I often hear founders complain about the burden of having board meetings and the endless preparation that goes into them. Similarly, I often hear other VCs complain about how little discussion or action comes from them.
So the question stands: How can board meetings be shaped into an essential tool to guide your business and help you scale its potential? Or, in other terms, “Ask not what you can do for your board, but what your board can do for you.”
It’s healthy to acknowledge that sometimes, the best thing a board can do for a company is stay out of the way. One should not be shy in articulating this point of view.
To answer this, let’s explore several key principles for holding effective board meetings.
1. Align Key Performance Indicators (KPIs) and Metrics
For board meetings to be truly effective, the materials must reflect the same KPIs, metrics, and tools founders use to measure their success. If any materials are irrelevant to the founders’ key decisions, their inclusion should be questioned.
It is vital for both the board and the founders to align on the key metrics of success and the primary business goals. This alignment should translate to budget allocations, spending decisions, and strategic initiatives. The core focus and purpose of the board meeting should revolve around these aligned goals.
2. Leverage the Board's Expertise
Founders should come to meetings prepared with specific questions to leverage the board’s expertise. These questions might pertain to product development, the pace of hiring, or other pressing business problems. By approaching the board with a clear agenda of what they need, founders can ensure the board adds tangible value to the business.
This is when it becomes imperative that you focus on what your board can do for you. This translates into action items you should request from specific individual board members. Board members should be personally accountable for preparing answers to these requests.
3. Expect Preparedness
Reading slides during the meeting is never a good use of time. Instead, give your board members homework and set the expectation that they come to meetings prepared. If board members do not take the time to prepare, this should raise concerns about their commitment and effectiveness to the business. Ensuring all participants are ready to engage meaningfully can significantly enhance the productivity of board meetings.
Some companies have embraced the practice of assigning case studies or fact patterns with relevant and specific decision points the company may be facing to the board in advance and having a healthy discussion at the board meeting.
4. Understand Decision-Making Dynamics
It’s important to recognize that major decisions are rarely made in the boardroom. Critical decisions are typically made outside the boardroom and are only formalized during board discussions. Understanding this dynamic can help set realistic expectations for what board meetings can accomplish and ensure that the time spent together is focused on high-value activities.
5. Set the Cadence and Structure of Board Meetings
Determining the frequency and structure of board meetings is another crucial aspect of making them effective.
Frequency: Board meetings should occur at least four but no more than twelve times annually. This balance ensures that the board is sufficiently engaged without overwhelming the company with constant preparation and meetings.
Duration: The optimal length of a board meeting can vary, but it generally ranges from one to three hours. This timeframe allows for thorough discussion without leading to fatigue and diminishing returns. In my experience, more than three hours leads to radically diminishing returns and value created.
Participants: Deciding who should participate in board meetings from the company is also important. If only the CEO had attended, the board would have missed out on interacting with different functions and department heads, and these leaders would have missed the opportunity to receive direct feedback from the board. However, if too many people are present, it can distract from the meeting’s purpose and drag down the efficiency. Striking a happy medium, where key leaders attend without overcrowding the meeting, is desirable.
Conclusion
Transforming board meetings from a colossal waste of everyone’s time into positive value creation with specific action items and direction requires a deliberate approach. By aligning on KPIs and metrics, leveraging the board’s expertise, expecting preparedness, understanding decision-making dynamics, and carefully setting the cadence and structure of the meetings, founders and board members can unlock the full potential of these gatherings. Board meetings can become powerful platforms for guiding businesses toward sustained growth and success when executed well.
