There is a lot of existing data tying board diversity to better company performance, but most of it focuses on companies that are already public. This misses the bigger, and potentially much more impactful opportunity for startups and growth stage tech companies: to build a diverse board now, not later.
For the first four or so years of a company’s life, boards are dominated by investors who, given the ratios in venture capital, are predominantly white males with backgrounds in finance or tech. Yet during that time, the Founder/CEO’s biggest challenges are both deeply operational (who and how to recruit; what to spend for customer acquisition) and deeply strategic (how to create a lasting brand; whether to rethink the business model). In addition, this is a period of constant change, where a Founder/CEO may be at his/her most lonely and grappling with issues he/she has likely never faced and can make or break the company.
Public-company CEOs have increasingly recognized that having a range of experience and perspectives on their boards helps them identify opportunities and anticipate challenges. Diverse points of view mean questions get raised and debated early; and a range of skill sets and functional experience help them stay agile and adapt to change.
Diverse thought adds value to a startup; adding independent board members is a step toward diversity and can dramatically enhance the effectiveness of your board.
If they benefit from having other “operators” on their board, earlier-stage CEOs should benefit even more from board members with category expertise, recruiting experience, partner development and/or marketing chops. Just as importantly, diverse perspectives in the room should lead to better decisions at a time when data is mixed, or missing altogether, and every decision has ramifications and risk.
While stopping to add independent board members now as opposed to later may seem too time-consuming, the return-on-time-invested is huge.
Here‘s how to do it:
Examine the functional expertise or skill sets you lack that are critical to your company’s long-term success. Public companies have scrambled recently to add “digital board members” to help them compete with digital players and adapt to shifts in consumer behavior. Don’t make the mistake they did and wait too long to bring in someone who knows what you don’t. If you have a consumer-facing company and you are not a marketer yourself, consider adding one to your board. If logistics are going to be important to your business, find someone who’s already scaled a logistics operation. If you are not an engineer by training, adding a CTO or product exec will complement your skills –- and potentially give you access to a level of engineering talent you can’t hire full time. Not only will these people be valuable sounding boards and advisors, they will be huge assets when you begin recruiting a more specialized team.
Find a sitting or former CEO or founder who lives or has lived in your shoes. There is nothing like having a peer on your board who has grappled with the same issues you do, and also has a board to manage. Their ability to coach you through customer issues, empathize with a tough employee situation or help solve a resourcing challenge is unparalleled.
Look for people who have time to give, and a reputation for giving it, over a “big name.” Same deal here as with financial investors: everyone wants the big-name VC, only to find out that he is on dozens of other boards and incredibly hard to reach. So it goes with board recruits. Think about who will be conscientious and deliver for you; that’s a premium that goes far beyond a big name.
Look for women, for built-in diversity of insight. Assuming all of the above, you will get even greater benefits if the person you choose is female. First, she’ll bring a different perspective to board decisions, which means more discussion, less rush to consensus and better (fully vetted) decisions. Second, she understands the mindset of a big segment of your target user base -– the majority, in fact, if you’re in a consumer-facing business. And, she will be a resource and sounding board to shape workplace policies that will help you recruit and retain the best possible talent -– everything from family leave to opportunities for advancement. It will also signal to your employees that you are serious about diversity, starting with your own board.
Reach out to your first order contacts (investors, former employers, friends) and specifically let them know the profile(s) you seek. With the criteria above, it is quickly clear that the pool of candidates is large, and accessing them becomes easier. Look at companies whose functional execution you admire and figure out who on their management teams are responsible for it. If you are looking for skilled female founders and CEOs specifically, this list of more than 300 women entrepreneurs from our previous #ChoosePossibility post is a great place to start.
Of all the things to consider in recruiting a candidate, perhaps the least important is “former board experience.” While this is nice to have, the benefit of first-time board members is they are even more diligent, conscientious and eager to add value than those who have been around the block.
Diverse thought adds value to a startup; adding one or two independent board members is a step toward diversity and can dramatically enhance the effectiveness of your board. From director- or VP-level execs at public companies to CXO candidates from other startups, there is no shortage of qualified women and men who can help take you and your company’s performance to the next level. In the long list of things that every startup CEO has to tackle, instead of moving this to the bottom of the list, consider putting it at the top.