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Why Do Businesses Need a Board of Directors?

Why Do Businesses Need a Board of Directors? Interview with Rick Williams

Rick Williams is the Founder and Managing Director of Williams Advisory Partners, Most of his recent career has been serving on the board of directors of technology companies.

Today, Rick helps leaders make important decisions, prepare to raise capital and overcome barriers to growth. He also recently published a book called, "Create the Future," , which he wrote specifically for leaders who believe they drive the future for their organization and for themselves by the decisions they make.

In this inspiring and empowering interview, Rick talks to Triple G’s Gregg Stein about what success really looks like, how to choose the future, and whether or not you should have a board of directors as a small to midsize company.

Gregg: Hello and welcome to Success at Scale, the podcast that delves into the world of business with experienced entrepreneurs, business leaders, and startup founders, uncovering the secrets to turning business ideas into tangible results. I'm Gregg Stein, your host, and today I'm thrilled to have Rick Williams, the founder and managing director of Williams Advisory Partners. Rick is not only an incredible individual, but also the author of "Create Your Future - a powerful 5-step method for leading your company to a better tomorrow." Rick, welcome, and tell us about yourself.

Rick: Thanks, Gregg. My current work revolves around helping companies achieve greater success by serving on their board of directors. Additionally, I provide consulting and advisory services, which I like to think of as a blend of my consulting career and my experience founding and running a company.

Gregg: Well, let's dive into it. It's certainly a challenge, but let's approach it seriously. When we first connected, you were heavily involved in boards of directors and your leadership in that domain. I'm eager to hear your insights on what it truly means to be a leader on a board.

Rick: Absolutely, Gregg. Let me begin by sharing my condensed pitch on why having a board of directors is a significant advantage for companies of all sizes. Recently, I had the opportunity to host and moderate a program at the New Venture Summit, which focused on why young companies should establish a board of directors, especially those aiming to grow to scale.

Here's the crux of it: The CEO, whether a founder or a hired executive, along with the senior leadership team, is primarily responsible for running the company, shaping its vision, and day-to-day operations. However, even if they possess extensive experience, they need the support of individuals who can stand alongside them—setting expectations, providing coaching, and acting as advisors. The board of directors also has the crucial fiduciary role of representing the shareholders. The board ensures that shareholders receive accurate reports and information about the company and oversees corporate governance, particularly for public companies.

When it comes to the company's operations, having a board is beneficial for every leader, particularly the CEO and President. It's invaluable having access to individuals who can ask thought-provoking questions like, ‘’What is your strategic plan for the company over the next one, two, or three years? What is the company’s performance against the plan?" Furthermore, they can assess the leader’s performance against those goals. This accountability helps leaders stay on track and ensures that they deliver on their promises.

Now, there's one more benefit of having an engaged board of directors that I'd like to emphasize. The leadership position can be an arduous task, often leaving individuals without a confidant to turn to for confidential and open discussions. It can be a lonely role. Having an engaged board that fosters an environment of openness and transparency provides important support for the company’s leadership. Leaders can openly express their uncertainties, seek guidance on decision-making processes, and weigh options in a confidential setting. In the end, the leader must make the final calls and be accountable for the outcomes, but having an engaged board of directors enhances the leader’s effectiveness and ultimately contributes to the overall success of the company.

Gregg: That's an interesting point, Rick. In reality, the dynamics of board involvement can vary significantly. So, how do you believe one can effectively engage the board of directors in their company?

Rick: You're absolutely right, Gregg. It's unfortunate, but the truth is that many small and mid-sized companies lack active boards. Oftentimes, the company owner feels skeptical about the board's ability to contribute meaningfully. They might think, "Why should I bother with a board? They won't possess the same level of knowledge about the company as I do. How can they truly assist me? It's just an inconvenience having to explain myself to them. What value will they actually bring?"

In such cases, the owner might have a board composed of friends or acquaintances, such as their Saturday golf buddy, or even professionals like their attorney or banker, who occasionally provide advice. They believe this is sufficient for a board. Many individuals, particularly company founders, share this sentiment, expressing a reluctance to be bothered by a board. They believe their understanding of the company surpasses that of anyone else, and they don't wish to engage with individuals who might nitpick or ask ill-informed questions.

If you assemble a board that isn't the right fit, it can indeed become a nuisance, offering little value in return. Therefore, it's crucial to invest time and effort in determining what you genuinely seek to gain from the board. Identifying the right individuals to serve on the board is paramount.

It's important to recognize that establishing an effective board requires a thoughtful approach. By identifying the desired outcomes and diligently selecting qualified individuals, one can build a board that adds significant value. It's a worthwhile endeavor that can truly make a difference.

Gregg: So, like any other aspect of business, having the right people with the right skill set in the room is crucial. Trust is a significant factor in successful boards, as you mentioned earlier. Trust allows for a sense of security and confidence when seeking advice and feedback. However, it often seems lacking in many small to midsize companies, leading to dysfunctional board dynamics. In light of this, Rick, how do you overcome trust challenges in business, and what advice would you offer to dysfunctional boards?

Rick: You're absolutely right, Gregg. Trust is indeed vital, and it must flow in both directions. The board needs to trust that they are receiving transparent and accurate information from the company's leadership. Simultaneously, the company's leadership must trust that they are receiving the best possible advice from the board members. Trust is something that must be earned over time.

As the CEO, one must take the risk of opening up to the board and sharing challenging issues. For example, there might be a vice president of engineering who is underperforming despite being instrumental in the company's growth. In such a scenario, the CEO needs to address questions like whether to retain or replace the individual and how to find a suitable replacement. Taking such risks and being open with the board is crucial.

Similarly, the board members themselves must be willing to take some personal risks. Often, challenges in board function arise from the fact that the members don't work together on a daily basis. They might not know each other well. Even if they meet once a month, the limited time available for decision-making can hinder collaboration. To overcome this, it's important to build a diverse board with individuals who bring different experiences and perspectives to the table and give board members opportunities to get to know each other and build trust among themselves.

Creating an environment where talented, energetic, and verbally communicative individuals can effectively collaborate is a challenge. Board members are professional peers, and they might hesitate to appear uninformed or inferior to their colleagues. Building trust among board members involves fostering an atmosphere where they feel comfortable sharing their uncertainties and past experiences.

Ultimately, trust is built through persistent efforts and a willingness to listen, accept, and respect each other's viewpoints. It's about acknowledging that valuable insights and advice can be gained from others, even if it means deviating from one's initial stance. Over time, with consistent engagement and open-mindedness, trust can be nurtured and dysfunctional boards can transform into cohesive and effective teams.

Gregg: What a great overview it is! Thank you, Rick, for all your expertise when it comes to the essence of the board of directors. I think it’s very helpful for Triple G readers. To our followers - thank you and until next time! Stay tuned for more exciting content coming your way!


Read more about Success at Scale podcast with Triple G Ventures here and watch the original podcast episode up on the Youtube link!

This podcast covers business stories from experienced entrepreneurs, business leaders, and startup founders on how to translate business ideas into business results.

In each episode, Gregg shows how companies grow from seed to scale, testing his theories with successful business leaders.

Success at Scale is hosted by Gregg Stein, Founding Partner and CEO of Triple G Ventures. Dynamic, forward-thinking visionary, dedicated to unlocking the potential of great people, great ideas, and emerging technologies. 20+ years of experience building, leading, and scaling connected IoT consumer electronics, ed-tech, audio/music tech, and content businesses to $500m+ with several exits. Specifically recognized for scaling ION Audio, ROLI, and Kano Computing, Fast Company's Most Innovative Companies of 2018 and 2019, just behind Apple.


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