In the last five years, as we have built Feelunique.com into a sizeable business, I have often been asked about the role of the non-exec director in my company.
The topic has come to light again with the recent appointment of Whitbread CEO Alan Parker as non-exec Chairman of Mothercare.
For the record, Feelunique has no non-exec directors.
I have repeatedly toyed with the idea of recruiting some. City types tell me that I needed some gravitas on my board – individuals who have seen it all, done it all and who could advise me as to the pitfalls of rapidly growing an e-commerce company.
Probably sound advice. I have spoken to numerous people in the past who seem to fit this bill. But ultimately, we have not made any appointments.
For a private company with a tight shareholder base, the traditional role of the non-exec to look after investor interests does not really apply. So what should a non-exec bring to the table for an e-commerce company?
It is hard to justify the decision not to appoint a non-exec or two without sounding arrogant. Non-execs are there to provide experience that your executive team does not possess itself. The counter argument that I always ran into was that we never encountered candidates who knew more about our business than we did ourselves.
Full-time executive directors will inevitably know more about the business, the market and how to achieve the company’s objectives than any non-exec you might bring in for a day or so a month.
So is the non-exec simply there to sanity check operational decisions? Any management team can be guilty of getting too close to their business. I love my business and every founder and CEO of an e-commerce company will feel the same. Typically a CEO has grown an e-commerce company from small beginnings. We are passionate about its development and its growth story.
I think the danger lies, in this context, of losing perspective. The views of an experienced businessman or woman, who remains slightly detached, is priceless. CEO pet projects should get knocked on the head and the non-exec is there to remind about return on investment and to help maintain a disciplined approach to running a business.
Start-up company bosses are also often uncertain about when to bring in non-execs. Too early and the strain on finances and the potential dilution of equity can be hard to digest. Too late and the company’s course is already set.
I quite like the recent report on risk management by the Chartered Institute of Internal Auditors. It found that too few non-execs pay enough attention to the risk profile of companies’ strategies. Using this approach, the role of the non-exec is to kick the tyres of big operational decisions to see whether the executive management team is taking unjustifiable risks.
But I have only partially answered the question of why Feelunique does not have any non-execs.
If I were to be brutally honest, I would argue that too many entrepreneurs pay too much heed to the ‘grand fromage’ class of non-execs when it comes to strategic decisions. Every e-commerce company has a unique strategy. Do not let a non-exec tell you that you should be doing something, simply because in his experience it worked somewhere else. Sector expertise is not the same as knowing what is best for your company. Stick to your guns and if you are going to hire non-execs make sure they bring something new to the table.
Note: The views expressed here are those of Feelunique CEO Aaron Chatterley and do not necessarily represent the views of Retail Gazette