Reinventing the Board Part III: The Agenda
CEOs, investors, and board members frequently complain about ineffective board meetings. Steve Blank, Jeff Bussgang, Brad Feld, and Fred Wilson each have suggested board meetings could be improved by changing the format, process, or content.
Having good meetings starts by having the right people in the room (as discussed in the first installment of this series) and in having a good chair or facilitator for the discussion (as highlighted in the second). The board then can create the right agenda with a relatively simple, three-step process.
First, the chair and CEO should circulate the key questions and proposed agenda a week prior to the meeting, or even start collecting agenda items at the end of the prior board meeting. Most importantly, this helps everyone avoid wasting time creating dozens of slides that the board doesn’t value. It also allows time for reflection and input from other board members.
Some of the most effective CEOs and chairs I’ve seen call each board member in advance to get their input. Doing so also helps them build and maintain political clout with the board by encouraging board members to be heard, seeking their input, and avoiding nasty surprises at the meeting.
Second, in creating the agenda, the chair and CEO must reflect on what key questions are vital to the company’s success, as opposed to what are the most obvious. In the dozen years I have been on boards, I have seen too many stuck in the same routine. It’s easy—and a bit too comfortable—to review how sales were since the last board meeting, how many leads marketing generated, how the product has developed, and when the company might need more money.
All but the last question are like driving by looking in the rear-view mirror. Looking ahead to the next quarter’s sales or to the next release of the product at least focuses on the future, but only in the low-visibility fog of short-term goals. These are good questions, but more tactical than strategic. Of course companies need to address tactical questions, but too much attention there can lead to greatly missed opportunities.
Strategic discussions always start with tough questions that aren’t being asked. There are five areas for the board to have on its strategic checklist, with an optional sixth that should be reviewed at least twice per year (sometimes more frequently).
• Team. Does the company have the right people in the right roles? Are they the right ones for where it wants to be in six months or a year? Veteran entrepreneur and venture capitalist Bob Metcalfe once said that in big companies, people grow faster than their positions, so are often promoted; in startups, the company grows faster than the people, who often are forced to move into new roles. The board should always be looking ahead to which senior management jobs are changing and how they should be filled-not just the CEO, but at least one level below.
• Market. Is the company in the right market? Is there a better one now available? Has the one the company is in left it behind? Should the company be selling directly or using channels?
• Product/Service. Does the company really have the right product(s) or service(s), or is the management team listening too much to themselves and early adopters? What are the necessary sets of features and offerings to satisfy the market? Are there technological changes that could make the company’s offering(s) obsolete? Are there dependencies on suppliers or partners that make the company vulnerable?
• Competition. How are competitive companies really doing and what should we do about it? Do we really understand their strategies and what is good about them? What potential competitive threats are on the horizon and can the company do anything now to ward them off?
• Finance. Is the company’s financial profile the right one to be a successful and valuable organization in the market? Are its various financial ratios superior to its peers? Is it spending enough resources to grow at the appropriate pace? Is it harboring its resources appropriately? Is it creating enough absolute enterprise value to reward all its stakeholders, including customers, partners, employees, and investors.
• Regulatory (optional). Are there coming regulatory changes that could affect the business? These include direct changes such as governmental oversight and compliance and indirect changes such as in trade, currency, and macroeconomic factors affecting sales or supply.
Third, the board should agree on the format of the meeting. There are several choices, depending on the questions and the best way to discuss them:
• The Management Team Review—each group leader has a few to a dozen slides to showcase their area of expertise, such as sales, marketing, and development.
• The CEO Visionary Pitch—only the CEO speaks to the board, giving a presentation about his/her vision for the company going forward, with the rest of the board commenting or reflecting on the proposal.
• The Fireside Chat—no Powerpoint, just the agenda and maybe handouts of supporting data to discuss key questions and choices as a team. The CEO might not even offer a recommended strategy at that time, choosing to build consensus around main points first.
• The Board Huddle—several or each of the board members prepares materials for a portion of the meeting based on their expertise or fresh perspective. This approach is particularly useful for questioning assumptions and taking a fresh look at a marketplace.
• Executive Session–-the board meets without management team members to review the company’s performance and prospects. Executive compensation is often a key feature of this meeting.
Each of these formats also can be effectively combined with one or two others. Two of my portfolio companies, Vela Systems and Apperian, regularly start each meeting in the fireside chat format for 15 to 30 minutes, switch to management team review for another hour, and close with 15 to 30 minutes of executive session. The varied format draws out different perspectives and participants on issues facing each company.