Private Company Q&A with Private Company Director Magazine
Bernie Tenenbaum sits down for an interview with Private Company Director Magazine to talk about private company governance and his board experience.
Q. What was your first board experience like?
I was so ignorant and so unprepared to be a director the first time. I didn’t understand the boundaries between being a director and being a manager. While I can focus on the strategy, I was very much concerned with the execution. One of the best rules I've heard for a good board member is, is if you're standing at the window, you can put your nose in but you have to keep your hands outside the house. I've learned to be effective in motivating management teams to accomplish the goals that the board sets. To motivate team members who are actually tasked with execution with accountability as opposed to trying to use the board as a way to manage the business directly.
Q. What is the most rewarding experience being on private company board?
There are a lot of different kinds of rewards. In a family setting, it was great to be able to drive the performance of a company in a way that allowed deep-seeded issues between family members to become resolved with cash rather than with anger. Being able to create a degree of success in a family company because of pointing the business towards a very rewarding strategy and forcing family members to be accountable for that strategy. It enabled the company to reallocate its resources in a way that diminished the degree of interpersonal anguish that I encountered when I first joined the board.
A different kind of rewarding experience is to find a company that has tremendous potential, but sometimes not the courage or the experience to achieve it. And so to participate at a board level in driving a strategy that identifies and then incentivizes key team members to accomplish a level of growth and performance that requires courage and imagination is a tremendous contribution as a board member. It’s not doing the job, but being able to identify the target and to help assist the team members in achieving that goal.
Q. Is there a common theme for success or failure?
The issue is always whether it’s a family business or business family. Does the business exist to support a family lifestyle? Does the family benefit from the success of the business? And so if the family sees the business as a giant piggy bank, and the competition is between various family members or branches to see how much they can benefit from the family, at some point, the golden eggs will die. If you get a family business that says, ‘this is a family business that will be here for generations, and it’s our job to be caretakers of this business for the following generation of the family,’ you often see a level of success and commitment to a strategy that transcends time. It’s more accurately focused on trying to drive the best possible outcome for the business. What I find is, the highest rate of success comes when the family treats the business as something they’re responsible for as opposed to something that’s there to suck dry.
Q. Reasons not to join a private board?
I come from a strategy background. What I ask myself when I’m approached to consider a position as an advisory board member is, ‘Is the company really ready for a board? Do they have a clear strategy? Are they focused and aligned? Do they have manageable metrics? Are they on a path to success? And does everybody agree that north means north?' If any of the answers to those questions are, “No,” then I typically will ask that company to go away and work on their strategy first.
Second, does the management of the company have cement ears? Are they willing to listen? I don’t really need to go to another board meeting. The reason I like being a director is because I can contribute. I think I might have something of value to add. If we don’t have that kind of interchange and relationship, it’s not very attractive going to board meetings. It’s not about money or prestige, it’s about making a difference.
Q. As a director, what is the biggest challenge in dealing with other board members?
Culture trumps strategy. So if the people putting the board together - it's not about the resumes - it's about having the right people on your board. You can't play a team with five LeBron James'. There isnt enough ball-time. There has to be balance, there has to be coherence, there has to be mutual respect in a board setting. And very often people go about collecting celebrity resumes. That's not what makes a great board. What makes a great board is a board that listens. Both to one another and to management. A board that contributes, a board that understands that there's DNA that animates the business; and they get that DNA and they want to protect and amplify it and not make it soemthing that the board can't be. When someone sucks up all the air in the room, it's really difficult to breath as a director.