While there is extensive analysis available on how boards of established companies should operate, especially those in the public interest or publicly traded shares, there is very little guidance on how to make venture boards (for fast growing scale up businesses) work effectively. Most companies have a set of obligations in their Articles that are merely taken from the Model A statutory format and provide a minimum set of requirements, at best. Based on our experience across board roles, board advisory work and mentoring chairs and NEDs, we outline below five considerations for venture businesses to make their boards more effective:
- Purpose: Consider the purpose of the board and the relative importance of your different expectations. There may include, for example;
- To optimise decision-making, especially when faced with increased complexity or a variety of investor opinions.
- To support effective relationships for senior management and investors.
- Scope: Consider the scope of the board as the non-executives or board advisors will not expect to be ‘doers’ in most instances. Typically an effective board will develop an objective consensus-based approach to; plan and evaluate; make decisions; solve problems; and set policies
- Chair: Consider the chair and CEO axis, taking into account their shared strategic vision, chemistry, someone the CEO can trust to be challenged by, who demonstrates empathy as well as being demanding. There is no statutory requirement for a chair, but that person can take responsibility for membership of and the effectiveness of the board and will have an aptitude for governance.
- Selection: Consider what you see form a board advisor/non-executive, which may include:
- Access to networks, insights or infrastructure
- Credibility to relevant stakeholders
- Dynamics: Consider board dynamics based on individual qualities (eg honesty and authenticity) as well as collective behaviours (eg accountability).
Drawing on scale up and high growth experience from venture boards to listed companies, we provide integrated leadership support from non-executive appointments, to board advisory retainers or reviews. Our integrated approach combines operational experiences and expertise covering leadership, strategy, finance, people, legal and IT. If you would like a confidential conversation to understand how we might help you, you can contact us on email@example.com for one of our specialists to get back to you.
Are you a high growth business?
If you are wondering what a scale up business is, it’s a fair point and is defined by the Scale Up Institute as businesses surpassing the £10m turnover level or with assets of more than £5.1m and sales growth of 15%-20%. The threshold mirrors current financial reporting thresholds that mean this is the first opportunity for those businesses to be visible and in reality, there are many more scale ups – fast growing businesses of substance that fall below these limits but are nonetheless experiencing similar growth challenges. It also means that these are proven businesses who have gone far beyond the MVP and market validation challenges of earlier stage businesses. To see an overview of the top challenges facing scale up businesses, see our article “Top five challenges for scaling businesses”