16 January 2008

Barney Relationships

How many times have you been told by a bubbling senior executive of a high potential company about a relationship they have just signed with Bigco. She tells you how that relationship itself validates the value proposition of her company. And you probably believe it. After all, Bigco is a household name with legions of very smart executives who have their pick of the litter of companies with whom they could affiliate. In fact it’s not just one relationship with one Bigco that the company has rung up. In fact they have four or five with several different Bigco-like companies. Sounds impressive.

A good friend of mine, Gordon Rapkin who is currently CEO of an really cool data security firm in Stamford, CT – Protegrity, puts these kind of relationships into perspective. He calls these Barney relationships.

Depending upon your age, you either grew up with kids who were familiar with Barney the purple dinosaur, or perhaps you were a Barney fan yourself. Barney is this loveable character who caters to youngsters. You may recall Barney’s theme song. It included the words that Gordon was referring to:

I love you, you love me ….

I’m sure you can probably hum the tune.

In any case while these relationships may in fact be interesting or may even be predecessors to a more serious relationship, they are not equivalent to real market traction, unless that love also amounts to money changing hands. So while we all can all celebrate these successes, we should be very careful to realize that Barney relationships are not a proxy for a real sales or for tangible market penetration.

05 January 2008

Don't get Bored of your Board

I had a Director who once told me his job was easy. "I just have to show up once a quarter and whine!" Thankfully, this particular director was kidding.

I have witnessed Boards who do little more. However, with the right people and some advance planning, your board can be an important corporate asset. But this requires you as the CEO to provide some leadership.

Here are a five helpful hints that will enable you to get more value from your board:

1) Prepare - If you want your board to provide you with valuable insight at your meetings, get information to them well in advance of your meeting. While you live with the information every day, the board's view of what is going on inside of your company is limited to what you provide. If they get their board books a couple of days before a meeting, they are liable to only glance at the materials in advance. If it arrives a week before, they will find the time to read it through. You may even want to circulate your agenda in advance of the meeting and ask the board's input on topics they wish to discuss.

2) Communicate - Board books are invaluable tools for your Board. However, limiting their information flow to a book once a quarter is a meager helping of corporate information. Get in the habit of communicating more often, sometimes informally. Regular calls between meetings, timely information that comes up that relates to topics you've discussed or plan to discuss, or even face to face meetings outside of regularly scheduled board meetings can help an interested board member stay abreast of what is going on and hence provide richer input. Some industrious CEOs that I have known have given their board members jobs. I don't mean they make them employees or even consultants. Rather they designate special concentrations related to issues the company is encountering and have the board member become the "lead" in this area - typically an area in which they may have some special expertise.

3) Time manage - If you allow it to happen, most of the time at your meeting will end up being a review of your last quarter's performance. These kinds of meetings tend to look a lot like a quarterly report card for the CEO. Anything you can do to avoid this should be done. The vast majority of your meeting should be spent looking forward. The board's biggest value should be as an advisor and sounding board. I usually allocate no more than 1/4 of a meeting to reviewing the past. Your agenda is the start of this trend and then effective time management during the meeting can ensure the rest.

4) Be proactive - Engage your board in the issues that matter. There is a fine line between asking for feedback and asking for direction. I would always prefer the former. In my role as a board member, I'd expect the CEO to come up with a plan and then expose the board to his plan, the underlying assumptions and rationale. But if you instead ask for direction, you may get just that. And it may be a direction that doesn't suit your desires. Don't let the board fall into the habit of making tactical decisions for you. Be proactive, do your homework, make your decisions, and then provide the transparency required to enable your board to understand why.

5) Avoid surprises - If you are going to take on just one of these five recommendations, make this the one! Boards hate surprises. The Board's role is to look out for the interests of the shareholders. Surprises make the board uncomfortable in that role. Surprises connote a betrayal of trust and result in a Board that questions everything and pulls tight on the slack they have given to the CEO. Delivering bad (or even good) news surprises in close to real time, is a much better prescription for the CEO who wants to continue to ensure a healthy board relationship.