By Ivana Magovčević-Liebisch, CEO of Vigil Neuroscience, as part of the From The Trenches feature of LifeSciVC
In an industry where boom and bust cycles occur regularly and 90 percent of drug candidates fail to reach the market, an outstanding Board of Directors can be a key differentiator for life sciences and biotech companies.
As the CEO of a clinical stage biotech, I am intimately familiar with the advantages of an experienced board, but in many ways, I have learned more in my role as an independent BOD member than in my years in the C-Suite.
In biotech, there is often a need to bridge the gap between the science and the business. As a JD and Ph.D., I see my role as one of providing perspective and professional experience from both sides of the table. I welcome opportunities that allow for exploration of science coupled with the nuance of balancing an organization’s business needs in a highly regulated industry.
Overcoming the Inevitable: Common Hurdles to Avoid
As an independent BOD member, my role is to provide strategic insight and effective governance with the goal of encouraging sustainable, long-term success. Each organization is different, with different goals, opportunities, and challenges.
While not all challenges are avoidable, there are some that – if identified and managed well, can improve the way larger problems are handled. In my experience, there are two predictable forms of deadly dysfunction that can disrupt the performance of even the highest performing management teams or BODs. As with most problems, these are the result of poor communication, misalignment, and unclear expectations.
The first, “black box leadership,” occurs when a CEO is not sharing clear, consistent information with the board. It should be obvious, but when a company’s management team and strategy are obfuscated, the BOD is unable to fulfill their duties and properly advise and guide.
In a “black box leadership” style, board meetings are littered with surprises and provide only a cursory glimpse into the company’s management, operations, and strategy. While board meetings are important milestones on a CEO’s calendar, they should not be the only point when board management is top of mind.
One of the key responsibilities of any CEO is board management, and understanding your board is key to success. Knowing the strengths of each members ensures that when facing a hurdle, the CEO knows who to consult and when. Ideally, a board meeting is a review of the progress the entire team – BOD, management, and staff – has made since the last meeting. Surprises are a symptom of dysfunction which can only be cured with consistent, candid communication.
The second common dysfunction is when the board crosses the line – becoming too operational and involved in the details. As I noted above, the role of the board is to provide strategic insight and effective governance. When a board dictates next steps or strays too far into the minutiae of the company’s operations, it is indicative of larger problems, typically stemming from a misalignment of roles and responsibilities, a misunderstanding of management accountability and ownership, or mix of both.
Fortunately, these two deadly dysfunctions are two sides of the same coin: a board may overstep when kept in the dark, and when a board oversteps, a CEO may withhold information for fear of micromanagement.
Bringing up problems early is a critical step for building trust and transparent communication. As a CEO, I know that sharing a problem can feel intimidating and vulnerable, but bringing issues to the board quickly helps establish an open dialogue that will only improve the outcome.
Key Considerations for Thoughtful BOD Relations
While every CEO and board member will bring their own expertise and style to the relationship, I have found that there are some general recommendations that can be applied across experiences and groups.
As a board member, it is important to come in without any preconceived notions. Boards, like everything else, have their own dynamics. New board members, in an effort to hit the ground running, may make the mistake of stepping in before understanding the subtlety or the history of a given situation. Once you understand the dynamic and your new role within it, then you can thoughtfully offer your insights.
As a CEO creating and managing a BOD, that group dynamic is something I want to manage in a way that is best for the organization. To that end, I seek out specific people with different elements of expertise. If your BOD is stacked with academics with no operational experience, you might struggle to get actionable advice on how to motivate a team or manage a P&L.
Similarly, diversity of opinion is crucial to success. Too often, CEOs seek out marquee names or seasoned board advisors without considering how they might fill the gaps in the management team’s experience. Ensuring that your board’s expertise compliments the strengths and limitations of your management team will undoubtedly do more for the company’s long-term success than the short-term attention generated by a high-profile board appointment.
Finally, in an industry plagued by a persistent diversity problem, a thoughtful approach to recruitment for all positions, including the BOD is critically important. At Vigil, our Board of Directors is comprised of >60% women. A metric much higher than the life sciences industry average, which exemplifies our company’s commitment to diversity and promoting women in leadership in the life sciences industry.
When I talk about Vigil’s commitment to board diversity, I often hear the push back, “but there just aren’t enough seasoned BOD members out there.” While the statistics tell us this is certainly true, it is not an excuse for perpetuating BODs with limited representation. Every seasoned BOD advisor had their “first” board appointment. To expand the talent pool for board members, we must welcome new people to the table. The prerequisite for consideration should be a willingness to share relevant expertise, not prior appointments.
The data show that diverse boards create more value, which, ultimately is the goal of any board. A diverse board with defined roles and consistent and clear communication can help improve company performance and achieve goals. In an industry focused on creating transformational treatment options for patients, every advantage helps, and the importance of proper board management cannot be overstated.
