several hours. In detail, but at a level that resulted in clarity for the board members and management.
The other key lesson from the Supreme Court is paying attention. I’ve written about this also in VC Behavior in Board Meetings. I continue to fall victim to the blackberry checking syndrome. In the Supreme Court, phones, computers, and PDA’s weren’t allow. So I paid attention. And as a result I really followed what was going on and processed almost all of the information. Even in yesterday’s board meeting I found myself drifting a little and pulling out my iPhone – bad Brad. It detracted a little from the meeting (my fault), but most importantly it caused me to likely miss a few things I shouldn’t have missed.
I’m at Defrag all day today and am going to try to pay attention.