What makes a board of directors good? What makes a board bad? Fred Wilson shared a thoughtful piece titled “Striking the Right Balance,” and for as much board wisdom as it contains, there are also several valuable broader themes to apply to management, parenting, and life in general.
The role of a board is to apply governance to a business, looking out for the future of the business itself (and therefore shareholders, investors, et al). Directors give direction. The board focuses on vision, mission and strategy.
The role of management is to handle operations and execute the steps that march the company towards the desired future. Management manages the day to day. Management focuses on executing strategy with tactics.
With this distinction in mind, it’s clear that the role of a board is not to manage the company, and the role of management is not to direct the board. If a board has to meddle in every process and procedure, they’re too involved and it may be a sign that management isn’t doing their job (and probably needs to be replaced, which is usually the board’s responsibility). In the opposite direction, management shouldn’t be directing the board either. If a board blindly rubber stamps every ask that management comes to them with, then they aren’t providing governance. This is the balancing act Wilson writes about.
Here’s the most powerful part: by dividing up vision and mission from operations and execution we force ourselves to have a conversation about the relationship between the two, even in a small operation where people wear multiple hats. Both sides are unified by a shared sense of ownership in bringing the company’s vision to life. We won’t all be on the same page every day, but this ensures we’re all reading from the same book.
With clients, kids, professional partners, or anywhere the distinction doesn’t seem clear – start by defining the abstract “investor.” The investor cares about the future and a return on their investment. The board protects the vision of that future and therefore the investor’s interest in it, directing management – who decides on and executes the strategy. For clients, the “investor” could be the long-term results that stem from having worked with us versus having not. For kids it’s often the balancing between their future survival and their fun (“I know you think jumping off that couch looks like fun, but in the interest of keeping you alive, I’m going to ask you to stop”). For professional partners it’s knowing our larger objectives and continuously returning to them to stay tied to our purpose.
In all cases, we are finding a balanced approach towards achieving common goals. We are committing to communication, and to a collective future. Any way can help tell the story counts.