The CEO and the Board

Posted by Richard Moran.

An elephant almost always joins the festivities when the CEO and the Board gather. This is not an elephant that stomps around and trumpets trouble. It’s a pachyderm who is very subtle but still very big and complicates the dynamics in the relationship between a CEO and the Board of Directors. That tricky relationship is fueled by business issues, style, decision making power, and all the stakeholders involved. The rigors of corporate governance compound the dynamic with committee charters, proper policies and procedures, independent directors and plenty of counsel. Compliance cloned the elephant in the room into a herd.

Sometimes I feel like I am wearing special glasses that allow me to see elephants where no one else can. If I can see them, every CEO and Board member should be able to see them too. To see the elephants in your boardroom you don’t need special glasses, you just need to be honest and ask the hard questions. Here are some of the questions to ask yourself to see if there are elephants thundering into the dynamics between the CEO and the Board.

The Elephant Questions

• Are there too many people on the Board and no one is sure who should go or how?

• Is the CEO under-performing but thinks he/she is doing a good job?

• Is there that one “special” person that just can’t get along with the CEO?

• Does the founder or former executive on the Board create issues because “the old days” were better?

• Do back channels of communication make some Board members more informed than others?

• Is there a Board member who is not doing their fair share but no one will discuss it?

• Do some Board members feel underpaid while others are afraid to address Board compensation?

• Is there is a feeling that the Executive Committee is too powerful and doesn’t share?

• Does the Executive Committee feel under appreciated and over worked?

• Does the Audit Committee have low confidence in the CFO but…
 Too much pain is involved to switch
 The Auditors like the CFO
 A 10K is delayed and needs to go out
 The CEO supports him/her
 The Analysts like him/her

• Do some Board Members preach about “When I was at GE, Intel, Wells Fargo…(fill in the blank)

• Are there plenty of consultants (and bills) but no visible signs of progress?

• Do some Board members always need more data in order to make a decision?

• Are Board retreats time wastes and do they duplicate management efforts?

• Do Board members wordsmith and want to review too many documents and reports before released?

• Are succession plans dodged by the CEO so no one ever quite gets to it?

• Is recruiting new Board members always botched?

• When Directors go off into minutiae, does any one pull them back to the meeting at hand?

• Do Directors talk about each other disparagingly in private conversations?

• Is every Board meeting a dog and pony show that “shuts down the plant” in PowerPoint prep work?

If the answer to any of these questions is Yes, there are elephants lurking that you’re your organization less than effective. Elephants, often called other things, are the big issues that can put a divide between the CEO and the Board if not resolved. They are often so big that everyone sees them, but no one wants to address them. Or, they can be so big that no one even sees them. The first step is for the Board and the CEO to acknowledge the elephants so they can be addressed.

As a venture capitalist, I have seen issues emerge between the board and ceo’s that can determine whether or not an early stage company is successful. When the board is full of investors and the entrepreneur is developing his “baby”, the dynamics are as complex as a marriage.

In a more mature company, there are other issues, the life of the company may not be at stake but the career life of the CEO may well be at stake. It is never the case where a batch of well meaning people get together for a casual meeting and make some decisions about the future of the company. It is always the case that over time the dynamics between the Board and the CEO will change and may alter the effectiveness of both. There are solutions.

Here are three simple principles that might help:

1. Pay Attention to Group Dynamics. If you have a dysfunctional relationship between the board and the CEO, it permeates the company and transcends the four walls of the office. Keep the elephants in the zoo and let them run wild in Africa and Asia. Do you dread a Board meeting they as much as a root canal? Get counseling, see a rabbi or priest, do something! Think about the kind of team you are trying to develop. Too many Boards and CEOs are disappointed if they don’t operate like a high performing basketball team. Instead, consider operating like a track team where a group of highly talented people work independently, most of the time, but come together for the success of the team.

2. Treat information as a tool, not a nuisance. Anticipate your Board’s needs and know what will be asked. Company operations should be transparent to the Board. Dog and pony shows are not required, but do expect ad hoc or special requests from the Board when they don’t see that level of transparency. Know that measures for the CEO must be clear and consistently reviewed. Information should be regular, digestible and tell the Company story – both the Board and CEO should be able to answer the question, “How are we doing?”

3. Put the big issues (the elephants) front and center and tell the truth about them. The agenda should not be set by compliance but rather, how to make the Company successful. Boards too often meet for eight hours and never get to the meaty issues. If the intent of the Company is clear, the Board should know how it should act to help achieve that intent. So whether you are the CEO or the Board ask yourself if there is an elephant in the room. Addressing the elephant will make for a better dynamic and progress will ensue.

Remember, the relationship between the CEO and the Board of Directors sets a tone and permeates throughout the company. The very success of the company is at stake based on how the relationship develops. Keep the elephants where they belong and out of the Board room.

This article was originally posted in April, 2007 on (, an online publication of the Sand Hill Group.

Avoid Paris and Collect People

Posted by Richard Moran.

A Commencement Address Delivered May 26, 2007

To the Board of Trustees, Head of School, Faculty and Staff, Parents and Friends and Most of All, You the Graduates of the Class of 2007, I am honored to be invited into your midst and know I bear a heavy responsibility as your speaker.

Graduates, you are confronted with a serious set of issues that will effect your lives. Terrorism, global warming, immigration, sustainable energy, not to mention you might get killed by spinach. You will be relieved to know I am not going to discuss any of that. Instead, I am going to ask a few questions and give you two pearls of wisdom. Just two.

First, my question for the graduates: Do you know how lucky you are to have attended this school. Wow. The more I learn about the school, the more impressed I am and how privileged you are to have attended such a special place.

I attended Rahway high school in New Jersey. Rahway is the home of the famous prison and penitentiary. Many of my classmates were in the school to be close to their Dads, who were in the prison. Growing up in New Jersey I heard something along the lines of the United States is on a slant, and everything that’s loose rolls into California. So here I am.

I suspect I wouldn’t be here if it wasn’t for the success of my books so let me tell you the genesis of how I became a writer. I wouldn’t have written any books if it wasn’t for a dog, a golden retriever to be exact.

It happened during a job interview. I was interviewing a very talented woman for a high level job with high pay. She was doing great. About half way through the interview, she looked me in the eye and said, “You know, you remind me of a golden retriever.” It’s hard to know how to respond to that. But she went on, she said, “you have the same coloring and even the same personality as a golden retriever.” It’s hard to know how to respond to that. WOOF.

As much as I like golden retrievers, she didn’t get the job. My question became, why do I have to suggest to people that they shouldn’t tell people interviewing them for a job that they look like a dog? Why? All of my books are shaped around simple questions like that.

A new question emerged and was the genesis of my latest book. That question is, why do I need to suggest to people that it is rude in so many ways to talk on your cell phone while you are in the bathroom? You know what I am talking about. Especially you Type A’s out there. I don’t know about you, but I don’t want to talk to people with the sound of flushing toilets in the background.

That new book is Nuts, Bolts and Jolts and it is full of lessons but the most important lesson that I can pass along is that great things don’t happen necessarily when you plan for them. Or wait for them. You can do great things now.

I didn’t wait for a great inspiration of literature and I now suggest to you, don’t wait, exercise every mental and physical muscle you have right now. Books aren’t written when you plan to spend those special two weeks on the mountain thinking great thoughts. Science discoveries don’t always happen in the lab. Youtube happened at a party, not at a developers conference. Great contributions don’t happen at the end of your career. You can do great things now. And I know you are already doing great things.

As I reviewed the accomplishments of this class, it occurred to me that you are all probably pretty good at following advice. Other wise, you wouldn’t be here.

You know the advice:

Get good grades,
Choose your friends carefully,
Come home on time,
It matters where you go to college,
Stay off myspace and facebook
Call me if you need a ride, no questions asked; and my all time favorite:
Make wise choices.

You took that advice to heart or you wouldn’t be graduating as such an accomplished group. And now you are embarking on a new path which will continue to require good judgment but the advice may not be as readily available.

So it is that my charge today is to come up with different and challenging pearls of wisdom. I think I have done that and better, I think you can execute on this advice without any trouble at all.

So here are my Two Key Messages for you today. As promised – only two pieces of advice.

Number One – Avoid Paris

Paris is large and full of temptations like fine wine, rich food and decadent desserts. But I am not talking about Paris France, I am talking about Paris Hilton.

Now, let me be clear. I have never met Paris Hilton and I suspect our paths will not cross soon. I presume she is a typical young woman on her own journey like many of you. My question is, why do I know so much about Paris Hilton?

For me, Paris Hilton has become the poster child of information that I do not want to know. I hesitate to mention a lot of names on such an auspicious occasion but they are all out there. Why do we know about Britney Spears? Why do I know about Simon Cowell and Rosie O’Donnel and Donald Trump? I don’t want to know these things. I don’t’ watch a lot of tv and I don’t read US magazine but these people are a part of my knowledge base. They have crept in and they have crept in to your life and you need to say, So long, Paris.

Lest you think you are immune from this barrage of pop culture, does the name Sanjaya ring any bells? How many of you know Lindsay Lohan’s current boy friend or address of her rehab center? Why do you know the name Kevin Federline? For those of you who are saying who is he talking about, good for you. For others, like me, you should be asking, why do I know about this?

I don’t want to know any of this info.

Think about how many celebrities you can name. I bet each of you is familiar with thousands of celebrities. Think about how many athletes you can name, probably thousands once again. What a waste! It’s like being really really good at solitaire. You are not learning anything and there is absolutely no use in knowing who Sanjays’s hairdresser is, there is nothing to learn there.

So let me ask you a different question.

Now that we have established you know a lot about Sanjaya, or Britney, how many of you can name a living poet? A hush falls over the crowd…. How many of you can name a living mathematician? A living astronomer? A living painter? A living economist? I can make this a long list but I don’t want to induce guilt. Think about that…you know all the contestants on Dancing with the Stars, but not one living poet.

Within fifty miles of where we are sitting today there are probably 20 Nobel Laureates, hundreds of authors and artists and poets and inventors and dreamers and visionaries. Some of them are here in the audience. You have the opportunity to know them and learn from them. That is where your attentions should be focused. Listen to those people.

In a recent study by the National Endowment for the Arts, Dana Goya discussed literacy in America and the looming crisis. Just about everyone can read. The crisis is not that there are illiterate people in the US. The problem is that the literate people don’t read. Those millions and millions of people who are educated don’t stretch their minds. Don’t practice intellectual curiosity. Read.

So avoid Paris and next time someone starts telling you about her or any one closely related, think of that commencement speaker and say TMI. Not a hard piece of advice to follow.

Which brings me to my second key message.

Lesson Number 2 – Make Lifelong Friends

You have had opportunities to make friends in high school. The advice to make lifelong friends seems obvious but there is more to it than might appear at first.

I learned this lesson only in retrospect.

It was a while ago, but I still remember it as if it were yesterday. I was a sophomore in college and let me paint a picture of what my life was like at the time:

My grades were awful and I had no idea what I was going to major in.

My roommate was a jerk who stayed up all night playing Beatles records backwards.

I hadn’t had a date yet in college.

I went to college on a track scholarship to run the mile but I was now on crutches with a broken ankle.

It was a dark night in February with freezing rain outside.

Get the picture? Dim.

At a fraternity meeting an alumnus came back and with great fanfare declared, these are the best years of your life!

I thought to myself, if this is as good as it gets I might end it now.

But that alumnus was right. I bet many of you have heard that same statement – these are the best years of your life; the variation is I would give anything to be where you are right now. They are right, listen to them. All times are good but you are in the middle of a particularly good and opportunistic time.

That alumnus who said that was right because there is not another time in your life that will allow you to make as many friends as those that you will make in high school or college. No other time will give you the shared experiences that create such bonds.

So what I am really saying is advice you might like: over the next four years you will take calculus and all the courses that will allow you to be sitting in a similar chair down the road, but what you will remember is your friends. So don’t worry about Geology and English Lit, you won’t remember that but you will remember the friends you make.

What I started in high school was a people collection and that guy who said these are the best years of your life inspired me to increase that collection. I am still doing that and all of you are now in my collection.

The President of Stanford once told me that the only thing that holds that great University together is the heating system. At the Priory that is not the case. It is held together by lining the life of the mind with the life of the spirit. By standing for something and by encouraging relationships that will last a life time. Keep those lessons near as you go forward with vigor.

I just saw a recent study that claimed that 85% of the population in the US lives within 25 miles of where they went to high school. Hard for me to believe but that means that you will probably be back go for now but make those friends.

So graduates, I hope you see that my messages are not about nuclear winters or world peace, the messages are small things with a big impact. Your life will be measured not in how many A’s you receive but by making those million of small efforts that will generate millions of friends. Your life will not be successful if you can list off Angelina’s children, but if you remain intellectually curious.

That’s it. Avoid Paris and Make Lifelong Friends. Advice that is easy to take and will result in an enriched and special time. I suspect you will ignore my advice about Paris and that you will still know about her and all of her friends in another year.

But trust me on the advice about friends.

Good luck and God bless you all.

Who Are They Talking To?

Posted by Richard Moran.

First, let me proclaim my total reliance on my cell phone. I used to check to make sure my wallet was in my pocket, now I check to make sure my phone is in there. So when I ask the question, “Who are they talking to?”, it is not from a perspective of cell phones are a blight on the universe. Rather the question is posed more out of real curiosity.

My wife and I attended a concert not long ago. It was romantic and mellow with young couples all around us. At every break in the action the couple in front of us each took out a cell phone. Rather than talking to each other, they dialed, put the phone to their ear and ignored each other. When the music started again, they put the phones away, held hands and listened raptly. Who were they talking to? Who better is there to talk to than each other? I can’t imagine. Any date, any occasion has a rhthm that can’t stand the interruptus of the constant phone calls.

While jogging on one of best trails in the Bay Area, I came up behind two fellow joggers in the journey of life. It looked like two friends enjoying a solid sweat together. We were headed in the same direction and as I passed the two women I overheard each of them talking on their cell phones. Not to each other I presume. Who are they talking to? Rather than enjoying the fresh air with a friend and chatting about the exercise, the weather, what’s new, ANYTHING, they are talking to someone who is not “present”.

Taxi drivers present their own mysterious question. In every taxi I’ve been in lately, the driver is engaged in a sultry and mysterious discussion with someone on the cell phone. No, it’s not the dispatcher. It is someone who understands exotic languages and can decipher the mumblings. They can engage in this mystery chat for a seemingly endless time; or at least as long as I am in the cab. Who are they talking to? Is it a mistress and the driver is proclaiming his love? Is he calling his brother asking for directions? Is it his broker relaying the tips from the previous customer? Who knows, but it is not me.

I talk on my cell all the time. I call my Mother on it. I talk on it while I am driving. I talk on it while I am walking around. I still don’t talk on it when I am on a date or jogging. OK, I do talk on it while I am in the back of a taxi. Why not? The driver won’t notice.