Does the perfect corporate board exist? Here is your answer.By
Does the perfect corporate board exist? Friend, colleague and fellow author Adam Epstein makes a compelling case for it in a remarkable new book, The Perfect Corporate Board: A Handbook for Mastering the Unique Challenges of Small-Cap Companies (New York: McGraw Hill, 2012). Adam has produced a first of its kind playbook specifically for—a neglected segment which happens to drive most of today's job growth and innovation—small-cap companies.
The Perfect Corporate Board addresses a long-standing void in corporate governance that has troubled me for decades. Though 70 percent of the public companies in the U.S. have less than a $500M market capitalization, corporate governance best practices are one-size-fits-all—and the size is usually XXXL. You see, our “bigger is better” mantra does not acknowledge or support the needs (or market impact) of small cap companies. But lest the “small-cap” nomenclature fool you, small-cap's are “big” suppliers of innovation and U.S. jobs. In fact, they are “bigger” suppliers of U.S. jobs than most of the major corporations for which the United States is best known around the world.
In the book, Adam brings to light issues that we work on rebooting in companies every day—helping entrepreneurs, leaders, boards and investors to be more mindful of their situational issue like:
· Mindful that governing small-cap companies is not the same as governing larger public companies—not even close.
· Mindful that the “one-size-fits-all” approach to corporate governance not only doesn’t work but is, in part, responsible for why our “big” suppliers of U.S. jobs chronically underperform.
· Mindful that the incessant need for growth capital creates governance challenges that are unique to small-cap companies.
· Mindful that dire enterprise risks are lurking around every corner for small-cap companies.
· Mindful that without his playbook, and considerably more enlightenment like it, small-cap directors will continue to struggle to help their companies.
He makes a compelling case that, if one of the chief lessons learned from the financial crisis was that directors will ultimately fail if they are continually asked to manage risks they don’t sufficiently understand, then the corporate governance community hasn’t learned very much. That is: (1) the vast majority of directors in the Unites States govern small public companies; (2) the vast majority of those companies are not cash flow positive and regularly need to access the equity capital markets to survive; (3) the vast majority of small-cap boards either can’t afford to or don’t have capital markets and corporate finance experts on their boards; and (4) the vast majority of small-cap directors are forced to simply “do their best” because there are no objective resources available to help them.
Adam is a proven corporate director, capital markets expert and runs a cool group that collaborates with us at Boardroom Innovation and Reboot Partners called www.thirdcreekadvisors.com. Like me he is also a Board Leadership Fellow at the National Association of Corporate Directors and he speaks and writes regularly in national forums with respect to corporate governance. Lastly, I love the fact that Adams’ book royalties are being donated to charity, just like we have done with the royalties from our book, The Big Moo. Adams donations are going to Fisher House Foundation, a military non-profit organization that provides a "home away from home" for families of patients receiving medical care at major military and VA medical centers. So please buy the book, lean a lot and help support www.fisherhouse.org in the process.