Startup general interestVenture Capital

CEO and board must be united

By July 12, 2011 No Comments

Brad Feld put a great post up yesterday titled Note to CEOs: Decisions come from you, not the board which makes the point that it is a mistake for CEOs to blame the board for a decision that has been made, either because they don’t agree with it, or because they want to distance themselves from it.  Either way the CEO is abdicating some responsibility for the decision, and that undermines his or her authority and de-motivates anyone who sees what is going on.  Nobody tries as hard to do things they know their boss doesn’t believe in.

I’ve seen this play out in a large number of boards and problems have always followed.

The right way is for the board to present a consensus, including the CEO.  Behind closed doors there may be heated debate and even disagreement, but presenting a united front is a pre-requisite for good leadership.

Taking this line of thinking to its logical conclusion you end up with the following position (from Brad’s post):

I’ve come to believe that the only real operating decision that a board makes is to fire the CEO. Sure, the board – and individual board members – are often involved in many operational decisions, but the ultimate decision is (and should be) the CEO’s. If the CEO is not in a position to be the ultimate decision maker, he shouldn’t be the CEO. And if board members don’t trust the CEO to make the decision, they should take one of two actions available to them – leave the board or replace the CEO.

Backing up a little, the overall role of the board is to make sure the company has the right strategy and is appropriately resourced from a cash and people perspective.  So there are bunch of critical non-operating decisions that the board is involved with, but as Brad says with the one obvious exception all operating decisions are the CEO’s.

I’ve been a little brief here, and if you are into this topic, or want the link between the board presenting a united front and fact that the CEO must be the ultimate decision maker then reading Brad’s post (and the comments) will help.

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