Constructing a great board
I often get asked how to go about building out a board. At Aconex, we were fortunate to have a tremendous board of experienced, passionate and supportive directors. The process of putting the board together was quite organic and, as I’ll explain below, the board itself evolved as the business grew. But regardless of the stage of your company I think there are some common traits to look for as you build your board.
Supportive above all else
As a founder, the most important characteristic that I look for in a board member is that they are supportive. More important than skills and experience is a mindset that they are there to help you - founders and CEOs - to develop your company.
They should not see their role as limited to compliance and oversight, but that it extends to supporting you and enabling the company to succeed. They should be passionate about the problem your company solves and be willing to get their hands dirty. The right board member will mentor you as the company grows and be prepared to tell you what you need to hear; it may not always what you want to hear, but they will do it constructively. They will be curious, asking helpful questions to refine your strategy and drive operational execution. And they will use their networks to advance the company, recommending potential staff and referring sales opportunities. They will get involved in strategy and planning.
Build a supportive board and it will not be there to try and catch you out but, while fulfilling its responsibilities, will work constructively with you to grow the business.
In the Aconex case, Rob and I knew all our early board members and trusted them to help us build the company. We were fortunate to know some experienced business leaders that brought skills and experience that we didn’t have, and they were thankfully happy to help us out. It’s critical to get to know potential board members well before they join the board. We took time to get to know potential board members so that we were comfortable that we could work with them.
A diverse range of skills
When I wrote recently about decision-making I noted how delegation should free you up to focus on what only the Founder or CEO can take care of. One of those areas should be thoughtful development of your board. As a young founder, look to a board to help plug your experience gap, so you can learn from their scrapes and scars, to better deal with the many challenges and opportunities that you will face.
It’s important to think about the range of skills and experiences needed to help the company grow at any given stage in its development. A well-rounded board should bring a diversity of experiences and approaches and be able to work well together as a team. The board dynamic is very important as even a single difficult board member can negatively impact the dynamic of the group.
The mix of skills and experience I look for in a well-rounded board includes elements of the following:
Entrepreneurship – someone who has built a company before
Operational management and leadership - someone who has run a company or large division
Industry experience (in the Aconex case that was construction industry experience).
A legal background
A finance or accounting background
Sales and marketing experience
Human resources and remuneration expertise
International experience that is relevant to the markets you are operating in
And, as you start to move towards IPO, public company experience
Many experience board candidates will tick several boxes, having been exposed to more than one particular area in the course of their career to date.
The Aconex board immediately prior to the Oracle acquisition brought a diverse range of skills and experience, with backgrounds in engineering, construction, property, finance, law, entrepreneurship, management consulting and private equity. While we had a 50:50 gender split on our management team, we only had one female director when Aconex was acquired, but were conscious of lifting the ratio. Our board had all operated at a CEO/CFO/Partner level in their business careers and included directors from Australia, the US and Asia. The group had a very collegiate approach, working well together as a team, and had a constructive relationship with management.
Independence – saving founders from themselves
Early in the Aconex journey we moved to a majority independent board, with three non-executive directors joining Rob and me on our board of five. It is perhaps a little unusual for founders to give up control of the board, especially when they still have majority ownership, but we felt that it was the best way to represent external shareholders and to prevent Rob and me from making any terrible decisions. This structure worked well and we rarely had a major disagreement within the board on the strategic direction of the company.
Of course, as founders you want to make sure you’ve brought in directors who can be supportive as well as independent, as discussed above, before going to a majority of independent board members.
The critical board relationship – CEO and Chair
Perhaps the most critical relationship in a company is between in the Chair and the CEO. In Australia, it is common to have the roles of CEO and Chair separated, and I think this makes sense from a corporate governance standpoint. But if the CEO and Chair don’t work well together the fallout can be felt across the company.
I was fortunate to have a great relationship with the Aconex Chairs over the years – Adam Lewis, Simon Yencken and Martin Hosking. I remain grateful to all of them for their amazing support of me and of the company. Each of them had been on the board, and I had come to know them well, before they became Chair. I was always mindful of investing time in these important relationships. I spoke with the Chair at least every week and in some cases when a lot was happening, such as during our IPO, nearly every day.
Advisory boards and mentors
At Aconex we didn’t have an advisory board, but these thoughts would also apply to developing one. An advisory board can be a good way to bring in greater experience and to get to know potential directors before they formally join the board.
One thing I personally found is that it is important to have mentors outside the company, so I didn’t bring all of my mentors onto the board. There may be times where you need to bounce ideas and decisions around and it is not appropriate to do this thinking with board members when you are still forming your view. I found having mentors and an executive coaching relationship outside of the board helped me work more effectively with the board and management.
Never be afraid to ask
Constructing a high calibre board requires some planning but also the ability to ask. Along the Aconex journey, once I had got to know some great potential board members, I simply asked them to join the board. I was amazed that they said yes. The willingness of talented and supportive board members to join Aconex and help us build the company was a key element of our success.