Board meetings can be a gigantic waste of time if not run appropriately. On the flipside, they can be a valuable source of input and guidance for a management team in the pursuit of maximizing shareholder value. While there are a number of different ways to approach and run a board meeting, I thought I would outline a few of my philosophies on them, and what I expect from my portfolio companies in terms of content.
1. Be prepared: Board meetings are like theater. Like any play, I expect the CEO to have a well thought out and scripted agenda for the meeting. The most efficient way to do so is to lay out an agenda and get feedback pre-meeting from the other board members to ensure that the board covers appropriate topics and allocates the right amount of time for each one. From an update and preparedness perspective, the CEO should always go into the meeting having a complete understanding of where the various board members stand in terms of any major decisions. There should be no surprises. This means that the CEO should have individual meetings and calls in advance of the board meeting to walk each director through any decisions that need to be made and the accompanying analyses behind them.
As far as board packages are concerned, I typically like to receive them at least 48 hours in advance so I can process the information and be in a position to ask intelligent questions.
2. Timing: For an early stage company, I typically like to meet in person every 4-6 weeks. Lately I have been skewing to more of a 6 week time horizon. I believe that timeframe gives the team enough time to execute on some of the goals outlined in the meeting and not spend their time constantly doing powerpoints for the board.
3. Content: As much time as possible should be spent on discussion, rather than update. What I want to know about is the management team’s priorities and why, how they are tracking against those goals, and what keeps them up at night with respect to meeting their objectives. What I do not want is a litany of presentations and tech demos with no discussion. At board meetings we should continually evaluate and monitor the company’s strategic goals, understand where the market is and how we are positioned vis a vis our competitors, and discuss management’s plans, priorities, and performance.
While there is no right way to run a meeting, having a framework can be a great way to lead organized and informed discussions. A good framework that I like to use is having the CEO give a high level company overview followed by a department level drill down delivered by the functional head. Typically, in the context of these department-level updates, discussion will ensue on milestone progress, roadblocks or hurdles to realizing the goals, resource constraints, performance of various employees, and any potential addition or subtraction to the list of goals.
Listed below is a standard framework that I like to use in board meetings along with some sample reports that help guide the discussion and allow directors to review performance. By no means is this meant to be an exhaustive list. Alot of these reports serve as good leading indicators for potential areas of problem down the road and none of these should require management to reinvent the wheel.
Company Summary by CEO
-Company overview discussing recent performance with highlights on each department
-Summary of key matters to be presented and decisions that need to be made – remember that decisions can only be made if the directors are all familiar with the issues and have had a chance to review the supporting analyses and risk factors pre-board meeting
During the meeting, it is the CEO’s responsibility to cover the agenda and keep the directors on topic and focused. That means if the conversation runs off on a tangent the CEO has to bring everyone back in line and table the discussion for another meeting.
Sales Review
-Detailed sales pipeline review by region
-Key wins/losses – detail on the losses and to whom
Professional Services (usually incorporated in context of sales discussion for smaller companies)
-Status of existing customer implementations and satisfaction
Marketing
-Competitive positioning update
-Product roadmap
-New product launch plan, etc…
-Lead generation statistics
R&D:
-Summary development plan of key features to be delivered for quarter and current progress
-Bug report broken out by severity-should also track resolution and time outstanding against prior months/quarters
Customer support:
-Statistics on level 1, 2, 3 calls and performance as measured by time outstanding versus prior months/quarters
Finance:
-Plan vs. budget – income statement, balance sheet, cash flow statement
Depending on the stage of company, the time of year, or crisis of the quarter, there will be a much deeper dive into various departments to discuss topics such as product roadmaps, the budget, the sales plan, and partnership strategy. The more information the board has in advance by way of supporting analysis, the more informed the discussion will be.
At the end of the board meeting, I typically like to have a board-only session where the members can not only make the requisite board approvals for stock option grants and the minutes but also feel free to discuss any pertinent or sensitive topic like executive compensation, budget planning, financing/exit strategy, or concerns about personnel. This session allows the directors to evaluate any management proposals and comment on performance in a candid and open forum without embarassing or browbeating any executive. While a board meeting should only last 3-4 hours for the most part, you have to remember that much of the work of any board happens outside of the formal meeting and through the informal daily/weekly interactions with the mangement team via telephone, email, IM, and face2face meetings. This is where the heavy lifting happens. When you find yourself diving too deeply into a discussion on sales tactics, for example, the board may be better off saving that conversation for after the meeting. Before you present next year’s plan to the board, you should run it by a few of your more active board members for comment and advice before rolling it out to the whole board. If you find yourself having 8 hour board meetings, then you are probably getting too focused on the details (breakout sessions or scheduling subsequent informal meetings to drill into a particular topic is more appropriate) and not doing enough preparation in advance of the meeting.
If you are more interested in the board’s role and who should be on the board, I suggest reading some excellent posts from fellow VCs Brad Feld, Fred Wilson, and Jerry Colonna.
UPDATE: Fred Wilson adds to my post emphasizing the non-executive board discussion. As Fred says, it is always a great idea for the non-executive directors to be in synch wih their thoughts and overcommunicate prior to and after the board meeting. This also means having the right people in and out of the room. I totally agree.