Evolve Your Governance/Board Structure and Roles
By: Case At Duke
Tags: Board, Governance, Social Enterprise, Scaling Pathways

How do your board needs change along with your evolving scaling strategy to ensure this critical part of your team can help drive toward impact?

Another critical structure to help drive scale is an enterprise’s board (or other governance structure). In early stages, boards are often working boards that help run operations in the absence of sufficient staff capacity to perform all needed functions. However, as an organization scales, the expectations and requirements of its board must also evolve to drive strategy and results.

Advice from the Field:

1. Identify the board “superpowers” necessary to drive scaling strategy.

In the first section, we talked about the importance of identifying the skills needed to drive to the next scaling stage and next set of decisions. As a parallel process, it is important to map board members against the matrix of critical skills and functions, with the goal of identifying board members with aligned superpowers. VisionSpring’s superpowers specific to its scaling strategy and business model include, in CEO Ella Gudwin’s words, “amazing marketing perspective, commercial law experience, somebody who’s scaled optical, someone who knows what’s going on in the future of optical technology. We also have people who have built businesses in multiple countries, including in India, which is where we have our biggest footprint. So, everyone has a very unique, professional perspective to offer in addition to the personal attributes they bring to the table.”

For CAMFED CEO Lucy Lake, scale means that the board must have “a deep understanding of risk, recognizing that risks become that much more meaningful at scale.” Board members who have navigated scaling scenarios and have experience managing risk can better support the enterprise in balancing its risk-return ratio inherent during scale — and they can bring important perspective on the investments needed to achieve impact at scale. Our interviewees noted other board skills that become particularly important during scale, include providing advice (and connections!) for government partnerships if those are a key part of the strategy, managing more complex layers of capital and financing, and, critically, developing, retaining, and facilitating the succession of talent. According to co- founder of the Bridgespan Group, Tom Tierney, “80 percent [of the board’s time] should go toward issues that are most important to the organization’s long-term impact and the talent strategy to deliver that impact.”

A Word of Caution: Be careful not to overvalue non-strategic skills

According to Sneed, et al.’s 2016 “Scaling the Social Start- Up” survey, 68 percent of surveyed organizations named the board as one of the top three sources for guidance on organizational strategy (behind the senior leadership team and the CEO’s personal network). This statistic reinforces the importance of recruiting board members capable of providing effective strategic guidance and not solely focusing on tasks such as fundraising — as is often seen in nonprofit board recruitment. Matt Forti, Managing Director of One Acre Fund USA, stated, “We believe strict fundraising requirements can produce unintended consequences. Not least, they almost certainly preclude perhaps the most valuable strategists and governists — nonprofit executive directors in adjacent fields or further up the scale curve — who need to fundraise for their own organizations. They also could crowd out higher-value uses of board member time across the wide range of functional areas a nonprofit must get right to be successful.”

2. Ensure legal and governance requirements are met.

If an enterprise’s scaling strategy includes expansion to multiple countries, it may mean that multiple boards will be required. VisionSpring, as an example, has a global board, boards in India for each of its three legal entities (a private limited company, a society, and a foundation), and a small board for its recently formed company in Bangladesh. Some of these boards are more strategic in nature and others born out of regulatory necessity. Gudwin’s advice on managing multiple boards is to first ensure that regulatory and fiduciary requirements are met, and then to facilitate communication and coordination between the boards so that they are helping to develop and drive toward a shared vision. Lake added a tactical mechanism that CAMFED has found helpful in ensuring coordination across boards: for each national board, it puts a representative from another CAMFED board. This arrangement enables cross learning and a shared culture and saves on the cost of bringing all of the boards together.

3. Ensure boards maintain accountability to your core stakeholders.

In addition to the more traditional roles of board governance, interviewees stressed the importance of ensuring a connection between the governance model and core communities and stakeholders. For CAMFED’s Lake, “having the young women who are our clients on our boards — which effectively means having local boards overseeing and having a stake in local activities — has been absolutely critical. The shareholder framework at the community level is an absolutely critical part of that governance bubble.” CAMFED has set up over 150 district-level committees who have responsibility for program oversight and a real sense of being the shareholders in the activities they oversee. Incorporating core communities in the governance model also means that all boards need a culture of humility and active listening, rather than a culture that values only leading. As Lake articulated, “If you’re scaling, and if you’re really looking for that to be led by and from those on the frontline, then you want a board that is ‘strong’ in the sense of being prepared to come behind that, not to be working from the front. I think that balance with the board is critical.” [For more on how you can hold your organization accountable to stakeholders, see the ‘Ensure Data Efforts Drive Toward Equity and Inclusion’ article].

Do’s and Don’ts of Evolving your Governance/Board Structure and Roles