In the Nation's Interest

Trustee Blog: Entrepreneurs on Boards

March 12, 2014

Entrepreneurs on Boards

By Larraine Segil
Director, Frontier Communications Inc.
Chair of Foundation & Vice Chair of Governing board of The Committee of 200, Global Women’s CEO’s
 

Having served on a Fortune 300 public company board for the past 8 years, I believe that many public boards are missing a huge opportunity. We should be nominating more entrepreneurs into directors seats.

The upside is clear – innovative thinking; challenging questions; diminished concern about the ‘old boy network’ and the kinds of self-censoring remarks that are required to meet with its subliminal approval; technological and millennial thought-provoking ideas; and so much more.

The downside is also clear – challenging questions; dissatisfaction with the status quo; impatience with process and bureaucracy; and lack of knowledge on ‘how to be a good director’ by the standards of long-standing in-board room behavior.

Yet the downsides are exactly why these individuals bring change and positive benefit to the boardroom.  Because they ‘don’t know how to act’, they look objectively at practices and processes and question their validity and efficacy. And that is exactly what many large organizations need.

The boards I have chaired and served on have all fortunately involved a mixture of entrepreneurs and individuals from larger companies. The mix is hugely valuable. Freedom of thought permeates the minds of those who have started something from nothing and made it happen.

Some years ago I did research on over 200 companies at Caltech where I taught executive education in Strategic Alliances for 24 years. I found that the cultures of companies and the personalities of their leaders were directly related to the life-cycle stage that the organizations were in or were moving from or into. High-growth companies or divisions were generally led by those who had little tolerance for process and more interest in action with a high risk-taking profile, whereas mature or declining organizations were over-processed with low risk tolerance (Intelligent Business Alliances, Random House, Times Books).

Changing the culture of an organization must start at the top – not just with management but also with the board. Bringing a few successful entrepreneurs into board positions can change the board room dynamic and the appetite for change as well as speed up decision making. Weighting compensation to performance-based rewards (which are typical of how entrepreneurs are rewarded), while good governance, also stimulates the behaviors that increase the flexibility and responsiveness of line managers at the field level.

Change the speed of ethical proactivity at the board and senior leadership team level and change will trickle down into a flood of behavior that is rewarded for the right things – taking initiative, thinking of the customer first and generating profitable growth.

What could be better than that?

Trustee blogs are the views of an individual trustee and not the official policy of CED.

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