The Art of the Board Meeting
I've been on both sides of board meetings: as the entrepreneur (a.k.a., the “victim”) and as the board member (a.k.a., the “heavy”). I can't tell you that I've run perfect board meetings nor that I am the world's greatest board member, but I can provide some tips on the art of the board meeting. These tips apply to startups, established companies, and--with very little modification--to school boards, church elders, and not-for-profits.
Before we discuss board meetings, we need to discuss board composition. A board should contain five to seven members. Clueless entrepreneurs want rubber stampers with deep pockets, but in a perfect world, your board members would represent these archetypes:
- “The Customer.” This person is, or represents, the type of person or organization that is hopefully going to buy your product or service. You need this person as a reality check on features, pricing, and marketing practices.
- “The Geek.” This person provides a reality check of your technology, so that when your CTO tells you that she's going to re-write the laws of physics, someone smacks some sense into you all. The downside to having the geek on your board, however, is that once in a blue moon your CTO may be right. Still, it's most likely that your CTO is too optimistic. Note: a benefit of having a geek on your board is that it will inspire your engineers who generally believe boards only care about financial issues.
- “Dad.” Or, “Mom.” This is your mentor, buddy, and frequently pro-bono psychiatrist. His or her role is to guide, comfort, and support you when things get tough. Think Marcus Welby, MD. One of these folks is plenty because they tend to live in the past.
- “The Tightass.” This is the “adult” on the board who acts as the tough guy to tell you that your “conservative” sales forecast is off by 90% and that you cannot give your roommate the title of CTO just because she's a co-founder and the most technical person of the founders.
- “Jerry Maguire.” This person has the Rolodex that enables you to leap ahead of mere-mortal startups by connecting you with customers, partners (I hate this word), vendors, and job candidates. Be forewarned, however, most of the time your perception of a board member's ability to open doors is overly optimistic.
- “The CEO.” This is someone you can “relate to” because he's in the middle of the fray too. Unlike most board members who have “been there and done that,” this person “is there and is doing that.” He acts as a reality check on the other board members who are victims of selective memory--for example, the attitude that “back when I was a CEO, we never missed a shipping date.” This person can also provide first-hand information about what companies are paying engineers, which PR firms and advertising agencies are hot, etc.
Collectively, your board should provide guidance, support, and connections. If it doesn't, frankly, it's your fault.
Start in the morning. I've been on boards that start in the morning, midday, and in the afternoon. Without question, the most effective board meetings start at 8:00 am or earlier. This is because people are fresh in the morning and not burdened by all the crises that pile up by the middle of the day. Plus, it makes you look better because you're an early bird that gets a jump on the day as opposed to the slug that gets in at noon.
Get the easy crap out of the way. Most board meetings require the routine approval of administrative things like the minutes of the previous meeting and legal formalities. There are two reasons to get these done at the onset of the meeting: first, you might run out of time and if some members have left early, you may not have a quorum; second, you want to set a tone for approving stuff before you start dropping any controversial bombshells. I could also make a case to do these administrative things last--so that you don't waste any time and get right to the important issues. (Somehow administrative things always get done.) Either philosophy can work as long as you know which one you're using. :-)
Don't bull shitake your board. The three most powerful words you can utter at a board meeting are, “We beat projections.” The second most powerful three words are, “I don't know.” When you don't know, admit it, and then follow up no later than the next board meeting. (A good board member will hate it when she asks for something, and you ignore her and do not address the issue.) If you admit that you don't know the answer to a question, then when you say that you do know the answer to another question, board members will believe you.
Let the CEO run the show. Maybe it's an American thing, but many teams want to show the board that the entire executive team is deeply involved and effective. However, a board meeting is not “share and tell” like in elementary school where participation counts as much as results. The CEO should handle seventy percent of the meeting. The CFO should handle twenty percent, and other employees (if any other employees are present at all) the last ten percent.
Observe the 10/20/30 rule. The entrepreneur that pitches his company with sixty slides usually prepares sixty slides for a two hour board meeting too. The 10/20/30 rule applies to board meetings too. You should be so lucky as to get ten topics covered in a board meeting. I guarantee you that you'll never get beyond the twenty-fifth in most board meetings. You may want to provide a “360 view” of your company, but most boards want only a thirty degree view:
- What's going right?
- What's going wrong?
- What do you want the board to do?
This justifies the amendment of the 10/20/30 rule to the 3/20/30 Rule of Board Meetings. If pressed, I could further boil these three issues into one: What is the level of revenues and how can we increase it? Truth be told, this is mostly what board members care about because, as I've said before in this blog, “Sales fixes everything.”
Don't surprise your board. This is the most important rule of board management. You should never, ever surprise your board. (Perhaps there is one exception: when sales are higher than expected.) If you have bad news, speak to each member before the meeting. Ideally, by the time the board meeting happens, (1) your board members will have calmed down; (2) you are on to the solution to the problem, and (3) they have thought of ways to help you with the problem too.
Nota bene: Emailing a five-tab Excel spreadsheet and sixty-page PDF the night before the board meeting doe not qualify as warning your board in advance. Most board members don't read these attachments before the meeting, so you'll walk into the meeting thinking that they've already heard the bad news and calmed down when they haven't. And you will deservedly get blasted.
Pre-sell as much as you can. Along the lines of “no surprises,” don't try to do any “hard selling” in a board meeting. For example, if you want to change your business model, hire that proven entrepreneurial superstar from Microsoft (this is a joke, guys), or buy a Super Bowl commercial, you should discuss your idea before the meeting. In this way, you'll learn what kind of support you'll have and what the issues are; you may decide not to try getting board approval for something that won't fly anyway.
Present solutions, not questions. The reason why you're running the show is theoretically that you're the best person for the job. Therefore, you should present “solutions.” For example, take your best shot for the company logo, company mantra, product design, and introduction plan. Then, solicit feedback and make the appropriate changes. This is very different from opening up cans of worms by asking, “How do you think we should introduce the product?” This question doesn't show flexibility and openness--it shows that the wrong person is running the company.
Use them. This doesn't pertain strictly to board meetings but board utilization in general. Most boards are under-utilized, not over-utilized. If there's anything worse than asking for too much help from a board member, it's asking for less than she's willing to give. That's a crime. Once a board member makes the psychological (and legal) commitment to serving on your board, get as much as you can out of her. Trust me, she'll push back if you ask for too much.
Written at: Atherton, California. (Special thanks to Glenn Kelman for his comments.)