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Organizations usually reflect their boards—for better and for worse

Make sure you have the time to be a committed member of the board. If you’re overextended, you may not be able to bring your full attention to the business. 

Organizations usually reflect their boards—for better and for worse
[master1305 / Adobe Stock]

It’s obvious, of course, but boards of directors matter. I’m surprised by how many CEOs take boards for granted or don’t think of them as being nearly as consequential as they actually are. It’s important for CEOs to remember that board members are your bosses—they can literally hire and fire you. And they make a lot of other existential-level decisions.

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Much has been written about the important roles and responsibilities of boards, including in blog posts, TED talks, and magazine articles. And yet, there remains a persistent challenge in corporate governance.

Movies and TV shows have been made about the failures in leadership and governance at Theranos and WeWork; the drama at Uber between its founding CEO and board is well-documented; and new dramas are yet to unfold.

Over the years, I’ve served on more than 15 boards, ranging from public-sector boards like San Francisco Unified School District to non-profit boards like National Center for Lesbian Rights and Black Girls Code, and also several tech startups and finally Udemy, a pre-IPO company when I joined that is now public.

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As managing partner for Black Ops Ventures, part of my job is to help set up boards and serve on them. As a founder and CEO of several for-profits and nonprofits, I know how highly effective and ineffective boards and directors behave.

If the goal of any organization with a governing board is to generate stakeholder value, then establishing a high-functioning, well-run operation is central to achieving that objective.

While founders and CEOs are essential to the performance of an organization, I’ve seen over and over again a simple truth play out: organizations almost always reflect the board that governs them. A high-functioning, focused, and ethical board will see itself reflected in the company’s leadership and throughout the whole operation.

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ADVICE FOR BOARD MEMBERS

Whether an investor or an invested stakeholder, board members should show up ready to serve. At Black Ops, we prefer to lead the seed stage because we want to establish a true spirit of partnership and a supporting structure right from the start of a new venture. We show up committed to being of service.

Beyond this core approach, I am guided by three philosophies that should have fidelity for any board:

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1. Bring a landscape mindset. Provide an “eye on the horizon” perspective: macroeconomics, trends from the marketplace, competitive insight. Provide a view that operators might be missing.

2. Bring an advisor mindset. Ask yourself: How can I observe and listen, and engage in pattern recognition? Provide proactive and empathetic advising based on your observations.

3. Bring a fiduciary mindset. Ensure the organization is leveraging best practices; ask the hard (but also the most helpful) questions after careful scrutiny of the company’s financials; come from a “default alive” perspective; help ensure adherence to GAAP, applicable statutes and laws, etc.; and pay attention to and approve an annual audit.

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In addition to these first principles, make sure you have the time to be a committed member of the board. If you’re overextended, you may not be able to bring your full attention to the business.

Along these lines, I’ve found that there are a few other things that serve me well as a board member, all of which take time:

• Make decisions that benefit the company first. Your commitment as a director is to put the company and the employees ahead of your fund’s best interest. This means you should take the time to understand the many perspectives and motivations at work around the table.

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• Coach, groom, and guide the organization’s top operators. Be a fair and clear evaluator of the company’s performance. Commit to helping company leaders grow.

• Be an aggregator of new resources. Go beyond capital to introduce new advisors, top operational talent, and industry best practices.

• Deeply understand the go-to-market strategy—and formally approve operating budgets.

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• Establish clear accountabilities. Operators should know what the board requires in terms of regular updates and cadence.

• Commit to showing up and being present in good times and bad. Remain focused on the organization’s mission, vision, and values. Implicit in this is a commitment to be as mission-aligned as if you were a founder yourself.

• Take time to walk in the shoes of your product or service’s users. Be a user of the product or service yourself. Deeply understand the value being delivered.

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I’ve also learned a few lessons the hard way. Here are four things board members should actively avoid:

1. Defocusing: Advancing ideas that have little or nothing to do with the core business model can result in operators shifting their focus away from addressing the fundamental priorities.

2. Micromanaging: Except in the most dire circumstances, choose to work at a governance level and avoid getting into operational modes.

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3. Hubris: Don’t show up believing you know more about the product or service than the founders, who are the subject-matter experts at the table. Bring a spirit of curiosity and discovery to your conversations. Respond to what you’ve learned through a lens of experience.

4. Demotivating: Don’t tear people down. Lift them up, always. Don’t put on superior airs. Bring an equal-partner spirit to your relationships.

Finally, as a Black lesbian who’s been both an operator and an investor, I can’t stress enough the importance of boards reflecting the teams they hope to build and the customers they intend to serve. Boards should be comprised of women, people of color, queer people, and people with diverse perspectives.

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California passed a law a few years back requiring all companies headquartered in the state to have at least one woman on their board. While the law is being challenged in court, it has already altered boards for the better.

Diversity of perspectives and lived experiences matter to board governance. Race, gender, and sexual orientation matter. Experience in technology, investing, management, and design all matter equally. You don’t want a board to be thoroughly disconnected from the company’s employees’ or customers’ experiences.

Every organization requires governance. Those who commit to being a governor must not do this lightly. Those assembling a board must similarly take the task very seriously. Every stakeholder in an organization will benefit from good governance; bad governance will almost always end in failure.

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Heather Hiles is a technologist, entrepreneur, investor. Director at Udemy and OppZo. Managing Partner at Imminent Equity, Black Ops Funds.

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