Advisory Boards: Turbocharged Business Development
Dr. Earl R. Smith II
Dr. Earl R. Smith II
(From Amazing Pace: Turbo-Charged Business Development)
DrSmith@Dr-Smith.com
www.Dr-Smith.com
When I set out to write a book about how to turbo-charge business development, I met lots of people very interested in getting an advance copy. It made me realize that making business development work is one of the primary challenges that any CEO faces no matter what industry the company is in.
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I build and manage Advisory Boards as business development engines for emerging and well-established companies. They are the single most powerful component of business development that I have ever found bar none! The process of setting up and managing the Boards is one of the most fulfilling roles that I play. It is also one of the most subtle and complex processes that I have ever been involved in.
My discussions with a CEO or Chairman about designing, building and managing a board generally begin with an initial contact which has been the result of a recommendation by a friend or business associate. Most often the recommendation comes out of a discussion about the lack of effectiveness of the companys business development efforts or the revolving door that has become the companys senior business development slot. During the initial call I usually recommend that the person read several of my articles on Advisory Boards and then call back if they are still interested in talking.
I confess that I make this suggestion purely out of enlightened self-interest. I want to filter out the instant gratification types who see the process of designing, populating and managing a productive advisory board as relatively simple and straightforward. If they will take the time to read and think about the articles, I take it as an indication that there is some hope that they are serious about engaging in ways that I have found necessary in order to produce a highly productive advisory board that will drive the companys top line.
For those who call back there is yet another hurdle. I have learned that there is real benefit in running through a meticulous description of the process in person before there is any talk of an engagement. It is important that the CEO or Chairman clearly understands what they are signing up for. Later is no time to realize.
What follows is a typical presentation in which I outline the dynamics of the process, a typical engagement focused on the design, population and management of an Advisory Board and the areas that need to be thought through very carefully before embarking on the effort. Parts of my presentation will vary with the size, complexity, scope and intensity of any engagement. But this should give you a fairly good idea as to what is involved. So join me over lunch in a meeting with John Slate the CEO of Rocket Science, a fictional company that has been in business around a decade and is currently doing roughly fifty million dollars annually in gross revenue.
Its not normally a monologue, but Ill streamline it for you. For purposes of brevity, Ill skip the initial pleasantries and descriptions of the menu items selected! But I will have a martini and do think that food is not suitably dressed without wine.
Lunch with John Slate
John, I appreciate your interest in Advisory Boards and your willingness to sit through a description of that is involved in setting one up. One thing I have learned about setting up and managing advisory boards as business development engines is that preparation is a critical part of the process. Another is that the company, and particularly the CEO, needs to have a good grasp on what is involved in addition to what impact a Board can have on the future of the company.
Im not a golfer never found a decent recipe for those little white balls so I fish instead but Im told that a key to the game is preparation and practice. It is much the same with designing, populating and managing an Advisory Board. I want to give you a fairly detailed briefing on what is involved. Some of this may seem tedious but I have found that going through it face-to-face and answering your questions afterwards is the best foundation for any engagement.
First and foremost, I want you to understand that this is an extended, complex and subtle process. You need to come to see that because sometimes tensions arise with CEOs who are anxious to get started want to race through the getting ready stage and get right to the getting people on their board part. For this lunch, we must slow down and get your mind around the process so that you can understand clearly what is involved and the foundation that needs to be created before a board can be launched.
First we need to make a baseline assessment. Rocket Science is not ready for an Advisory Board and there is much preparation necessary to get it ready. You have built a magnificent company that is very good at doing what it does but managing and benefiting from an Advisory Board is something else again. Building a board prior to completing the foundational work would be like dropping a Ferrari engine into a VW frame. Without a good bit of re-engineering, pop the clutch and you get a pretzel not a race car! This is what potential advisers would see John and, in our experience, it is almost impossible to get high-potential members to make the kinds of commitments that a Board requires if they see a train wreck as one of the likely future scenarios.
In the broader context, advisory boards are dangerous undertakings because the barriers to entry are so low. Any CEO can form one and most, at one time or another, try to. You could probably form one in an afternoon if you so decided. The trick is not getting a board set up it is setting up a board that is highly productive when measured against a set of pre-established metrics. In this case the metrics are focused on driving the gross revenue of your company very easy metrics to set up and monitor harder ones to have a board meet.
Like most CEOs, you suffer from several limitations that reduce your chances of success. First, although you are very good at the business of your business, your experience with highly productive boards how to design, build and manage them is limited. Second your range of contacts with potential members is limited. My experience is that you need to contact close to a hundred candidates to fill one seat effectively on a board. Finally, you are very close to the trees but need a set of eyes that is looking at the forest a strategic view that can give you a holistic handle on the thing. An effective advisory board will impact and place burdens on every part of Rocket Science.
Here is something that you need to think about. We will eventually be dealing with very sophisticated, experienced, well connected individuals who have had careers that often involve building and managing businesses much larger than Rocket Science. John they know good management when they see it. They will have built and managed very successful teams. We will be asking them to risk their reputations as strong advocates for your company reputations that they have spent a lifetime carefully building. For them this is not just a consequential matter it will be the central matter in their thinking. In every discussion they will be looking for indications that you and Rocket Science may drop the ball not follow up effectively on the opportunities that they can bring to the table and they are very good at spotting those weaknesses. You will be dealing with pros at the top of their game.
Remember we are talking about building a board which will subject its members to a strict set of performance metrics. Members will be expected to produce. They will want to be sure that neither you nor the company either through ineptness, inefficiency or poor organization and resourcing will interfere with that performance. And John, trust me, simply saying that you wont wont make any difference to them at all!
One of their security blankets will be the fact that you have brought in a set of professionals steady and experienced hands that they trust. They have to buy into the model before we would be willing to place them on any particular board. Lots of them will have had seats on non-productive boards. Most will have decided not to waste their time like that again. I help give them confidence that the process is being approached professionally and with careful planning and execution.
After listening to all of this, you may decide to try this on your on and if you do, mazel tov. But at least listen to what I have to say. It will help you assess the risks.
If you rush through this or do it badly, you will lose and end up doing much damage to the Rocket Science brand. Lots of CEOs have never thought of the negative branding that resulted from an unproductive board. But it is there and the more influential your advisers the more broadly the negative branding will spread. Thats right John, the better the people you have on your board the more pervasive the consequences of screwing up. A couple of A list advisers and a botched capture effort can turn Rocket Science into the proverbial dead man walking long before your know it. Even talking to very influential people has a severe downside if you havent done the necessary spade work first.
So John, let me outline the early stages of a typical engagement. Once an engagement agreement has been inked, we begin an initial phase not this lunch but a series of sessions in your office with you and your senior team. This stage has two principal objectives. The first is to thoroughly acquaint your team with Advisory Boards, the effort and commitment that will be required, the likely schedule that the engagement will follow, the relevant costs and benefits of the effort and to outline the terms and conditions of an engagement. Secondly, I conduct a detailed assessment of your company, its history and resourcing and the potential benefits of building and managing a Board for it. Successful graduation from this stage requires both that the company is ready to proceed with an engagement and I am convinced that the company is a good candidate for a Board. This stage normally will take about a month to complete.
At the end of this phase, I begin an intensive effort of creating a design for your board. We work with your team to identify key targets for business expansion both within existing areas and into new ones. We also work with other team members to rework your materials particularly the ones that will be presented to potential advisers and will be used by them in approaching targets. Very often CEOs have told us that this process alone results in a completely new understanding of their business a collateral benefit.
This stage results in a preliminary design for a tailor-made board, a description of the various seats on that board along with a profile of ideal members, a schedule for populating the board, cost estimates and an analysis of the resourcing and reorganization that the company must undertake in order to prepare for the launch of the board. It normally takes two to three months to complete. So, you see we will have been at it for three or four months without talking to one potential adviser!
At the end of the first two steps, we will formally present our recommendations to you and a group which will include all major stakeholders. Normally this is done within the context of a strategic planning retreat that covers other related areas critical to the process of actually populating, launching and managing the Board. The result of this step is an approved plan and an expanded engagement agreement.
Once the design of the Board and the profiles of members are agreed on, I identify candidates for each seat. Two to four candidates for each seat are normally identified. Background information on each of these candidates is presented to the senior management team. I facilitate a review meeting of prospective candidates. Once candidates are approved, I arrange for interviews. These interviews tend to be two-way streets with the company getting to know the candidate and the candidate getting to know the company and its senior team. Either can decide that discussions should not go forward at any point.
A major milestone in this process is when at least three board members have been identified, offered and accepted seats and are ready to begin service. At this point planning can begin for launch of the board. The process of filling out a four to seven member board normally takes four to six months.
While board seats are being filled, there is plenty that your team will need to be doing. It is vitally important that the company and senior management prepare for the launch and operation of the Advisory Board. This is not something that can be done on the run John or after the fact. Board members who experience an unprepared team will quickly re-think their evaluation of the company and the risks to their reputation. The recommendations presented and agreed to during the strategic retreat must be implemented by your team prior to Board launch.
So John, now we are getting close to the launch. Once a sufficient number of members have agreed to serve on the board, we will schedule and organize an initial meeting. I will handle the arrangements and facilitate the meeting. You and your team will undertake the substantial work that needs to be done in preparation. Generally it will take about a month to prepare for the meeting. First meeting of any board is critical to its continued success.
We have found it a good idea to coordinate a first meeting with either a strategic planning retreat or (and this is the best) an all-hands retreat. My experience in facilitating these meetings will go a long way to assuring that the board will be launched successfully and make major contributions to the companys future success but your team will carry a substantial part of the burden.
Prior to the meeting, your team will have worked with each board member to identify targets of opportunity. It will be important that each member be involved in targeting at least one major source of business by the time the first meeting occurs.
OK, John were almost done thanks for hanging in. An Advisory Board normally meets four times a year. Two of the meetings are face-to-face with one of them coinciding with the companys annual strategic planning retreat and the other occurring six months later. The other two meetings are normally teleconferences. But most of the work of the board is done via direct contact between individual members and the companys senior team that means you and your most senior associates. Work, sometimes on a daily basis, with individual members to target, pursue and capture significant revenue opportunities will be your principal focus with the board. From our experience, you might end up spending as much as half to two-thirds of your time working with an active Advisory Board. The percentages will be higher for your senior business development team members.
While you and your team will be working with board members, I will be managing the Board. We will continually assess Members productivity, search for new members, advise you on the expansion of the Board and on a whole range of other issues. We will facilitate meetings and conduct debriefings with each board member.
Well John, thats it in a nutshell. Take some time and think on it. Visit my website and read the articles posted there. And, when you are ready, lets schedule a meeting at the Rocket Science office to answer any questions and decide if we are going to do this.
Summary
So John leaves with lots to think about and probably a decision to re-read the book and some of the articles on the website. His senior team will probably be introduced to the idea of an Advisory Board and receive reading assignments as well. Time will tell what he decides.
My experience is that one in three decides, after such a lunch, to begin immediate discussions about having me build it a board. Of the other two, half come back within six to nine months for the same purpose. In a serious way the process filters out those who would not make good candidates. Not bad for a pleasant lunch!
But the one or two that do are in for an amazing ride to a new future for their company.
Dr. Earl R. Smith II
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by: Dr. Earl R. Smith II
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