A note from Nick Sturge, the Director at Engine Shed: The Power of NED

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No, not my friend’s son, Ned – though he is wise for his age and not afraid of making his views known. I’m talking about Non-Exec Directors (or Trustees, in the 3rd sector) and the value that they can bring to businesses. It’s a topic particularly on my mind at the moment as I’m on the Institute of Directors’ nominations committee, and this month we’ve been interviewing for a new non-executive Chair of the Institute to lead us through the next phase of the organisation’s 115 year history.

Whilst most start-up and scale-up businesses I worked with in the SETsquared incubator are not quite that long standing, the issues are the same. Every organisation needs good leadership: to seize opportunities, to set strategy, to marshal resources and build, develop, nurture, and replenish the team to deliver on the chosen strategy. And everything else that goes along with running an organisation, like managing stakeholders, dealing with the press, setting a good example. All that stuff and more. It’s a tough job – though hugely rewarding.

But leadership can be a lonely place, however strong your executive team. That’s why the most successful organisations (of all sizes and sectors) take advantage of a board of directors, some of whom will be non-executive (i.e. no executive authority in the business and engaged typically 1 or 2 days/month). Good non-execs must bring objectivity to the board: a different perspective to both challenge and support the CEO. They may also bring a broader knowledge of the business’ industry, or adjacent industries, experience of relevant stages of growth, or be a specialist in a particular aspect of the business, like finance, regulation or commerce.

They should be a good foil to the CEO – there’s no point building a board of people who just say yes, or have the same profile and experience as the execs. The CEO who isn’t open to being challenged is unlikely to be doing the best for their organisation, and hence their stakeholders. That’s where the four D’s of diversity on a board come in: good Diversity leads to good Debate; good debate leads to good Decisions and, guess what, good decisions lead to good Direction. Simple.

Even simpler than that: my 7 year-old friend Ned is an argumentative fellow, always challenging his parents (aka the CEO & CFO?). But someone who continually asks “Why?” makes you think carefully about what you do. Don’t you think?

I strongly believe that more businesses can benefit from building effective boards and evolve them over time. That is key to helping businesses help themselves to scale up, so we’re now looking at how Engine Shed can best accelerate the take of good quality NEDs.  A Board-Builder-in-Residence perhaps?

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