In small to medium sized businesses there is often a missing corner or two on the boardroom table and, increasingly, the same is now true of larger companies.
What are these corners and what purpose do they serve?
The smaller the business the more likely that it is run by people who think in similar ways. For start-ups that friendship, that ‘likeness of mind’ is often a key component in getting from concept to reality but at that point it can become something that hinders the unsuspecting company.
The ‘Board’ (or those running the company) becomes a couple of people or a group of people who think and act the same. They lack the diversity that is required to drive the kind of growth which delivers on early potential. The business reaches a critical size and growth ceases or, if they are fortunate, slows.
In the larger company the situation is different but generates the same problem. There are a number of people around the boardroom table, often very diverse in specialism, experience and knowledge. And because of that diversity, a dangerous assumption is made – that the necessary range of skills, knowledge and experience are assembled.
In both cases, a reality check is needed. That check involves ensuring that four vital specialisms are assembled; the four key corners of any boardroom table. But what are these four key specialisms?
- The Strategist. This specialism is the most easily and most frequently overlooked. The board assume strategy to be a generalist skill which they can all handle between them and any ensuing strategy ends up being a hotch-potch of generalist ideas lacking proper direction and cohesion. And responsibility for strategy (in other words the company’s future) is shared, the buck does not stop anywhere and over time the strategy becomes a vague notion or is discussed in terms of aims and objectives with few (if any) clearly defined actions worth having.
- The Money Man. Of the four, this is the specialism least likely to be omitted in larger companies (there will usually be a Financial Director) but in the smaller companies is an assumed presence which doesn’t really exist. It is assumed because books are kept and the accountant checks them over every quarter (if lucky) or annually (more commonly).
- The Manager. Of bureaucratic mind-set, the Manager is the ‘husbander of resources’ essential to any organisation to ensure the economical use of those resources and to the eradication of waste. Unwatched the Manager can become caught up in his/her own bureaucratic processes and start overlooking the very waste he/she despises because the processes appear to be working. Focus is on the job of management not the future of the organisation.
- The Leader. Often, wrongly, assumed to be the same person as the manager, the Leader tends to the less bureaucratic and more to the adhocratic. The Leader’s role is to take people with them on the journey. Of course, without a dedicated Strategist the journey is often ill-defined and the Leader, being of adhocratic mind-set will lead wherever people will follow but not necessarily in the right, planned direction best for the company.
Put together the four might seem a strange group to be working together but it is their diversity which gives them their strength. The Money Man and the Manager tend to be data driven, needing historical information to inform any decision making. The Strategist and the Leader tend to the visionary, preferring to look to the future in preference to the past.
The mix is further diversified when considering where they sit on the continuum between bureaucratic and adhocratic. The Manager tends to be highly bureaucratic, the system and the process are everything and ease the job of management. The Money Man and the Strategist sit nearer the middle of the continuum, the data driven Money Man tending to (but not driven by) the bureaucratic and the future driven Strategist tending to (but not driven by) the adhocratic. The Leader tends to be more highly adhocratic wanting everyone pulling together regardless of direction.
None of these definitions are absolutes. There are certainly Strategists who favour historical data and putting a strategy in place requires a healthy dollop of bureaucracy if it is to be cohesive and executable.
The key to the four corners is that they balance each other. Bureaucracy and adhocracy are not natural bed fellows but are both important components of a healthy board. Data driven and future driven mind-sets are more likely to get along (but not always).
Most boards will feature a nominal leader in the CEO however the reality is that individual could be from any of the four corners but tend to be either the Manager or the Money Man. Companies are run sensibly, conservatively but are resistant to change. This is all very safe unless change is required (think of the recent spate of closures on the High Street).
There is nothing wrong with the CEO being Manager or Money Man so long as the board is balanced, that all four corners are occupied. However, most likely to be absent from the board room are the Strategist and the Leader which can undermine future planning and the spotting and seizing of opportunities to diversify and realise attractive directions in which to move and grow.
The healthy board will ensure the four corners are filled before adding other seats around the table. But how many actually do and how does yours shape up?
© Jim Cowan, 2013-2016