The Keys to Board Success

Guest Contributor & Past Board Member, Tom Dunne

Editor’s Note: Tom Dunne recently completed more than 7 years of dedicated service as a volunteer Board Member with Maine Venture Fund.  During that time, Tom served in several roles including Board Chair and Vice Chair, and selflessly devoted considerable time and effort to help individual companies in the MVF portfolio above and beyond his duties as a Board Member. In departing, we also had one last ask of Tom: that he share some of his hard fought wisdom with our readers. He was kind enough to acquiesce.

Reflecting on my time on the Maine Venture Fund Board of Directors, investing personally, and consulting with organizations large and small, it's evident that several factors play an essential role in the success of new ventures. 

A good board increases the chances of success.

I've worked with enough strong-willed entrepreneurs seeking to raise capital for the first time to recognize the questions they have regarding the value of a board of directors. Among them, "will it be time-consuming and costly?", "will it interfere with (my/our) decision making?" and "will it dilute (my/our) authority?" 

These are all great questions. Engaging with a board of directors requires critical thinking and exploration. 

The senior executive(s) and the organization will be better. And boards aren't one size fits all. 

Regardless of how good an executive is, no one person can deliver more than a solid team. The adage "teamwork makes the dream work" comes to mind. Board brainstorming, subcommittee efforts, and good collaboration between a qualified group of people will deliver more than anyone can on their own. 

A solid board will expand the organization's skill, expertise, and network, especially essential in the early days of an organization. 

A board's innate focus on strategy, risk assessment, and monitoring will provide the organization's leadership with forums and insights absent in an entirely internal environment.    

It's important to remember that there are different types of boards, and the business needs in the early stages will likely evolve as the business grows.  In early stage companies, an advisory board can provide point support, including mentoring.  A fully mandated Board of Directors, usually formed once the company takes on outside capital, has the ultimate power and fiduciary responsibility for the company, usually with founders operating as a member of the board with differing degrees of influence.

Most outside investors will insist that in exchange for their investment, there be some form of fully mandated board.

Potential investors make a lot of judgments, reviewing spreadsheets, plans, visions, and assessing the people involved in the enterprise.  A strong leader is typically beyond the point of needing total control and innately accepts the checks and balances and benefits a board will bring. Often, if a startup entrepreneur needs convincing that they need a board, it's a sign that that particular leader may not be ready to lead a larger and more complex enterprise.   

Simply put, board governance is important because: 

·       Setting up a governance framework will balance the expectations and interests of the many stakeholders, providing measures of independence and accountability. 

·       A board of directors can help provide better strategic direction setting, monitoring progress, and giving feedback.

·       Providing credibility and, with that, the ability to attract better employees and lower the cost of additional capital.

An okay board is better than no board, and no board is going to be perfect.

Continual board improvement should always be on the agenda. Perhaps not at every meeting, but periodically boards should reflect on their performance, including the basics: are people showing up and adding value? Key stakeholders should be polled to determine the board's value added to the organization.     

An organization should regularly evaluate whether the organization's need has outgrown the current board structure. New investors are often the catalyst for such structural changes.

The bottom line: If it is not working – fix it – make it better.  

Tips for better board engagement: 

The relationship between the board and the CEO and the Board and the Executive Team can be tricky, taking purposeful effort. It is not a friendship, but there needs to be positive energy and respect on all sides.

·       Invest in the relationship, especially early on, spend time getting to know one another. How? Have meaningful and purposeful conversations with the entire team, employ strategies to understand clients better together. Get out of the meeting rooms, whether virtually or in person.

·       Communication is vital. Focus on common goals and understand that there will be disagreements. Ask, don't tell, especially when asking for more than has been given before.

·       All interactions must be respectful. For example, deliver board books for review days, not hours, in advance.  And remember, the worst bad news is late bad news.  

·       The world is full of rainbows and unicorns...well, actually, it's not. Delivering a balanced view of what is and isn't working will improve engagement and build trust. Very little will sour a relationship between a Board and an executive more than a sense of distrust in the information provided.  Get to the truth sooner rather than later, or not at all.

When it comes to Boards - when it comes to almost everything in life - there is always a gap between the ideal and reality, but you should strive for the ideal. Make the best of the situation and then make it better.  

About Maine Venture Fund

Maine Venture Fund invests in dynamic businesses that have the potential for significant growth and impact in Maine. For more information, visit maineventurefund.com. 

Inquiries:
Terri Wark
Maine Venture Fund
(207) 924.3800
terri@maineventurefund.com