The nature of the startup beast

As the Ministry of Awesome has become even more . . . awesome . . . the board has had to change with the times. And that has meant creating a skills matrix with succession planning in mind.

Founded in 2012 to help build a vision for earthquake-hit Ōtautahi Christchurch, the Ministry of Awesome has become a force for high-growth startups and innovators in New Zealand thanks to a 2.0 reboot in 2018.

Marian Johnson MInstD, who has recently stepped down as CEO after nearly seven years at the helm, says the ‘startup for startups’ was a post-earthquake recovery organisation that functioned essentially as a think tank for Christchurch and its economic future.

When Johnson joined, she says they needed to move beyond the think tank phase in the earthquake recovery period and into providing solutions for strategies that required execution.

“We had a powerful board, but it was made up of people who were most useful during the experimental stage of city development. Given we now had a city whose economic future relied on innovation (think aerospace, future food and fibre, healthtech/medtech), we needed to transform into an organisation that could deliver the foundation for a high-growth startup ecosystem.”

She says the board had clear strengths, particularly chair Kaila Colbin CMInstD, who is well-known for her leadership in the technology and transformation sector (launching Singularity University for Australia and New Zealand, and being the founder of Boma).

“There were a few people on the board who were 100 per cent relevant for where we wanted to go, but we did need to rethink our structure, our governance, and our board members. We began to put a system in place, constructing a new matrix of skills and attributes, and looking at the experience and capability we needed going forward. The creation of that matrix was really the cornerstone of our succession planning because without that we had no guidance.

“Quite often that would have something to do with business development or being able to execute on a particular strategy. Those things are important, but there are other elements to consider which will keep the organisation on a righteous path heading towards the agreed vision. And that’s the role of the board.

“Once we had that matrix in place in terms of skills, attributes, experience and the types of personas we needed on the board, that became our fundamental document for our succession planning,” says Johnson, who now chairs Electrify Aotearoa and Electrify Accelerator, both empowering women and startup founders under the Ministry of Awesome umbrella.

She counts about three separate turnovers of the board in her time at the ‘Ministry’. “The board needed to change each time to have the support and risk mitigation for the work we were doing, and the expertise to be able to navigate the new kind of territory.

“We used the board matrix regularly, as well as updating it at each successive stage. This was led by the chair and deputy chair and enabled conversations to be open, transparent, and respectful. The culture of the board has been very strong because it’s hard to have conversations like these unless there is a purpose and a data set to refer to. Otherwise, it’s a very difficult thing to navigate.”

Johnson says as a CEO you need to find mentorship on your board for the various challenges you face. And she was lucky to be in the room with consistently strong players.

“Sometimes it’s hard, even with the matrix, to find the right people. It’s not only about the time people are willing to give and the time they have available, but also whether their personalities mesh, particularly with the CEO.

“When it does, an organisation really sings because then the vision, the ideas, the innovation, and the creativity are not on the shoulders of one person. The board involvement makes it much more powerful. We were successful in doing that, but there were times when it wasn’t there and as a CEO that’s a lonely place to be in.”

Being open and transparent allows “difficult conversations” to take place and she says it was the chair leading by example. “The chair runs the show, but my relationship and feedback to the chair was obviously an important part of the considerations around executing on succession. It may have been before terms were up because something changed, something was demanded.”

Mutual trust and respect are the cornerstone of the board/CEO relationship. In this way, she says the board is never surprised and because there is a regular opportunity to “download, talk strategy and work through sticky issues”.

She says this sort of environment, where conversations happen easily and there is an intimacy in relationships, is something all boards should want to create no matter how large the organisation.

“Not every board-CEO relationship has that level of trust. And if you don’t have that, whether you are a large-scale or a small organisation, then the effectiveness of that relationship and the ability for the CEO to navigate difficult situations is always going to be hampered.

“I frequently hear about terrible relationships between CEOs and board members, and I just think, ‘how awful’. I would never have been able to do some of the things I’ve done without the support of the board and without the regular refresh of board members.”

That change brings fresh thinking. “I don’t have all the answers, but I’m happy to go to a board member and say, ‘Here are the challenges I’m trying to navigate, this is how I’m navigating them, and these are some solutions I’ve come up with’. What’s so powerful about diversity of thought, culture, experience and gender is generally they’ll come up with something I hadn’t even thought of.”

In the startup sector, she says advisory boards are critical, but there needs to be further education.

“It’s a huge challenge for founders who are running their own show and almost literally doing every job themselves. I often ask startup founders to create a strategy, then an organisational structure that executes that strategy. They find that hilarious because their organisational structure is them and one other person so imagining a future organisational chart can be an immensely empowering experience.

“Generally, the minute you raise capital and have product market fit, you end up with a more formal board and one of the members is frequently your investor. Suddenly, you have someone to report to. And if you haven’t built that cornerstone of trust, it can heat up very quickly and become a negative situation. It does happen frequently enough for many founders to worry about that loss of control.”

Johnson says succession is not on a startup’s radar at this stage. “It’s too early. They’re barely getting used to the idea of having a board in the first place, if they even have one. Before the Ministry of Awesome I was at a high-growth startup, part of a well-funded tech incubator. My role was to validate potential use cases, potential customers for a product, and to raise capital. We were at that very vulnerable stage of early capital and still finding product market fit.

“Most of my learning on how to navigate risks in the startup environment come from everything that went wrong at that startup, because everything that could possibly have gone wrong, went wrong, and at no stage did anyone on the board raise a red flag or step up their involvement. It showed the crucial nature of a startup board. It will never be lost to me.

“In the beginning, many people come onto a board to fill a seat – and add to their CV. You can’t do that in a startup – and you can’t stay too long because startups grow quickly and your role on the board may no longer be useful if the startup is hitting its straps.

“In terms of succession, you very quickly know the qualities that are required. Be able to have open and frank conversations during board meetings and have regular reviews and 360 reviews. The CEO should be able to do a 360 on the board members and the board members should be able to do a 360 on their CEO. Likewise, the chair.

“I can’t even begin to tell you how important that is because it allows for transparency and the difficult conversations can begin from there.”