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How To Avoid The High Cost Of A Fake Board

Updated: May 28

Each day, the manager of the logging company shows up to cut more timber. His goal each day is to cut more timber in less time. He carefully tracks how many trees they cut each month, week, day, and even hour. The center of his thinking is efficiency. The company cuts more timber than any other.

One day, the business leader shows up on the job site. The manager is proud to report their efficiency. The business has never been more efficient.

But, something doesn’t feel right to the leader. He quickly climbs one of the trees. He scans in every direction at the top. Returning to ground level, he says something that shakes the manager to his core.

“We are in the wrong forest,” the leader says.

Like the leader in the story above, a “real” board makes sure your “tree cutting business” is efficient, but also harvesting trees from the right “forest!” Most businesses (70%) fail in their second generation of leadership often because of their fake board.

Deciding whether you will have a real or a fake board is a crossroads that all entrepreneurs face. It is at this crossroads that most entrepreneurs choose the road most traveled and settle for an ornamental board. Doing the smart work of having a real board is the road less traveled.

A fake board will leave you in the wrong forest and will cost you a lot in the long run. These boards lack the skills to make decisions and stimulate effective communication and collaboration. Everyone loses when your board is nonfunctional and fails to monitor and guide the company effectively.

This happened to Hubert (read previous post). He filled his board with friends who allowed him and his business to coast. Basically, they all put in their time, and collected their paychecks, but never challenged him to build a company that would be powerful without him. Their short-term success was a recipe for long-term failure.

The CEO with a high-performing board will have regular performance discussions. They will look at leading indicators and financial and nonfinancial metrics. They study the values that drive the business, discuss alternative strategies, and study the distribution of resources together with the CEO.

High-functioning boards keep pushing the CEO to plan for the day when he isn’t around. Succession planning is always a priority for high-functioning boards.

A high-functioning board is constantly studying your trees to make sure you are cutting timber in the right forest.

A fake, nonfunctioning, ornamental board will cost you dearly. Ornamental boards operate at a high cost to the company and the entrepreneur’s legacy.

How Do You Avoid The High Cost Of A Fake Board?

1. Have a board that you can be vulnerable and transparent with.

Being vulnerable requires risk, so you want to have a trustworthy board you can be honest with. Don’t wait for a crisis to practice vulnerability. Let your board know you also need them to practice vulnerability in being honest with you.

Being vulnerable allows you to receive the precious gift of being known. When you allow your board to know you, it frees them to be honest.

A board that can’t be straight with you is not real.

2. Get experienced business leaders to be board members.

Here is a rule to follow: If you can hire them by the hour, don’t put them on your board. Remember the story about the manager and leader at the top of this post. A board full of bean counters and penny pinchers will have you efficiently cutting trees in the wrong forest.

The leaders you need on your board, likely, are not available to hire by the hour. Hire them to sit on your board.

Get leaders who have been where you want to go. If you are a seven on the leadership scale, look for eights, nines, and tens. Make sure the people on your board are better leaders than you are at this stage.

You want leaders with healed battle scars who are still engaged in leading their own enterprises. If they are not actively leading their own companies, let ‘em go.

3. Don’t get too many.

The bigger the board, the more likely it will be fake. Have a few, pay them well, and listen to them. Never forget:

The smallest mind in the room can often kill the biggest ideas.

When tens begin to understand that they are stuck working with fives, they will shut down and exit the process.

Getting a real board will cost you. Settling for a fake board will cost you more.

See you at the crossroads. I have confidence in you!

Harry T. Jones

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