Emerging growth companies are works in progress. On good days, every growing company feels that it knows just where it is going, and how it plans to get out of No Man’s Land. Feeling like a lonely band on a mission to disrupt a market and take share from its incumbents, “us against the world”, can be motivating and empowering. But there are other times when the founder and his team feel isolated.
The market they are aiming at seems huge and overwhelming. There are limits to the skills and experience the team has in-house. They hanker for more perspective and insight about what other companies in their market and contiguous markets are planning. They recognize that they need an objective look at their strengths and weaknesses--from the outside.
It’s at times like this that companies could realize great value from having an Advisory Board.
What it Provides
An Advisory Board provides advice, contacts, skills and experience that go beyond that of the company’s management team. It may include individuals with industry, sales, operations, strategy, financial, marketing, technology, investment, intellectual property, or human resource expertise. Advisory Boards have no governance or fiduciary responsibility. They are solely focused on helping the company achieve its goals. Advisory Board members can offer perspective on everything from making introductions to sources of financing to targeting niche markets and forming partnerships with market leaders.
The fact that they have no power can be a real selling point to the founder/s and investors: no control is ceded to non-owners on the board.
Given everything they have to do, though, how do companies go about recruiting such an Advisory Board?
The Best Advisory Board
The best Advisory Board is one built from independent third parties by an outside advisor. A well-connected advisor who understands the company’s strategy can help recruit senior executives with diverse backgrounds who will bring an enlightened, unbiased perspective. A “vanity board” full of well-known names who are not prepared to commit time to the effort will be window dressing and won’t produce tangible value. Your Advisory Board needs to be populated by those with contacts helpful to your business, the will to exercise their skill and knowledge on your behalf and a firm commitment to see it through. Bringing on golf partners, book club members, neighbors or family members is the path of least resistance. But avoid that approach—Advisory Board members must be prepared to add real value or the effort will flounder.
A critical point in recruiting an Advisory Board is to identify individuals who have something to gain from their participation. They shouldn’t feel that they are doing you a favor. Even if their backgrounds are impressive and they hold significant positions in companies much larger than yours, their role on your Board can give them exposure to valuable ideas, trends and contacts that they couldn’t get on their own. Don’t sell yourself short in positioning what’s in it for Advisory Board members to devote time to this effort.
Once your Advisors have been selected and assembled, they can start to work together—at regularly scheduled meetings and ad hoc conversations. My next article will describe how the mechanics of Board membership work and what the Board actually does.
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contact Art at art.medici@newportboardgroup.com
image credit: Pride Alliance Long Island
