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"In Search of...The Great Strategic Board Member"©
by Frank Moscow, President
The Brentwood Group, Ltd.
featured in the High Tech Advisor

What makes an exceptional board member?
Are you tired of reading about Sarbanes-Oxley? So are we! While compliance is necessary, business success and how best to leverage a great board is essential. So, what are the qualities of a great board member? Based on our Board of Directors search experience and our interviews with CEOs, Venture Capitalists and independent board members, here are the traits and experiences of an exceptional board member:

1. Nose in / fingers out
   "The great board member has superior skills in listening, coaching and advising – which is different from being an operating executive," says Steve Leeke, Partner at 2M Ventures. Tony Audino, Managing Director at Voyager Capital, explains, "A great board member needs to know when to ask questions, which questions to ask and when to keep your mouth shut." At The Brentwood Group, we see one of the biggest disconnects affecting board performance as the individual's expectations about what is expected of a board member versus how the board and CEO define successful board performance. "The ability to develop a solid 1 on 1 personal relationship with the CEO, where constructive feedback goes comfortably in both directions and where the board member leverages their unique skills in a very effective social way is key," according to Dave Cole, CEO & President of Coinstar. Dave states, "A great board member, when giving advice to the CEO, is asking 'have I gone too far' and is always aware of governance 101 – the CEO, not the board, leads the company." Dave Chen, General Partner at OVP, puts it this way: "The most important contribution of a board member is being the CEO's sounding board for the hard decisions, lending perspective, helping him/her lift their head out of operations and thinking about the big questions or big issues. What not to do? To think you are management."

2. Best in class experience combined with maturity and adaptability
   "To really add tremendous value, the best in class board member must be, or must have been, best in class at something," comments Wally Rhines, CEO & President of Mentor Graphics. He goes on to say, "Unless you have achieved top performance at something, it's hard to recognize and develop excellence in those you supervise. This is important for the Director's critical role of recruiting and evaluating the CEO as well as for the ability to sort out the difference between insight and good presentation by others in the company." A great board member will know what's going on at the leading edge of his/her industry and function on a global basis, with a perspective and delivery that others will listen to and value. While offering insightful advice based on that perspective, the great board member is mature and doesn't get upset if the company fails to act on that insight. "Adaptability and being very thoughtful on where you and the board invests limited time is key," says Scott Gibson, a highly regarded independent director. "Rote reporting is mindless --- a great board member makes sure the board time is spent on items proportional to the opportunities and challenges of the business."

3. Independence/Integrity
   This isn't a Sarbanes-Oxley legal/compliance issue. Our perspective is purely focused on the added value of the board and growing a successful company. Steve Leeke comments, "Under no circumstances should the board member be afraid, unwilling or unable to stand apart from the company and behave independently. They should have both the experience and relationships that allow them to mount a credible stance apart from management if that is required. Their personal, financial and/or professional well-being must not depend upon the company in any material way." The Brentwood Group advises our clients to ask prospective board candidates about examples where they acted in the company's best interest, even when it went against their own personal interest.

   As David Billstrom, Managing Partner at Co-Motion Ventures writes, "A top class board member has been on at least three boards and has a great reputation for independence, integrity and hard work."

4. Unique added value perspective
   By supplementing a weakness rather than adding to a strength, you will have a much broader board with a variety of perspectives that will add value. Mike Gullard, General Partner at Cornerstone Management and Chairman of MERANT's Board of Directors states, "In terms of skills, my approach is to develop a matrix of skills required on the board. These are skills that will complement and challenge the skills of the CEO. Overall, the board requires industry, strategic planning, customer focus, operating, marketing, accounting, financial community (investor) and possibly international experience. The key is to have a board which in total has all of the required experience."

   David Billstrom states, "In designing a board, I generally think about two orthogonal issues: topical/focused experience and general experience. Imagine a table, and along the x-axis is the depth of experience on boards, with ranges from zero to deep (like an executive, we're looking for skills as well as a track record – what are the last three boards, how did those companies fare, quality of executives hired/overseen, etc.). Along the y-axis, we're looking for strength in a particular area. Any one board member is likely to wear several hats. We like all of the hats to be covered with a small number of people so that the working group is tight and effective. Obviously, we're trying to create a "shadow team" for the executives, so they have someone on the board they can relate to and use as a sounding board between board meetings. Some of the roles are obvious, such as understanding the customer. Ditto for the skills of marketing and sales."

   We encourage our clients to cast a broad net and search beyond what is easy or convenient. The result, regardless of size of company, will enable you to attract world-class leaders to your board who have unique and beneficial experiences and success.

5. A true willingness to serve
   This isn't about showing up at the board meeting with a point of view. This is working with the CEO, other board members and management team to drive the business forward. Serving on the board isn't just fun and ego gratification - It's a lot of hard work. Great board members do this because they love to help the next generation of entrepreneurs or help a company achieve the next milestone in its success. Financial considerations are important but not the driver. World-class board members are passionate about success and work hard all of the time (not just at the board meetings) to insure their company's success.

   Plenty has been and will continue to be written about the legal requirements of board service after Sarbanes-Oxley. While compliance is important – these five perspectives will move you beyond compliance towards identifying a great, high value board member.