The Board Of Directors: Board Chemistry

One of the least discussed elements of a Board of Directors is the chemistry among the Board members. It is critical to a well functioning Board but not always considered in Board construction.

Like a well functioning startup or a top flight sports team, the chemistry between the participants on a Board must be strong. That doesn’t mean they need to be best friends who hang out with each other outside of the job. It does mean they must respect each other and lean on each other’s strengths to get to the right decisions.

When you are building a Board, you must think about chemistry as much as you think about it when you hire a team. You want to have a Board that can work well together.

And you need to invest in chemistry after you’ve assembled your Board. I like regular Board dinners before or after the meetings. There is nothing like breaking bread and having a beer or a glass of wine to get folks to relax and connect. I also like annual Board offsites where the group spends an entire 24 hours together, usually talking about and plotting strategy for the coming year(s). These activities outside of the Board room are critical to developing and investing in Board chemistry. Once obtained, you cannot let Board chemistry calcify. You must continue to invest in it for the long haul.

Sometimes you will have a Director (or two) that just doesn’t fit in. Unless that Director has a contractual right to their seat (usually as a result of investment) or brings a critically important skill set to the Board, you should seek to remove that person from the Board and replace them with someone with similar skills who will fit in better.

Even when an investor has a contractual right to a Board seat, you can get one of their partners to replace them in an effort to get better Board chemistry. Don’t take this approach lightly however. It will be seen as a hostile move by the person you are seeking to replace. I have been involved in these situations a few times and it must be handled delicately, usually via the senior partner of the firm involved. If the person who is serving on your board that you are seeking to replace is the senior partner of the firm involved, then you have an even more difficult problem.

If there is one point that I want to drive home more than any other point in this entire series on Boards, it is that your company needs a strong Board and you must do everything in your power to make sure you get one. Don’t accept that you have a dysfunctional Board and you have to live with it. If you have a bunch of investors on your Board that you can’t get rid of, seek to add a bunch of independents to balance them out. And then build chemistry between the independents and the investors.

Group dynamics are an interesting thing. Adding or subtracting one or two people from a five to seven person group can dramatically change the chemistry. So pick your Board members wisely and if you have an issue, deal with it to the best of your powers.

I think Matt Blumberg, CEO of our portfolio company Return Path, has done an incredible job in developing Board chemistry. He has removed and replaced a number of Board members over the years, including an investor director. He invests heavily and continuously in Board chemistry. And he has assembled a set of strong personalities with very diverse strengths (and weaknesses) and he gets more out of us that I could possibly imagine. He should write a book on this topic.

I bring up Matt and his success as a way to suggest that seeking advice and counsel from other entrepreneurs and CEOs can be a good way to think about how to improve your own Board. And you might want to consider some of them for independent Board members while you are at it.

Your company is going to have a Board. It should not be an afterthought. It needs to be well constructed, well managed, and it needs to function easily and efficiently with strong chemistry. When you achieve all of those things, you will see that a great Board is a tremendous asset to a company, and you should pat yourself on the back for doing something that very few manage to accomplish.

 

From the comments

Adam Huttler added:

I agree that good Board chemistry is essential, but it’s equally important to be wary of group think. It’s easy to have good chemistry when everyone has a similar background and worldview; much harder when there’s genuine diversity (intellectual and otherwise). I’ve found that a wide range of perspectives and experiences can help avoid falling into traps that are otherwise common (and therefore invisible) to a particular industry or practice.

mattblumberg replied:

The key is to foster productive conflict. You have to create a safe space for this built on an atmosphere of trust.

To which karen_e asked:

Love that mentality of setting up the atmosphere of trust, Matt. Here is a question for you:

How can I as mid-level person with a growing body of business experience in my field get on a for-profit board? This is a real question – I truly need to know. How can I over, say, the next five years, position myself to get some board experience?

Which JLM answered:

Start w/ non-profits.  Easy to get on and teaching the same lessons perhaps made more intense by their fragility.

Network w/ folks who are on for profit Boards.  Hang w/ them.

Master the working of Boards and commit it to writing so you become a subject expert — even if only to you.  Know the issues.  Learn the landscape.

Did you know the capitals of Iraq, Afghanistan and Pakistan before we went to war there?

Identify what discrete skills you will bring to a Board.  Really sweat this.

Build up a set of exemplars of Board charters, committee charters and other governance docs.

Identify companies within 25 miles from home — small companies, not Microsoft — and make contact.

After you have built these relationships, ask directly.

The biggest secret we ever learn in business is to ask for a favor.

 

This article was originally written by Fred Wilson on March 26, 2012 here.