I have trained hundreds of board members. In my experience they rarely understand the company’s or the team’s capabilities, or the market dynamics the company lives in. Most board trainings I have seen in Finland barely mentioned them at all.
My experience comes from startup boards: as an investor, as a board member, and from the observer’s chair. A startup board sits much closer to operations than a corporate board does. In a startup the founder is typically the majority owner, the CEO and a board member at the same time. That changes the interaction dynamics quite a lot compared with an externally owned company. Most of the dynamics are the same, though, and much of what follows applies to corporate boards too.
Ambition without a base
Senior Finnish business leaders are calling for higher growth ambition, and boards are being told to raise their targets. I am not against higher ambition, but it needs to be facilitated and understood. One should understand the difference between path choice and ambition. Paths and actions are visible for outsiders; the ambition is not.
Across 10,000+ startups reviewed, nearly every one had high ambition, and most of it was based on dreaming. Ambition is not about dreaming; it has to be backed with deep knowledge, and it rarely is. Giving a big target without basing it on anything is a common mistake. Screaming for more ambition is like a coach only screaming “skate faster”: it only leads to bigger dreaming. My read is that the startups I review already carry high ambition relative to their existing capabilities.
My partner at Gorilla Capital, Risto Rautakorpi, put the underlying principle into one word: runkonopeus, hull speed. A displacement hull has a maximum speed set by its physics. Install a bigger engine and the speed barely changes, while the fuel consumption multiplies. In a company, the engine is capital, headcount and hours. The hull is what has actually been proved and what the team is genuinely capable of.
The hull speed is the maximum if nothing changes, but the hull can be changed. Proofs modify the hull; almost everything else only burns more fuel. Whether a company can reach a higher target depends on its hull, and the board’s job is to help enhance it so the company can achieve more. That takes certain things in place in the board work itself. Two boards I have sat with show the difference.
Two boards
Not long ago I sat as a board observer in an early-stage SaaS company going through hard times. It was still unclear who would actually pay, the value customers received was not understood, the founder was still the machine, and money was running out. Board discussions turned into operative orders, many of them directly against the founder’s own experience of his customers, with no better evidence behind them. “You need to sell more” is the kind of comment that sounds like direction and is actually nothing. It names no buyer and no missing evidence, only pressure. The board members began to argue with each other, then avoided the meetings and stopped preparing for them. The founder began to wonder, out loud, what the board was for.
A little over ten years ago a founder I did not know called and asked me to join his board. His company was one of the leading marketplaces in its segment, and his plan for the board was precise: every member would carry a designated responsibility based on their expertise. I joined together with two other new expert members. Each of us covered our own area with the founder, before board meetings and in advisory sessions. We worked with him on who actually buys, identified multiple buyer personas, and he adjusted the offering to each. We found the products whose prices could be raised substantially, and he raised them. Within a few years the company was sold to a large media company.
Both boards had smart people on them. In the first, opinions competed, people ended up defending themselves, and the board turned political. In the second, the roles were explicit, the work ran on evidence, and each member brought depth from their own area to the table.
What needs to be in place
1. The basics before the target
Before a board sets a high target, it needs to know whether the basics for it exist: deep industry understanding, capability for strong execution, and a deep understanding of market dynamics. If they do, aim high. If they don’t, the target is a dream. A simple discipline helps: in the board material, every claim a target rests on is marked as proved or still assumed.
2. Deep knowledge, divided among the members
In my experience, most startup boards have no structure for dividing responsibilities among their members. Every member is expected to follow everything, and nobody follows anything deeply. Depth needs focus, and on a board, focus comes from dividing the job. Large companies already do this through committees. Startups can do it to a smaller extent.
A dedicated role is concrete. Take technology. The member who holds it keeps an eye on the area, studies it, prepares materials with the team, and takes part in team discussions to understand the team’s hull speed in technology. The same model works for the other areas growth depends on, and there are plenty of them.
The role work happens between meetings. On the marketplace board, each of us covered our own area with the founder before board meetings and in advisory sessions, and brought it to the table from there.
With the work divided, the chair is the orchestra conductor and the one closest to the CEO.
Evaluating and watching is not taking the wheel. The role holder studies and understands; the founder and the team steer. The safeguards are the usual ones: team access and advisory work are coordinated with the CEO, individual members do not give operational instructions, and each role holder’s findings and assumptions are open for the whole board to challenge. Board decisions stay collective, and everyone needs to make their own evaluation, but who has the deep knowledge?
Not all work needs to be divided, and not everything is a priority. A small board covers the areas the next step depends on and leaves the rest collective.
3. Growth judged against the market
Growth measured in percent can mislead. A company growing 3% in a market that shrinks 20% has outperformed its market by a wide margin. Growth has to be judged against the market, and when growth is the target, it should be substantially over market growth.
Position matters too. A market leader has scale, distribution and pricing power, but it faces hundreds of challengers and has something to lose, so it plays more defence than attack. Followers have freedom to operate.
4. Both sides of growth managed
Growth has another side, and a board needs to manage both sides: the target, and the profitability, reliability and efficiency that carry it.
After selling my first company, I led the acquirer’s distribution business across seven countries through a leadership change and a turnaround to €120M. We were already the market leader, in a market with low growth: the same products in the same markets, with new dynamics and structures. It took less than three years, and we did it mostly with the same people.
The turnaround required drastic things. The first was cutting unprofitable sales, from €80M down to €60M. Giving up position is hard, terminating supplier contracts is hard, and the uncertainty is hard. Then we changed what we were aiming at, the company culture, what we measured and how, and how people were rewarded. Our total focus was on profitability, reliability and internal efficiency. We went from loss-making to a high EBIT margin in a highly competitive business, double the EBIT margin of our largest competitors. The growth from €60M to €120M was a side result. So growth is achievable for a market leader too. The cut was the path outsiders saw.
5. The board hears the team
A board that only hears the founder gets the founder’s summary. Once or twice a year, put a customer-facing team member in front of the board to present what buyers actually did: the lost deals, the renewals, the objections. Ten minutes of raw buyer behaviour calibrates the board members better than a quarter of polished reports.
6. Competitive understanding with perspective
Winners write the history. Which CEO would write “we got lucky”? Studying successful companies carries a bias. Some of the growth stories held up as models rode a tailwind they did not create. Only good companies can ride an opportunity; mediocre and weak ones get beaten by the competition.
Evaluating another company from the outside, without knowing its hull speed, its strengths and weaknesses, or its weak signals, builds the analysis on wrong assumptions. Boards typically outsource this to consultants, which makes it outsourced learning without perspective. Good management should have this job in place, and the board should make sure it does. When you are the challenger, you win with your own strengths.
7. Board training that covers capabilities and market dynamics
I taught Finnish board member certification courses for many years, and I saw this gap there. Capabilities and market dynamics belong in the training alongside reporting and compliance.
Where this stops
Very early, a company often benefits more from its statutory board and a few sharp advisors than from an expanded external board. And everything in a board is in the end collective. But having someone with deeper understanding of the related hull speed is instrumental.
More scars than trophies.