When attracting Series A funding, most ventures install a supervisory Board. In most cases, they do so because this is stipulated in the term sheet by the VC investors. After all, for investment directors it is of crucial importance to have positive influence on the scaling of the venture and therefore secure a high financial return.

In practice, the impact of scale-up boards is a mixed story. For many scale-up CEOs the board is just one more stakeholder to manage. At the same time, many boards struggle to add value. There is misalignment on objectives and strategy; the quality and expertise of the Board can be quite varied;  So much is happening that the board is always behind; the board finds it very difficult to coach the CEO; and the experience is often one of moving from crisis to crisis.

While facing a nearing end of the cash runway without having a next funding in sight, the situation is further complicated by the fragmented cap table: No investment director has a significant share, so decisions – also those that are make/break – can only be reached in consensus.

ScaleUpNation has conducted in-depth research at hundreds of ventures in the scale-up phase, specifically on what makes ventures scale up, and why so few do. One clear finding: Having a board is not enough; it needs to be an effective one. Effective boards demonstrate the following:

  • Alignment on purpose. Having one hundred thousand percent alignment on the importance of scaling up and the strategy and time horizon to achieve the specific scale-up goals. And being fully aligned on the personal development goals of the CEO/MT and how the board will support and coaching them on this journey.
  • Staffed for the task. This starts with understanding the practices that differentiate scaling from stalling. Plus knowing the industry and having access to relevant customers and partners in it. As important is to create effective board dynamics: i.e., asking powerful questions, not jumping to conclusions, having a reflective style and adhering to a clear decision-making process. And to create a safe place, with attentive listening, appreciation of differences of points of view, constructive debate, maintaining confidentiality and protection of everyone involved. This earns the trust required for personal coaching. And finally, independence and lack of self-orientation – to avoid acting only as a shareholder representative.
  • Structurally enabled. This means educating the CEO on effective upward management, including over-communication, being transparent and honest, better anticipation and asking earlier for help. It results in much better preparation for Board meetings and a much more constructive interaction

These skills and practices are clear yet difficult to master, and it requires not only mastery at the individual level but also as a team. After all, a board is more than the sum of the parts. The chemistry is at least as important as the individual competencies.

Skills are not mastered from reading the “test easy steps” handbook. Instead, they are developed in exchanging experiences with each other, in experimenting with different behaviors in safe settings, in having time to reflect and learn from receiving feedback. More on this in the next article.

PS: Also to actualise this aspiration and complete our offering, next to the board program, we have recently launched the Board Matching service.

 

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Menno van Dijk

CEO ScaleUpNation

Author Bio

About Menno van Dijk

With a background at McKinsey for over 22 years, Menno has a deep understanding of strategy, innovation and growth in media, high tech and energy. After his time as a consultant, Menno started THNK school for creative leadership, and founded ScaleUpNation:

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