Essentials of Highly Effective Companies #7: Build a Billion Dollar Board

The subject of board performance is near and dear to us.  Businessweek recently interviewed David Thomson on his “Essential No.7 – Build a Billion Dollar Board,” during which he discusses the topic with Tom James:

James says that having experienced, seasoned people on the board is just what a growth company—and its management—need. “A board has to have no fear about challenging management. As a CEO…you need to be willing to stand up for your ideas, but sometimes you learn that the ideas of highly experienced board members are a lot more important than yours,” he says. James also points out that relationships that board members have outside the company can be an invaluable asset.

James’ methodology, from even before his company went public in 1983, was to hire former CEOs of other brokerage firms. He used to tell his CEO board members: “We are putting you on the board so that we can avoid the mistakes that you have already experienced.”

During the course of the interview Thomson recommends three specific steps to strengthen a board:

1. Act early to balance your Board with CEOs, customers, and alliance partners.
2. Leverage Advisory Boards to bring deep expertise.  Make them small but highly talented and experienced.
3. Breathe fresh life into your Board, renewing it or adding to it to get fresh perspectives.

Watch this 3-minute outline of Thomson’s “7 Essentials of Highly Effective Companies” on Blueprint for a Billion – here at BPV’s Youtube channel.  (His discussion of boards begins at 1:38 of this clip.)