Many of my clients have found that establishing an advisory board has been enormously helpful. However, other clients have had different and less happy experiences. For the benefit of anyone considering whether to establish an advisory board, here are some key points to note.
The first and most critical point is to decide on the purpose of the board. There are many possible issues that an early-stage company may be facing where the input of an advisory board could be helpful. The full list is unlimited, but key issues that often arise are: determining the optimal sales channels, deciding on key markets to pursue, technology build-versus-buy decisions, building out the management team, developing a strategy for pursuing outside investment, etc. Although this does not cover every issue, the key is for the company to establish and clearly define both a purpose and a focus for the board.
Business is inherently dynamic, and the board’s role will likely change over time. However, not knowing a clear reason for an advisory board is a prescription for a board that flounders and ends up being an aggravation for everyone rather than a mutual benefit.
Founders considering a board should critically and honestly evaluate their own individual strengths and weaknesses, and consider using an advisory board in part to help overcome the founders’ limited experience in certain areas. If the founders have strong technology backgrounds but limited sales and marketing expertise, perhaps one position on the board would be someone to provide top-flight input in the sales and marketing area.
The next point to consider is whether the founder has available time to establish and manage the board. It takes many hours to find and vet the right candidates, and the best potential candidates may need to be convinced of the company’s long-term prospects and value proposition. Once the board is assembled, the company should consider the amount of time it takes to prepare for and conduct meetings. In addition, if the board is going to be successful long-term, the entrepreneur will also need to commit to consider and follow up on matters raised in board meetings. Because the typical entrepreneur runs a lean operation and is wearing multiple hats, he/she should consider whether time is available to commit to working with the board and considering their recommendations, which is essential to the board’s long-time success.
Assuming that the founders have identified a purpose and believe that they have the time to help a board be successful, the next and perhaps hardest question is this: are the founders willing to fully consider input from the board and change or develop new business plans based on the board’s input? I have often seen the following dynamic play out over time with advisory board meetings: the entrepreneurs give some consideration to the board’s input but generally proceed as originally planned without implementing or incorporating the board’s advice. As the advisors realize over time that their input isn’t being valued they become disenchanted. This points to a key characteristic of founders who have successful advisory boards: the ability to listen to quality advice.
In summary, advisory boards can be tremendously helpful, but only if a proper purpose is established and only if the founders take the time to make the board successful and truly consider the board’s input. After considering all of this, perhaps you’ve decided a board isn’t for you. On the other hand, if you remain interested in creating an advisory board, stay tuned – I’ll cover how to go about establishing a board and other related issues in upcoming blogs!