While there has been some debate around the importance or otherwise of advisory boards – and I guess the conclusion ultimately determines their value – there’s savvy aplenty in the general rule that getting added intelligence into the company can never be a bad thing.
Intelligence, of course, is one of the key currencies that separates the great companies and organisations from the good ones (and the not-so-good ones!) and any vehicle that can serve as an astute sounding board and inject some high level thinking into the corporate conversation should be welcomed.
As the name implies, the advisory board is there to provide advice, which can then be used to inform the decision.
The advisory board is particularly valuable where there’s a proprietary limited company with two or three shareholders and directors, all of whom work in the business. They tend to have a particular skill set related to the line of business they’re in and then buy in or outsource other required skills such as legal, accounting and public relations by appointing consultants in these disciplines.
But beyond that, they tend to feel alone and in desperate need of a bit of counsel, especially when it comes to the big business decisions. There’s no one to question their greater business acumen, to make sure the ideas they have, the paths they’ll look to tread are the right ones – and the ones that will take them forward and ever closer to their goal.
That’s when they usually turn to their mates, those whose views they hold in high regard. It’s a great first step as it provides them with a different perspective and they feel comfortable chatting with these people, even to the point of exposing their own shortcomings.
Many progress to joining a professional networking body such as the Executive Connection or Behind Closed Doors, where they regularly meet with their peers in similar situations and, under the guidance of a seasoned facilitator who leads and steers the sessions, arrive at some great solutions.
They are challenged and grilled on their decisions and made to think longer, harder and differently.
These experiences tend to instil in them the value of external input, which often leads them to appoint an advisory board.
Yes, the original shareholders are still determined to control the company and call the shots but they have come to appreciate that the gaps in their knowledge and skills can be plugged by a non-threatening ‘pseudo board’ of clever people who provide advice on a raft of key corporate matters.
In the evolution of things, it’s not uncommon – indeed, it’s a healthy progression – for some of the members of the advisory board to join the actual board of the company as directors, especially when they hold the required intelligence.
And that’s smart thinking as intelligence within a company is a vitally important ingredient in its ultimate success.
Until next time,