In my experience, there are two types of startup boards: high-functioning and low-functioning. A high-functioning board is characterized by trust and admiration among its members, and an ability to work together to tackle tough decisions. On the other hand, low-functioning boards often struggle with infighting and misaligned incentives.As a founder, it’s important to understand the dynamics of your board and work to foster strong relationships among its members. This will be especially important during difficult times, when a cohesive board can make all the difference.
When it comes to the kinds of decisions a board may face, there are a few common examples. For instance, a board may need to decide on a company’s cash burn rate and cash runway, or consider whether to raise capital and at what price. They may also need to weigh in on executive compensation, cost-cutting measures, or even conflicts among the founders.
One way to encourage high-functioning behavior among your board members is to spend social time together outside of formal meetings. This can help to build the trust and admiration that are so important for a successful board.
What is a low functioning board?
A low-functioning board is one that is ineffective due to a variety of factors. This may include:
Board members who are unprepared for meetings
Management that treats the board as a formality
Misaligned incentives among members
Lack of time and attention devoted to the board’s work.
Low-functioning boards may also be characterized by members who are distracted during meetings, or who are not personally invested in the company’s success.
Additionally, boards with too many members or stakeholders may struggle to have productive discussions and make effective decisions.
Do you recognise any of these traits?