Every entrepreneur, sooner or later, runs into the limits of their own capacity. We all confront myriad challenges. Some we’re equipped to overcome. For others, we need support. As Peter Drucker famously said, “the measure of the effective executive is the ability to get the right things done.”
Often, getting the right things done requires the support of others. And a formal Advisory Board is an opportunity to convene the support you need to accelerate your enterprise.
Advisory Boards are more than teams of mentors. Whereas a mentor is there to support the individual entrepreneur, Advisors are there to support the whole enterprise. Sometimes, Advisors will also be mentors. But successful Advisory Boards are typically focused on your team or your whole enterprise.
“Good to Great leaders… first got the right people on the bus, the wrong people off the bus, and the right people in the right seats.” — Jim Collins, Good to Great
Advisory Boards are different from Boards of Directors. Directors hold a fiduciary responsibility for the success and good governance of the enterprise. They’re legally required to make decisions in the best interests of the company—and sometimes those decisions may conflict with the best interests of the entrepreneur. Both Boards will help you lead effectively. Advisors will help you decide what to propose to your Board. And sometimes, Advisors make good candidates for the Board of Directors.
Ultimately, a strong and successful Advisory Board will lift the dreams, capacity and performance of the entrepreneur. As the famous quote goes, it takes “a small group of thoughtful and committed citizens” to change the world. It’s also been said that ‘great minds like a think.’ Convene your Advisory Board as a thoughtful group, and turn them loose on your greatest challenges.
Here are seven key things to consider when forming your Advisory Board.
1. Focused Objective: The intent behind convening an Advisory Board must be clear and focused. Are you seeking personal support for your leadership? Advice on how to navigate change or challenge? Or insights into how to achieve a specific goal? Focus on one, clear objective, and you’ll position yourself to manage your advisors, and measure their success.
“You can accomplish anything in life, provided you do not mind who gets the credit!” — Harry Truman
2. Supportive People: Choose the right people—individually and as a group. Expertise that’s relevant to your objective, comfort playing the skeptic, chemistry with you and your colleagues, and diversity of age, gender and cultural background are all good factors to consider. Ultimately, make sure they meet the Three Cs: complementary expertise, no conflicts of interest, and the capacity to participate.
3. Intimate Size: Most Advisory Boards meet rarely as a group; instead, individuals are tapped one-on-one when their particular expertise is required. But their impact is really amplified when you can get them all in a room. More than three to five people and these meetings get cumbersome to plan.
4. Clear Terms: Concise, documented terms of reference are perhaps the best tool to manage and lead an Advisory Board. They should include the Board’s purpose, terms of membership, how the Board is established and how long it will exist, meeting means and frequency, and how information will be stored, shared, and held confidential.
5. Fair Compensation: Remuneration of advisors need not be a touchy subject. It’s typical for the company to cover reasonable expenses, and it’s not unusual for a stipend to be paid for meetings. In the social space, goodwill and the opportunity to connect with entrepreneurs are often sufficient compensation. In other cases, a small slice of equity (perhaps 0.1% per year of service) is appropriate. There is no right answer: You decide.
6. Assured Value: Advisors deliver the most value when they’re given full insight into your business. So share openly. Maintain communication between meetings: cultivate the group culture and the one-on-one relationships.
7. Simple Gratitude: In this, as in all things, politeness counts. Broadcast your gratitude whenever possible, and make your advisors feel like they’re contributing partners in your company. Nothing is as valuable as being made to feel part of something incredible.
Mike Rowlands is a Principal at Junxion and Entrepreneur-in-Residence at RADIUS, an impact venture accelerator. Contact him for more insights into forming a successful Advisory Board for your organization. This content was originally presented at Social Venture Institute Vancouver.