Board members have same Hippocratic oath as doctors: “Do no harm”
Venture Investor, VenRock Partner, Waterfall Evangelist
The cardinal rule of BoD meetings is “No Surprises.”
A BoD should not feel like a staff meeting.
Good boards do not freak out at bad news.
Lesson: BoD Management with Brian Ascher
Step #9 Lessons Learned: Board members have same Hippocratic oath as doctors: “Do no harm.”
One misconception of newer entrepreneurs is that you can't give your board bad news or you can only bring them bad news if you have a solution already. I don't go by that. I think that if you're sharing news early and often then you may not have a solution yet.
Now if the problem happened six weeks ago, and you're just now having a board meeting, a, I would suggest you would have wanted to have alerted your board of any bad news, so it's not a surprise at the board meeting. That's the cardinal rule of board meetings, no surprises.
But you might have started to think about solutions, and you may not have a full recommendation, but you might have managements’ inclination or it might be a full recommendation. But bring it to the board with as much work as you've done or if it's late breaking, no work done, but you're going to let the board know. And then if you have the right board, they're going to help you solve the problem not freak out.
So that's another myth is that boards don't always freak out at bad news. Good boards don't freak out.
A bad board meeting is where you don't really cover important topics. It either, A, feels like just a cheerleading session that you know you covered up the real issues, or it's just been down in the weeds. It feel like a staff where you're reporting one way and it's a lot of rote information, or it's a very a bad dynamic develops. You get into this doom cycle of lack of trust where you know you're not getting the full story from management and so you start to doubt anything you're being told and that turns up the heat on management, who then gets more defensive. That's a bad cycle.
You really prefer to be in the positive cycle of trust where because you bring problems early and often to the board, and then the board has the obligation to respond constructively and without hysteria. And then you get more and more truth and early warning too issues as they appear and you begin to trust management more and more and give them more and of the benefit of the doubt and the leeway.
Transparency, candor, frankness, I mean all of this is the most important attitudes to bring to the table, on both sides frankly. There can be board members, investors or other, where they don't come prepared and so they have very distracting topics. Sometimes they want to exert their will. They have opinions, but they're a little bit too strident in them without being open to other opinions and managements’ opinions and it's particularly dangerous when they're not prepared or they're not backing them up with good argument and they're closed minded.
So you just want that open-minded, constructive, everybody monitoring their own air time and how many questions they ask. It's really important for investors and board members to not burden management with excessive reporting requirements, throwing out topics for follow up that are going to be very labor-intensive without a lot of strategic importance. So it's a balance and good board members abide by the same Hippocratic Oath of doctors, “Do no harm.” That should be an easy baseline to hit. It's not always but it shouldn't be and from there see the opportunities to seek value.