AVEVA today announced that Philip Dayer, a member of its board of directors, has been named a non-executive director of JSC KazMunaiGas EP, the Kazakh onshore exploration and production company.
Why is this significant? Mr. Dayer (whom I’ve never met) is an investment banker to small and mid-market UK companies who has specialized in the oil and gas sector in recent years. The list of companies with which he is associated in that space is impressive: he was a financial consultant to OJSC Rosneft Oil Company, a Russian state-owned oil and gas company, when they went public in 2006. Mr. Dayer is currently on the board of directors at Dana Petroleum and Cadogan Peroleum and was on the board of Baltic Oil Terminals plc. In other words, Mr. Dayer is very well connected to players in several of AVEVA’s targeted verticals.
All of the board members I’ve met through my consulting to engineering software companies have been intelligent, thoughtful people who brought a great deal of expertise to their board duties. But few brought the in-depth end-user expertise Mr. Dayer would seem to possess, which brings up the topic of how one creates the right mix of skills on the board of any company. (And you are planning to build a company that needs a board, right?)
A board of directors exists to advise company management on all sorts of issues, from strategic partnerships, financing, acquisitions, and key hires to legal and regulatory compliance. The board also offers oversight, audit, and human resources functions. Picking board members can be tricky; how do you whom to choose?
Build expertise and fill gaps
Most obviously, board members can bring expertise that the management team lacks. If the long-term vision for the company includes international expansion, bringing in someone who has overseen international operations makes sense. In Mr. Dayer’s case, he brings end-user industry experience at a strategic level, that might be difficult to hire directly into the company.
Bring in experience
If your company is young and its management new, bringing in a seasoned board can smooth some of the hurdles. Pick board members who know about audits, compliance, strategic planning and the like to help elevate the company more quickly than management’s on-the-job learning curve.
Since boards are groups, and small groups work more efficiently than large ones, board members that can embody more than one attribute are highly desirable: accounting experts who know about international expansion; an end-user-vertical expert who can speak to bankers, etc.
Don’t aim too high
But don’t look for the “perfect” board member. Odds are, she is already on so many boards that she won’t have time to fully participate in yours; you need to be able to contact members whenever there is an issue that needs to be worked through. Their commitment to your company needs to be more than attending board or committee meetings.
How do you find these people? Sometimes, they find you: most investors will insist on a board seat. But for the seats you get to fill, look to a broad range of people including attorneys, CPAs, fellow executives, educators and even directors from other boards. Look for people who have built successful companies in industries slightly off from your own (so there is no direct competition). Consider a veteran customer (if they can bring broad experience so your company is not seen as providing too specific a solution).
An effective board is made up of people that offer diverse viewpoints, challenging company management to make the best possible decisions. They offer outside experience that can help you avoid problems and take advantage of opportunities. And they can connect you to those opportunities — always a good thing.