Matt Kinnich, CEO, and The Operators community of PE-Backed Executives collaborated to discuss Communications as a Value Creation Lever. While implanting effective communications in your portfolio company can add value, the inverse is also true. Enabling poor communication habits actually works against you and serves to hold back value creation.
There are three entities with whom to communicate. As a portfolio company leader, you will need to manage up to the board, down to the management team, and out to customers and prospects. And in all three cases, communications involve both listening and speaking!
Share your perspective, ask questions, and listen for clues that suggest a misunderstanding, disconnect or disagreement. For each audience, you will need to assess if you are more of a storyteller or more of a seller. However, you may also want to allow the situation to dictate whether storytelling mode or selling mode will be more effective. In all instances, think of yourself as a sherpa, a guide, who is enabling the other side of the communication (the board, the management team or the customer) to solve a dilemma or a goal. (As a leader, you may need to ensure alignment on the identification of the problem to be resolved or the goal to be achieved.)
Board Communications
Working with a specific Board for the first time is challenging because it may not yet be clear what their priorities, interests and expectations are. You will need to discover, quickly, what they want to receive, when, and how often.
Before the first Board meeting, before the first Board deck, and before meeting personally with Board members, focus on gaining a tangible understanding of individual and shared expectations of the Board. A good place to start, in terms of gaining perspective and context on Board expectations, is the Investment Thesis and the lifecycle of the company. For example, the Board of a turnaround company, with a timeline of two years, will be very different than the expectations of a Board serving a relatively simple growth story in a five-year timeline. Consider the Thesis, Goal, Strategies, Lifecycle and Timelines in gaining a better understanding of the Board’s communication expectations.
Ask about the Board’s operating style and expectations at the outset. What are their preferences; relating to points of contact, communication, resources, their biases toward the timing of sharing problems vs. solutions and collaboration. Seek to understand Board Members’ individual motivations, areas of concern, and personal styles. Who is most interested in numbers and who is most interested in personal relationships? Who wants specifics, and who is satisfied with the big picture?
By investing personal time to get to know Board Members, you will buy yourself future acknowledgement and understanding if and when you need to ask for their support. Chemistry with individual Board members comes easier with some than with others. Executives would be wise to take advantage of any opportunity, whether formally offered or subtly suggested, to get together in person outside of a group Board meeting. Your management team should have separate and periodic meetings with key players, such as the chair or subject matter experts are on the board.
Shared experiences and understandings serve Board members and executives well during emergencies. Past experience that may simply be background can benefit the organizations in certain unforeseen situations. Only if those experiences, knowledge, skills and interests have come to light – possibly through personal communications — will those skills and capabilities be called upon.
Meeting Agenda and Board Materials
Help ensure that the Board finds your meetings productive and meaningful. Ensure decisions and resolutions can be achieved. Stick to the agendas and the tasks at hand and keep the entire group on track. It may make sense to use dashboards or a one-page summary to highlight priorities, challenges, proposed strategies and financial health.
Consider using online platforms or portals if the Board is not using them already. To increase the efficiency and timeliness of both operational and financial information flow. Doing so can help reduce the risk of errors, omissions and misrepresentations. In addition to helping with compliance issues, these platforms allow board members to easily look back at information and provide visibility for CEOs to always have a record of what was shared with the board. An online board portal makes it easy for board members to access, review, and exchange key business data wherever they may be. It can also serve as a portal for knowledge sharing of documents and information. This form of reporting provides board members with enhanced opportunities to formulate more pointed questions and offer their expertise more frequently.
That said, board members sometimes know a lot less than they appear to know. Think of them as either experts in specific functional or situational roles, or generalists who are a mile wide and an inch deep. They typically are not both. Therefore, you will need to summarize and present the details if and when asked for them. Be prepared to answer specific questions, with details on hand if needed.
When the first Board Meeting is scheduled, bear the old saying in mind that “The board meeting should never be held at the board meeting.” Best practice is to socialize pertinent information in advance, so that the Board meeting is a discussion and not a reveal. Executives should avoid surprises, especially around bad news. Communicate adverse results or situations early and often. Negative surprises are obviously to be avoided. Conduct “pre-selling” with the board. Share potential solutions, or options to solve the dilemma, rather than simply airing problems with the Board to foster collaboration.
In general, CEOs should always strive to field questions from board members in an affirming way so that the board member feels that he or she has posed a valid question, while the CEO can demonstrate that he or she is informed on the topic. You do not always have to take a board member’s suggestion, but you should always internalize the suggestion and determine the best course of action.
There are going to be situations, of course, in which an Executive disagrees with a Board Member’s perspective. When this happens, acknowledge their point of view and why it seems sensible or logical. Then explain why you have a different perspective. Respecting, valuing, appreciating Board input goes a long way toward creating an atmosphere of mutual respect and appreciation – and not hostility or competition.
Board members sometimes cling to the past and may be averse to change. You may need to explain carefully why and how change is necessary. However, do not create unnecessary controversy or defensiveness. It is acceptable to disagree with a board member, but bear in mind that even the CEO has a boss – the board.
Management Communications
Members of the management team have a difficult task in starting out an assignment in a portfolio company. They must dive into the deep end, start swimming rapidly, and make an impact. However, in a PE-backed environment, they also need to simultaneously listen, observe, ask and collaborate. The management team, the board and the Operating Partner may have three unique perspectives on a particular decision. It is important to hear out all viewpoints, assess and analyze the points of view, and make an informed decision.
It is particularly important to communicate norms and expectations, goals and strategic direction with all members of the team. Especially in smaller organizations, where systems, processes, culture, technology can often be amorphous and ambiguous, clarifying best practices and expectations early and often helps ensure alignment. In some cases, there is a need to celebrate previous ways of doing things while simultaneously clarifying how and why processes will be different going forward. Maintain transparency and open communication across all levels. Weekly updates with your team and stakeholders ensure alignment, sharing both successes and setbacks. Continuous feedback is essential, enabling swift course corrections and reinforcing team commitment. Success in the first 100 days often depends on a blend of strong communication, empathy, and data-driven insights.
As stated above, communication is not a one-way street. Management should be asked to weigh in, share, collaborate, and participate in strategic decisions. High-performing teams require a clear vision and mission to ensure alignment. All-hands meetings help ensure buy-in on the “how” and “why” if not on the original intent or goal.
Customers/Prospects
Customer/prospect communications entail first asking and then deciding where and how your organization can help. Next focus on serving as a guide to solve the dilemmas of various customer personas. Lastly, strive to influence how customers and prospects “brand” your organization with marketing tools and messages.
Seek customer stakeholders input, ideally in the form of a collaborative meeting or discussion rather than in a survey, to share more details about their needs, wants, wishes, interests, purchase decision criteria and feedback on what aspects of the relationship are working well and what are need improvement. Based on these insights, you will be able to determine unmet customer needs or problem areas, and purchasing decision factors across customer segments.
The next step is to communicate, in a variety of ways, with your customer segments, your intentions, capabilities, areas of focus and emphasis, differentiators and value proposition in order to influence how they think about your company. However, just because you think the message has been delivered, do not assume that the messaging has been received, processed and understood. Some customers listen differently and process differently than other customers. As a simple example, some people are visual learners, while others are auditory learners.
As customer relationships develop in new ways to solve novel customer problems, you will want to track open items and expected deliverables to assure that both parties (your organization and the customer / prospect) are aligned in terms of what is expected from the other. Doing so, following a regular cadence of communications, helps to build trust and make the process more unified.
Conclusion
The Operators who were present for the discussions shared common experiences that making assumptions on topics without thorough due diligence and without communicating openly can lead to pushback if subsequent passage of time reveals poor judgment. In other words, assuming, estimating, guesstimating or shooting from the hip are rarely rewarded. Humbly, confidently acknowledging that you do not have an informed enough opinion on a topic at this time to make a decision, typically results in acknowledgement, understanding, appreciation – if not patience. Ensure you understand all perspectives, from all parties – Board, Management or Customers before making any assumptions or jumping to conclusions.
