Comments on: The Role of the Independent Director http://www.2-speed.com/2010/06/the-role-of-the-independent-director/ Entrepreneurial Leadership and Management . . . and Other Stuff Sun, 05 Feb 2012 18:29:00 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: LJC http://www.2-speed.com/2010/06/the-role-of-the-independent-director/#comment-103840 LJC Fri, 11 Jun 2010 23:30:39 +0000 http://www.2-speed.com/2010/06/the-role-of-the-independent-director/#comment-103840 Great post, but only really scratching the surface of the subject. Please write more.<br><br>The CEO has to take some responsibility for the effectiveness of the outside board member. If they're going to make a difference, often they need more, or different, forms of communication that the financial interests on the board. Often the financial interests on the board provide more value on balance sheet, governance, and legal issues, while outside board members can add value on more "strategic" (not to say that running out of money can't have a strategic effect !!) such as partner alignment, sales channel strategies, product directions, etc. Great post, but only really scratching the surface of the subject. Please write more.

The CEO has to take some responsibility for the effectiveness of the outside board member. If they're going to make a difference, often they need more, or different, forms of communication that the financial interests on the board. Often the financial interests on the board provide more value on balance sheet, governance, and legal issues, while outside board members can add value on more “strategic” (not to say that running out of money can't have a strategic effect !!) such as partner alignment, sales channel strategies, product directions, etc.

]]> By: DaveJ http://www.2-speed.com/2010/06/the-role-of-the-independent-director/#comment-103838 DaveJ Fri, 11 Jun 2010 03:20:46 +0000 http://www.2-speed.com/2010/06/the-role-of-the-independent-director/#comment-103838 I'd recommend joining NACD to independent directors who are new to the game - although chapters vary in their emphasis on smaller/privately held companies. The presentations are helpful but more importantly you get to meet others in similar positions, some of whom are more experienced. I'd recommend joining NACD to independent directors who are new to the game – although chapters vary in their emphasis on smaller/privately held companies. The presentations are helpful but more importantly you get to meet others in similar positions, some of whom are more experienced.

]]> By: Will http://www.2-speed.com/2010/06/the-role-of-the-independent-director/#comment-103836 Will Fri, 11 Jun 2010 02:14:04 +0000 http://www.2-speed.com/2010/06/the-role-of-the-independent-director/#comment-103836 An excellent point, Jarrett. The industry expert outsider, especially one new to the directorship role, can find VCs very intimidating. I agree, that outside communication can help bridge this gap. I wish this happened more. Practically speaking - and it's an awful thing - there are some investors who aren't motivated to train and empower those who might not support their opinion. Many are willing to help, though. In my experience, the independent director needs to take an active role in making sure that communication happens to make it successful. An excellent point, Jarrett. The industry expert outsider, especially one new to the directorship role, can find VCs very intimidating. I agree, that outside communication can help bridge this gap. I wish this happened more. Practically speaking – and it's an awful thing – there are some investors who aren't motivated to train and empower those who might not support their opinion. Many are willing to help, though. In my experience, the independent director needs to take an active role in making sure that communication happens to make it successful.

]]> By: Will http://www.2-speed.com/2010/06/the-role-of-the-independent-director/#comment-103837 Will Fri, 11 Jun 2010 02:09:48 +0000 http://www.2-speed.com/2010/06/the-role-of-the-independent-director/#comment-103837 Thanks Steve and excellent point. No shared interest with any insider, especially financial, but even more basic. Thanks Steve and excellent point. No shared interest with any insider, especially financial, but even more basic.

]]> By: Jarrett Collins http://www.2-speed.com/2010/06/the-role-of-the-independent-director/#comment-103835 Jarrett Collins Thu, 10 Jun 2010 20:46:10 +0000 http://www.2-speed.com/2010/06/the-role-of-the-independent-director/#comment-103835 Agree that independent directors can bring a lot of value to a board, Will, even though they (like you) are usually outnumbered *and* they (unlike you) are often inexperienced in serving on boards. (Many independents are chosen first for industry expertise, not governance expertise.) This means that it can take a lot of courage to speak up in the boardroom. One remedy is to have good lines of communication *outside* the boardroom, in one on one conversations. Doesn't solve all problems but it allows for more iterative and exploratory discussions, hopefully leading to better decisions for the company. Agree that independent directors can bring a lot of value to a board, Will, even though they (like you) are usually outnumbered *and* they (unlike you) are often inexperienced in serving on boards. (Many independents are chosen first for industry expertise, not governance expertise.) This means that it can take a lot of courage to speak up in the boardroom. One remedy is to have good lines of communication *outside* the boardroom, in one on one conversations. Doesn't solve all problems but it allows for more iterative and exploratory discussions, hopefully leading to better decisions for the company.

]]> By: Steven Kane http://www.2-speed.com/2010/06/the-role-of-the-independent-director/#comment-103833 Steven Kane Thu, 10 Jun 2010 15:18:48 +0000 http://www.2-speed.com/2010/06/the-role-of-the-independent-director/#comment-103833 Nice post Will<br><br>I might add one more "does not have" to your list - does not have financial or employment or any other shared interests with any other major shareholder in the company, eg potentially competing or conflicting or compromising relationships with the company's investors or venture firms etc<br><br>A lot of "independent" directors are on boards because are initially proposed or nominated or whatever by the company's venture investors. which can be perfectly ok. but sometimes such "independents" have deep relationships (or hope to) with those venture firms which can create sticky conflicts etc Nice post Will

I might add one more “does not have” to your list – does not have financial or employment or any other shared interests with any other major shareholder in the company, eg potentially competing or conflicting or compromising relationships with the company's investors or venture firms etc

A lot of “independent” directors are on boards because are initially proposed or nominated or whatever by the company's venture investors. which can be perfectly ok. but sometimes such “independents” have deep relationships (or hope to) with those venture firms which can create sticky conflicts etc

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