Erevena’s Maria Josife talks to Hema Patel, a successful NED to Oxford Semantic Technologies and ReMake Technologies, Founder, Investor and an ex Silicon Valley global tech Executive.
They explore the role of the modern NED and she explains why companies need to look beyond just previous CEO/CFO experience to bring added value and diversity of thought and experience to their Boards.
What can you tell us about your Executive background?
I bring an entrepreneurial and corporate background, in B2C/B2B businesses such as Microsoft, Facebook, Adobe and News Corp. I’ve delivered £0-£500m in revenues across 100 markets through an IPO, built and led sizable remote teams across four regions serving as both Head of Strategy across EMEA and as a Global Executive Director.
I devised the first global partner alliance, modelled and scaled it and spearheaded a global data steering committee at Microsoft to devise their data strategy back in 2009.
Previously, I led the commercial team at The Times, (£100m P&L), through change of broadsheet to compact, working with the Managing Editor, Michael Gove. I’m financially literate with a degree in Accountancy and all of this combined gives me the breadth and depth of Executive experience one might need as a NED.
What about your more recent experiences?
I’ve worked with a range of VC/PE backed companies from seed to pre-IPO through my own company Impeller Labs, mentoring through London & Partners’ Mayor’s scale-up programme and I’ve sat on two Advisory Boards including a climate tech platform Skoot.eco.
Now I serve on the Board of two scale-ups, ReMake Technologies (private equity) and Oxford Semantic Technologies, backed by Samsung Ventures and Oxford Science Enterprises. Finally, I’ve also done some angel investing and volunteered as a Trustee to a not-for-profit sailing club.
How would a Company or a Board attract someone with your experience?
Firstly, I evaluate companies based on their domain and the value I bring. My expertise lies in the media/marketing/creative industries or tech and deep tech. I’m also interested in contributing to the success of climate companies given the urgent macro issues we face.
At the moment I’m working with earlier stage companies and I tend to evaluate these based on four criteria: product, team, traction and metrics.
- Firstly, I look at the problem they are solving and the solution itself. A moat essentially and assess whether the product has good potential. Could this be a billion dollar company? Where do they fit versus competition and market size?
- Regarding the team, experience, chemistry and complementary skills are important. I assess whether it’s the right team to solve the problem. At Oxford Semantics we have a seasoned CEO from IBM Watson and three Oxford University Professors who invented the technology on our Board.
Before finalising my appointment at ReMake, I met the CEO and the COO over dinner, to test the relationship and make sure there weren’t any big egos likely to clash.
I also ask relevant questions up front, such as why they need a NED, what skills gap they are addressing, whether the Board is aligned with respect to the future direction, are leadership changes anticipated and how comfortable they are with challenge and accepting alternative views
- When it comes to traction, it’s very important early-stage companies have paying customers and product market fit.
- Finally, I look at the metrics which are important for that stage of the company. If it’s a young company, it’s about runway, burn rate, margin, revenue, retention versus churn, pipeline, COGS and scalability.
For the larger businesses, it could also be QoQ share price growth, multi year contracts, ACV, engagement, ARPU, ability to disrupt and innovate, debt levels and reducing debt etc
By looking at the key metrics, you can understand where a company is and ascertain what you need to bring as a NED.
How important is stage relevant experience when joining a board as a NED?
It depends on the role of the NED and the skills being sought at that particular point in time. A company heading into an IPO, might need a seasoned finance expert in which case it’s incredibly important.
But if it’s a ‘growth stage’ company and you’re looking for a growth specialist, I don’t believe stage relevant experience here matters, as every company will continue to grow and innovate regardless of stage. A listed company still needs to show QoQ, YoY growth and answer to Wall Street! At Adobe we grew the share price from $35 to $600 in 6 years.
In addition, bear in mind the Chair (of the Board) normally brings experience of being a CEO at the required stage, so ascertain what is needed to complement this. Focus on these additional skills, or say the global customer network required, which is something I can bring for rapid scale.
What else should companies focus on instead of the stage of experience?
I think what’s equally important and sometimes undervalued is cognitive diversity. Silicon Valley has been successful as it has focused on the latter, as ‘the future doesn’t fit into the containers of the past’.
At Microsoft, I think I mentioned I devised and incubated the first global alliance, modelled it and scaled it, which is now the de facto approach in corporates and startups alike, plus it represents close to 80% of their revenue! It became an entirely new consultative way to build long term global customer relationships, and safeguard long term repeatable revenues.
I also spearheaded a global steering committee to devise their data strategy back in 2009, whilst companies were still asking why we needed digital, let alone why data …. Now, of course, it’s the backbone of cloud and AI, which is the futurist in me who can execute.
Hence cognitive diversity.
The ability to invent and drive change.
We won’t solve Climate change by looking at one’s previous stage of experience!
So embrace people who understand these complex businesses, who have led disruption, growth and digital transformation for some 20 years, who have grown and scaled these companies, built and navigated organisational change and bring new approaches.
For instance at Facebook, we were doubling revenues through the IPO, yet there were bottlenecks throughout the company, constantly changing capability requirements and a failing business model aligned to desktop rather than mobile. We had to transition and bring change to an organisation already 6,000 people in size, which is a lot harder than trying to change and pivot when you’re 60 or 600 people. Whilst this was a late-stage business, that change management experience translates to a younger company and so it’s a very relevant experience to draw upon.
Therefore ask questions around an NED’s skills, mindset, aptitude, diversity of thought and innovation and ascertain their range of experiences, rather than purely the stage of business or whether they have been a CEO on paper.. If you keep hiring the same people, who have done the same journeys, you’ll get the same companies in the UK.
For example I’ve seen an ex Groupon/Amazon Developer who has gone on to build a supersonic jet company. They have an ex scientist from the Air Force on their board.
Or an ex Stripe merchants payments engineer lead Watershed, a climate change company with Al Gore on their advisory board. There is no ‘relevant stage’ experience in either of these companies and that’s the difference between the UK and US. Hire for skills and diversity.
What’s involved in your role as a NED?
It varies from company to company. In the younger stage companies, I focus on four or five key areas, which I deem to be relevant at any stage.
- Governance is probably the biggest area. Helping the CEO to be accountable in terms of clear financial metrics and KPIs. For a larger organisation, this could be industry regulation and for all companies, it’s about data governance, ESG and information security.
- The second area is vision to execution. I’m very hot on supporting the CEO, not only with strategy and where the business fits in the market, but also the capability needed to deliver the product road map ahead of the competition and execution to a point.
- Commercial growth is the third area. For example this could be through customer introductions or assessing the sales and marketing team org structure. Are we putting in the right people, in the right roles at the right time with the right comp? While some early-stage companies don’t have remuneration committees, it’s a good practice. even when they’re small.
- Then there’s the operational side. For this, I have the mantra of nose in, hands out! Being operationally aware is good so you can see risks, but you’re not there to ‘do’ and hence there is a fine line that the NED has to walk.
- Finally, I aim to be a sounding board for the CEO, whilst also maintaining the independence of a board member, where I might be assessing the CEO. It’s a tricky balancing act. On the one hand you are almost a coach and listener for the CEO and on the other you’re helping to ensure the company is being well run and you’re thinking about the shareholders and investors.
How do you quickly make an impact as a NED?
If you take the above approach I believe you’ll make an impact. I guess I’m unique with the ability to drive commercial growth and lead on strategy and operational growth. I’ve pivoted across both my entire career which gives me a unique lens.
It’s also important to onboard effectively at the start:
Take the time to listen, to really learn what’s working, what’s not and to understand what the priorities are. Learn where the company is, look at the previous minutes, the financial reports and what the market is doing. In other words, do your homework, so you can see where to prioritise and drive impact quickly. Whilst near-term impact is important, so is the future. The Board needs to think about the longer term 5 year strategy.
How does the board on which a NED sits continue to have an impact?
You have to measure the impact of the Board overall and individuals. One way is to set outcomes via a balance scorecard to measure progress QoQ so you can drive impact from where you are now, to a future state.
I think it’s good practice to have that evaluation in place, otherwise how do you know if you’re effective? Very few boards are independently evaluated and perhaps that’s a gap.
However the role of the Board is to also exercise good judgement which is hard to measure as its subjective.
What other metrics and/or targets might help a Board drive real value?
The Board needs to ask what’s going to make the company more resilient and more efficient, such as an extending runway or a way to remove company debt. Then there’s the longer-term, strategic view, five or longer into the future and how you’re going to get there. What are the milestones that you need to hit as a board?
Another, softer, target might be the Board’s composition in terms of skills, diversity and culture and whether the right succession planning is in place.
As a NED, self-assessment is also important. Ask for feedback from the Chair and your peers on the Board at least annually.
What advice would you give anyone considering their first NED role?
Making the leap is the hardest part. I have yet to see a playbook for a portfolio career but I can offer some advice based on my own experience:
- Figure out the value of your brand, identify your broad skills and assess whether this is the right career for you. Ask yourself what you bring to the table from a skills perspective.
- Try to get some experience, even if it’s a Committee member or a Trustee of a not-for-profit. This will help you make the transition to a Board role as it’s an opportunity to be present in this environment and learn.
- If you are serious about a NED role, then it might be worth investing in a course to understand a Director’s duties, for instance learning about the legals and regulations required depending on which sector you’re trying to go into.
- Learn how to read financial statements. It will be your responsibility to approve accounts for the year. You’ll be expected to have an opinion around capital allocation, dividend payments and share repurchases if it’s a listed business. Unless you understand all of this, you’re not going to be able to comment or do the business justification. 6 years of Accounting experience (O, A levels and BSc) helps me immensely!
- Do it for the right reasons. I’ve seen Execs joining the board of high growth tech start-ups because they want an IPO or growth shares.. What they don’t anticipate is being hands-on and easily doing four or more days a month, on low pay rather than just attending a board meeting. That’s on top of all the reading that’s required to keep up with the market or networking for fundraising.
You have an opinion on Board remuneration – can you tell us about this?
I feel if UK Boards want to attract talent, diverse people, diverse thoughts and experiences, then perhaps we need to review remuneration?
For instance if we want younger NEDs, especially those who bring relevant tech or say ESG skills, who are not retired and drawing pensions, we need to accept they probably still have large mortgages on high interest rates to pay and need to survive.
Perhaps there needs to be broader industry education here and salary benchmarking against a global market to draw a wider pool of candidates? We have to keep up in terms of global market norms, especially around technology and innovation. Perhaps then, NEDs and Chairs won’t ‘over board’ and have a portfolio of 7-10 companies, which can’t be managed effectively and focus on say 4 well paid positions – which is a win-win all around in terms of focus and value. I think there will be new government legislation on this soon regardless.
How should companies rethink their approach to appointing non-exec directors so that they are more inclusive, rather than simply opting for people with previous CEO/board experience?
The system needs to change.
Why is it difficult to find a NED/ board role in a corporation? I see lots of low paid or pro bono public appointments, very few corporate positions advertised and yet many PR articles announcing new corporate Board members!
Are we hiring the same people over and over again from the same databases?
Being controversial, are we hiring the same ex CEOs or Big 4 consultants who may have not got things right the first time around, to make the same mistakes again? Hence an entire decade of digital transformation driven by Silicon Valley and startups? Think differently!
Perhaps companies also need to hire candidates who reflect their customer base, which will open the door for potentially young candidates. If these aren’t appropriate for a main Board, then perhaps we should think about creating sub-Committees, especially around tech and innovation skills, which supplement the main Board and would be a way of bringing through new talent?
Can we make it mandatory for companies to publish Board vacancies on their websites, alongside other internal career opportunities? This would broaden the talent pool. Can we host career days for new NEDs, like we do for graduates? Allowing a potential NED to shadow a Board member and sit in on their Board meetings is another option, especially for someone who hasn’t done the role before. This was something I was lucky enough to experience before joining a Board.
Are there other ways to diversify the board?
Shorter appointments to address a particular need and hire for relevant skills, such as cybersecurity, to keep the Board dynamic. You might not need a generalist retired CEO for the particular hurdle you’re trying to address at that specific time.
Also, think about the recruitment process itself. Do we hire from the same network? People we know? Or should we have a proper framework in place to recruit for skills?
I’d also urge investors and recruiters to rethink how they interpret a candidate’s CV. From personal experience, I’d say that a potential NED might not have ‘CEO’ on their CV, but as a Global Director from a tech company, they could have easily managed 300 people globally, run their own P&L, navigated tech/product innovation and capability building – a division they probably built from the ground up. Furthermore they would be working across multiple regions in a matrix environment, delivering rapid repeated revenue uplift QoQ, YoY and bring a global customer base. Unicorns in their own right. That’s very much what a CEO would do for an organisation, so while someone might not have that title, they certainly have transferable skills and unique insights, which any Board should welcome.
As a candidate going for a Board role, how do you assess a company’s attitude towards diversity on their Board and ensure it’s not simply a tick-box exercise?
As a candidate, it would be interesting to dive deeper into the Company itself to understand how diverse they are….. I appreciate diversity is more than gender, but as an example, let’s take females. How many females hold leadership roles within that organisation? This may be indicative of what you will also find in the Boardroom. Make this information available in the interview process and you’ll soon see whether it’s a tick box exercise.
Going forward, I would urge companies to be aspirational and assess whether you are ‘seeking different’? Perhaps that should become a value for Board recruitment. Are you trying to avoid unconscious bias? Do you screen CVs without names and gender references to hire the best person for the job?
Maybe take a survey of board members to establish the current mix of skills, experiences, perspectives and thinking styles. Look at customers, employees, suppliers, and other stakeholders, and consider the mix. Consider the topics and challenges you face as a board: do you have people on your Board who are insightful in those areas? We need to get more comfortable with talking honestly and openly about the mix we have in our Boardrooms, and the first step to achieving that is knowing what that mix is and hence diversity.