Board members and directors can be viewed as the primary strategic body in a company. In today’s turbulent business environment there are several challenges to overcome within a board and especially for startups. We discussed the topic with Dr. Carl-Henric Nilsson – founder and entrepreneur with several years of experience as a board member and chairman.
With these three common challenges brought up by Carl-Henric, we hope to shine light on common areas that board members need to focus on during the startup journey:
1. Incorporating the board’s input in the day-to-day work
Although the board is responsible for strategic direction, it can be difficult to ensure strategic alignment into the daily operations. Lack of communication and collaboration is often the underlying reason for difficulties in transitioning from board decisions to concrete actions. Thereby, often leading to the board taking on more responsibility and getting involved in daily operations. Therefore, it is crucial clearly define responsibilities and have clear communication with the CEO and Management team.
2. Securing funding in the start-up phase
There are too many great ideas that remain as ideas and never get off the ground. One reason is that the board might be unable to secure funding for the company. There can be several reasons why this challenge might arise, and one reason can be the lack of network contacts. To ensure that the company can acquire the necessary financing to get the company off the ground, the owners and the board needs to have a clear and honest communication regarding how the company will finance the different stages of the company. The board members also need to be recruited with the financing in mind – especially during the intensive start-up phase.
3. Interpersonal relations between the board of directors, CEO and management team
The ability to build consensus in key areas for the board can be a complex and time consuming process. Individual issues and viewpoints can be misinterpreted due to lack of communication and understanding. The management team tends to focus on the daily operations while the board focuses on strategic direction. To make sure that the board, CEO and Management actually get along, it can be a good idea to schedule time outside of the board room and make sure that all governing individuals get to know each other.
Reflection and evaluation – a way to deal with these challenges
By continuously evaluating the work of the board, an open climate is created and possible blindspots will be identified. This makes it easier to work together within the board and with other people involved in corporate governance. Carl-Henric further recommends a few suggestions to strengthen the corporate governance for a startup:
- Business model know-how – it’s important that all directors understand the company’s business model to prepare their company for future success.
- Joint strategy days – during these strategy days, the board of directors have the opportunity to go into depth with strategic planning.
- Board training and education – board members should sign up for specific board training and education.
Are you curious about a board evaluation, learn more about effective corporate governance and what corporate governance evaluations could mean for you.