Accelerating Change.
Growth company chairs on embracing transformation and change.
Intro.
The last year has rapidly changed the way companies in all sectors, all over the world do business. According to a recent McKinsey Global survey, COVID’s impact has accelerated customer digitisation and supply chain by three to four years. This advancing tech innovation has now altered the way most businesses operate, engage with customers and plan for the future. So what makes the difference between those companies who are surviving and those who are growing fast and winning the race?
We spoke to notable Chairs who lead both growth (start-up, scale-up and fast-growing companies) and listed businesses on what growth lessons they deploy to help their later-stage companies embrace digital change and transform.
Contributors called on teams and companies, who’ve been through such extensive change not to “waste this crisis”, viewing it as the “ability to create a new world... with the social piece at the fore”, urged them to “retain that transformation mindset” - or “become toast!”. They encouraged listed boards to “get comfortable with risk”, strategise less and “do it and iterate more” and get all board members digitally literate or risk losing customer share fast.
As the world, and workers, re-evaluate their priorities, our Chairs also urged listed boards to recognise that top talent will increasingly go where the diversity, sustainability and ESG agendas are strongest. So, if companies want to win, they must now put these values front and centre.
There are many positive - and challenging - suggestions here. We hope you find them valuable for your own board and company’s growth.
Our Contributors.
A huge thank you to our contributing Chairs:
Alison Davis Advisory Board Chair, Blockchain Capital; NED, Collibra, Fiserv, Janus Henderson Group and Silicon Valley Bank
Andrew Fisher OBE Chair, Rightmove; Remuneration Committee Chair, Marks & Spencer
David Tyler Chair, Domestic & General and The White Company
Darren Shapland Chair, Moo.com, Topps Tiles, Aerofoil Energy and Change Management Group
Glyn Barker Chair, Berkeley Group, Irwin Mitchell, Tappit; NED, Transoceon, Various Eateries
Dame Inga Beale Chair, Mediclinic and NED, LondonFirst + Crawford & Company
James Bilefield Chair, SThree; Remuneration Committee Chair, Moneysupermarket.com
Martin Gilbert Chair, Revolut, Toscafund and Co-Founder + former CEO, Aberdeen Asset Management
Mary Phibbs Chair, Virgin Money Investments; NED, CPP Investments
Melanie Gee Chair, Syncona; Former Chair, Ridgeway; NED, Standard Life Aberdeen
Tim Weller Founder / Chair, Incisive Media; Chair, Trustpilot, Pixomondo, Resi and Sohonet
Richard Pennycook CBE Chair, Boparan Holdings, Howdens Joinery and On the Beach
What we asked.
How is chairing a growth or entrepreneurial company different from a corporate?
How has the crisis changed the way Chairs lead their growth and listed boards, and will these approaches stick?
What can later-stage corporates learn from growth companies and vice versa?
Embracing accelerated change and predictions for the near future.
How is Chairing a growth company different from a corporate?
Chairing a growth company can be an exciting roller coaster ride - rewarding but not without risk. There are, of course, differences and similarities between chairing growth and listed companies.
Some Chairs feel at home in both scale-up and listed boardrooms are easily able to flex their styles and expertise between the two - for others it will feel more of a stretch or just plain not right.
Given the insights we were keen to establish on growth vs. listed boards, we’ve captured our Chairs’ observations on how these boards compare and what to look out for if you’re interested in that direct experience.
Some aspects of the Chair role are unique to growth company boards:
Get comfortable with risk. “A start-up is not a dead cert, many will fail so you’ve got to be relaxed with the risk:reward ratio, some will win - others may not - so spread your bets. If you’re more comfortable with certainties, this may not be the ride for you.”
Importance of chemistry. “Inevitably, a chunk of the Chair's time will be spent guiding a less experienced founding team so that chemistry is very important. For start-ups, it’s more about a close personal relationship than you’d have in a classic PLC governance environment.”
Founder dynamic. “In a corporate, the Chair and CEO dynamic is more clear-cut. It’s the same in a start-up as in a corporate, that the Chair is never the hero of the business - the Founder always should be. But sometimes the business has moved beyond the Founder’s capabilities and you need to have some frank conversations - that’s particularly tough when they hired you.”
More hands-on. “Growth company Chairs tend to be more engaged and roll up their sleeves. They can help Founders with mentoring, coaching, driving the agenda forward and helping the team move away from firefighting.”
Faster pace. “I enjoy the flexibility and lack of bureaucracy on growth company boards, their greatest asset is that things can move quickly.”
Different board structure. “Scale-up boards will have more investors than independent directors. A good Chair should be an effective bridge between the management and investors, that’s really important. As a company gets bigger with more investors around the table, you need to make sure everyone has a voice.”
Some aspects of the entrepreneurial Chair role are similar, and will be familiar to listed company Chairs:
Chair’s role. “The Chair is there to run the board, not the business and mentors the Founder or CEO to help them make decisions.”
Company purpose + values are critical. “The company’s purpose should be driven out of a need to disrupt a fragmented experience. I’d always look for that and for a CEO who is driven by those values, rather than just being in it to make money.”
Look for a high quality leadership team. “What are the Founder and CEO’s aims and aspirations? Do they have integrity? Do they mean what they say and can they listen? Is there personal chemistry? There obviously also needs to be underlying trust.”
Team coach. “The Chair's job is to make the team work better together. I think the job of the Chair is to make the executive team successful as a unit by advising, encouraging, challenging and pushing them. The Chair is at their best when she or he brings out the elements of different backgrounds to the organisation - making it a more successful environment for everyone.”
Check for stamina. “I ask myself: do I believe this company has the chops to keep growing and not flame out? The same needs to be true of the leadership team.”
How has the crisis changed the way Chairs lead their growth boards, and will these approaches stick?
This last year will have been the making - and breaking - of many growth businesses. How did Chairs use their experience from previous crises and their own varied careers to support their Founders and companies? How did they adapt their styles and approaches to work with their leadership teams during the last year? And what approaches will they keep in their arsenals for future use - across all their other boards? Here we share their most critical insights:
Survival vs. Winning. “It’s been about cash, cash, cash and surviving over the last year. The winners will be the people with the strongest balance sheets. You want to come out as a winner, not just a survivor.”
Planning. “I’ve been through a number of crises: the dotcom crisis, recessions and the Financial Crisis, my advice is: plan for the worst and hope for the best.”
Upping Availability. “As Chair, the only way my role changed was being there 24/7 and 100%. We’ve slowly scaled that back as things have calmed down, but my Founders do know I will always be there when they need me.”
Supporting founders. “The Chair has a great lens on the business and can reflect on priorities. I’ve found the need to be more supportive and encouraging. There is fatigue among leaders and teams - even the best!”
Staying focused. “It’s important to acknowledge how much effort has been expended and help leaders maintain a level of ambition, keeping focused on the north star. We’re being disrupted by macro factors out of everyone’s control! So focus on what they’re achieving, where necessary be tactical, and help keep that strategic lens.”
Prioritising. “I could bring in my previous experience to help them think through a roadmap, and a project method to focus on priorities like cash, staff welfare, customer welfare and series of project plans to get in place.”
Flexing styles. “For many, it’s been a bit more hands-on and into the detail. I’ve been talking more often with my CEOs, they were looking for help and I’ve been drawn into more conversations but now may need to draw back and be more strategic. Ultimately, I’m there to be the sounding board, so I’ve returned to a more Non-Executive role.”
Positioning for opportunity. “Competitors have been weakened, landlords - if you have them - will be giving better terms than ever before. There will be all sorts of opportunities in terms of talent acquisition for those who are in a strong cash position.”
Continuing Zoom vs. In-person. “80% is the same with Zoom but 20% is missing, the bit that's missing is much more important. With scale-ups and start-ups, as the Chair, you need to be together to build those relationships and trust. I’m sure we’ll keep using Zoom for some meetings, but we now know it can’t replace in-person.”
What can growth companies learn from later-stage companies and vice-versa?
We asked our Chairs what they’ve learned from chairing growth companies that they’d use to accelerate change in their listed companies - and equally, were there any lessons for their entrepreneurial businesses?:
Agility. “When you're a big public company, you can be slow to move, there can be a lot of process. You learn from smaller businesses to bring constant pushing. Lots of organisations are not set up to move quickly, you learn about that with smaller companies.”
Digital up-skilling. “I think the lack of digital expertise in the boardrooms of public companies has led to a fundamental loss of value, especially in areas like retail. Customers may think a retail experience in a store is fine but it can be shocking online. Boards need a range of digital skills on tap to address this, they need immersing in digital.”
Choose the winning side. “It's simple, this is another industrial revolution - boards can choose to be part of it, or be Luddites and lose the race.”
Cut back on the bureaucracy. “There have been so many things but most importantly I’d say it’s about cutting out the bureaucracy. That's all you need to do - it will release the energy!”
Just do it. “A huge amount of time in larger corporates is spent talking about strategy, medium to long-term. Start-ups tend to just do it and then iterate.”
Risk. “Corporate boards to need to get comfortable with risk. Many have had a dislocation or reset on the back of Covid, which has liberated them from looking at last week's like-for-like’s and focusing on the bigger picture of survival. If your board is with you on closing 300 stores, they’ll be with you on this re-set opportunity.”
Targeted digital expertise at board level. “We set up a Digital Advisory Group, which helped us work on a combination of investment ideas, M&A, and many other areas. Experts can really contribute and these are the people you should be talking to, they can speak a language most bigger companies can’t, therefore they can bring important learnings.”
Better start-up boards. “Good governance got a bad name from some people, but everyone needs it. Young companies can teach big companies to act as an owner and try to get actions and decisions taken quickly with the right governance around them, if you can manage to create that culture then it’s great for everyone.”
Prioritise innovation. “Above all else, this needs to be every company’s focus...they are all toast unless they innovate!”
Embracing accelerated change and predictions for the near future
Huge strides have been made by teams, companies and boards over the last year. How do our Chairs predict that behaviours and attitudes will be affected now and in the near future?
Pace of change is here to stay. “I hear board colleagues saying things are going to go back to normal, they are not going to go back to normal! This pace of change isn’t going away, it’s here to stay.”
Embracing transformation. “We need to make sure bigger businesses don't revert back to previous practice and retain that transformation mindset. They knew what they needed to do, and they’re now moving a lot faster. The important thing is not to move back to a comfort zone.”
Accelerated change. “It’s enabled boards to make hard decisions we knew we had to make. Retail CEOs would have balked at closing down hundreds of shops before. There will be many redundancies but COVID has allowed us to view more clinically what we needed to do to survive - and grow.”
Shifting markets. “It will be choppy for the next few years, a period of great change but the underlying market place is strong. There is growth in the UK markets and young, fast growing companies are at the heart of that. There may be repositioning, but that should provide opportunities for entrepreneurs.”
Changing attitudes. “The talent agenda will become increasingly important. In the near-term, people have rallied but they will re-evaluate, so the most important thing is to be doing everything you can to maintain the best talent. One thing is very clear, that values and the ESG agenda have been amplified and will become an important consideration for people’s choices and with growth.”
Look to the future. “It’s forced people to think about what they really want to do with their lives. It’s made us look at the future more. Good organisations are trying to look at the positives, to discover from lessons learned and how to hang onto them. Boards and leaders will need to work together to learn from that.”
Diversity front and centre. “Building a diverse workforce is going to be high up on the agenda too, people have realised this needs to be a priority.”
New perspectives. “There’s a real appreciation for the fact that we have the ability to create a new world - everything is up for grabs. We can make things better for more stakeholders. The social piece is coming to the fore and we can - and must - make a step change.”
© Copyright Rachel Ingram 2021. All rights reserved.
