Growth Chair Circle | Steering Growth Boards Through a Crisis | Spring 2020
23rd April 2020
From being a “sounding board” or “shield”, to “kicking the hell out of landlords” and “doing PR”, chairing a growth business today requires a veritable Swiss-army knife of skillsets, and never more so than at present. In the first of our deep-dives into what makes a successful board, we’ve gleaned targeted advice from a number of seasoned growth Chairs, currently wrestling with the most challenging commercial environment of their careers.
Beginning by carefully vetting your future founders and learning how to mentor them, to being hands-on and directive with CEOs in a crisis, we tease out the nuggets of wisdom that our growth Chairs wish they had known before taking on the top-job.
With huge thanks to all our growth chair contributors (see full list at end) for their considered openness on this subject. We’ve summarised the highlights of our conversations below.
What to know before taking on your first growth Chairmanship
We asked our experienced growth company Chairs what advice they’d give on selecting the right start-up to chair:
- “Make sure you love the business model and the team. It’s always flattering to be asked but if you don’t know anything about the sector and are not 100% sure, think hard about taking it on. It’s other people’s lives and livelihoods at stake – and you may be Chair for many years.”
- “Remember, in start-ups, cash flow is everything.”
- “Expect the unexpected and above all, remember it’s about people, people, people. Spend time getting to know the people and the culture. Think carefully whether you can help set them up for success.”
- “Chemistry with the founder is critical. You need to spend a lot of time with him/ her before saying yes. I would take multiple meetings to get comfortable and feel you could genuinely add value to the business and people.”
- “Is this a founder, leadership team and company you can genuinely add value to? The CEO may be outstanding but if they think they know everything already, you need to think hard whether they’re going to take your advice. None of us are the finished article.”
- “Make sure you’re comfortable with the stage of growth of the business – whether that’s pre-Series A or pre-IPO. Know what stage you’re getting into and feel comfortable with that, they’re all extremely different.”
- “Do your due diligence on the investors, you want a high-quality investor set. You also need to understand if the business is sustainable and if there is a decent level of tech behind it.”
- “Look out for a clear purpose and culture. The founders need to be committed and you want to see a culture of honesty, transparency and success.”
- “It’s not a straight line: you’ll see a business plan at the start, but things don’t always go according to that plan. It’s a bit like raising a child: fulfilling but not without challenges!”
- “Will you enjoy it? Crises aside, it should be fun.”
Setting Expectations: Time commitment and engaging with the business
In normal circumstances, growth businesses expect between one to four days a month from their Chair and can be more demanding of your time than many listed businesses. Start-ups will typically require their Chair’s help to support the CEO and leadership team, advise on strategic decisions as well as with fundraising, making senior hires and liaising with investors. It’s worth exploring the founders’ expectations early on and factoring in potential peaks such as fundraising rounds.
Our contributing chairs outlined their advice on setting expectations from the outset, getting to know the leadership team and under the skin of the company:
- Role of the growth chair. “You’re not there in a supervisory category, you’re there as a resource to mentor, guide and challenge. It is different from chairing a listed business.”
- Time with the founder/ CEO. “I meet the founder weekly or bi-weekly, often for breakfast – it’s informal. Let them know the best ways to reach you, I can be available super quickly by phone, email or WhatsApp and fine with evenings and weekends. It’s less predictable than a listed business.”
- Establishing your relationship. “If the company’s their baby, you need to be mindful of that. Not all founders are logical people. You’ve also got to work out the size and shape of what you have. You should be asking: how structured and strategic are they? What’s their appetite for growth and debt? You need to test that early on.”
- Setting expectations. “Some founders think you’re available 24/7. You need to set clear boundaries of what is acceptable and what is not for you. It’s fine to expect that in a crisis but if it’s not, then you may need to be straight and tell them it can wait until Monday morning.”
- Getting to know investors. “Have a lot of cups of coffee with the investors in the first six months. You have to build those relationships early so you know each other well if/ when things go wrong.”
- Providing “air cover”. “You’re there to provide additional air cover to the CEO. There’s a heavier time commitment during fundraising, you’ll almost certainly be involved in that process, so you need to factor that in.”
- Advising on key hires. “The team use me as a resource for senior hiring, to meet candidates for final round interviews. It’s important to make time for that.”
- Communication style. “Start-up boards are more informal, I’ll have regular contact over WhatsApp groups between the Chair, CEO and leadership team – as well as with other board members. We’ll often have daily chats this way.”
- Availability for the wider team. “You have to be visible, quick and proactive in this market and not seen as hierarchical. I spend time with the leadership team and with the CEO once a week including the CRO, CCO and CFO. I also do a breakfast with the team every quarter with six or seven people.”
Guiding Founders and CEOs through the Coronavirus crisis
Our contributing Chairs are all deeply experienced, but none have seen a crisis like this. Many have led teams and companies through multiple crises from 9/11, the Icelandic ash clouds and the Great Recession/ Financial Crisis of 2008. They have earned their spurs, but all were quick to point out that every crisis is different, and few teams if any will have been prepared for this Coronavirus crisis. As one chair succinctly put it:
So how do chairs give the right level of guidance and direction to CEOs, arguably going through the toughest time in their careers’?:
- Getting the CEOs position. “The main challenge is that the CEO has to worry about the well-being of their organisation in a completely unknown environment and they can’t communicate in their standard leadership style. They have to discover how to keep people motivated in this totally different context: that’s a big enough task.”
- Be supportive. “This is not a time to be critical. You can always have the post-mortem in three months’ time, it’s the time to be collaborative and supportive.”
- Upping communication. “In a crisis you engage more frequently. I’m communicating with my CEOs daily to check in. It’s about finding the right level of input, while allowing them enough time to act.”
- Assessing the CEOs needs. “You need to do a situational analysis of the CEO and engage with them differently. You can provide well prepared CEOs with advice and direction. That may be enough. If a CEO is less experienced, you may need to be more directive and mildly cross the line from being a strategic and advisory chair to providing more executional direction to help them.”
- Stepping up. “As a Chair I’m much more involved than I would be in normal circumstances. I’m speaking to banks, suppliers, kicking the hell out of landlords and doing PR. I want to give the CEO as much support as they need so they can get on with keeping the business going.”
- Reality checks. “In one or two cases founders have shown inappropriate optimism over how quickly this crisis would be over. It’s important to get them to a place where they understand the severity of the situation.”
- Helping focus the leadership team. “While matters are urgent, everyone needs to keep calm and focused. This is a moment when people need to stand tall and when teams prove themselves. If people start running for the hills, it’s an acid test for when the lights come on.”
- Protecting the team. “Global businesses never close. You need to make sure senior people are able to switch off and get down time or they will burn out very quickly.”
- Managing the board’s involvement. “The leadership team shouldn’t be distracted by the board from the job in hand of getting the business up and running. Board members need to allow executives time to think, plan and execute so you may need to rein in the Non-Executives.”
Adapting your chairing style to the Coronavirus crisis
As there’s no playbook for the current situation, chairs we spoke to have had to quickly assess their company’s situations and adapt their board leadership according to individual needs.
What’s emerged from our conversations are a range of approaches from our chairs. What they have in common is increased engagement and flexibility, more informal and frequent communication with the leadership and other board members, and the need for the chair to step up and become more directive in some cases.
Here are their key pointers to help boards run more effectively in this crisis:
- Running the board in a crisis. “What makes a good board run well in good times is also how you get the board to work together in adversity. If you can’t achieve the former, you certainly can’t achieve the latter. A bad board isn’t going to get better in a crisis. So always hire well!”
- Adopting a flexible approach. “Having been through multiple crises, it’s clear that the approach you have going into a crisis isn’t going to be the same as what gets you out. Revenues will reduce, but when they come back, it may be in a different way. With limited visibility, you need to think about what this will look like at the other end.”
- Rapid decision making. “The board behaves in the same way, but data is scarcer and you need to act faster. You have less time to make decisions and you can’t necessarily get the whole board together on every call. It’s about communicating differently, agreeing on a path quickly with the information you have.”
- Frequency of communication. “Availability of board colleagues is very important right now. I’m speaking to board colleagues most days informally and we’re meeting via Zoom once or twice a week in some cases. It feels extremely concerning and many decisions are formally agreed and considered quickly.”
- Communication methods. “As a board we’re speaking on the phone daily, messaging on WhatsApp and holding board meetings by Zoom. Our communications were always pacey but it’s sped up. There are some changes I think we’ll keep. Did we need travel for every board meeting? I think it will change our behaviour longer term.”
- Delegating to sub-committees. “I’m a big believer in structured sub-committees to deal with specific problems, particularly in a crisis. You split out the areas that the board needs to tackle, so one group can support the CEO or CFO on a particular issue, or access information more rapidly.”
- Contingency planning. “I’m much more mindful of leadership succession right now. What would we do if the CEO and CFO got sick? You need to have a plan.”
- Transparency with investors. “The more transparent you can be with lenders the better. Hiding the reality will put you in an awful situation, so you may have to face up to uncomfortable truths. Seeking help is more important than ever. Now is not a time to be smart and clever with valuations, we need to be clear, transparent and engaged with stakeholders.”
Managing board dynamics
Chairing boards of start-ups is a contrasting experience for many to chairing a listed business. Founders may be less experienced leaders, board resources may be more limited and boardroom dynamics are certainly different, as boards are usually populated with investors and fewer independent non-executives.
Board composition varies according to the stage of the business but expect to be the only independent director if it’s early stage. Managing the dynamics with investors as board colleagues is a new skill to learn for many Chairs. Increasingly later stage boards are recruiting more independent non-executives and are aware of improving diversity representation, as listed companies have been for some time.
Our contributors shared their advice on navigating board dynamics for start-ups and managing boards in this crisis and longer-term:
- Leading focused board meetings. “Process inside and outside the boardroom is very important, particularly in a start-up where things can be less structured. Somebody once said a great meeting depends on having a well-defined outcome, the right content experts in the meeting and having the right process that allows the content experts to express themselves in an efficient way to get all the ideas out in the open, decisions made and implementation plans agreed to.”
- Being the “bridge” or “shield”. “There are often tensions between investors and management. You need to act as a sounding board for both and they will come to you. To some extent you are there to be a bridge between investors and the management team. Sometimes it feels like you’re more of a shield.”
- Independent mindset. “I’ve chaired businesses that are massively underperforming. Do we fire the founder? Do a Rights issue? I position myself wherever I think is right. I will make an independent assessment for the company as a whole and in the best interests for the shareholders/ debtholders. I can’t be bought.”
- Managing investors’ risk appetite. “Investors can be risk averse, you need to support the CEO to take risks to ensure growth and value. I will push back and present scenarios. I can show them that if they insist on sticking with a strategy, that’s going to be the difference between a £50m and £500m business.”
- Differing agendas. “It’s not unusual to have one company with a range of directors with very different interests. You sometimes have equity investors with divergent views: some want to hold, and some have different time horizons. These are not insurmountable, but you’ll need to spend time with each to be clear on their position.”
- Easing tensions. “If things are getting blocked or held up by the board, that will drive a founder or CEO nuts. Try and help them unblock it. Somebody has to be number one and that’s the CEO. It’s all on their shoulders so you have to help them.”
- Developing the board. “By Series B you should have independent NEDs on the board and fewer investors. You need the governance set up to get ready for a later stage, to do this you shouldn’t just go to your network, you need to use a search firm”
- Encouraging diversity. “Let’s face it, many start up boards are behind the curve in terms of gender, ethnic and social diversity. In growth companies, investors must represent customers if they’re going to continue to thrive.”
Founders Keepers | Growth Board Advisory
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Thank you to our contributors
- Cyrus Ardalan, Chair, OakNorth Bank and Citigroup Capital Markets
- David Giampaolo, Chair, Gousto
- Debbie Hewitt, Chair, Visa Europe, BGL Group and White Stuff
- Sir Hossein Yassaie, Chair, Mindtrace.ai and Ultraleap
- James Bilefield, Chair, SThree
- John Clarke, Chair, Science in Sport and Futura Medical
- Jonathan Schneider, Chair, Ada Health, Iwoca and Multiply.ai
- Margaret Rice-Jones, Chair, Penguin Portals and Origami Energy
- Niall Wass, Chair, Glovo and Trouva
- Peter Williams, Chair, Superdry, Dominos Europe, U+I, Mister Spex and Sophia Webster
- Phillip Riese, Chair, Flywire and eWise
- Susanne Given, Chair, Made.com and Outfittery