Get the Most Out of Your Board

Sometimes the best way to re-imagine the use of an asset is to think about it as your only asset. Imagine slashed budgets, a hiring freeze, a tough competitive landscape, and unreasonable time constraints (or perhaps you don't have to imagine this state). If you had zilch, you'd have to be more innovative, more passionate, and more creative. You'd have to make the most of what you do have.

And one asset that's always with you and too often ignored is your board. Now is the time to stop thinking of your board as a mere legal formality and start thinking of it as untapped potential. More than a legal requirement or simple list of fancy names adorning letterhead, a strong board of directors can be a source of great ideas, great revenue, and great leadership. While these lessons come from the world of not-for-profits, this power of zero thinking can provide powerful ideas that anyone can use.

Here are three ideas to get you started:

1. Select for love of the product or service. One of the main criteria for selecting someone to join a not-for-profit board is passion. Instead of being paid with stock options or cash or other benefits, our board members pay us! They are involved with our activities as they are alumni or parents or current participants, or simply enthusiasts of our programs. Big donors, big volunteers, and big champions end up on the board. That check or those hours are a proxy for measuring the passion someone has for our product or service.

Are your for-profit board members passionate about your product or service? Do they love it? Do they ever even use your product or service? For this post, I examined the individual habits of board members of two struggling companies: Hewlett Packard and Yahoo. Are the board members champions of the product and services of those companies? Sadly, many of the HP board members use rival computers at the office: three use Dells, one uses a Lenovo, and two use Macs. Many Yahoo board members appear to use Gmail accounts — including one who publishes a Gmail address widely on the internet.

2. Select for diversity. People often ask about the demographic composition of a not-for-profit board of directors. Before investing money in us, they want to know how many women, how many African Americans, and how many Latinos are on our board. Why? This seems like an arbitrary question. But it turns out that this isn't just some politically-correct litmus test. It's actually a very simple performance indicator. Boards that look more like their target market have a better understanding of their target market. The Teach for America board includes teachers, and parents of kids in public schools — members who represent diverse markets. Similarly, it makes sense that one of the world's largest providers of home products and personal care items, Unilever, now has three women on its board. In fact, research shows that companies with diverse boards outperform those with a "male, pale, and stale" composition. A 2010 Catalyst Information Center study (PDF) found "companies with gender diversity at the top drive better financial performance on multiple measures — including 36% better stock price growth and 46% better return on equity."

3. Encourage transparency. Why are the proceedings of boards so mysterious? Sure, some of what happens in a board meeting should be kept under lock and key so that shareholders, competitors, vendors, and employees are not spooked. But many board proceedings are routine, and many topics would benefit from being in the light of day. And if board members had more contact with employees beyond the CEO, those board members would have a more complete understanding of the company's strengths and weaknesses. Many not-for-profit board members work on various special projects or white papers with disparate members of the staff. For example, the CTO of DonorsChoose is in regular contact with board member Jeff Weiner, the CEO of Linkedin. They discuss DonorsChoose's plans to better utilize data and analytics — areas of deep expertise for Linkedin, a communication tool that helps the board and staff to be better informed.

Board building is an ongoing activity, and a process of continuous improvement. And while my three suggestions might seem outrageous for a Fortune 500 company, advice and opportunity sometimes come from unexpected sources. Can you afford not to listen?