Jack Welch said, “If change is happening on the outside faster than on the inside, the end is in sight.”
I’ve thought about this often over the past thirty years. As Managing Director of three technology companies, I was often swamped. Every day I dealt with unrelenting pressures, and with many different demands on my time. Fortunately, I had boards that would think with me – and for me. Boards that asked the big questions.
A growth-focused board looks to the future without trying to predict it. It’s versatile and meets market challenges head-on. It changes faster on the inside. How?
1. They set the right goals, fast
The critical thing about a growth-focused board is that they must understand and drive agreement about what the goals are. If there’s no alignment about where you’re going, it doesn’t matter how fast you get there.
The board has to work with the executive and the founders and make sure that the right goals are chosen. If you don’t very quickly work out what direction you want to go in, then you’re never going to build a great company.
Having the right goals is important for all organisations. But because a rapid growth business is aggressively investing to build the business, the consequences of misalignment are so much greater. There’s no ‘steady-state’ to rely on. Any misalignment, for even a period of weeks, has heavy costs in dollars and engagement.
Getting the goals right must be priority one for any growth-focused board.
2. They attract people who will attract others
The second critical thing that a fast-growing company must do is get the right people.
In a growth-focused organisation, it’s likely that you’re going to need to hire large numbers of talented people. This makes early hires so much more important. Top quality people are an amazing magnet for attracting other top quality people.
In my time as Chair of Readify, I saw this virtuous cycle at work first hand. Readify attracted exceptional talent, largely because of the exceptional talent we already had working for the organisation.
When you get this right, the talent of the organisation becomes a defensible competitive advantage. No one wants to leave an organisation full of A-players for a competitor that’s comprised of B and C-players.
Again, getting the right people matters for every organisation. But it matters so much more when you’re growing fast, because your talent pipeline can so easily constrain your growth.
3. They know how to identify and grow competitive advantage
Finally, the board needs to work with the executive to make sure that the capability of the company is very difficult for competitors to replicate.
The board must make sure the capabilities and capacities of the company provide them with real competitive advantage in doing things that is very difficult for competitors to replicate. If you are able to build products and services that your competitors just can’t compete with, then you’re able to charge a premium.
So a board needs to work with the executive and talk to customers to help assess what really is the true capability of the company to build defensible competitive advantage.
Focusing on defensible competitive advantage isn’t unique to growth-stage companies. It matters at every stage of a company life cycle. However because a growth-stage business is landing new clients and expanding rapidly, they’re more vulnerable to a competitive threat. The business doesn’t have the benefit of relationships and the track record of delivery that comes to exist over time. Until these barriers are built, it’s critical for the long-term viability of the business to make sure the basis of competition is sound.
When working with a growth stage company, the board must be aware of the specific strengths and vulnerabilities that come with rapid growth. Whilst the opportunities can be huge, the risk profile of a company that’s growing at double or triple figures annually is also substantially enhanced.
I’d love to hear from other directors who work regularly with high-growth companies. What do you think are the key characteristics of a successful growth-focused board?
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Russell Yardley / About Author
Russell is a professional company director. His experience includes Chairing Readify, Tesserent and Powerhouse Ventures and as a board member of Wunderman-Bienalto, NICTA, The ARDC, The Victorian Government Purchasing Board and the Alannah and Madeline Foundation. He is an experienced director, entrepreneur and innovator, with expertise in technology, strategic & business planning and an extensive knowledge of government.
Russell was appointed a Fellow of the Australian Institute of Company Directors in 2012. His expertise has been recognised by SmartCompany as one of Australia's 12 Most Influential People in Tech and as an Honorary Member of the Australian Computer Society.