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I’ve enjoyed participating on freelance marketplace advisory boards. Its fulfilling to help new CEOs and leadership teams build their business. In turn, the CEOs I’ve supported appreciate the value of my experience and expertise. Many of my colleagues have also found advisory service a good experience, and there is a great deal of literature out there recommending the practice to both startups and current and retired executives.
For example, advisorycloud.com points out: “An advisory board can have the single biggest impact on the success of your startup. Imagine 4-6 senior executives who want to help you and your team by sharing ideas, resources, connections … whether your advisory board is focused on one specific challenge or opportunity such as your next round of funding, or serves as a sounding board for overall strategy, an advisory board is one of the most underutilized tools in helping startups achieve the next level of success.”
Silicon Valley Bank also notes the value of advisory boards, and their blog describes how advisors can contribute to companies like Hostfully, a property management software company. “’It has helped us move faster,’ says Hostfully’s CEO. ‘Our advisors act as an extension of our team — sometimes there are these hard decisions when you need to talk only to people you trust. Advisors are really, really great for that.’ They can also give you a ‘third-party’ perspective, she adds.”
What should CEOs consider as they mull the formation of an advisory board? There is a good deal of information out there including my own writing, but it all comes down to three tests of whether your plan is fit for purpose and meets the job to be done:
- Are we ready to fully benefit from an advisory board?
- Does the board composition meet our needs?
- Is there real reciprocity: are we meeting our advisors’ goals as well as our own?
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Are we ready? Inexperienced CEOs are sometimes eager to form an advisory board before they are ready to make good use of one. When an advisory board is convened before the organization is prepared, it rarely works out well. In assessing readiness, keep in mind three fundamental tests:
- Are the goals of the advisory board clear and compelling to potential advisors?
- Will the CEO devote the time and resources needed to make the advisory board a productive and meaningful experience for advisory board members?
- Is there enough happening in the startup that can attract and retain the interest of high powered advisory board members?
Without a positive response to all three tests, your organization isn’t ready for an advisory board.
Does the board composition meet our needs? If the startup is ready, the next question is whom to recruit. Smart CEOs populate their advisory board strategically. A good advisory board enables the CEO and team to “see around corners” as Rita McGrath puts it. Experienced executives and entrepreneurs have perspective that young startup teams often lack: defining strategy, scaling operations, growing internationally, raising money, creating a culture, and building an effective leadership team. As the Advisoryboardcentre.com offers, “Consider exactly what you’ll need from your advisory board and ensure the advisors you choose can fulfill your needs. Rather than just selecting high-profile people, carefully evaluate your business priorities and what type of knowledge or experience you need to tap into.”
My colleague David Alberts, has created an important freelance consultancy in marketing and advertising they call “Been there, done that” and the company name perfectly describes a well-designed advisory board: A group of individuals who have been there, and done that, in professions relevant to the startup, and willing to share what they’ve learned. When the right individuals are brought together, and kept well informed of startup progress, they are a powerful source of insight.
But insight without candor isn’t worth much. So, pick advisors for their expertise but also for their willingness to speak bluntly and honestly in the best interests of the company.
Is there real reciprocity? This is an area where new CEOs and advisors are often frustrated. Some CEOs expect too much from advisors, and expect their advisors to be deeply involved in the business, and regularly available. Others expect less than they should, and don’t see the need for interaction beyond the occasional call or introduction. Dave Ulrich and Norm Smallwood note that reciprocity starts when “give and get” is aligned.
That requires understanding the interests of both sides. Startup CEOs must be confident that advisors will meaningfully contribute. And, advisors must feel committed and well compensated – in all respects, not just financial – for their time, effort and relationships.
A tool to help: The Advisory Board Survey. When I first began participating in advisory boards, I sought a tool to help me know when to say yes, and when to say no. I couldn’t find one, and so recently created one: A brief survey to help CEOs and potential advisory board members articulate their goals, share interests, and assess alignment. Part A is for the CEO. Part B invites potential advisors to describe what attracts them. Step one: Complete the survey. Step two: Share the results.
Part A: What do I want from my advisory board? (divide 100% as appropriate)
_____ Introduce us to potential clients
_____ Invest in our startup or company
_____ Help me and/or our startup to grow in reputation
_____ Identify looming customer or competitive challenges (seeing around corners)
_____ Provide helpful feedback on company and leader strengths and weaknesses
_____ Identify profitable opportunities we may not see or recognize
_____ Offer helpful counsel when dealing with difficult situations
_____ Connect us with investors to raise growth funding
_____ Help me build relationships with other leaders in my industry
_____ Provide access to expertise that can help us when needed
_____ Identifying inflection points that require a change in product or strategy
Part B: As an advisor, what do I want from participating on this advisory board? (divide 100% as appropriate)
_____ Building my CV
_____ Gaining experience and expertise in a new industry
_____ Working with new, interesting, colleagues
_____ Income from an honorarium or other means e.g., fees from introductions
_____ Travel to interesting places as a guest of the company
_____ Earning a valuable equity stake in the company
_____ Building an attractive and broader professional network
_____ Satisfaction of mentoring / coaching
Hack this survey and let me know whether you’ve found it of value. I’m eager to hear your stories of successful advisory boards, as well as why some fail.
Viva la revolution!
