Part of the reason I write this blog is to promote transparency into the venture capital process. That wasn’t something I really expected when I started.
To that end I am posting these links to Peter Rips post on this subject where he links to Munjal Shah’s description of a key strategic decision at his company. Munjal is CEO at Riya, one of Peter’s portfolio companies.
If you are interested in this subject you should read the posts. The highlight for me is captured in this passage from Munjal:
Most people think a CEO is at the top an can do whatever he wants. This is just not true. While I don’t strictly report to these four, they are my biggest shareholders and it is important that I get their input and support. If they disagree it is important that I hear why and consider it.
That being said, I’ve realized that all too frequently CEOs, let a board drive decisions and then take no responsibility when it fails. For example, “I told the board not go that way, but they did and so now the disaster is their fault.” Or my favorite example, “The board has decided we need to cut staff. Sorry team I fought but I lost.”
Both of these are pure crap. A CEO should always keep the business focused on what he believes will make the most money for shareholders and what he believes is right.
Besides this Munjal and Peter are saying it is important that board members are capable of handling change, able to make time and understand key issues in depth, and having done that to take important decisions quickly. Couldn’t agree more – prevarication and constantly reaching for more information are the enemy of success, but you need to be close enough to your companies to understand the issues and not be afraid of change.
Not much value add from me here (so apologies to readers who have seen Peter’s post already), but these posts contain great insight.