Succeeding In The Boardroom: Tips From LinkedIn’s #1 Board Advisor
Creating an advisory board for your company is designed to provide strategic direction, insight, and vision. It’s an undertaking that when done right, can propel your business to new heights.
But how do you get it right? How can you get the best executives on your board, and keep them aligned to the mission of your company without losing control?
Alex Arnot is the no #1 recommended board advisor on Linkedin. He sits on the board of 35 companies, and built and sold three companies himself, so he’s got some incredible insight after sitting in on over 1000 board meetings.
Here are Alex’s most important mistakes, lessons, and advice when creating your senior management advisory board.
Did you know that 75% of seed-funded tech startups fail, and 60% never make a profit?
A lot of this comes down to the direction their ship is sailing in, and the way their advisory board operates.
Here are some key insights, as well as common mistakes founders often make:
1. Get the right people on board early on
One common mistake founders make is that they don’t get the right people on the board, or they do it too late in the process.
It’s never too early to get advice on your board. Learn from people who have been there before – the broader the experience, the more advice you will have.
Another common mistake is that they don’t know how to select board members.
Who sits on the board is absolutely critical, because they will be helping you make key decisions.
But you don’t need a complete board from day one, with every key player with a vested interest in the company.
Sometimes you just need one or two important people on that board to help get you investment.
Who should be on your board?
Nonexec director (The independent advisor)
- A peer to bounce ideas off, and check that you’re making the right decisions
- They help to keep things focused
- Hire this person early, because it adds credibility and you can get your plan in place
- You can hire this role on the board later – use an advisor instead initially
- Ensure this person has experience of delivering against a plan
Chief Revenue Officer
- Tech companies often focus too much on tech roles rather than making money
- You need a board member to be revenue-focused, because investors want a return
- Hire HR Directors later on in the process, as well as your Finance Director
- You can outsource these in the beginning, which will give investors confidence. These could work on a part-time basis.
Top Tips to remember:
- When you start scaling up, you might need a full-time board member, but it’s not essential at the start.
- Keep observers on your board to a minimum. If they can’t add value to the board, then they shouldn’t be on your board.
- Board advisors can be very expensive. If you set things up in a certain way, you can agree with the individual some metrics to measure against and make sure you get a return on investment.
- If you have lots of interest, invite people to bi-annual board meetings or send them an annual pack – this will help you be more focused and have fewer distractions.
- Many people also choose to have an odd number of voting directors because it reduces the risk of a ‘no’ vote. An odd number can make a lot of sense, but each round of investment will often bring a new person to the board.
2. Understand the board will evolve along the way
With the growth of your business, the culture and structure of your board will change.
People who are there at the start of the process may not be there throughout.
Titles for the board members may change too, and so it’s always worth discussing how the board may evolve early on, but be careful not to demotivate existing board members.
Another mistake founders often make here is that they don’t realize that they need different people along the journey.
It’s important to be diverse. Can you do these things better? Can you make it more diverse and inclusive?
A common pitfall is inexperience – it can lose you control.
If a founder doesn’t know the problems in a business, they don’t foresee them. The investors then start pushing the founders out as they are able to see what is ahead of them.
Maintain full control however you can. One way to do that is to create a permanent role for yourself separate from the CEO role because usually, the CEO is the one on the firing line if things go the wrong way. So that way you still have a place on the board.
3. Learn the structure of efficient board meetings
When businesses don’t get board meetings working efficiently, it can hamper results.
There are five things a board needs to consider when creating an efficient board meeting:
- Are we ahead of the KPI’s?
- Has the market changed since we last met? Did it affect us positively or negatively?
- Has the team changed? For better or for worse?
- Has our position in the market changed?
- Did we do what we said we would?
Tips for smooth board meetings:
- Keep your board as small as possible.
- Meet each board member separately and in advance – ask them questions. Ask them what they think about a particular issue, and what they think about the agenda.
- Circulate a board pack at least 4 days in advance – keep it visual and lighthearted, with all of the key facts and figures. Everyone should have read it inside out, and bring the questions to the meetings. Find out who has read the pack – if they haven’t bothered, they shouldn’t be in the meeting.
- Set review periods where you assess the viability of each board member, so they prove they are adding value on a continual and consistent basis.
- Be transparent – don’t see it as a clandestine secret club. Keep employees in the know, because often they would like to understand what goes on.
- Get your board members involved in the company – many often like having an assignment and something they can do after the meeting.
- Monthly board meetings can work well for some business cultures; keep them short. It keeps members accountable, and often delivers good results. Stick to 2 hours maximum.
Ultimately, it’s important that founders remember that the board works for them, not the other way around. They are there to help and drive your business forward.