Building High Impact Boards — Katy Trost

Are you thinking about how to grow your business with near and offshore staffing, but you're also wanting to make sure that it's reliable, cost effective and really well done? I think docsa talent is the way to go. Here's why. They don't just fill your jobs. They bring integrity, top talent and a people first approach that's hard to find. I've known the people at Doxa talent for over 20 years now and I say that you can count on them. I have talent. Talk to Doxatant and you won't be disappointed. Go to doxatant.com Bill G. Again, that's doxatalent.com Bill G. One more time. Docsatalent.com Bill G. Check it out today. All right, we're talking today about boards, how to have and manage and work with your board, how to use your boards effectively. If you've gone through a couple rounds of funding from almost any source, you probably have a board of directors and you have to deal with them. And that could be a great thing or it could be an awful thing. That's a subject of our conversation today. Hello, hello, hello again, everyone. My name is Bill Gallagher, scaling coach and host of the Scaling Up Business podcast. We bring our show to you every week with something to do with scaling your company lately, a couple times a week with some thoughts on, and ideas and stories on how to scale your company, grow your business, get the team, team right down the strategy, execute better, optimize the cash and lead the whole darn thing through many stages of growth. That's, that's what we do. You'll find all our shows and more wherever you're Getting this. Now. ScalingCoach.com is our website where we've got all of our coaching programs, workshops, things like that and you can find all that and more. Scalingcoach.com all right, so with that said, I want to bring on now our guest, Katie Trost. Katie joins us from London. She spent some time in the Scaling up world working with one of our other friends, Neil Lewis, and she's done a lot of work with funded tech companies both in the US and in Europe. And she's going to talk to us today about boards. Welcome to the show, Katie.

Thank you for having me. I'm excited.

Yeah, it's a pleasure to have you on. So I think, you know, it's always great to kind of start with a little bit deeper back background on the coach. Tell us about what drew you to coaching, kind of what your path has been and like that. So you've worked with a range of companies?

Yeah, absolutely. Yeah. So I arrived at this stage, I would say, in my coaching maybe a few years ago, where I just started focusing on working with CEOs, lots of business coaching, got the Scaling up certification as well. And before that I was in mostly corporate America, did lots of corporate leadership, coaching new managers, new leaders, people who wanted to transition their career, get into a new career, get promotions, and just the whole corporate world. And then before that I had a branding and marketing business and I was traveling for a long time. So a friend of mine told me about coaching and I was fascinated by it, mostly because of the personal development aspect. And then once I got into it and got into the whole executive coaching world and of the business side of it, then I knew that was where I wanted to focus.

Yeah, I think it's interesting. So a lot of us in the Scaling up world are former CEOs and entrepreneurs who grew companies and exited them and we got old enough to lose our hair and, or have gray hair and, and start to do that, as you know, Neil, in my world. But then there's also people who specialize in coaching, who learn that. And I think there's value in just that, like the discipline of coaching, it's not necessarily about having done that other thing, but being able to listen and help people see. There's a certain amount of teaching involved, but there's value just in being that guide, focal point, listener and support for people as they go through.

Yeah, absolutely. I think my whole focus is to master CEO excellence. So I kind of dedicated my life to this and dedicated my, my, my career obviously to this. And I think, I mean, as you said, the, the value of having gone through the experience is obviously tremendous. And I would say my coaching really got really impactful once, once I started just seeing dozens and dozens of companies going through very similar challenges. Yeah. So I think there is definitely value in just being able to specialize in this space and to see the same challenges over and over again. See, see them being handled very differently in different organizations and just practical experience as well, because theory is great, but obviously the real life experience is invaluable.

So I think another thing that's interesting about your work is that you are more focused on funded tech companies, and that's not so common in the greater Scaling up community. There are a few of us and more than half of my clients have been that in part because I'm based in the San Francisco Bay area, but. And that the companies that go through Rounds of funding face unique and different challenges. The mandate's different, the focus is different. As they go through that, one of the things they have to deal with is a board.

Yes, exactly. Yeah. It's a very different animal. Obviously, if you grow 20, 30%, I think in scaling up, the definition was 20%. Year on year growth is a scale up.

Yeah.

In my world it's more 2, 300%. So very, very different challenges. And just, you know, you're going to try the wheels from, keep the wheels from falling off and just.

Yeah, many, many. I mean, we have clients that will do 25, 30 a year, but the vast majority are doing 100% plus growth a year. And the focus is on like doubling every year or better in some cases. You know, that that crazy hockey stick that's going up and that brings a unique set of challenges. And then having the funding is great because you can try things and work on things and invest in things, you can do acquisitions, but it brings with it challenges. It brings with it that board.

Right, yeah.

So a lot of our companies have had that, that experience and I thought it'd be great for you to share some of yours as well. One of the stories that you shared in preparing for the show was about a UK fintech board. And it's funny, I had a fintech client a few years ago and then they sold not long ago for a billion dollars, which is a really great thing. But it was a very difficult journey. It was very difficult for the CEOs and there were several along the way, managing with the board and a large number of founders. So talk to us about what you encountered, how that went.

Yeah, so I think the board can be a blessing or a curse, and it depends on the CEO what that's going to be. And many CEOs kind of fall into it. I feel like they accept the board for what it is and they just present and give the updates and just go through the governance process and just serve to the board whatever the board is asking for, even if it's completely unreasonable. And also oftentimes follow advice that might not be the best for the business. Because obviously every board member comes with their own objectives and they have, obviously their investment. And some of them are non execs, but they come with different objectives. Oftentimes it's political or just getting recognition on the board, for example. So I've seen CEOs follow the wrong advice, definitely. And I think that. And I've seen that when you set a really, really good foundation for the board and in this case it would be, and I can go into details in a second, just creating a, almost an expectation for how the board is supposed to help the business. And I always call it the board being a strategic tool to the CEO and the board can be invaluable and can become invaluable. And in this case we completely changed the meeting structure. We went down from one full day where in some cases even they do two days in a row, which is very intense and just lots of, of updates and just running through all of the different, you know, all of the different departments and what's been going on and then the CEO getting questioned and whenever he can't really answer something and obviously it reflects very badly on him or on the team who's, you know, whichever department they are questioning. And we completely changed the reporting structure and we made it much more of a strategic discussion. So in this case what we did, we set some anchor. In the beginning we had two, three different topics that we wanted to cover in the board meeting. We halved it, but in terms of time. So we went down from one day to a half day, had very specific asks for the board and then we went into a little bit of CEO reporting, a little bit of department reporting, brought in a couple of people, the CFO, the CMO for 20 minutes each and it was not enough. It was actually a Q and A. So in this case it was everyone having to read the board pack before and then they can ask some very specific questions. So you see how the dynamic changes completely from oh, I'm just going to sit there as a non exec and I'm just going to listen to the update to I actually have to do some homework, be thoughtful, ask the right questions and then the head of department can answer those questions. And then the whole afternoon is really just the strategic discussions for one hour each for each of the topics and then everybody goes for lunch after. So for him it was game changing.

And I hear a couple interesting things in there. One of them is you took charge of the agenda and you changed it around to make it suit you. Very often with our private coaching planning clients, we're leading their strategic and quarterly planning sessions. And with those, we always recommend that they do that before the board meeting. And then the work that we've done that they use that as the board presentation later. So they review the wins and the Mrs. And the learning and they talk about the key issues that they've got going on, they share the facts and that is all kind of the beginning of the Board presentation. Then they talk about the focus areas that they're going to work on, the priorities for the coming quarter okrs or whatever language they're using. And then they give the board some things to do. And I think that's the other thing I heard that is really useful. A lot of times people let the board drive the agenda, gender or let it sort of be like a little bit of everything and it's all over the place and it's so much work. They create these massive board decks and they give and then the board just sits there and looks for things to pick apart, which could be like on point or could be off. Could be kind of random based on like accidental reading and stopping at a particular point because they didn't do their homework, their preparation. The I think the other thing that you said that struck me is they give the board a job to do. Right. So these are capable, intelligent people that are on your board. If you don't give them a job to do and tell them what you want, they'll make up a job for themselves. Right. They'll pick up things and pet projects and they'll chase down threads. Right. And I. That's really great what you did there, like actually telling them, here's what we need from you. I want to focus you in on this. Right. Then you get there, there.

It's almost like you have to manage your board as if they were another team. Yes. Your executive team would act the way most boards act. You probably would be around for long.

Yes.

So thinking of your board as your team and then also just having those individual relationships with the board members can be super invaluable once you have, you know, certain voting rights and you just want to have everybody behind standing behind you and support you. One of the exercises we did as well with this particular board was actually one of the topics was a complete. What's it called? We did a scorecard really for the board. And you're familiar with scorecards, it's all about having actual outcome oriented responsibilities and roles and responsibilities. And so for this board we created almost like a strawman with, okay, what is the expectation, what are the KPIs for the board, etc. What are the outcomes? How does the board help? And we then did an exercise, or in this case the CEO, he did it alone with the board, was to fill that in and to really have that common understanding of what is the mission of the sport and how is the sport going to help the business. And I think to just have that one hour conversation Even once a year, every other year to just refocus. What are we here for? What's the value we bring? And everybody's time is expensive. Why wouldn't we want to make something of this time together? I think it sets a very healthy foundation for the business and for the board.

Yeah, yeah. Really it makes a big difference to figure out what they're going to do and what I think the thing. So some of our listeners don't have boards and maybe you've already tuned out. But if you don't have that, remember that a board member is generally that non executive board member. Is it representing some ownership generally. So somebody a fund, an individual, somebody put money in, the company will get a board seat generally to go along with that. The number and how and all is a matter of negotiation when you're putting together the equity position. Right?

Yeah.

And then the number of executive board seats, members of your senior executive team that sit on the board is also generally something that you're going to negotiate the overall size of the board and how it is.

Yeah. And some have also non non execs and independent non execs and I find.

That, yeah, that's less common in our world. But independent non execs. Right. Might be a little bit like having like an advisory board. So we want a particular expertise of some kind on there or a name or something like that that can help make the company more attractive, bring particular.

Perspective to the company or vote. That's also I find if you have a, you know, if you have two or three investors on there and then it's you and maybe your co founder or maybe it's a cfo.

Yeah.

And you just want to have somebody else on your side where you just know, okay, this person is going to, it's going to vote for me whenever there's a decision to be made. Independent chairs I find so super valuable and not having the chair be one of the investors. So especially at the serious B.C. i think it a lot of sense to have one or two independent ones. Yes. But we also don't want to put too many people on the board because the moment it's more than six, it gets a little bit cluttery and just not very effective. I find the board meetings, again, just anything over seven can be a little.

Bit ineffective anytime you get more than seven people. But there are definitely many companies where that number is just going to be that and you don't have a lot to say about it. Do you notice any difference that we didn't ask about this in preparation between US and European boards. I know there's a big difference in the way we look and think about business between the continent and, and the UK and the United States. Any thoughts on that?

Yeah, I think the main differentiator is that in the US you have much more. The VCs are usually I think 80% or 70% former entrepreneurs.

Yes.

And in the UK I think it just got up to 20% and before it was I think less than 10% before COVID and everybody else is an investment banker. So you have to be careful with who you have on the board and what advice they give you because they haven't been operating in companies necessarily. They really look from an investor lens. Right. And they can lead you into a wrong direction if you, if you're not careful. In the US I find them much more opportunistic and much more growth oriented and growth focused. We're here. It's a little bit more stay realistic and you know, a little bit more conservative in terms of their growth aspirations. So oftentimes, especially at the, at the CD round, usually you get American investors on the board and they kind of disrupt a little bit of that European. Yeah, 2x is great. And the US investors just want to go through the roof. So there's definitely a difference in just vision.

Yes. It's funny. Well, so much of the investment is based on that assumption. Like we're going to have a lot of companies that are going to fail, but we have a few that are going to be like 100x plus and that is going to be how we're going to make up for all the investments that didn't do well. And you know, there's lots and lots of examples. I know when I've led workshops in the UK and in Europe, I get this a lot. Like, oh, you're so American. Right. You're salesy, you're persuasive, you, you're, you're more impulsive. You'll just like go for stuff and it, everything's grandiose and like. Yeah, that's, that's definitely true.

Yeah. That's why in the US you have much more capital being invested and many more entrepreneurs, not so much in Europe.

Yeah, it's, it's interesting to watch how that evolves. I, I know like even just watching my son's career progress through several, through he raised money and started a couple companies and then he eventually merged his work into another company that, that went through and but his guiding thing throughout everything from his first work in AI to Some of the other companies was, I want to do things that are, like, disruptive and affecting the whole world. Right. So he naturally went to things, even he's ended up with a creative. He works with a company called Midjourney Today, developing their AI. And all through the whole thing, it's like that mindset of let's do something that the whole world takes notice of.

Absolutely. Totally Silicon Valley mindset. I'm from Germany originally. Nobody grows up thinking that at all. That's not a thing nobody aspires to do that everybody wants to, I don't know, just go with the traditional path and maybe climb the corporate ladder, if so. So in the UK already, I would say it's a little bit in the middle.

Between the US there's a reference, a reverence for social order, for, you know, adhering to things. Right. In. In Germany, they're like, no, you follow the rules. Like, the rules are important. The rules are how we exist. And I go to place, like, joining me, like, oh, my God, I just want to do whatever I want to do. Like, get off me. I'm going to, like, behave however I want to behave, like, as an individual.

Yeah. That's why I left. It's like, there's no way for me to build a business in this country. It's just not happening now. It's funny because I do have clients in Germany and Austria and Switzerland, but I kind of had to go that route to America and the UK and then. Yeah. But it's interesting.

So another company that you talked about as we got ready is a European membership platform, tech business. And there was an issue there with the board and the CEO. Trust and talk. Tell, tell that story to us.

Yeah. So this one specifically was about the board not necessarily having confidence in the CEO. So imagine you're the CEO and it's your business, and you know your business very well and you know your executive team very well, and you've probably dedicated many years of your life to this business. And then the board comes along and doesn't really trust your expertise in the area. And how do you handle that? Right. How do you have that conversation of, I know what's best for my business, and yes, you're very, you know, capable, and most board members have some kind of, you know, expertise, and they're very good, especially on strategic questions. But in this case, I don't think it was reasonable what they were asking him and just to kind of give up control over the direction of the business. So it was very similar in terms of the Conversations that we had with the board, not that we did that whole exercise, but it was really about setting the expectation and being very clear of where he wanted to lead the business and strategically where he wanted to focus and not just give in to the board. Now many CEOs, especially when they just raise, they kind of want to focus on the investor because obviously they, they hope for follow up investment as well. So sometimes they can get a little bit off track when it comes to direction. And I've seen it go bad in the past where you just go a big, big detour because the board leads you that, that way. And then eventually you come back around, you know, you're like, okay, maybe we should have focused somewhere else. And the board was like, well, I guess, yeah, we tried. I mean, we gave, you know, we tried to give you good advice. But I've, I've seen it happen before and even the board then apologizing to the, to the founders that they didn't really know what they were, what they were advising on. But yeah, that's how we solve that one. But I think it sometimes takes a little bit of the confidence of the CEO to really stand up for themselves and for the business.

The thing that comes through to me there is the humanity, right? Like at the end, it's not roles and systems operating consistent way. These are human beings and trust is a fundamental thing. So what breeds trust? Our ways of speaking, our history, our stereotype, the way that we show up, the language that we use, our mannerisms. All of these things either destroy trust or build trust. And then there's the background of the fear and insecurity and the aspirations. All of these things are human beings interacting. So you've got a board that doesn't trust a CEO, a CEO that probably also is having trouble with the board. It takes work to turn that around.

Absolutely. That's why I always say, try to invest in your board relationships when things are looking good. Build these personal relationships one on one with them. Take them out for dinners, meet them on a quarterly basis, connect with them personally. Don't only talk about work, otherwise you're always judged on your business decisions and always on your business performance. If you build these personal relationships, they understand much more of the overall picture of why are you thinking this way or why you're acting that way. And you have much more of that support when things can get a little bit more difficult. So I would highly recommend investing in those relationships when everything is good.

It's interesting that some years ago, my coach, long time ago her son served in the US White House for a couple terms as one of the special assistants, the president. And so we went to visit the White House. We walked around and I'm like, so are you, like, working on policy recommendations and analysis of this and that? And it's like, no, no, no. Here's what I do. I move people in and out of the West Wing and the White House, and I coordinate things and I put a particular attention to how people are treated and how they. And what they're worried about. And very often then I'm also dealing with their friends. So it's like members of Senate and Congress and then their friends and family. I want everybody on both parties to feel good and not, like, feel bad or get upset, what's going on. And so sometimes I don't want them to see each other. So I'll figure out how to take them down this hallway instead of that hallway to get them in and out at the same time, because this thing's happening. It's all human psychology.

Absolutely. And it's so funny when you look at it from the outside. You always think it's a sophisticated. You know, just everything is so professional. And when you get into the room, both in a boardroom or just in exec teams. Right.

Yeah.

I mean, it's humans, as you said. Right. It's very. Just depending on the mood of the day, depending on if there was good breakfast or not. Like, all of these things can just really impact how people work together. And to know that and to understand what levers you can pull to just make the most out of that and to just really build deeper relationships with each other and just do. Even if it has to be formal team building. Right. There's nothing wrong with doing some team building on the board. I don't think there's anything wrong with that. Informal.

Do some, you know, human connection. Human. I had a tech company a few years ago, and they. One of their board members was kind of at the end of his career, and he was mediocre contributor to the board and often difficult and. But it was tied up to his ego. So we spent a lot of time discussing role playing and strategizing ways to make him feel good and important and use him in the right way, but to keep him from kind of his worst tendencies, where he was kind of at the end of his career and not as helpful. You talked about a mediocre board for a hardware company. Tell us about that company.

Yeah, so I think very. I mean, I love the point you just made. Right. Most non execs, they come to the board not really knowing how they can help. Sometimes they do have the expertise and the background in the industry. Sometimes they do have a, you know, let's say they have. Not always, but no, not always. And even if they do, it doesn't necessarily mean but that, that is what's required for this boat in order for them to, to accelerate. Right. So I think it's super important for the CEO to know what to ask from the board because otherwise you're never going to get it and to set the expectations to be just setting the scorecard, I guess also for each one of the individual non execs and just put structure around it and tell them what's expected from them in terms of input, tell them to be thoughtful. Oftentimes when we have these, let's say we have the strategic topic discussion, if you just put a topic out there, everybody just throws in their two cents because they want to contribute. They want to feel like they give something, right? They say something, but it doesn't make it very impactful. It's not necessarily valuable, right? So putting out a topic with two, three, four questions that you would like to have answered and then giving them time to think about it. So whenever there is a topic that's presented, let's say the CEO goes 10, 15 minutes, gives a little bit of background, gives the two or three questions that he or she wants to have answered. Should we go this direction? Can we make a plan on this? What's the decision between A, B and C? And then give 10, 15 minutes just for them to think about it, just to be super thoughtful in the answers and then everybody shares around the table, people are much more thoughtful. It's very targeted to whatever the CEO wants to get out of them and from them and then decide, okay, which is the best answer and, or how can we combine them, how can we compromise if there's two opposing ones? And just be super structured in the way you present certain topics and certain challenges or decisions that have to be made. Now for the non execs and their contribution and just that mediocrity in the boardroom, which is I think pretty common. I love to use board evaluation forms and have them after every board meeting. And there is a template I use, I usually send it to my clients and it goes through everything from prep, how valuable and focused they found, the board pack, how valuable they found, the time spent, the topics, et cetera, and then obviously what they would change next time, what they really would double down on and that whole start, stop, keep conversation and then also highlighting top performing board members and maybe the board members that are not performing so well and just making that a confidential feedback. Right. You have that every time after your board meeting. That might be every other month or let's say quarterly. And then once a year you sit down and do it a little bit more in depth and you look at the next year, you set again strategic objectives for the board. Go back to that exercise. What are we here for? What's the mission? What's the impact that the board can have and maybe even look at? Is there anyone who needs to be removed? Is there anyone who needs to be added? Can we bring anyone from being a board member to maybe being a board observer to just to clean the room and make sure that only the most valuable people in the room doesn't have to be anything personal, but maybe it's just they're not necessarily an expert on it and just having that continuous feedback. I find it super, super valuable to keep people on their toes because if they know that after every board meeting people are evaluated on their input and who gave the best input and who maybe, you know, having that kind of.

360 review and feedback loop is great for any team and unusual. Putting it on a board is outstanding because you get a little, little bit of anonymous feedback is useful. And a lot of times if a board member is being obnoxious, they're probably being obnoxious. It probably occurs that way for the majority of the people there. So yeah, and that will happen. The other thing I think you said was really great is if you want people to be their best. Right. And, and we really do. We, we want everyone not to catch them at their worst. We're not out to get somebody off the board in particular until they've gone that. But set them up, give them time, time to think about it, advance notice, a little bit of thinking time so they're not just blurting off the top of their head, which, you know, may. Sometimes we all say things that are kind of stupid before we stop to think about it.

And even before the board meeting. Even so let's say you send out the board pack a week before and you give them three, four days for them to submit comments, questions, suggestions, and then you can already add that to the update, the short version update, obviously that you give during the board meeting. So 80, 90% is already cleared. And then you just have a Q and A that's very focused on specific topics. I like to keep the Q and A also pretty short. And I mean we went from like you know, a full day of updates to basically one and a half hours and the rest is all forward looking, future oriented, opportunistic looking forward and not backwards. And you just completely change the dynamic of the board. It doesn't take much honestly. You can really change the dynamic of your board within two or three board meetings, one quarter. And it can be completely different board, not in terms of the people who are on there, but in terms of what you get out of them.

Some shout outs before we give some of your final things and recap some stuff. If you'd like information about our programs, that kind of thing, scalingcoach.com is our website info scalingcoach.com to drop us a line. We are about to introduce a new program that makes Scaling up accessible to way more companies. If you've ever wanted to do the kind of work of Scaling up but it felt like it's a little too expensive or you weren't quite ready for it, drop us a line. Tell us you want to know about that program info scalingcoach.com that'll launch this year. So just a little teaser there on something coming of course you'll find all our programs and more@scalingcoach.com I want to give a shout out to Wanda Mitchell, our show producer working in the back around assisting get everything ready scheduled and that kind of thing. And the folks at Podfly Productions who get our show ready and out the door every week. And to my coach and my friend and my mentor Verne Harnish who created the Rockefeller Habits and then the scaling up framework that we know and use today and all of those things. So Katie, if you want to know more about Katie's work, Katie trost.com is her website. Easy to remember. There you go Katie. So some comments, right? Think of your board as a team to manage another team, manage it well. You talked about using scorecards. You talked about being aware of non executive and executive directors, developing human relationships, elevating trust with them, giving them advanced time to think about things, taking charge of your agenda, focusing more on the productive conversation and not so much on endless PowerPoints. So I, I don't know, I heard a lot of good, good things in there that I think are hopefully our listeners and viewers loved.

Amazing.

Did we miss anything?

No, I think you summed it up perfectly.

Awesome. Katie, thanks for joining us on the show. Thanks everyone for watching, for listening. Like it subscribe it turn on your notifications so you get them each and every week. We'll talk to you again next time. In the meantime, keep scaling up. Bye bye. Are you ready to turn your goals into daily wins? You should check out our Scoreboard software powered by Align. It's the official software for scaling up. With Scoreboard you'll get an AI driven coach for priorities and KPIs and it'll help keep your team focused on what matters most. With Align you can track your goals in real time and you'll even see results on the go with their mobile app. You can rest easy knowing that Align has world class onboarding and support to set your team up for success. This is really more than just software, it's what I actually use to manage growth in our scaling up client teams. Unlock clarity and results with Scoreboard by Aligned. To try it now go to aligntoday. Com Bill G One more time. Aligntoday. Com Bill G that's aligntoday. Com BillG Check it out and try it now.