We recently hosted our 7th biennial Edison Directors College, which was a bit of a milestone for us. Over the past 30 years we’ve been doing this, and we’ve recognized just how great of an impact the right board can be for a company. However, it has only been in the past 5-10 years that we’ve begun systematizing what we’ve learned and put in place a framework and a standard set of best practices that all of our companies can implement. Stay tuned over the coming months as we’ll begin to roll out our Growth Company Board Playbook and share both ours and our CEOs' views on what works and how to deal with the challenges inherent in building and operating a world-class board.
While trying to distill all we’ve learned about running great boards, we discovered one problem that virtually all of the boards we studied had. Put simply, they lacked a plan. As every executive knows, all businesses need a plan, and so does a board.
The plan informs everything from strategy development to operational decisions inside the company, and ensures everyone is on the same page. Somehow, however, this concept of a high-level plan driving tactical decisions seems to evaporate when we look at boards themselves. Many boards set an agenda at the beginning of the year, and then board members roll in a couple of times per year to hear management’s view on the company and approve corporate actions. This isn’t sufficient, and its sapping the company of the true potential it can and should get out of its board and directors.
So what do we mean by a plan for the board? Each plan will be unique and bespoke to a company, but here are a couple of key topics we’ve found work well for board plans:
What are the skills and capabilities that the company needs in its board members to help the company scale? How does the composition of the board need to evolve over time to support the company? A plan needs to be put in place that maps out the expertise & responsibilities needed from the board over time, and that directs periodic assessment to determine when change is required. This is one of the hardest things for a board to do, but is critical to make sure the company is getting the most from its board.
Similarly, the board needs to periodically assess what they believe the C-level management team needs to look like in 12/24/36 months. This will change as a business pivots and grows, so it needs to be part of a board’s SOP and should be part of its deliverables back to the CEO. Ultimately, building the management team is the CEO's job, but it is an area that should have key input and oversight by the board. Once the goals have been determined, the board needs to set milestones to measure against to ensure they are, in fact, getting the “right people on the bus” who meet those criteria.
The best boards we work with have their directors working for them consistently throughout the year, not just at board meetings. Board members can be assigned goals just as the rest of the management team can, and, given their stature, have the ability to significantly contribute to company progress. We’ve seen goals like prospect introductions, strategic/BD conversations, talent referrals, M&A leadership, and mentorship activities with CEO and other top managers.
While it is the job of the management team to create the strategy, the board should be a key input. Board members should have their eyes focused further down the road, and can help the CEO and team think about the strategy for their business in context of the broader ecosystem around the company. Boards need to provide input to make sure that the activities and strategy the company is pursuing will ultimately result in increasing enterprise value. The board should have a plan to periodically seek input from the market on the company strategy and its potential value in the marketplace.
Board-level Roadmap for the Business.
Finally, the board should also have its own plan for the business, including what the board believes are key levers to driving enterprise value, milestones, and timing to achieve them. Periodically, the board should compare its plan to management’s plan to verify that all stakeholders are still pointing towards the same north star for success.
We’ll dive into these specific topics deeper as we weave them into our Growth Company Board Playbook over the coming months. Stay tuned...!