Every board needs what I call “fresh eyes.” I define it as being able to see things that others do not. Boards acquire fresh eyes when they add outside directors to their board.
They are called outside directors because they are not employees or stakeholders in the company. They are especially beneficial when a board has become static in composition (same people, all internal board members, etc.), and, therefore, have been addressing problems in the same way. Outside directors provide unbiased opinions.
But, only when they follow the following guiding principal…
Board Principal #1: ‘Eyes in, Fingers Out’
There is the board principle I’ve always subscribed to: “eyes in, fingers out.” This means the board function is not to run the company, but to pick the management and set policy.
If the board is micro-managing the company, there is definitely a problem and either you need new management or outside directors with fresh eyes to help the company get back on track. The board’s job is to govern and management’s job is to manage. Here are the right ways outside directors can use their fresh eyes to a board’s advantage.
6 Reasons ‘Fresh Eyes’ Can Help Your Company
- They have different perspective on issues. They aren’t tainted by the existing board’s view on issues and haven’t been part of the politics that have created the issues.
- They have experiences and views from other industries that may have already experienced and solved the problems or issues being discussed. Many times more established industries have already dealt with the challenges faced by newer industries. Outside directors can bring that knowledge to the board to help expedite the creation of effective solutions.
- They have a new network of resources for the board to consult. Outside directors bring a whole new set of contacts and connections that can be leveraged.
- They will ask new and different questions to stimulate the board’s decision-making process. An outside director will ask questions as a way to gain perspective, which will force the existing company to think about its own responses and possibly have “ah-ha” moments related to the situation.
- You need to bring in someone who is not a specialist, but someone who has been involved in all areas of running a business. A board member needs to be able to see all sides of a problem and all the implications it can have. Outside directors are usually highly qualified generalists who know a lot about all aspects of running a business.
- They can bring a new understanding of a subject that the board does not have. Outside directors usually have a specialty (i.e. industry knowledge or skill set) they leverage to educate the boards they join. For example, one of my specialties is data storage and disaster recovery. I help boards understand their responsibilities and their exposure when they do not have a proper plan in place for the company they are guiding with respect to data backup and recovery.
Outside directors bring incredible value with their “fresh eyes.” I believe boards that have not brought somebody new to the organization in the last one to two years run the risk of stalling the growth of the company.
What’s been your experience with boards? Have you seen situations where adding an outsider director with fresh eyes made a measurable difference? I’d love to hear your comments and experiences below.
P.S. – Do you need an Outside Director, Advisory Board Member, Trusted Advisor, or Interim CEO? Someone who can help you see your business and your goals through “Fresh Eyes.” Contact me and I will work with you to look at where you want to go and help you find the best way to get there. Sometimes all it takes is someone with a fresh viewpoint, unencumbered by company politics or culture to help find the right solution.
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This article is “right on” as well as being very well thought out and written. Each of the 6 points resonate with me. As Founder and President of the 1400 public company director member Corporate Directors Group, I run into the issue of “fresh eyes” frequently. Most directors I know would agree with Larry Putterman.
I found this article to be “spot on”. Larry has quickly encapsulated six of the key issues that I have found to be most relevant pertaining to why “fresh eyes” are often helpful and rejuvenating to Boards. Further, although he hails from the Technology world, these issues cross industry lines, and are relevant to virtually all public and private Boards of Directors. Well done, Larry.
Steven, thank you for your comments and insight… “Fresh Eyes” are relevant to all boards and industries.
Not to minimize longevity and consistency as they bring a deep understanding of the company to the table. This history must be complimented with “Fresh Eyes” that will bring new perspectives to the company.
Leonard, it is a mixture of “Fresh Eyes” and “Seasoned Eyes” that make for a strong and powerful board. Thank you for your comments.
Valid points. Any thoughts for tackling the challenge of a pre-existing board / management team that is giving only lip service to input of a new board member? Being a forceful voice to improve shareholder value – without micromanaging – is not easy. Do you have any practical tips to offer?
Dan… I have been in that position. Time is usually the answer. The other directors need to work with you over time to see that you are adding positive input. Has anyone else been in this position and how did you overcome the situation?
I agree with the others that these “6 reasons for fresh eyes” are spot on and apply to compnaies and non-profits as well. We had this very discussion at a credit union board on balancing experience with fresh eyes.
Finally, an excellent “reader-friendly” summary of what is truly important when it comes to creating a board. “6 reason for fresh eyes” summarizes the salient aspects of board function in a manner that is quick to understand, easy to implement, and easy to follow. This should be required reading for future directors and board selection committees. Thank you Larry!
John, thanks for your comments on “Fresh Eyes.”
Great comments here…especially Item #6. Too many boards are constructed with common acquaintainces and friends, or worse, too many venture investors. I’ve always used either the one or two martini rule. One martini is perfectly ok and provides a certain type of calm. Apply that to venture investors and having one on your board is actually beneficial given their huge roledex of connections and financial accumen. Two martinis, two investors, you’re going to get a bit out of balance. Three martinis, three investors, you’re out of control.
Creating balance on a board is critical in terms of diversity, skills and experiences and then connecting all of the directors through a passion to create value is critical to management’s success.
Jack, great analogy. It is one that we can all relate. Thanks for sharing it with the group.
I don’t have this direct experience (yet) as a new board member or bringing in a new board member, but the general phenomenon is definitely true for any leadership team I’ve joined as “the outsider”. It’s always interesting to me to hear “that’s the way it’s always been done here” as explanation for policies and rules and I always ask “wouldn’t you like to do it better?”. As a scientist, I’m always encouraging experiments to test new ways of doing things and everyone gets to review the results of the experiment and decide whether change is warranted.
David, thank you for sharing your experiences and showing us that “Fresh Eyes” work in many different situations.
Your points are dead on with my experience working with early stage high-tech companies. Many of the entrepreneurs whom I worked with were either young techies or former mid-management techies. They had little experience working with a board. Reflecting your third point about bringing a network – one of our clients was struggling to get their first line of credit. A new outside director made an introduction, and the LOC was not only approved, but it was fast tracked.
I also have seen how having outside directors forces some discipline in preparing for board meetings. This is often missing with boards composed of internal management.
Thanks for the article.
Good points. These items also work well with late stage startups and established boards. Thanks for sharing your experiences.
I think your article “Fresh Eyes” is put forth in a simple straight forward manner that should resonate with Chairmen and CEO’s. I think it applies to companies of all sizes, as well as being an important resource for Non For Profits.
In addition to all of your points, which are perfectly on target, what’s amazing to me is how so many things stay the same across various industries.
I cannot tell you how many times I have said to myself (and I am sure you have too!), “I’ve seen this movie before!”
Not that you are or I am smarter than anyone else, but after a while, you see similar “patterns” in companies. That’s where an outside person, with “fresh eyes” or maybe even “old eyes,” SEES something that someone who is running the day to day misses.
That’s why outside directors and advisors are easily worth the money or the equity they require.
Marshall, great points about “Fresh Eyes” and “Seasoned Eyes” and why they are worth so much to a company. Thank you for sharing your comments with the group.
I believe Larry’s comments are very valuable for all boards – small, medium and large companies, from all industries, new and more mature. The fresh perspectives of outside directors can enrich the impact and improve the effectiveness of a board. Having these outside directors come from diverse backgrounds and industries can create a more meaningful dialogue at the board level while producing a new level of creative thought and insightful questions. Beyond the important role of governance, an effective board can create an environment where all are stretched to think even more deeply about the issues at hand. Management can very much benefit from this forum of ideas and at the same time, be energized to be more innovative and bold in their decision making. Larry’s article should give us all pause as we think about the criteria of adding new members to a board. Nice job Larry!
I enjoyed your thought provoking article.
The 6 reasons are profound because they are both simple, yet offer considerable insight that any company needs… FRESH EYES with suggestions that come from beyond the normal set of thinking. Just as individuals have a hard time seeing themselves through others eyes, so do companies. And this is the key to moving forward. The harder pill to swallow may be actually taking and implementing ideas that “someone else has”; but that is exactly what the best companies do! Thanks, Larry!
Bill, I agree, the best companies implement what is best for the organization. Thanks for your comments.
Excellent points Larry. A board lacking “fresh” eyes is inherently “stale.”
I’d also add that having those fresh, unrelated board members, who are free of conflicts of interest (Point 1) elevates investor confidence in the entire organization. A significant advantage in fundraising for a start-up or sustaining a more mature enterprise.
Matt, thank you for the insight into the added investor confidence of having outside directors with “Fresh Eyes.” Your comments are appreciated.
As an outside Board Director for companies ranging in size from VC Backed up to S&P 500 companies- my experience is that specific Board needs differ. The one item that applies to all- is the need for Diversity (of thought, background, experiences) which aids a board in its ability to support a company. Adding “fresh eyes”-as Larry calls it, is critical in this process. Thank you Larry-for emphasizing this.
Larry, you make excellent observations about the value of advisers who bring a different perspective to issues, including those with experience from other industries. The challenges faced by a firm may not be unique to their specific situation or field; and often they have been faced many times over. Looking to experienced problem solvers with diverse backgrounds is a critical educational opportunity for the leaders of a company.
Nice write up, Larry.
I’ve been an outside director for a medical device company.
I definately brought a fresh set of eyes to the board.
I found that I asked one question over and over again as the board was considering a decision — “How will this affect shareholders?”
I felt it was my job to make sure that the the folks running the company always stayed focused on the interests of the people who invested with them.
Keep up the good work with this site.
All the best,
Bud Bilanich | The Common Sense Guy | Denver, CO | USA
I’ve seen the result of having the same board members hang on over a period of time. The result is just what Larry speaks to in his article. There is no appreciable insight offered, no alternative visions brought forward or fresh ideas put on the table. In a privately held company, the owners need to develop self-discipline as to how they want to construct their boards , what areas of expertise are they looking for and with what frequency do they need to turn members over.
Larry, I enjoyed reading your ‘Fresh Eyes’ perspective. The Board diversity you describe is essential today because of the increasing pace of change in technology and global competition. I believe your points about perspective and experiences are particularly valid to help a management team better leverage their own capabilities. I have benefited from working with diverse Boards as a manager and have also been fortunate to bring a diverse perspective as a Board member. I look forward to your continued perspective and the dialogue it generates.
Great post, Larry! We have this conversation regularly on the boards I participate on. It’s important to always think strategically about what “vision” is going to be needed next and to get that person on your team. Nice summary.
Not only does the insight apply to for-profit entities, it also applies to non-profits. So often, non-profits are mired in operational issues and fail to stay at the 30k foot level and concentrate on strategy. Fresh eyes will resolve this issue 100% of the time. Great article and I have sent it to all board members for the organizations to which I serve.
Stephen… thank you for showing us that “Fresh Eyes” work for all types of organizations. Thanks for your comments.
All good points delivered in a very direct matter of fact style. Agree that generalists are important but also believe having a strong background in a particular discipline
and / or skill set is equally as valuable . Boards that have become tired need an infusion of both. Boards need to continually evolve and maintain an awareness of necessary change and direction. Otherwise they will miss opportunities and in some cases the sunny skies they expect will become thunderstorms and maybe even a hurricane. And it is unlikely the days of bailouts will return anytime soon.
I totally agree with your article Larry! So many young companies do not have advisory boards, and if they do, they are not properly structured. Boards that include external members can be an essential tool for growth. I have seen boards, especially in the technology industry, that are essentially made up of the executive team of the company and challenges aren’t addressed by the board because the problems often are a result of how the leadership is managing and their vision. “Fresh eyes” are necessary to evolve and meet the organization’s goals and objectives.
I have seen instances in which new board members can bring a fresh and relevant perspective to some policy issues without being encombered by ‘the way things have always been done’. Further, there can be times when long serving directors become defensive about decisions made that have subsequently proven not to have been in the best interest of the company/organization.
Great article. As past Director of Leadership Susquehanna Valley it was my responsibility to train “fresh eyes” of their value to — and encourage them to join non-profit community boards. This article also reminded me of how much I love the dynamics of Boards and the value of fresh eyes – especially with Boards that become complacent or just a rubber stamp for the organizations. Another reason why Boards should set term limits that require the member to step aside for a period of time after their term(s) is completed.
This is sound advice for all companies, particualry those that are in the emerging growth phase. Most companies who have raised outside cappital will have representatives of the investors on the board. That too is a good thing but this article rightly points out that a properly constructed board also includes more than just members who have direct financial interest in the company.
Thanks for the work of thinking about this and the posting. A couple of themes in the comments of the readers run to whether it is seasoned eyes or fresh eyes that are needed, and the importance of the diversity of views. In structuring boards, I have found value in a balance of perspectives about the industry the company is in, but most businesses are so complex today that totally fresh eyes are a luxury; the learning curve can be very long before the board member can be an effective voice in the conversation. New board members have to come forward quickly and build credibility right away as valuable advisors to help the company keep pace; finding members from the same or adjacent industries speeds this.
I completely agree with each of the six points. I am a long-serving member of a non-profit board. When we have added new trustees, I make it a point of sitting down with them after two or three board meetings to gain their impressions. They invariably challenge my existing beliefs and enable me to create new perspectives. I find this invaluable. At board meetings they always add a breath of fresh air and alter the existing dynamics of board interactions.
I would add that a Board of Directors and an Advisory Board are two different things. The first deals with management and strategy: the second deals with technical issues, customer service or other such matters. Often the two roles get mixed together in smaller companies and non-profit organizations which can result in conflicting or insufficient perspective, knowledge and experience for either role to be properly served.
CEOs, especially in smaller companies and non-profit organizations, are usually up to their ears in running the business, and there is never enough time or big enough budget, for top management to attend suitable refresher courses or seminars. Think about it. If you were a craftsman, would you use dull tools to make your product? One way to help a CEO recognize the value of Fresh Eyes is to have him/her serve on the Board of Directors of another organization.
Richard, great thought to give the CEO “Fresh Eyes” by serving on another board. Thanks for your comment.
Larry, all the positive responses you have received show how clearly your “Fresh Eyes” resonated with so many of us. Thank you.
A fantastic article absolutely to the point Larry.
We must meet up when I am back in the US.
Ian…Thanks for your comments. I look forward to meeting.
It didn’t occur to me until after reading your article and the following comments that this may have been posted up to three years ago. So, you’ve clearly brought “Fresh Eyes” to the fore as timeless advice. Great work. I would add to the others before me the category of Family-owned and operated business that in as many, if not more cases, need that extra fresh set of eyes! Thanks.
Jim…Thanks for bringing up the importance of “Fresh Eyes” to family businesses.
Thanks for including the graphic of the “fresh eyes” as a woman’s eyes.
Nancy…Thanks for bringing this to everyone’s attention.
Well done, I like the article and the information is very helpful.
I’ve served as outside Board Member for several franchise systems – I find it to be important and challenging at the same time – so I take it seriously and careful.
Great opportunity to help and add value in a unique way – perspective matters!
Good to have some ideas to share with others – I’m going to share with some of my people, thanks for sharing with me!
John…I appreciate your kind comments and sharing my article. Thanks
Great article. As a shareholder in many companies, board refreshment is a major concern but I don’t like the idea of mandatory limits on years of board service or age.
What do you think about a general rule that at most companies at least half the directors should have served for less than 12 years? That policy would allow great flexibility in retaining those with valuable experience, while ensuring at least some fresh eyes.
James…Thanks for your wonderful thoughts and comments. I like your idea, but as a policy for boards to follow not a rule. It makes good common sense.
Though TRUE, in reality the fear amongst the existing executives and Board Directors slows down this process of FRESH EYES. As a Transformational Business Coach, I have experienced it personally that members of the BOD are interested in safeguarding their positions and therefore do not work in the best interest of the company. Board refreshment is always a challenge. The BOD need to look outwardly at developing the Brand and the Vision – most of them get involved in the Operations of the Company – a wasteful task. Ask a BOD member regarding the exit strategy and they avoid the question all together!
Hi, In successful companies, this is not the norm. Thank you fo your comments.