An experiment-based practice for board directors to manage risk while going fast

Boards need to govern in an age of intense speed and the need to balance risk with decision velocity can be a challenge.

Operationally, startups build companies through experimentation.

Build, measure, learn.

We ask, what is the lightest version of this idea that we can put in front of a customer and measure what happens? And what will we see if our hypothesis is correct?

Boards can design and build strategies in the same way.

Director behaviours that slow things down and reduce the quality of decision

It is that moment in a board meeting when it is clear there is no consensus. The moment where decisions are deferred to future meetings pending further information or when sub-committees are formed. The moment where this idea starts a 6 month bounce into the future.

Startups die this way and directors cause the problem.

Here’s some behaviours I have observed and done myself.

  • We over index around risk. The topic is trapped identifying a list of risks. The burden of the decision grows rather than the opportunity explored.
  • We are not open to something new: Board directors can be ‘knowers’ not ‘learners’ with so much experience it is too tempting to say “In all my years of experience, I have never seen something like this work.” In one sentence, a seed of doubt is sown.

A new board habit — get the company to the next action

I like to transform opinion into evidence.

#1: Ask questions at first

Understand the opportunity that is being presented. Fuel up with what is possible.

Ask how the plan will be staged and how directors will get to understand it as it progresses? What happens if we are right? If you see a risk, ask how it might be managed or removed?

#2: Transform the discussion into an action

If there are questions around the strategy, how could we start anyway with a small version of the idea? What is the smallest version of the idea that can be rolled out before the next board meeting? What will we see if we are right?

#3: Put it on the agenda for review at a future board meeting

This is the step that most people forget.

This is the moment where the board learns through action. Put the decision back on the agenda and review the outcome of the experiment.

What does the data say?

Ten abandon the project or double-down.

In the meantime, we’ve been moving.

Let’s talk about it on Twitter.

This post was created with Typeshare

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Phil Morle

Phil Morle

Deep tech VC — Main Sequence Ventures. Ecosystem builder. Maker. Director. Startup Scientist.