“Looking to increase your business wisdom? Put some excellent counsel around you and your business.”
It’s always exciting to see businesses succeed with ideas that take the market by storm. The leaders behind these triumphs have shaped history and most have been richly rewarded. It’s important to recognize, though, that virtually every one of them attained success by standing on the shoulders of others. Consider Henry Ford, who revolutionized the world with affordable automobiles. Keys to his breakthrough included using interchangeable parts (an idea he learned from Walter Flanders who saw it used in the manufacture of Singer sewing machines) and the continuous-flow assembly line (inspired by the disassembly lines of the Chicago slaughterhouses and meat packers).
Your company can also benefit from other people’s ideas. Look for seasoned, clear thinking, well connected leaders and enroll them as advisors. A common perception is that these people would make up your board of directors, but there’s another approach for enhancing your business.
Think of 6 or 8 influential and experienced people you believe could catapult you to higher heights of thinking, planning, networking and decision making. Chances are that most of those people will have lots of excuses for not accepting a position on your board of directors.
Commonly, they will reason to themselves that:
- They just don’t have enough time to attend all the meetings and serve on the obligatory committees.
- They would rather not be required to wade through the ever growing bureaucracy of paperwork and compliance checking demanded of boards.
- The work and travel schedule they already maintain makes it awkward to coordinate another set of meetings in their calendars.
- Considering the escalating exposure directors have to liability claims, it’s just simpler and safer to avoid another board position.
The great news about advisory boards is that they can be used to eliminate all of these excuses and make your association with those winners much more attainable.
Before we go further, though, let’s clear up a potential problem. Advisory boards flounder when the people involved have an incorrect understanding of their role. Simply put, these people are being asked to share their wisdom and help open doors. They do not have authority to make decisions for the company. They are not part of the governing board. It’s essential that anyone invited to join in this capacity be clearly informed about the role. And to reduce confusion, it’s best to avoid the term advisory board and replace it with one less indicative of decision making. Alternatives to consider are Advisory Council, President’s Council, and Council of Reference, among others.
The advantage of advisors
An advisory council is not a replacement for a good governing board of directors, but it can powerfully augment your corporate composition. When directors gather to govern, their legal role is to direct and protect in the interests of the owners. It’s most effective if the board refrains from advising the CEO and management team in the context of the board meetings.
The talented people on your board of directors ought to be engaged for their wisdom and networks, but so can a host of other outstanding leaders. You may have your advisory council members meet together once a year or so, but the majority of connection will just be direct conversations to get perspective and input on specific issues. Sometimes, the most immediate service they can offer is to help you avoid the landmines they have encountered. As humourist Sam Levenson aptly quipped, “You must learn from the mistakes of others. You can’t possibly live long enough to make them all yourself.”
There are so many additional advantages, too.
- Sometimes you want to project greater credibility by having prominent personalities associated with your company. Usually, it’s better that they not be given a decision-making voice at the board table. Their prominence may have little to do with skills for governing. Rather, ask them to join your advisory council, draw on their help, thank them generously, and avoid compromising your board’s effectiveness.
- Like any other company, your business will go through seasons when specific areas of expertise are needed. Tap into this in key people without creating a long-term commitment – on your part or their part – and release them when the season is over.
- The decisions made by the board and management team are often complex and always affect many more people – shareholders, employees and customers. Assembling a collection of people with diverse backgrounds can provide broad perspective and valuable insights that complement the skill sets of the board members and senior staff.
- Involving people in an advisory capacity can be a pipeline for fresh blood on your board of directors. Those people who don’t seem to fit can be edged out casually because the expectations are comparatively low. Some advisors will shine and even develop an appetite to be more involved. Now you know what this person can contribute and how they are likely to relate with your leaders.
We trust you have big dreams for your business. Go find some giants! Put the power of an advisory council to work in your company. Use this cadre of counsellors to help you envision and achieve more of what you imagine.
Jim Brown is a founding partner of Strive!, a consulting firm that helps boards and executive teams be the best they can be. His book, The Imperfect Board Member, has been a best-selling book on governance since its release in 2006 and is now in its seventh printing.