Cluster Boards

Every business must have a high-level decision-making body in place to plot its future success, even very small businesses.

For businesses that do have a Board in place, a Board of Management, a Board of Advice or a Senior Management group, the question becomes how effective they are in planning, decision making, and plotting the direction and strategy of the business, as distinct from managing the risks and overseeing the operational side of the business (neither of which will necessarily alter the future course nor success of the business). For businesses that don’t have a formal body in place, decisions for the future are most likely being taken by the owner(s), a key person or key people and the problem with that is that the planning and decisions are less likely to be well thought through, coordinated or effectively implemented.

There is always a strong objection from (very) small businesses that they can’t afford to have formal decision-making bodies in place with respect to fees required and/or the time required. Both of those objections are nonsense. Cluster Boards can get around the direct monetary cost if they are set up on a ‘return of favour’ basis, i.e. sit on each other’s Cluster Boards. This also provide a valuable learning experience for everyone involved as well as cross pollination of ideas. And to suggest that the time involved in running high level decision making bodies is too much is to risk just doing more of the same year after year, if not go backwards.

A Cluster Board is our term for a group of people with varying sets of expertise and personal attributes that, when added up, cover the absolute requirements to succeed in business in future.

1. The expertise must cover the following areas:
2. Direction & Strategy. Direction first (i.e. where the business should head) and strategy second (i.e. how to head in that direction). There is no point looking at strategies if the directions are unlikely to create success, e.g. dwindling future markets or ignoring markets that could be opened up.
3. Digital marketing. Whilst advertising, brand promotion and product promotion are still important, digital marketing is growing in importance and impact at a staggering rate. Expertise on this front is an absolute necessity.
4. Technology. This is no longer just about computer downtime, spam, viruses and updates. It’s about proactive ways of running the business better, from databases, to CRM’s, to lead and lag indicators, to the introduction of new technology per se.
5. Information and data. Note that information has been separated from technology. That’s to highlight the importance of the two areas rather than coupling them, as well as to raise the possibility that it may not be the one person any longer who can be across them both. Information and data is everything to future success … identifying trends, benchmarking, avoiding and reducing problems, creating efficiencies and so on.
6. Operations. Someone who is strong on the operational side of business, to ensure things run smoothly, efficiently and cost effectively. The cost savings that can be derived from this expertise are substantial, as well as the strong positive impact on the customer experience by better meeting their expectations in delivery of work and product.
7. Financial analysis and innovation. It’s one thing to manage the financial side of a business well but it’s another to ‘make the numbers sing’. Too many financial people do little more than report historic numbers and don’t bring to the table how to improve them. This means not just managing the money but using proper analysis to create future gains. It means bringing (new) ideas (on any front) that will improve profit, cash flow and business value.
8. Performance of people. This deliberately does not say H.R. There are some very old approaches still in place in business that simply don’t add to the performance of people. This expertise is about ideas and actions that will genuinely improve the overall performance of people within the business, beyond job descriptions, organization charts, performance reviews and empty statements about culture. This is about engagement, leadership, initiative and teamwork and the gains from these aspects of business should be driven from the top.

Even if a business’s decision-making body appears to include coverage of every aspect in the lists above, it’s worthwhile evaluating whether the people with the expertise parts are adequately up to date. The expertise areas are changing so rapidly that some people have fallen behind and will be unable to provide proper input for the future.

The actual people on the Cluster Board should include:

1. Male and female. The sexes think differently and can approach matters differently. That’s advantageous to debate, planning and decision making.
2. Older, younger and one very young. Older gives experience, younger gives newness and the very young is the business’s future customer and key employee. The very young person should be between 18 and 23 years of age.
3. Varied cultures, depending on (potential) markets.
4. Naive to the industry. This is to provide naive challenge, which can be enormously productive to people from within the industry who are used to doing things in existing ways and thinking along particular lines.
5. Inside and outside of the business. To engage the best of inside perspective and external suggestion.

The personality traits to include are:

1. ‘Can do’ and ‘Be careful’ people. To ensure a balance between the two.
2. ‘Big picture’ and ‘Details’ people. To ensure both are covered off and therefore decisions taken are more likely to work.
3. ‘Let’s do it’ and ‘Let’s review it’ people. So the business doesn’t take decisions too hastily nor too slowly.

So, how can Cluster Boards be set up and run?

1. Carefully consider your network for who could be approached to be involved with your own Cluster Board, according to all of the lists above.
2. Consider people for whom you could return the favour of sitting on their Cluster Board if you don’t wish to pay a fee to them.
3. Cluster Board meetings should be held every two months, with an agenda that is inclusive of all the expertise areas in the first list. These meetings could be anything from 2 hours to all day. The least frequent these meetings could effectively be held is quarterly.
4. From taking the decision to set up a Cluster Board (or to revamp your existing Board) to the first meeting would probably take a couple of months, to set it up properly. That’s ok, because of the influence this body will have over the future success of your business.
5. For people on your Cluster Board for whom you will return the favour of sitting on theirs, those meetings should be on a different day to your own. And, if it seems like a problem that you may be sitting on a few other Cluster Boards, it’s not. That’s a highly effective investment into the development of further ideas for your own business from what you will pick up in those other meetings.
6. At times, the Cluster Board could have additional specific purpose people included where the business is facing a particular problem or opportunity. There could be a potential merge or acquisition, for example, or a diversification opportunity. These are situations when specific expertise may need to be added to investigate it thoroughly.

For those businesses with Boards or similar bodies in place, consideration should be given to whether they cover all of the required aspects in the various lists above. If your Board is skewed towards males, 40’s plus in age, industry based, internally dominated, or misses any of the aspects in the lists above, it’s time to make it a more effective decision-making body than that.

The point is that every business needs a highly competent, diverse group of people who together cover off on all of the skills, knowledge and approaches necessary to make decisions for ongoing future success. To say that is too difficult, too time consuming or too costly is to contradict the importance of effective decision making and planning in achieving success. Cluster Boards should be the driving force of the business and they should not be put off for any reason. Whilst setting up a Cluster Board is not an easy exercise, it’s absolutely worth the time it takes.