Practicalities of Early Boards (Profits and Non-Profits)

In the past few weeks, I’ve been asked by three folks about the legal and practical requirements of implementing a board in an early-phase organization. There is a lot of information around on the subject of corporate governance – probably the most notable resource that comes to mind for me is National Association of Corporate Directors. There are also books on the subject (e.g., Corporate Governance), but there can be a lot to wade through depending on how deep you want to go.

Here’s my introductory $0.02 on the subject:

  1. The board’s primary purpose is to work on behalf of the ownership of the organization both a) to see that the organization achieves what it sets out to do and b) to provide a monitoring framework that ensures what management is doing is acceptable.
  2. Boards then, can be viewed as the balance point between the shareholders (which own) and the management (which controls day-to-day operations).
  3. Laws and articles of the organization may dictate the minimum requirements, but generally speaking, two key roles that are basically the minimum to organizations (profit and non-profit) are the chairperson and the secretary.
  4. The chairperson is often referred to as the servant leader of the board – that is, the integrity of governance starts with the board, and the chairperson is basically a facilitator.
  5. The secretary has responsibility for accurately documenting (guardian of) what the board has done.
  6. In some situations, the secretary may also play a key role in helping the chairman put together board documents and doing behind-the-scenes work to facilitate the board meeting (so that it is a non-meeting in many cases). Tends to be more true in environments where more legal mechanics and knowledge of confidential organizational infrastructure is required.

Early-phase organizations may have some wiggle room (e.g., number of directors, amending by-laws) as to how governance works for numerous reasons, e.g., the management largely represents all of the shareholders.

Some key things that I would consider (in the case of wiggle room) include:

  • Speed and convenience – larger boards may slow you down unless one of the following counterbalances the effects.
  • Leverage – boards can be a way to get help at no to minimum cash cost. Here some key things to capitalize on are the board directors’ networks, skills (e.g., legal or accounting), etc.
  • Advice – although this is one I personally put the less stock in because one can get some of this without a board director relationship, it depends on the makeup of the management team and desire of the owners. Board directors can complement the management team’s experiences.
  • Independence – as the owners of the organization differ in total composition as compared to management, the need for board directors to be non-management and independent increases.

As a final closing thought, fund raising is huge timesink that affects both for-profit and non-profit organizations. Some non-profits have even segmented their board into operating and fund raising groups. The former group looks at current operations, controller activities, etc. The latter group is more forward-looking and gets involved with the strategic direction and milestones for the group. Fund raising is something that should not be forgotten because it is buried in the notes I’ve outlined above (probably could be categorized as a way to get leverage). Consideration should be given as to how the board makeup should look based on putting fund raising in the proper perspective.

Interesting Technology Product Management Post

Hat tip: BusinessPundit. A interesting (but lengthy) post on technology product management by Raj Karamchedu which takes a stance that "Differentiation [is] A Phenonmena, Not a Concept". I think I directionally agree with Raj’s idea, and at a later date I’ll write down some additional thoughts later about applying Raj’s abstract concept to field-level tech situations.

Online Networking, Virtual Handshakes, & Real Deals

As some of you may know, for me blogging started out primarily as an electronic newsletter. It sidewinded into a book deal opportunity, online writing opportunities, marketing consulting engagements, start-up job offers, angel investor inquiries, and my recent position at 21Publish as COO. Three of these opportunities (which I closed) are international relationships. There are a number of other opportunities baking as well, some related to blogging, others not.

If you are interested in another source of information on doing business online, the concept of a "virtual handshake" and a book by the same name, is being promoted by Harvard Business School alum and CEO of Nitron Advisors, David Teten, at a blog here.

An excerpt of the book is here. Here’s a snip of that excerpt that provides some great context about why you should consider learning more:

Most professionals meet new people and maintain relationships the same
way they did 50 years ago—with phone calls, letters, and face-to-face
meetings. However, today you can use social software to build and
leverage a much larger and more effective network. Even if you do not
use these technologies yourself, your competitors are—to gain an
advantage over you, or at a minimum to learn more about you. Whether
you choose to participate or not, social software will impact you. 84
percent of American Internet users have used the Internet to contact or
get information from an online group–more than have used the Internet
to read news, search for health information, or to buy something.

More On Product Management and Product Marketing (and Requirements Design Skills)

Will Hsu (no relation to Steve Shu methinks … although the story is that customs reversed the "H" and "S" in my family’s last name) has a good post and emerging blog on product management and product marketing musings. Will is part of the product marketing department at eBay. I’m all for those that blog about product management and marketing disciplines.

Will’s post has some interesting perspectives on using more formalisms as part of requirements definition within the product management discipline. Having spent a good portion of my career in the telcom and software space (and writing requirements using all sorts of formal and informal methods), I think that it’s great when formalisms can be used (where the mix of technology, culture, and customer permit).

In the tech sector, good requirements skills also carry over to management consulting and sales discipline. Consider the following cartoon (source: unknown, click to enlarge):
Typical_project_life

A Smart Guy With A Foot In The Door In Venture Capital

Vincent Tang in NYC reported to me a couple pieces of news in his life that just made my week. Good news for a Friday post. First, he’s landed an analyst position with Lux Research, the research arm of Lux Capital (a venture capital firm focused on making early-stage investments in nanotechnology). Second, he’s started a blog here. Notably, he gives me credit in his post for providing him with support during his search, but I did nothing more than try to reciprocate for connections and support he extended to me.

In any case, this should be an awesome opportunity for Vincent. His opportunity reminds me of one of the well-respected niche firms in my old hometown of Chicago, First Analysis. Lux has a bit of a different wrinkle though. Should be both challenging and a lot of fun from what I can tell. Vincent is very entrepreneurial in his approach and attitude. He will go far no doubt. Congrats, Vincent!

More On Virtual Teams And Collaboration

Ken Thompson has added some additional thoughts to the virtual teaming topic (which is a highly-related topic and undercurrent to the work I am doing at 21Publish with respect to blogging communities). His point about exploring opportunites for sponsors and donors in the non-profit sector is at the back of my mind at all times, especially when I learn of non-profit endeavors such as this one (I’ve mentioned SAHRI before in the evidence-based medicine space).

On Small Companies And Solo Practioners Collaborating Cross-Borders

Carlos Valez poses some interesting questions about doing business cross-borders as a small company or solo practitioner. Most people only hear about the mega-offshoring deals. When I step back to think about the companies I have worked for and consulted to, it seems like I have worked with a more diverse set of people overseas when with a smaller company as compared to when with a larger company. Whereas I primarily did international business in Canada and Indonesia while working for larger companies, I have worked with folks from the UK, Germany, France, India, Australia, Japan, and Latin America when working with smaller companies or as a freelance consultant. Although there are likely several factors in play, I suspect a lot of the explanatory power has to do with the increase in virtual collaboration and networking technologies.