The Three C's of Effective Boards

4/5/2012

Earlier this week I attended a dinner function with 16 others, to hear a well-regarded Director and Chairman share his thoughts and experiences about leading the Board of a high-growth company. Amongst some great insights, he suggested three areas that Boards of high-growth companies need to focus on closely:

Capital: Boards need to ensure the company has sufficient capital to fund its growth plan. Otherwise, growth will be limited by available funds, and that inevitably means slower growth, and may mean important market opportunities are missed.
Capability: Boards need to ensure the company has sufficient people capability to execute its growth plans. That means recruiting a CEO capable of leading the company effectively, both now and in the future. It also means encouraging the CEO to recruit high capability people into key roles, lest the growth of the company outstrip the manager's ability to execute.
Culture: Driving growth is often hard work, so everyone needs to be on-board. The Board needs to ensure (through the CEO), that everyone is working to the same goal, and that they are signed up to an agreed set of brand/company values. People who can't sign up should be given the opportunity to "get off the bus".

Sounds easy on paper! What do you think?

1 Comment

Steven Stewart link

5/5/2012 01:40:06

Capital is easy compared to the other two. Capability and Culture are intertwined. Without good capability you cannot have good culture. Capability comes down to ability to execute and "how" you execute. I think "how" you execute builds a culture and actually executing reinforces it - like a snowball effect.

The Board choosing a CEO that can not only execute, but can execute in the right way is crucial to building out capability and developing the the right culture. It's pretty simple, "lead by example" stuff, but it still seems to go missing and as a consequence, the culture suffers and so does performance.

Perhaps another thing here is how the CEO is incentivised. Those performance criteria that the Board values will be how the CEO is remunerated. And this in-turn will impact culture. Incentivising for short-term growth, but also long-term, sustainable business performance could be interesting. Similar to just making a profit for a business no longer being enough, reaching financial targets for a CEO is no longer enough. The CEO also needs to do it in the right way to develop a winning, safe and positive culture.

Cheers - Steven

PS: Really enjoyed your "successaholic" piece and related article.

The Three C's of Effective Boards

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