CEOs, Pivots and Board communicationTags: board, CEO, governance, pivots
As the leader of a young company, the CEO is constantly faced with change. The jargon we use in the industry is “pivot”. There are two types of pivots: a) Systematic pivots which are tactical in nature and involve incremental change. Most of these systematic pivots are operational in nature, encountered during the normal course of prosecuting the growth of a startup – some do have a material impact on the company though and these I want to know about, all board members want to know about them, and b) Systemic pivots which are strategic in nature and involve material changes to the business.
It goes without saying board members want to and should be included in discussions relating to systemic pivots. All the CEOs I interact with at the board level indeed do include me and find ways to leverage me prior and during pivot decision discussions.
When it comes to systematic pivots, the situation is not as clear. In my experience, CEOs struggle to find the right balance and either share too much or not enough. Knowing when to share what systematic pivot decision is an art. Some CEOs get it immediately, others struggle.
I always insist on weekly calls with all the CEOs I work with, at least for the first 6 to 8 months of our business relationship post investment – rule of thumb is to go through a at least 3 to 4 board meetings cycles. Casual weekly calls allows to build two-way trust, allows me to suggest areas of focus and first and foremost gives me a venue where I can figure out how the CEO thinks, acts and processes information. The more I know, the more effective I can mentor and help. Most of the time we go through systematic pivots, every day decisions and choices. I get to know the daily innards of the business and often will tease out items that need more attention or need to be percolated up to the board either embedded in the board package or as an item to discuss.
My advice to peer investors interacting with startups? Establish weekly calls, they are invaluable and you will learn about systematic pivots and why certain are important.
My advice to CEOs when contemplating systematic pivots? Do not share ever systematic pivot but think of communicating with the board when these relate to items that may not seem big issues at first, but which always tie back to how good of a fit your product is with the market and customers you have identified.
Here are a few examples of what I mean:
– HR and organizational issues faced by your sales organization – for example sales talent quitting or difficulty in recruiting which invariably point to greater problems with the product, service or value proposition that may have escaped the organization to date.
– Sales process issues related to closing – sales pipeline conversion works well but you cannot complete the last step which may point to inadequate understanding of target’s inner workings
– Engineering issues with code development – too many bugs, slow release cycles which may point towards bigger issues with either sales, marketing or product management
– Professional Services department in charge of implementation, integration is overwhelmed – turnover, burnout. Which may point towards fundamental issues with product architecture or lack of preparedness of client.
As a CEO honing your skills to interpret the significance of certain systematic pivots is crucial. Communicating with your board will ensure you use each board member optimally and get buy in across the board. Assuming all systematic pivots are unworthy of attention from a governance point of view may backfire.
As always do not hesitate to reach out and start a conversation.