The ICD and board governance tends to focus on how to run and maintain public boards of directors, but there are merits to building one specifically for private businesses. The role of board directors in the growth of privately-held technology companies is increasing in importance,

Jim Balsillie speaks in the globe and Mail about how board directors need,

“To better understand the role intellectual property and data governance play in the modern economy; the mitigation of cybersecurity risks; and corporate finance, including how to prepare for the journey to public markets.”

As the director of the board of the ICD SWO, I recently co-hosted an event focused on this very topic of private business boards titled “Why Your Business Needs a Board (and how to build one).”

We invited three successful entrepreneurs who have built businesses by developing and leveraging their boards. They were Randall Howard (Verdexus), Carol Lea man (Axonify), and Murray Gam ble (The C3 Group).

All three speakers compared the experiences between public and private boards as well as building several businesses here in Canada and in the US. Along with facilitator D'Arcy Delamere, University of Waterloo, leading the conversation, attendees received a first-hand account of the challenges private companies face when building boards, and why the demands of building one are more than worthwhile in today’s climate. In fact some argued that they are more than worthwhile, they are essential.

Here are the top takeaways I summarized from the panel which also includes further articles:

1. There is a presumption amongst business owners that setting up a board of directors offers more risk than value. In fact, the opposite is true. The right board members can and aid the success of entrepreneurs by reducing risk in times of crisis and expanding their business network.

Rutger von Post and Robert C. Pozen in MIT Sloan Management Review says that

“Being removed from day-to-day operations, independent directors can help management teams battling in the fog of war to pinpoint the critical factors for survival while uncovering opportunities that will allow the company to emerge stronger in a radically reshaped world.”

2. Diversity and perspective, two key elements of a great business, are greatly enhanced by the outsiders you bring into your business. When you choose well, you gain value through increasing foresight and understanding of the variety of experiences available through the board. Diverse experiences are inspired from a variety of places whether they are based on gender, diversity, business background or expertise. It’s best to avoid having clones of your board members in order to improve the problem solving process, direction of the business and more.

Paul Michelman in MIT Sloa n Management Review suggests

“When business leaders say, “We didn’t see it coming,” after their companies fail to recognize the legitimacy of upstart competitors or customers’ changing tastes, who is the “we”?

Our corporate directors and CEOs. In the global economy, the markets that a company serves become less predictable and more heterogeneous every day. When too many people at the top are looking at our dynamic world through the same static scope, they are far more likely to miss seeing the full landscape in all of its fast-evolving glory.”

3. For an entrepreneur, building a board early on allows access to mentorship and strategic advice. Throughout heavy growth periods, a vital part of a fledgling business, getting fast and excellent input sves time and energy down the road. The role of the board can later cycle to a more traditional form of governance, meeting the evolving needs of the company at every stage.

Michael Camp writes in The Role of The Board In the Successfu l Startup of New Ventures: “The advantages to having outside directors include: 1) added credibility for the firm; 2) assistance with making major management decisions; 3) access to additional management expertise that is not otherwise available; 4) an unbiased outlook on the future of the company; and 5) a fresh perspective on many issues” (Daily and Dalton, 1992; Lauenstein, 1984; Nelton, 1985; Aronoff and Ward, 1992).

Stanislav Shekshnia writes in Harvard Business Review “The majority of board chairs are former CEOs, who are used to calling the shots and being stars. So it’s no surprise that many start behaving as if they are alternative chief executives of their firms. That sows conflict and confusion at the top. In addition, as research by INSEAD’s Corporate Governance Centre shows, the two jobs are distinctly different—and so are the skills needed in them. The chair leads the board, not the company, and that means being a facilitator of effective group discussions, not a team commander.”

Thank you.

I want to also say a special thank you to Ginny Dyben ko for working with myself and the ICD SWO to set up the event, and to everyone who attended. I hope to see you soon, and in the meantime, please do reach out to me if you have questions about the ICD.SWO Director’s Education Program, corporate governance, or would simply just like to say hello.