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Strategical and tactical boards in startups

I have been in enough boards to know that very few actually generate true value for the companies. I’ll try to explain why I think this happens and give a few ideas on how to get the most out of your board of directors.

Founders sometimes misunderstand the main purpose of a board of directors meeting in a startup. These meetings are not to report how the company is doing, but to try to get the maximum from your board members’ know how and expertise.

It is very common to see board meetings swamped with reports of all the different areas of the company. Sometimes the founders even invite some employees to explain their reports to the board, this is a great idea if you want your board to believe you have a great (or bad) team, but they are not taking advantage of the knowledge gathered around the table.

I am not saying that result reports should not be prepared for the board, but they should not be the main issue. I´ll get back to this point towards the end of the post.

The boards should be used to help the founders focus in the right direction. Easier said than done. I would say that there are two main kinds of value adding boards: Strategic Boards and Tactic Boards.

Strategic Boards:

It is not easy to carry out a real strategic board. As the name itself reveals it, in these boards the strategy of the company should be defined for the next one or two years.

A good way to start thinking in a strategic way is asking yourself the following questions:

“Where do I see my company in two years? And why do I want to go there?”

But a strategic board can be used to solve other question that are quite common in businesses:

“The market has changed. Should we change our business model too?”

“Our main competitor has shut down, how this does affect us? Is this an opportunity? How can we take advantage?”

If the founders can make the meeting revolve around these thoughts they will find that they get back much more value from the board members than in any other case. Founders need to understand that they must get out as much as they can from their board members’ experience in dozens of other startups for their own company’s benefit.

I don’t believe that all the board of director meetings should be strategical but,in normal circumstances, they should be carried out at least once a year and in any case the CEO or the board consider necessary to do it. The main reasons for doing an strategic board are changes in the market as issues with competitors, compliance, clients, providers…

Tactical Boards:

Tactical boards should come after the strategic boards. Their main purpose should be “how am I going to get there”.

These are some questions that should be addressed in these meetings:

“What do we need to change to accomplish our strategic aims? What should we get from those changes? What are the key metrics that we (and the board) are going to be watching out for? Who are the people in charge?”

These questions should affect all parts of the company: clients, users, sales, human resources…

Again, with these meetings founders will get great value out of the board members. The founders’ tactical skills may be outstanding but they are very unlikely to be more than the sum of all the entrepreneurs that your board members have worked with together.

The metrics and results reporting of non tactical issues should be sent to the board members before the meeting with the rest of the info. They could have a look at it and, if needed, would have the opportunity to ask any question during the board.

In case any board members ask for non strategic or tactical matters during the board try to make them understand this post and suggest to schedule other meetings regarding only those questions.