Business after business is hampered, rather than supported, by dysfunctional boards. Board members are picked for all the wrong reasons; because they invested, they are a friend, or someone suggested them as a quality executive. Boards are then created out of balance when it comes to the help needed because there was no plan put in place before the selection process started. Egos become the order of the day, and in the end, businesses end up with boards that don’t add value and spend time in operational detail rather than strategic direction and support.

Boards should serve two main purposes. Primarily, your board should help you, the CEO, make better decisions and grow your business more effectively. Second, they must provide the fiduciary oversight needed to manage risk and support shareholder / stakeholder investments; holding you accountable.

If you are setting up a board for the first time, you must build a plan for what you need, from talent to meeting structure and frequency. When it comes to the members selected, you should staff your board with a balanced set of talent needed to help you grow your business. From marketing to financial or development disciplines, it is critical that you staff your board like you would an executive team. Also essential is to get board talent that has the needed experience in your field of operation. If you build a board with significant experience in your field and a balanced set of professional disciplines, you will have a team that can and will help you succeed.

Yes, as you accept equity investments, you will need to allow specific board positions, so in these cases, select the best possible person from the investor group / fund and build the right talent around them to create balance. If you need to increase the size of your board to accommodate, get that done in the investment docs.

It is critical to understand that you, the CEO, need to be running your business, and your board needs to be helping you do so. Your board is not there to manage you (although they clearly have the right), and if you allow them to do so, you will create your own leadership nightmare. Select a meeting frequency that supports what you need. Build a meeting outline that provides the board the needed information to remain comfortable with your progress and when needed, provide strategic input. If you allow your board chair or board in general to get into tactical day-to-day operational issues, you will spend many frustrating hours defending your position to people who only engage in your business a few hours a year. If, on the other hand, you provide board leadership like you do your own executive team, you can create a relationship where you get the support you need, when you need it, without unnecessary projects or procedures.

You founded a company, you raised some private equity, you now have a board of directors, and you may even have brought in a CEO to help commercialize your business. So now you have an employee role in the business – could be CEO, could be VP of Development, CFO, etc. This is the critical point in time where you need to build a team with which to execute optimally. And in order to do so, this is also the point where you must shed the founder mentality.

For teams to work optimally they must be established based upon skillset and the ability to work together, and each person’s skills must be respected to maximize the value offered. This means that as the founder, you have to suppress the desire to make all decisions and you must figure out how to create working relationships that cause the maximum value to be generated by each team member. I have watched founders hire the talent they desperately need to move the business forward and then ruin any chance of that relationship lasting by continually playing the founder card and not listening or constantly challenging the talent hired in ways that drive the talent away. In the end the founders simply say – “they were the wrong person.” Wrong person because they didn’t do things the founder’s way even though the founders had no or little applicable experience or skillset.

Founders tend to be commanders. “It is my company therefore we are going to do it my way” typifies the foundation of a dysfunctional culture. If you found a baseball team and insist on playing shortstop and setting the batting order even though you have never played baseball before – your team is going to lose no matter how good the talent you hire. The better players cannot perform well enough to make up for your lack of capabilities and the environment / culture will cause the best talent to look for other teams on which to play. Team owners that really want to win hire great coaches and top quality players and stay out of their way.

If you are going to work in the company you founded or co-founded, aside from the passion you need to check the founder status at the door and engage with the rest of the team (that you need to be successful) in a manner the maximizes their ability to execute as a team. If you are going to be the CEO, then you need to learn what it takes to be a quality CEO and not just assume you can be such because you are the founder. If you are the CFO – then you need to understand the role of CFO and respect the other leadership in your organization, etc.

If you are leading and do it poorly, the entire company suffers. If you have hired a CEO and now have a particular role and yet you constantly play the founder card and disrupt the CEO’s ability to lead – then you may find yourself an unemployed founder. And yes, unless you created protection otherwise, if you do not hold a controlling interest in your business, you can be terminated.

You have a successful business, but new dynamics have presented you with the opportunity to create significant growth. You are excited about the potential and you start to make changes and hire additional employees. If you hire inexperienced talent, you find that the load on you, the chief decision maker, becomes overbearing and growth is diminished. If you hire experienced / skilled people, you start to feel out of control; you see decisions being made without you, purchases you did not approve, etc. You dive back into the details, request explanations, and reassert your position as chief of all things.

And in this process, founders become the roadblock to growth. They hire inexperienced people that cannot manage growth, or they hire experienced talent and give them responsibility without authority. They micro manage; inserting themselves, delaying actions, failing to take advantage of the skills hired, and in the process demoralizing their team. And while believing every step of the way that they are right, they themselves kill the ability to succeed.

The type of leadership and team required to succeed at one level of business can be significantly different than what is required to profitably scale to a much higher point. It is most certainly true that to take maximum advantage of new opportunity; old thinking must also be examined and modified. The number one killer of business opportunity is the inability of leadership to embrace the change needed in themselves.

Not knowing what you don’t know and stifling input and action from others that do know is the surest path to failure – driving many once-successful businesses under. Goals and actions created for growth become the sword by which a business actually meets its demise; all at the hands of a founder that would not change or get out of their own way. These same people believed they were right, and it was the new hires or market dynamics that caused their failure, when in fact the reason for their demise was looking at them in the mirror all along.

In Lou Gerstner’s book, Who Says Elephants Can’t Dance, Mr. Gerstner is quoted as saying “I came to see, in my time at IBM, that culture isn’t just one aspect of the game – it is the game. In the end, an organization is nothing more than the collective capacity of its people to create value.” Businesses with great internal culture project the same outward. They are more productive as a business because their people are more productive individually and as a team. Leadership understands that happy and engaged people are more productive.

Most everyone has worked in a business where the culture was bad. Where mistakes were punished, poor company performance is blamed on staff, and where dictatorship was confused with leadership. In these organizations, the average employee provides less than eight hours of productivity; taking advantage of every break, commiserating with other employees over e-mail or water-cooler encounters, arriving and leaving at precise times; putting in time for money.

In businesses with a great culture, where everyone’s ideas are respected, work enjoyment and creativity is fostered, mistakes are valued as learning experiences, and success and failure is owned as a team, employees regularly provide more than eight hours of productivity. They work thru breaks, come in early, stay late, eat lunch at their desk, all because they want to. All because they enjoy what they do and are thrilled to be a part of a winning team.
If your culture is great, results will be great. If your culture is poor or worse, your results are likely to follow. Culture and the resulting morale mean everything to your business. If you adopt the “beatings will continue until morale improves” style of management, you have missed the point.