Bath Business Blog: Nick Sturge, SETsquared. Why it’s vital to get the Chairman Thing right

June 6, 2014

By Nick Sturge, centre director, SETsquared and Vice-chair, High-Tech Sector Group, West of England Local Enterprise Partnership

Having worked with nearly 300 high-tech start-up businesses – some for just an hour, some for several years – and having done a start-up myself, I've watched, very carefully, how leadership develops and evolves over the life of a start-up.

I am particularly interested in the role of the board: how the founding entrepreneur develops into the role of company director (as well as shareholder, manager and worker in the early days) and how companies have built their board. Or not.

A big focus for us right now is on the role of the chairman on a young company's board.

The text books will tell you that while the CEO runs the company, the chairman runs the board. It's not about control as many bullish founder-CEOs think, it should be about supporting and guiding – and when it comes to shareholders, often deflecting the flack.

Never is this more acute than with early stage investors.

Investing in high-tech, high-growth start-ups is high risk stuff – not for the faint hearted, not for those who work by formulas and not for ones who don't understand what it's like to grow a company.

Everyone knows that the original business plan ("Plan A") rarely works – there will be events that happen, assumptions that get disproved and customers who change their minds. It will be down to the CEO and his or her team to work out what Plan B is and execute that swiftly and safely. That's why investors say they invest in the team rather than the product.

But what often happens, because the investment is high risk, the investor can lose their nerve and put pressure on the CEO to take quick, evasive action. What the CEO needs is space to breathe, think and act – they will know the business better than anyone.

If the CEO has an effective chairman who has the trust of the investors as well as the CEO they will have the ability to keep the investors re-assured and placated while the CEO gets on with the important business. That chairman role takes wisdom, a level head and good, extensive experience – typically the "white hair" in the team.

Sounds easy doesn't it? The key word in that last paragraph is "effective". A chairman is a specific talent and likely to be different to other non-execs and so, just like any hire in the business, recruitment is key.

Hiring a chairman could be THE most valuable and important thing a business does, so not to be scrimped on or rushed into. Don't hire someone just because they like you and the business – you will need challenge, for your own and, more importantly, for the business' sake.

Take advice and take care – to get the Chairman Thing right.

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