Professor Noam Wasserman Comments on “A Simple Guide…”

Professor Noam Wasserman of Harvard Business School wrote a post about "A Simple Guide to the Basic Responsibilities of VC-Backed Company Directors" on his Founder Frustrations blog.  He finds the "VC-Backed" portion of the title to be limiting because he sees much of the guide’s recommendations as applicable to many private copmpanies that are not necessarily funded by VC’s.  I agree with this point, but, in writing the paper, the Working Group recognized that there are many "corner cases" in private equity that we cannot address in this guide.  By limiting its scope and focusing on an area where we are all directly involved as practitioners, we felt that the Guide could be most effective.

Some of Noam’s comments:

In particular, the paper:

  • can help educate many founders, non-director senior managers, and other first-time directors about the board’s roles and responsibilities, regarding both business and legal issues;
  • highlights some practices that seem to separate effective vs. ineffective boards; and
  • provides a user-friendly checklist with which you can evaluate your own board and identify where it can improve.

I also like the fact that this paper is only part of an overall effort to improve board effectiveness. The members of the WGDABE are supposed to be pushing for their own companies to implement the checklist and other parts of the white paper, and the WGDABE is planning to do follow-up analyses of whether those companies gained any of the expected benefits from doing so. (They’ll hopefully get a large enough sample and do a rigorous enough set of analyses that they’ll be able to draw statistically- and practically-significant conclusions!) At the least, it’s an interesting experiment in improving governance, and if it reaches its full potential, it could be quite a productive effort.

We are reaching out to directors of companies that have read the Guide and would appreciate more feedback from the field.  The paper has already been downloaded several thousamd times since it was released on January 30, and we look forward to hearing from more readers.

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