The Board of Directors Over the Corporate Life Cycle
I am not going to describe the lifecycle of organizations. I am assuming that most of my readers know about it. For those who do not, please read Managing Corporate Lifecycles by Ichak Adizes available HERE.
In Courtship, a Board that decides, controls and directs is superfluous. It is not needed. Actually, quite the contrary; it can have negative repercussions to the organization.
In Courtship, the potential Founder (the entrepreneur) is dreaming. An entity such as a Board that will criticize his or her dreams and tell them what to do will suffocate the dreams. The potential founder needs a supportive advisory group, not one with authority. They need someone to wake them up from the euphoria of creating something new. This wake-up call should be made with love and support and not by an authority with the right to veto or approve.
In Infancy, there is a need for a Board that functions as a transition between an advisory group and a controlling board. The Board should have the characteristics of both. It should be comprised of people who share the Founder’s vision and support them emotionally as well as financially. But in this stage, the Board should also have the authority to make decisions. It is not strange to find startup boards comprised of spouses, friends, neighbors, etc., people who may not have any authority or give any direction.
In GoGo, there must be a serious switch in role of the the Board and its members. In GoGo, the founder is hyperventilating: excited about successes, expanding in multiple directions simultaneously, and disregarding the risks associated with such expansion. GoGo needs an external board, not a Board comprised of friends and family who would not dare to criticize the Founder.
I recommend that fifty percent of the Board’s members be family and friends, people clearly representing the Founder’s wishes. The other fifty percent should be outsiders who know the market, the technology and the economic situation, and thus, can anchor the Founder, restrain him or her from engaging in adventures that are exciting, but risky.
In GoGo, I like to have a banker and a lawyer on the Board. They are risk-averse, and that is the necessary counterbalance to the high-flying Founder.
In Adolescence, we need integrators. At Domino’s Pizza, years ago when I consulted for them, they had a famous American college football coach on the Board. They needed him to smooth tense relations that usually occur in Adolescence, to integrate, to spiritually lead. A reverend, a religious leader, on the Board should not be a surprising appointment.
In Prime, even the Founder’s representatives should be professionals. No more spouses, friends or neighbors. They should be professional people who know the market, the economy and the technology.
After Prime, as the organization ages, I would not have lawyers and bankers on the Board. They can be invited to make recommendations but should not have voting rights. Why? Because by profession, they are risk-averse. After Prime, the company starts to age and avoid risks. Bankers and lawyers accentuate this undesirable trend.
After Prime, instead of bankers, I would have artists. They think outside the box. They provide vitality, which is exactly what an aging company needs.
After Aristocracy, the company is exhibiting financial difficulties. It is time to bring lawyers and bankers to the board to try to save it from further deterioration.
Just sharing my experiences ,
Ichak Kalderon Adizes