A well-rounded board is an absolute necessity in these economically trying times.
The average board of today usually consists of at least one person who has expertise in the company’s business; a high-profile person who brings credibility and gravitas to issues; a financial person who, among other things, can chair the audit committee; and an attorney who has experience with corporate governance matters.
There is, however, somewhat of a newcomer to the lineup of board members. That newcomer is the strategist.
The Role of a Strategist
Because of the challenging business climate that we find ourselves in, boards need someone who will bring a completely fresh perspective to the issues facing a company. Of course, that person should be literate in business matters, but doesn’t have to be closely familiar with the workings of the company. In fact, quite the opposite can be true. The strategist can be an outsider who is a novice when it comes to the workings of the company.
Nowadays, a novice will not eliminate the strategist from contention to a board position because what brings true value to the novice is his/her ability to be a strategic, analytical thinker who can think as an outsider — outside the box, so to speak. This type of person, assuming that the board is an open and transparent board and has the interests of the company at heart, can bring reality to what has, in the past, been a cloistered situation where boards sit removed from the knowledge of what’s going on “outside” and make decisions based upon their somewhat provincial views.
A Strategist at Work
I was recently asked to advise a company about the hiring of a new board member. I told the board that they needed someone who can bring a fresh approach to their profitable but rather stagnating company.
At first they were somewhat resistant and asked me how I thought that someone who was not closely familiar with the workings of their company could possibly be able to bring value added to the board. I politely told them that their experienced board seemed to have hit a dead end when it came to new ideas about the company and its services. I then pointed out where I thought that the company was languishing in its approach to its revenues and its attempt to get new customers.
Surprisingly, the board listened and asked me several questions about how I thought someone who was completely unfamiliar with the company could bring new life to it. I then emphasized that it was the unfamiliarity that the person could bring to the company actually could be an asset. He/she would be looking at the company anew, afresh.
They finally bought what I was telling them and hired a search company to find them a new board member. They asked me to help them interview the prospect and assist them in the nomination process. I gladly did that once they presented me with candidates.
Questions to Ask
Once I sat down with the candidates, I would ask them why they thought they were strategic thinkers and could think out of the box. I asked them what seemed like irrelevant questions: what books did they read; what sports did they play; what games (cards, chess, etc.) did they enjoy.
I asked one person, who I actually was drawn to as a candidate, why she thought that she was a strategic thinker. This person was working at a high-level job in a software company. She had already achieved considerable success. But that wasn’t enough for me. She could just be some sort of a nerd who liked to be shut up in a cubicle and left alone to resolve some software architectural problem the company might be having.
Her response was really fascinating. She said that she had proposed a new product that she thought would enhance her company’s sales and profitability. The first reaction that she got from her board was quite dismissive. The CEO told her that not only would it never work but would also take four years of man-hours to even bring to a testing phase. Then, she was told, that it most likely would not pass that testing stage.
She then pleaded with the board to give her six months to prove her point. They reluctantly went along and allowed her to take a leave of absence from her regular job and devote her time solely to this new idea of hers. The upshot of all of this is that she came back to the board within four months with a software project that was unique, exciting and eminently doable.
When she told me this, I went to her superiors (with her permission) to verify all that she had told me. They confirmed it all in spades! They said that she had worked mightily for four months to do what some board members believed would take four years. Additionally, she succeeded beyond the board’s expectations. The product is now being sold — and sold profitably. Additionally, it made quite a positive difference in the company’s bottom line.
I heartily recommended this woman as a board member and gave my reasons: She risked losing her credibility and lofty position within her company; she got out of her comfort zone and intentionally put herself at risk; but mainly, she thought out of the box.
The board, per my suggestion and over no one’s objections, agreed to add her as a board member. She continues to make meaningful contributions in her new board position. Her employer is thrilled that she was able to help a non-competitor that probably will some day end up collaborating with her company on other projects. Everyone was happy.
Boards need at least one member who is some sort of a maverick. He/she should be an independent thinker and be willing to risk derision when introducing new ideas to the board. A person of this type is indispensable during these extremely competitive and trying times.
Shaking up a board is no easy task. But when the going gets rough for a board, a shakeup is inevitable. Boards are learning that they usually have nothing to lose when adding a new “mind” to their members. Such new member usually brings fresh vitality to a board — an ideal situation.
Theodore F. di Stefano is a founder and managing partner at Capital Source Partners, which provides a wide range of investment banking services to the small and medium-sized business. He is also a frequent speaker to business groups on financial and corporate governance matters. He can be contacted at [email protected].