Recently we’ve had a couple of clients ask us if they should have an advisory board and, if so, how they should go about building it. First, we think all businesses should have an advisory board. Perspective and experience on a wide variety of issues is an important commodity for a business owner to have available.
Often times, within our companies, we have accepted common views on topics. As a result we are not able to generate enough perspective to accurately assess opportunities and problems. Outside perspective is critical so that we don’t fall victim to group-think conformity and uncritical acceptance of ideas and conclusions.
Advisory boards also bring additional business knowledge and expertise to the table. Verne Harnish of Gazelles has also written about Advisory Boards, or Councils, “The three most important pages ever written for business leaders are pages 114 – 116 in Jim Collins’ landmark book Good to Great. It’s a bold statement, but I’ve seen the transformational impact on leaders and their growth companies when the concept on these pages is implemented.”
The key, as in building a strong company, is getting the right people to serve on your advisory board. Look for people who are not afraid to speak their mind when they disagree with something. The last thing we want are folks who agree with almost everything and anything. Those folks won’t bring valuable perspective.
Adding some people who don’t know the industry can be valuable because they don’t just accept the “norms” without question. Look for specific skills like IT, HR, Finance, Marketing, etc. Have a written and agreed understanding of what is expected of them, such as being prepared for quarterly half day meetings and committing to making at least three a year.
Be willing to pay them an appropriate stipend for their meeting and prep time. Consider what a senior level person would make and pay accordingly. When you pay them well you can hold them accountable, too. Finally, run all meetings with an agenda sent out at least a week before the meeting. To get the most out of your advisory board, you must be prepared and model the behaviors you expect from them.
Building an Advisory Board is similar to building a management team. It takes time, some trial, error, and corrections to get it right. At the end of the day it is an extremely important part of any successful business.