Many companies put off the task of assembling an effective board until they run into trouble.
Behind every great CEO is a great board, and I’ve noticed that startup founders tend to put off the task of building strong boards. Consider successful tech companies like Amazon and Google that built their boards early on. They’re more an exception than the rule, however; more often than not, companies find that there are few, if any, consequences until they run into trouble.
Many boards have gotten into trouble when they think they answer only to the CEO.
After years of advising startups on board management and executive search, I believe that the only true role of the board is to hire and fire the CEO. After all, great boards understand that they are accountable to each other and to company shareholders. Also, great boards are diverse – in thought, background, and perspectives. The statistics bear repeating: Just 10% of Silicon Valley directors are women, and the percentage of VC-backed startups with a female founder or CEO is even lower.
So here are some practical tips for assembling a great board.
Know the company’s vision. Where do you want the company to go? Define what you need the board to do to achieve those goals. Keep that in mind as you consider and define the attributes, skills, and experiences that you need of your board members.
Seek the right skills. Create a simple grid combining attributes that actually exist in the market. Draft a table with all the desired aspects of a “final” board. Fill in the table with prospective ideas for each director, ranking each in terms of depth or fit and whether that person can be recruited. Keep this list current, fresh, and ongoing, and make it an active item of discussion at board meetings.
Develop role and responsibilities for members. As Jim Collins says, “Do you have the right people in the right seats on the bus?” It’s never too early to have committees or key areas of responsibility. Do you have the best head of audit, compensation etc.? Who are the lead directors that you as CEO can rely on in each critical area?
Build a culture and invite debate. Foster a culture of open feedback and independence. You want different opinions and perspectives to help you consider alternatives. Consider the culture and interaction you want from your board: passionate and intense debate, or cerebral and deliberative? You want to recruit a board that pushes you, makes you uncomfortable and challenges conventional wisdom. At the same time, you want a board and not an operating committee – so setting boundaries is important.
Break through your comfort zone. Boards tend to reach for what’s familiar and comfortable, which results in homogeneity. Knowing that, you should strive for diversity of opinion and not be afraid to go against the grain. Keeping that top of mind will help you be open-minded to alternatives you would not have considered in the first place.
Juliet de Baubigny is a senior partner at Kleiner Perkins Caufield & Byers. She advises the firm’s portfolio companies on all aspects of company building including executive leadership, recruiting, compensation, corporate governance and team-building.