What’s The Secret To Dealing With Your Unruly Board?

“You remind me of me when I was starting out,” I laughed. “Your board meetings aren’t what you think they are going to be.”

“You don’t understand,” Ray responded. “They (his two investor/board members) are out of control. I really need your help.”

 

You need to learn how to manage your board of directors.

 

Ray was not wrong to have his concerns. He raised $6M from two VC funds that were definitely not Tier 1 firms. I had met Ray’s board members, and I knew they were not professional, so it was a challenging situation.

The reality is my “help” would be of little use to Ray because he needed to take control of the situation instead of leaving an open void that your board will fill. And this is especially true of inexperienced investors which Ray had.

I suggested to Ray that he create the agenda for his board meeting and that he stick to the agenda. “But, they wont stick to the agenda,” Ray complained.

“Look, I know these guys are out of control, but you can manage the situation,” I said. “Arrange a 1:1 meeting with each of them (Ray’s board members) and show them the agenda. Don’t ask for their approval. Instead, you can ask them if they want to add anything to the agenda.”

Ray agreed to this approach. Now it was up to him to execute.

 

Transparency is your weapon to control your board.

 

I’d love to tell you that the approach I gave Ray solved his problems, but it didn’t. Those early board meetings were rough.

Ray asked me what I thought he should do after the first board meeting. “Well, they (his investors) are unique,” I laughed. “But you need to step up your game.”

“What do you mean? I followed the agenda,” Ray said.

“Yeah, you did, but you didn’t provide enough information for the board to easily make decisions. For example, showing your investors your financials should be straightforward.

“You just cut and paste your income statement, your balance sheet, and your cash flow statement. Instead you made it too difficult to understand by showing bits and pieces.”

Ray still didn’t understand that you build trust with your investors by making it easy for them to understand, good and bad, what’s going on with the company.

And the frustrating part in Ray’s case was his team was executing well. He really didn’t have anything to fear. But like many new CEOs, Ray didn’t fully understand how much control he had as CEO.

Ray was literally snatching defeat from victory. Ray’s problems didn’t end with transparency.

 

If you create a vacuum, your board will step in and fill the vacuum.

 

Ray was also ceding power that was his as CEO to his board. For example, Ray asked me whether he should consult his board about whether he should use a retained search firm to replace his VP Business Development.

“I wouldn’t,” I said. “Instead, you should tell your board that you’re going to use a retained search firm.”

“Why do it that way?” Ray asked me.

“Because it’s your decision. You’re the CEO. You’re running the company. So just make the decision.”

The reality is that if you ask your board for their opinion, they will give you their opinion. But you’re creating an unnecessary problem. Worse, you’re encouraging inexperienced board members to get involved in running your company.

 

A realistic expectation for your board is for them to act as guardrails.

 

In other words, you want your board to let you run your company as you see fit. But you should expect your board to step in if you are going to get yourself into trouble.

Ray didn’t have a healthy relationship with his board because he and his overaggressive board were riffing off each other. Ray’s distrust of his board led to him not disclosing enough information. His board reacted by getting too involved in the management of the business.

Ray would need to break the cycle for this to end.

Ray eventually did change the dynamic between him and his board when he raised his next round of funding. He added two new, seemingly more reasonable, investors to the board.

However, Ray still needed to up his game. And he did. Ray took control. He was more transparent with his board. Just as importantly, Ray eliminated the vacuum between his investors and him.

 

Your board wants and needs information to share with their partners and investors.

 

Your board really doesn’t want to get involved in running your company. That’s why you’re there. Your board wants pertinent information, so they can report to their partners how your company is doing.

So, just like Ray began doing, give your investors the information they need to understand how your company is doing. The more you do this, and the better you and your team execute, the more your board will back off and let you run your company.

For more, read: Why Your Startup Doesn't Need A Board Of Directors 

 

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