Growth and impact: The value of creating a board for your startup
or companies looking to scale, creating a board could be a helpful resource. Not only can boards assist in guiding businesses toward their goals, they can also help minimize potential issues that might come up. But when should a startup start building one? And what are some tips startups should know regarding the process?
Whether it’s deciding to implement a board of directors or an advisory board, most founders of growing businesses will need to consider setting up a resource to help guide them at some point in their journey.
According to Jim Hagemann Snabe, a board is especially useful when “organizational inhibitors and new complexities” arise for a startup.
Having worked with some of the world’s most well-known companies, Jim has a wealth of experience under his belt. Originally from Denmark, he was the co-CEO and board member of software group SAP. Today, Jim is the chairman of both Siemens and Maersk.
When a company grows beyond fifty employees, for instance, or goes from offering one product to multiple products, this can introduce “a new set of constraints or challenges that the founders haven't dealt with before,” Jim told Startup Guide.
Boards can, however, anticipate potential issues and even help to minimize them. Thus, creating one for your company can ensure you’re focused on what’s important: growing and making an impact faster than you otherwise would.
Jim’s role as Chairman involves helping management challenge assumptions, creating spaces that allow for experimentation and constant reinvention, and prioritizing the next wave of long-term success over short-term financial goals. In his view, the role of boards in corporations is slowly evolving.
“Traditionally, boards at established companies made sure that they were acting in a compliant way, reporting their earnings consistently and not taking too much risk. But I think that’s changing,” Jim says. He adds that there is an “increased focus” to help companies “reinvent themselves and develop new business models.”
At Siemens, for instance, there have been talks about selling kilowatt hours, even though the company has sold products like wind turbines in the past.
In an increasingly digital world, products are becoming the enabler of business, according to Jim. If startups find themselves in a situation where their business model is changing, this is when the support of a board would be valuable.
One of the key roles of a board is to help the startup accelerate scale so that great ideas can make an impact faster than they otherwise would.
Jim emphasizes that if your board is to be beneficial to your startup, it needs to be composed in the right way. Rather than set up a board of people you know, such as your friends, it’s a good idea to find people who you believe your company can learn a thing or two from.
He suggests to “define a set of valuable capabilities and then look for people who have them – not the other way around.”
However, you should also consider the personalities of your board members. “Always make sure that personalities fit,” Jim says, “because at the end of the day, particularly in a startup, you have to work with people you like working with.”
Another of Jim’s tips is to avoid bureaucratic board meetings that dwell on the company’s successes, as this defeats the purpose of having a board in the first place. He recommends spending less time reviewing the past and more time on the challenges of the future.
In board meetings, Jim suggests being brutally honest with each other. Discussing exactly what needs to be improved in the company is, in his view, an absolute priority.
Moreover, while not all startups need guidance from advisors – for example, when you have cofounders or teammates with lots of experience or who have succeeded with global companies before – Jim still thinks they’re worthwhile.
“Having different opinions will make you better,” he says. To Jim, boards are like an accelerator, as one of their key objectives is to help startups accelerate scale.
[ See also: The keys to Nordic startup success ]
For those thinking of founding a startup in the Nordics, Jim points out a few advantages which make it stand out from anywhere else in the world. Here, educational institutions are showing initiative and creativity and ensuring students are able to challenge assumptions and test new ideas.
The Nordic region is also home to a culture of early adopters, meaning it’s an ideal market to test things out. And from a market point of view, you can experiment within the region, unlike in countries like the US or China, where you might not survive even if you have the best ideas and chances to scale.
This article was originally published in Startup Guide Nordics in December 2018.
Main photo of startup accelerator Fast Track Malmo by Startup Guide