BERKONOMICS

I have a good business friend, an experienced manager and teacher with a Harvard MBA, whose creativity and intelligence are admired by many.  But he dilutes his effectiveness with wordy PowerPoint presentations.  It has become a long running joke between us, as I often remind him that most of us have a very limited attention span and ability to recall important points from a presentation.

Note the title and tone of these insights.  Short, to the point.

Mark Twain said, “I didn’t have time to write a short letter so I wrote a long one instead.” He cogently encapsulated the problem.

It is more difficult to reduce your thoughts to a few core sentences, but that is what you should do for maximum effect.

Here’s another one from my Dad, a very wise man. He gave me this advice right after I received my driver’s license years ago.  It took years to understand the importance of this prophetic statement.

Taking this advice literally:

Gun shots, drunk drivers, mayhem, and even curfews qualify as just some of the things that could bite in the early morning.  And heck, soon I found myself the father of a teen-age female driver, and truly understood my Dad’s admonition.

But how does this have anything to do with our business lives?

Think of our midnights: time and money.

Take deadlines for example.  We often miss them, sometimes by a long shot. Every day a deadline for development, rollout, marketing campaign or even corporate reorganization is missed, we burn fixed overhead – money.  And we know that there is only so much available to burn at that.

Time management:

[Email readers, continue here…]    Companies have gone out of business from a lack of time management, especially when additional capital is not available when most needed.  Time management is a critical element in an early-stage business for this reason.  The sense of urgency senior management must create is a real and necessary skill.  Like most management skills – not easy nor pleasant.  But necessary.

Money – the asset we take for granted until low or gone.

We admonish our CEO’s to keep six to twelve months of liquidity available.  We know from experience that raising money may be nearly impossible when economic times are tough, and when we have under-performed on our business plan.  We tell our CEO’s to raise cash when not needed – because that is the time when it is easiest to raise.  Or when the news is particularly good.  Or the terms offered are especially favorable.  Or even just when available at any reasonable cost in equity or interest.

Good managers are good students – easily coached by those on their boards or advisors who have been through eh rough times in their business lives.

So, it is true for us in business too.   Nothing good happens after midnight – that event when money or time catches up to our business plan and begins to bite.  Gun shots, drunk drivers, cash crises, deadlines missed.

Do you have that sense of urgency?

Some of you have gotten along forever without a board of directors, or used your spouse as the “other” board member from the start.  But there are some very good reasons to build a great board composed of some outside members.  And good board members can add real value to you and the company.

Where to learn more…

In other posts (and in our book, “Building Great Boards” – available on Amazon and other booksellers) we cover legal responsibilities of a board, how to pay board members, the limits of their responsibilities, dealing with under-performing or “noisy” board members, and more.  Today, we cover an ideal board’s collective mindset.

If you are responsible for forming a board, managing it, or evaluating its collective performance, consider these three important modes of engagement as you guide…

Generative thinking:  Do you have board members who often ask “why?” or “What if…” Or “What are the alternatives?” Or the important one: “Is this idea on mission?”  These are generative thinking questions.  Hmm. Generative. Now there’s a word perhaps you have never heard, and should be added to your corporate toolset and vocabulary.

[Email readers, continue here…] Generative thinkers are relentless in asking questions that get to the core of an idea, often making the originator think more deeply about the effects over a longer period of time.  Some ideas sound unbelievably creative – and may be that.  But sometimes there is a barrier, an impossibly high cost not considered, a social backlash never thought of, or competition already covering the idea that is unknown to the originator.  Which leads us to the second class of creative board thinking…

Strategic thinking:  Board members who ask: “What is the competitive landscape?” or “How about the public relations impact?” or “Does this idea move us toward our goals?” or “Is this just too little value for too much money?” – are adding to the dialogue in valuable ways and should be encouraged, not just tolerated.

Most of us in management have too little time for strategic thinking.  “Ah ha” moments are too few when there are lists of urgent things to do that never seem to be completed.  Good board meetings allow time, and the chairman encourages members to ask strategic questions to help focus the board on its best use of that time.

Fiduciary thinking:  Most board members, especially those composed of members from larger businesses, are good at the fiduciary questions.  “Is this legal?” “Is it feasible (financially, with our resources, with our capabilities?)” “Can we afford to do this?” “Is this idea sustainable?”  These are typical fiduciary questions.  Importantly, these also help a board to cover the legal “duty of care” for the health of the company. But that, too, is the subject for another time.

The punch line:

Investing in the creation of a governance board is not enough.  We must encourage a constant use of generative, strategic and fiduciary thinking from  board members, encouraging this most appropriate mindset.  And we must present our ideas in board meetings or documents in such a clear manner that such questions will be asked, and discussion allowed.

Most importantly, we must leave enough time in a board meeting for these discussions. Which means reducing the time spent in routine reporting, delivering materials well in advance when possible, and encouraging participation from all board members.  This is not easy. But the potential for great results leads to the board giving “macro governance” and not delving into the micro details that management deals with on a daily basis.  A better company is the goal.  And what CEO or board wouldn’t want that?