One of the most important elements of growing your business is having the right people involved and engaged. The right people bring innovative ideas, create opportunities and help the company move forward faster toward its stated objectives. In fact having the right people involved is arguably more important than having capital because good ideas and good companies can attract low cost capital.
One way to tap into innovative outside resources is by creating an engaged Board of Advisors. I am not referring to a Board of Directors, where governance and oversight is the main purpose, but rather a group of individuals who are tasked with providing great advice. And while not to suggest that this is an easy task — as it has been one of the more challenging experiences as a PE professional investing in growing companies — but I can say without hesitation that a successful and engaging Board of Advisors is invaluable.
With that, here are three main issues I see time and again when creating an Advisory Board:
Issue #1: Lack of Engagement and Preparation
This is not evident when a Board convenes initially. In the beginning there is an excitement at the newness of it all. The lack of engagement generally happens later when everyone is more familiar with each other and the business and the solutions to issues are harder to develop because the low hanging fruit has already been picked. A key element to successful Boards is to share ideas out loud, so that other Advisors can consider these ideas and possibly build on them. Not having prepared eliminates the opportunity to provide insightful ideas in this creative moment where lots of good ideas can be germinated.
Issue #2: Too Much Focus on History and Detail
Too much focus on history and detail can severely limit the effectiveness of a Board. After all, how does that focus help strategic thinking going forward? I am a firm believer that Advisor meetings are for looking forward over the next six months to two years. Looking back, while instructive, should be done in preparation for the meeting and discussed in the first 10% of allotted time. The balance is about the future.
Issue #3: A Board that Doesn’t Evolve
Companies evolve and therefore the management team needs the source of their advice to evolve. Very few professionals have the breadth of experiences to be specialists in all areas confronted by the company. Advisor composition needs to reflect the domain experience the management team is seeking to benefit from at that time.
A possible solution to manage these concerns lies in the concept of having a series of single engagement strategic meetings with guests invited to discuss the topics most pressing. The newness and freshness of the strategic topic, the opportunity to network with other accomplished professionals, and a desire by the guests to do their competitive best in a networking environment keeps people on their toes and often gets the creative juices flowing. Management would share only the information where they are seeking help, and not burden themselves with the time and energy of creating an overly comprehensive report. This solution also frees management to change the composition of the guests at any given time to best suit the skill sets required as the company evolves.
While there are certainly many things that need to come together well in order to have effective and engaging outside advice, I do believe that by putting thought, effort and creativity into finding the right people to be actively engaged, with genuine interest in seeing your organization reach its potential, is immeasurable.