How do you build a Winning Board of Directors?
How do you build a board of directors? This can often be unchartered territory for a new, growing business. While this can conjure up images of long, time-consuming presentations, conflicts and power grabs, this is often far from the truth. New generation boardrooms are now seen as significant value adds for growing businesses, both for setting up startups and for maximising their growth.
Eden Exchange recently sat down with Warwick Peel who is the CEO of Startup Boardroom and a director at the Future Directors Institute. These two organisations have a stated mission to educate, empower and connect the next generation of directors and promote diversity and balance in the boardroom.
Thanks for speaking with us Warwick. Can you tell us a bit about your background and career? What brought you into the world of company boardrooms and startups?
Thanks for having me. After almost two decades as a head-hunter traversing investment banking, private equity, and strategy, my pivot in 2007 was as Co-founder of a search firm across the entrepreneurial carbon, renewable energy and clean technology markets.
I’m an entrepreneur who has been through to exit so I have the scars to know the startup game and the passion to enable startup founders with the right tools and connect them to the best minds to help steer their success. In startups, we need to be aware that ‘we don’t know what we don’t know’, so Startup Boardroom established a niche to build advisory boards.
As a young director myself, in parallel with Startup Boardroom, I also Co-founded Future Directors Institute. Future Directors educates the next generation directors who bring agile mindsets, disruptive, thought provoking arguments and digital governance to the boardrooms in the new economy.
How do you match a company with the right board member? Do you have a process you follow?
At Startup Boardroom, our Board Matrix workshop pushes the boundaries for owners/founders to think 3-5 to even 10 years ahead. It is about thinking on the business, not in the business. We then build an advisory board to add the expertise, connections and influence that are often missing from private companies and startups.
First and foremost, we conduct a character assessment and values alignment. While many advisory firms will focus on skills and gap/needs analysis, we do this after we’ve understood the values alignment. Startup Boardroom has a philosophy to focus on EQ to apply Gallup strengths to identify the best personality and character fit for effective board dynamics.
After all, just as the best footy team held the trophy at 6pm on October 1st, this year it happened to be the bulldogs, the board of directors is a team; leadership and collaborative qualities are an essential ingredient.
What advice do you have on setting up a board for the first time? What’s the key message you tell your clients?
There’s a lot to think about but probably the number one priority is to focus on diversity. Some may feel that a diversity quota is nonsense. At Startup Boardroom, we don’t, but more than that, quite simply, boards need to be curious, they need diversity of thought, not ‘group-think’. You need to assemble your board to reflect your stakeholders. With all due respect, does a cosmetics company know its customer if it has no female board members? Do we understand the workplace of today if we are missing 50% (millennials in 2020) of the global workforce? Does an Australian residential property developer have a Chinese board member?
If you’re a startup, then don’t just chase big corporate names that don’t have the entrepreneurial advisory hand on mindset.
Think about all your stakeholders. Recognise gaps in your arsenal and team and consider a seasoned investor with an IPO track record or deal sheet bigger than your shopping dockets. Think laterally. At Startup Boardroom, we strongly believe that diversity of thought equates to higher performance. Bring in a global mindset. Too often, Australia thinks there are 4 banks, 3 energy companies, 2 food suppliers all fighting over 24 million customers. You want to ask them where they have worked internationally, did they study abroad, where have they travelled? You want your board to be thinking global.
What does a company need to do to attract a good quality board member?
You need to truly understand your vision and articulate this just like you were doing your elevator pitch to investors. Experienced directors are willing to join the boards of companies where the founder has passion and energy and they are playing a big game.
You need to have more than a lean canvas and MVP. Timing is key so don’t go to market for an advisory board when the business isn’t ready. If you’ve hit a number of key milestones and you have traction, i.e. major enterprise sales, entered a new market, product pilot success, won some major awards, succeeded out of an incubator, about to accept investors, then this is a good time.
On the flipside, in your opinion what does a person have to do to get on the board of a high quality company?
High performing and in-demand directors either possess strong financial literacy and investment pedigree or they display a unique area of expertise. Domain expertise is of particular importance to many boards so become a thought leader in your market. Know your voice and know what you don’t know. Everyone has a unique value proposition, so it is key to establish true clarity in your UVP to then position yourself to the best aligned industries, companies or cause. Focus on your passions; know your Gallup strengths because it is about who you are as a character that determines your effectiveness in the boardroom.
While boards will always require financial stewardship, a lawyer and governance, knowing the customer, marketing and digital governance as well as technology and risk, even human resources, are all disciplines that are required for effective boards today. Emotional intelligence and organisational dynamics are becoming increasingly important to be effective in the fast paced change boards are grappling with.
What are some key industry trends you believe entrepreneurs and potential board members needs to be aware of? How has this changed in recent times?
Enter stage left: disruption. An example of this, who would’ve thought Pokemon would be the talk as a major risk and opportunity to an ASX50 board over the past few months? With the transparency of social media, reputational risk is critical, so boards like Qantas are appointing the likes of advertising ace Todd Sampson.
Technology and digital governance. ANZ has appointed a Digital Advisory Board to advise the board and so for private companies and startups, having the technology and digital advice is both a key risk to mitigate but also potentially significant opportunity to deploy for scale.
What separates a good board of directors from an average one?
Courageous. Contrarian. Curiosity. Creativity. One needs to have the courage to ask the pertinent questions focused on the organsiation’s core purpose, stay the course, be bold. A contrarian argument will better challenge the status quo and steer influence towards better decisions. Curiosity is required to investigate behind the numbers and to think laterally, to question risk from a whole-of-stakeholder perspective. Creativity sees disruption as an opportunity, not a threat, to open new markets, embrace a digital strategy, or consider joint ventures and alternative investments.
What’s the best part about your profession? What drives you to do what you do?
To be brutally honest, the best part – people! I meet over 1,000 people every year. I’ve done, year in, year out for almost two decades; listening to their dreams, failures, excuses, and their achievements. I’m not a yes man so I ask people the uncomfortable questions to probe and push the envelope.
So, what drives me is that one rare gem of a human. Sometimes, I might meet two in a week and they flip me off my chair. So what gets me out of bed? I love seeing passionate people achieve the extraordinary.
Thanks for your time Warwick
Startup Boardroom is a professional services and board advisory firm created by entrepreneurs and experienced directors for entrepreneurs. We help companies wanting to scale discover their board potential, and identify the ultimate board composition and expertise to help you as the company director deliver maximum company performance.
Future Directors educates the next generation directors to steer positive impact in the boardroom. We embrace diversity to empower emotional intelligence for effective governance in the new economy.
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