How to be an effective board member: 5 lessons learned

This year marks my tenth year serving as a Board member (usually in conjunction with being an investor). It’s been a fun ride with a lot of lessons learned. As I reflect on my “time served,” I’d like to share some findings from my vantage point on what it means to be effective as a Board member. 

Boards are inherently focused on two issues: governance and strategy. The goal of every Board is to ensure the company is making strong and ethical decisions (and complying with various laws and policies), and that there is a clear growth strategy in place. By their very nature, Boards are a consensus-based body that gives advice to the CEO. To me, the most important thing about both a private and public Board is whether they’re effective in giving that advice. 

Here are 5 things that help me be an effective Board member – but please note that 10 years in, I still find myself constantly learning. 

1) Rise above the endless details 

The most effective Board members I see are those who can accurately describe the forest, instead of focusing on the individual trees. I find those Board members frequently explain the context for an issue, as opposed to drilling into options and specifics. 

As an example, companies will have tough quarters; drilling down on the specifics of an underlying region (which you hope the operators have already done) is generally less effective than being able to judge if the miss was caused by a larger concern (competition or product). Instead, use your time to focus on the big picture. 

2) Empathy beats pedigree when making points  

Because Boards are consensus based, there’s often a temptation to use pedigree (“I’m on 7 Boards and none of them do this” or “When I was CEO…”) to short circuit decision making. But even if you have the greatest background and experience ever, the world still needs new ideas and fresh perspectives. 

A better way to be effective is try and show a deeper understanding of the challenges this particular team is facing. It may well be that once you listen and fully understand, a different approach is merited.

3) Prepare questions in advance 

CEOs prepare decks in advance. Good CEOs treat the decks as their “asks” for input from their Board (and even if you have a CEO who’s just in reporting mode, the deck should still be the starting point for questions to answer and debate in the Boardroom). 

A best practice here is to try and prepare your questions ahead of time. First, it helps you decide in your own head what is most important. After all, not every issue merits questions or discussion. Second, it allows you to focus and prepare for the answers. This makes your feedback less random and more useful.

4) Know when to dig in and when to defer  

I’m not an expert in sales management. Of course, there will be times I want to get my sales questions and opinions in the mix, but when other folks around the room who are experts weigh in, it is really not the time for me to hard position or grandstand. 

Know when to use your voice and when to pipe down. Many Board members do not seem to understand their impact in the room when they grandstand on issues where they have limited domain expertise. Save your influence for matters when your expertise is truly needed; this will help you have more of an impact.

5) Get to know the CEO  

The opportunity to serve on a Board is really about using your experience to help the CEO navigate the thousands of decisions they have to make every year. I’m sometimes shocked that Board members take little to no time to understand the CEO and their journey. 

As with most things in life, CEOs have experiences which shape and influence decisions. Some Board members never invest the time to understand those things (and can cross red lines without realizing it). Take the time to get to know the CEO as a person and a leader; it will be worth it in so many ways.

The journey to successful Board experiences 

Being a Board member is a privilege, and it’s not an easy job by any means. There’s no clear formula for success, and quite frankly, not a lot of great training programs in place right now. Fortunately there are people – like me – who are willing and happy to help as needed. My bonus tip, of course, is to look out for them. 

We believe culture, diversity, and operational excellence are a key part of building truly great companies. Learn more on our website or by connecting with us on Twitter and LinkedIn.

Steady on: Downturn advice from a seasoned investor

There’s an old English political saying that says the Conservative Party never panics, except in crisis. That feels especially true these days. Perhaps you’ve never really experienced an economic downturn, but I’ve been through at least two: In 2000 (when I was in the eye of the storm at Cisco) and again in 2008 (when the crisis hit hardest outside the tech world). Each brought with it a set of lessons that I’m happy to share as we navigate this latest challenge. 

1) Turn off financial media.

At this point, the story is the market decline, which the financial media will cover in all its gory detail. Just as financial media over-rotates to bullish commentators during good times, they will over-rotate to the bearish folks now. At some point in the cycle, we’ll see folks predicting the end of capitalism and democracy… But we have withstood greater challenges than this. Warren Buffett, who in many ways is the sage of market downturns, has a wonderful saying: Be fearful when others are greedy, and be greedy when others are fearful.

2) The cloud is still the greatest opportunity for tech investors. 

For those of us in tech, I believe the big thesis on the move to cloud not only does not change, but actually may accelerate. We’d been in a magic period where both existing companies and startups were ready to adopt new technology at a breakneck pace. Tech companies will need to wait and see if startups are still spending, but I believe enterprises will continue to spend. The new world is much cheaper than the old one, and folks may need to be aggressive in fixing old cost structures.

3) This is a great time to have dry powder. 

We’re still early in the economic downturn (where VC Twitter proclaims boldness in the face of risk). That’s going to change. Soon we’ll find out which companies have been overspending, and which VCs are willing to bet that those companies can improve. My personal feeling is that bad and even mediocre business models will feel a lot of pain.

The flip side is that funds like Operator Collective (which has a clear majority of its funds unspent) will have opportunities to invest in great companies at excellent valuations. Unlike most other VCs, Mallun Yen and Leyla Seka do not have a large legacy portfolio to triage, and instead have the chance to wait, watch, and act as valuations decline and markets become clearer. Rather than compete in overpriced rounds, Operator Collective will have the time and resources to cherry pick the best opportunities. 

4) Cash is still king. 

If you’re operating a company, that particular golden rule still applies today: Do not run out of money. Be ruthless in analyzing your cost structure. If you can adjust your business model to have your cash last longer, you have a greater chance of being able to raise again when the market comes back. The faster you adjust to this new reality and the faster you take cautionary action, the better prepared you are for the inevitable recovery. 

Separating fact from fiction 

In up markets, every VC looks like a genius – but markets like these let us know who’s the real deal. I hope all of you remain upbeat and look for the opportunities that will certainly be there in and amongst the damage. Steady on, friends. 

We believe culture, diversity, and operational excellence are a key part of building truly great companies. Learn more at www.operatorcollective.com or by connecting with us on Twitter and LinkedIn.