This is the fifth installment of an eight article series focused on helping early stage investors coach founders on building the best board dynamics they can.
What happens when board behavior doesn’t go exactly as planned? Thinking in terms of “hacking the board” is a way for advisors and investors to help guide early start-ups in dealing with the board and making the best of a situation the CEO cannot fully design or control. There are hacks for planning and running meetings, along with a checklist of expectations of board conduct.
Even assuming the directors understand their role broadly, there can still be significant issues to contend with. These fall into four broad categories: issues with logistics, attitude problems, interpersonal problems and competence deficits. We’ve looked at some key issues with director roles and logistics behavior, and now let’s look at attitude problems, with interpersonal problems and competence deficits to follow.
Director Attitude Problems
Regardless of whether you are an advisor, investor, director or CEO, participating in a startup is a bit like riding a roller coaster. There are times when you are up, and there are times when you are down. Regardless of whether you are up or down, there is almost always uncertainty about the right direction forward. It can be stressful for all involved. Having one or more directors with the wrong attitude in the board room can be a tremendous challenge and drag on everyone’s effectiveness.
Attitude problems fall into three broad categories: excessive optimism, excessive pessimism and outright cynicism.
The excessively optimistic cheerleader never has feedback, never pushes back, loves everything proposed, thinks every plan is achievable, and thinks hope is a strategy. Not only is this laziness a waste of a valuable board seat, if it is associated with a dominant voice in the room, it can make it that much harder for other directors to contradict and offer up the advice and ask the questions the CEO needs to hear. It can cause a shallowness of board room analysis and create momentum towards a rubber-stamping mentality.
For the CEO, dealing with this situation can take some self-awareness and a deft touch. Self-awareness because everybody loves flattery and support, and confirmation bias can make it hard to recognize when you are just grabbing at what you want to hear. It is hard for anyone not to think the person who agrees with you is the smartest person in the room.
But the CEO will need to challenge him or herself to recognize superficial input from a cheerleader and push them to go farther. For instance, the CEO can ask them why they like an idea or ask why they aren’t worried about this or that potential consequence. He or she can ask them to expand on their thinking or to reconcile their view with that of the others in the room. Drawing a cheerleader out can often force them to go a little deeper and provide the more nuanced advice needed.
We have all seen them. This person is not merely having a bad day. This is the person with a permanently sour outlook on life. The pessimist hates every idea, thinks everything proposed is doomed to failure, says “I told you so” to every setback, and always thinks the resources are too scarce or the timeline too long, or the effort not worth undertaking.
Pessimists can be terribly annoying and a real buzz-kill. More importantly, they can drive the ambition out of a plan and lead companies to embrace overly-modest and “safe” strategies that doom them to mediocrity. They sap energy and drain enthusiasm. Dealing with them is not always easy. With less dire cases, it is sometimes possible to jolly them out of it by giving the behavior a label or a nickname: “Steve, you are doing your ‘grumpy cat’ impression again?”
As with cheerleaders, CEOs may be able to draw pessimists out: “you seem overly down on this plan; what is your main concern?” Or, “I understand there are risks here, but don’t you think we have taken adequate steps to address them?” “Others have expressed enthusiasm – help me reconcile?” And, as with cheerleaders, CEOs can enlist other directors in the effort to manage pessimists: “Sarah, what is your reaction to Steve’s concern?” “Bob, what do you think about Steve’s question?”
Another technique can be to acknowledge their concerns and ask them if they can suggest any modifications to the plan or any alternatives that might improve it. In that vein, it may help for the CEO to ask whether some kind of a test would be their preference. If the CEO goes down that path, he or she will need to seek out clarification regarding what milestones or interim data would be necessary for the director to see to get them comfortable with the proposed approach.
The cynic may be the most troublesome. They take skepticism, which is about attacking the underlying facts and assumptions of an assertion, much further. A little skepticism can be a healthy part of any constructive debate, provided it is not chronic enough to fall into the pessimism category. Cynicism is not attacking the premise of the assertion, but rather is attacking the motivations and character of the person making them. Cynicism is extraordinarily destructive in the boardroom. It really cannot be tolerated, even briefly, and should be called out and dealt with immediately.
In general, it’s great to have skeptics who challenge individuals to do their best thinking, but it is death to have a cynic who is questioning a person’s motives or character. If a director is approaching every discussion with the assumption that the CEO is not telling the truth, or cannot be trusted, or has an agenda that differs from the directors, or is trying to pull a fast one on the investors, the CEO will need to have a sit-down with him or her and sort it out. This director either needs to become comfortable that the CEO’s motivations and character are appropriate or she needs to leave the board. There is no way a board can function effectively if one or more members starts with the cynical premise that the CEO is misleading the board. It is an extremely caustic dynamic that will break down the trust of all involved and entirely preclude any effective operation of the board.
Hopefully, with the above advice, advisors and investors can help the CEO to deftly and successfully deal with the cheerleader, the pessimist and the cynic. Next up we will look at dealing with the interpersonal problems and competence deficits.
To learn more about working with boards, download this free eBook today Director's Guidebook: How to be an Effective Board Director in Early Stage Companies or purchase our books at Amazon.com.