I had a meeting today with some of the players at Connect New Zealand. Among the topics discussed was the need to increase the quality of governance of hi-tech businesses, particularly start-ups.

Given my association with Economic development agencies, Governance groups and SME’s, I have a particular interest in this issue and wanted to share my thinking.

I am a firm believer in boards for SME’s. The old (and hackneyed) phrase about working on, rather than in, the business is my reasoning here. The ability to get distance and see the bigger picture is invaluable.

So who should a start-up be looking to when setting up an board?

The way I see it – there are three types of person we need to look at here;

  1. The entrepreneurs themselves – generally (and this is all about generalisations) these individuals are very innovative, focused on a particular product or service, totally immersed in their industry and prepared to commit much energy to the task(s) at hand. These individuals however generally lack the “bigger picture view” and have difficulty formulating strategy that would enable their organisations to grow quickly
  2. Professional independent directors – these individuals are often ex lawyers and accountants with significant experience in the “old economy” (I hate that term humour me here). They have significant experience at growing businesses but generally do not understand the “space” that hi-tech businesses operate in. Specifically they do not have an appreciation for rapidly product development cycles, development partnerships, the value of the community, new revenue models and other aspects of business fundamental to hi-tech enterprises
  3. The elite – serial entrepreneurs who both understand the growth models and understand the space of the “new economy”. People such as Drury, Morgan et al. These individuals tend to be fairly busy with their own businesses and are generally only attracted  to start-ups when they will obtain a significant equity stake or the rewards are high in terms of directors fees

This produces a quandary for start-ups. Do they attempt to go it alone and risk missing out on significant growth opportunities that independent directors may identify, or do they appoint an indepedant board that has little or no understanding of what they actually do? Or do they wait until they have the scale to attract a Drury, a Morgan, a Simpson????

Well this is where organisations such as Connect, the IOD, NZTE and others come in. A pool of individuals needs to be developed that possess both of the competencies outlined in 1 and 2 above. The above mentioned organisations need to flexible when choosing applicants – looking for vision, flexibility, dynamism and other strategic level skills that will allow our start-ups to scale.

I’ll post more on this soon – there are some interesting partnerships and programmes being set-up which may very well result in some good methodologies being put in place – I’ll continue this discourse as things progress….

Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

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