What Makes A Great Board Member - (You Really Need To Get This Right)

11/3/2016
WhatMakesAGreatBoardMember?(YouReallyNeedToGetThisRight)
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JUN 19, 2014 @ 11:22 AM
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WhatMakesAGreat
BoardMember?(You
ReallyNeedToGet
ThisRight)
Bryan Stolle, CONTRIBUTOR
I write about building businesses. FULL BIO
Opinions expressed by Forbes Contributors are their own.
Anentrepreneurrecentlyaskedme,What
makesagreatboardmember?assheisin
theprocessofputtingtogetherherboard.
Aboutthesametime,afellowVC
lamentedaboutamiserableboard
meetingtheyhadjustattended,andwhyit
wassobad.Thequestionsaretwosidesof
thesamecoin.Agreatboardistheresult
ofhavinggreatboardmembers.Bad
boardmeetingsaretheresultofineffective
orunqualifiedboardmembers.Sowhat
doesmakeagreatboardmember?
1.GreatJudgment
Judgmentisamust.Inmanyways,itis
THEjobofaboardmember.Aboard
memberwithsolidjudgmentkeepsyou
outoftroubleandhelpsyounavigate
difficultsituations.Theycanhelpyou
maketherightdecisionaboutstrategy
options,hiringandfiring,financings,
http://www.forbes.com/sites/bryanstolle/2014/06/19/whatmakesagreatboardmemberyoureallyneedtogetthisright/#22494ee068aa
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M&Aopportunities,legalissues,
organizationaldesignquestions,etc.If
youhaveaboardmemberwhodoesnt
havetheexperienceandgravitasessential
togoodjudgment,youaredoingyourself,
yourcompany,andyourshareholdersa
seriousdisservice.
CreatingaBoardofDirectorscomposedofgreatboardmembers
isvitaltoacompanyssuccess.
2.RelevantContext
A great board member needs to have as
muchrelevantcontextaspossibleinorder
to offer actionable and onpoint advice.
Therearefourkeyareasofrelevancy:
IndustryWhilesomeonecanbeagreat
boardmemberandnotbefromthesame
industryinwhichthecompanyoperates
(sometimesitsnotabadideatohaveone
boardmemberwhoisfromoutsideyour
industry,forperspective),ithelpsifmost
boardmembersdohaveindustrycontext
insomeform(customer,supplier,
academic,etc.).Itstoohardtotraina
wholeboardonallthenuancesofan
industry,whendecisionshavetobemade
withalacrityusingthebestinsights
possible.
BusinessModelTherearemany
subtletiesinanygivenbusinessmodel.
Thesenuancescangreatlyimpactstrategy,
accounting/finance,cashflows,etc.For
example,aboardmemberwho
understandsconsumersalesmaynotbe
abletooffergreatadviceorhelpmakethe
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bestdecisionsforacompanywitha
SoftwareasaServicebusinessmodel.
StageofBusinessThisismore
importantthanitmightseem,andisalso
adriverforboardchangesovertime.Just
asdifferentstagesinacompanys
developmentmayrequiredifferent
executives,thesameistrueofboard
members.AFortune500CEOisnt
usuallyagreatchoiceforastartup,justas
aformerCEOwhorana$50Mcompany
maynotbegreatforanotherthathas
reached$100Mandisstillgrowingfast.
Youwantboardmemberswhohaveseen
themoviebeforeandhaveaprettygood
ideaofwhatisaroundthenextfew
cornersasyourbusinessgrows.
Tradeindices
24hoursaday.

TradeGermany30
CFDlossescanexceeddeposits.
RefertoPDS.
FunctionItreallyhelpstohaveboard
memberswhohaveexpertiseinfunctional
areasimporttothebusiness(i.e.:
development,sales,marketing,finance,
internationaloperations,etc.)toshare
foresightaboutfuturechallengesand
opportunitiesyourcompanymayfacein
theirrespectiveareasofexpertise.
3.Wisdom
Tohavegreatjudgment,wisdomispretty
essentialwhenmakingcriticaldecisions
andthinkingstrategicallyaboutthe
future.Note,bothwisdomandjudgment
areusuallytheresultoflotsofexperience
intoughsituations,somefailure,and
strongintelligence.Forexample,M&A
activityaseitherabuyerorasellerisone
ofthemostchallengingsituationsfora
board.Itshardtobeawiseboard
memberwhocangivevaluedand
thoughtfulcounselaboutanM&A
transaction,iftheyhavenotbeenthrough
severalthemselves.MBAcoursesand
avidconsumptionofBarbariansatthe
Gatesorthelikeisnosubstitutefor
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havingsweatedoutafewtricky
negotiations.Unfortunately,the
combinationofbothlackofwisdomand
deepexperienceinanewboardmember
gainedviaarecentfinancingisoneofthe
mostfrequentcomplaintsIhear.When

seatinganewboardmemberviaa
financing,insistonapartnerwhobrings
realwisdomandexperiencetothetable.
Recommended by Forbes
GeneralMotors'
FormerCIOIsAmong
TheMostSoughtAfter
BoardMembers
AdvisorsVs.
Directors:HowTo
BuildBetterBoards
4.MotivationandInterest
Boardworkishardwork.Therecanbea
lotofmeetings,especiallywithcommittee
duties,homework,andtimeswhenvery
difficult,delicate,andchallenging
decisionsmustbemade,oftenconcerning
people.AsaCEO,youneedanddeserve
anengagedboardmemberwhoisalways
motivatedtolookoutforthecompanys
bestinterestsandactivelypromotesthose
interestsatalltimes.Beingagreatboard
membermeansbeinganactiveevangelist
intheecosystem,sharingyournetwork,
andkeepingyoureyespeeledfor
opportunitieswhenyoucanbestpromote
thecompany.Italsomeansbeingactively
engaged.Iamfamiliarwithacompany
thatiscurrentlyexperiencingsomevery
seriousleadershipandexecution
challenges.Ithasaverywellknown,even
famous,leadboardmember.Frommy
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remoteperch,Icanseewhatscomingand
thatthiscompanysfutureisinserious
jeopardy,buttheleaddirectorisnt
addressingtheissuesitsnotevenclear
heseesthem.Dontconfusefameor
staturewithbeingengaged,motivated,

andcommitted.
5.Style
Thisislesscriticalthansomeofthe
others,butultimatelyaboardmembers
styleshouldbecompatiblebothwiththat
oftheCEOandwiththeotherboard
members.ThisdoesNOTmeanthey
alwayshavetoagreewithyou,orbeyour
buddy.Itdoesmeanthattheyknowhow
toeffectivelycommunicatewithyouand
theotherboardmembers,areableto
constructivelyaddressissues,andbecivil
yetstilldirectandtransparent.Ultimately,
youneedyourboardtobeableto
collaborateandworkwelltogether,and
withyou.
6.EffectiveCoach,Mentor,and
SoundingBoard
Anoftenunderappreciatedroleforboard
membersisthatofcoachormentor.A
greatcoachormentordoesntusuallytell
youwhatneedstobedoneorhowtodoit.
InSocraticstyle,theyaskquestionsand
posechallengesdesignedtohelptheCEO
seeproblemsthattheymayhavenot
identified,tolookfurtheraheadthanthe
CEOmaybecurrentlylooking,orto
encourageadifferentperspective.Board
membersinthisroleshouldalsobegood
listeners,offeringtheCEOasounding
boardtotestideas,concerns,etc.Often,
becausetheCEOdoesnthaveanyonethey
canturntoinsidethecompanyforvarious
sensitiveissues,theyneedapersonthatis
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involved,butalsosomewhatremoved
fromthedaytodayactivities,tobring
freshbutapplicableperspective.
7.Courage

MaybeTHEmostunappreciatedtrait.
Yourboardmembersneedtohavethe
courageoftheirconvictions,aswellasthe
couragetofaceuptohardtruths(someof
whichmightbeaboutyou!),andtomake
toughcallswhentheanswerisntalways
obviousandwhenthereareconsiderable
consequencesifthecalliswrong.A
specificexamplefrommypast:whileI
wasapubliccompanyCEO,ourauditors
pushedhardtocompleteexpensive,
invasiveand,inmanagementsandthe
boardsopinions,unnecessaryauditwork.
Thiswasduringtheearlydaysof
SarbanesOxley,whentherewasagreat
dealofwitchhunting,lawsuits,and
debateaboutboardmemberspersonal
liability.Mostboardsranscaredand
allowedaccountingandlegalfirmstorun
amokwithexcessivezealand
commensuratefees.Theheadofouraudit
committeecouldhaverolledoverand
protectedhimselfbyallowingtheover
reachingwork,blamingiton
transparencyversusCYA.Instead,he
didwhatwasrightforthecompanyand
theshareholders,andrefusedtosupport
theexcessiveauditactivitiesand
associatedfees(whichwouldhavecost
severalmillionadditionaldollars).His
experiencetoldhimtheworkscopewas
unnecessaryandwasteful,andhehadthe
courageofhisconvictionstosayno!
Thereareotherdesirabletraitsastrong
networkinyourindustry,deepexperience
aroundaveryspecificissueorchallenge
youface,strongtiesinthefinancingand
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bankingcommunitybuttheseven
presentedhereare,inmyopinion,the
mostimportantcoreattributesofhighly
effectiveboardmembers.
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