Introduction

As a business leader, you could be surrounded by “yes men”. The bigger your business gets, the fewer people there are who truly understand the diverse challenges you face. Your team relies on you for guidance, investors expect consistent growth, and customers demand innovation. Yet making major strategic decisions often requires perspectives beyond your own.

That’s where an external advisory board can prove invaluable. These groups of hand-picked advisors provide the diversity of viewpoints, unbiased advice, and cross-industry connections every CEO needs.

In this article, I’ll share how advisory boards work, their benefits, and tips for creating one for your company. As someone who has participated in these forums for over 30+ years, I’ve seen firsthand how they can fast-track growth for organizations of all sizes. By the end, you’ll have a clear roadmap for establishing your own board of trusted advisors.

How Do Advisory Boards Work?

An advisory board is a group of subject matter experts who volunteer their time to provide strategic advice and mentorship to a company’s leadership team. They offer an outside perspective to help identify blind spots, validate ideas, and uncover growth opportunities.

Advisors are usually current or former CEOs, executives, and entrepreneurs with 10-20 years of experience. They hail from diverse industries to avoid conflicts of interest. For example, a software CEO could join a board advising a construction firm.

Boards typically meet quarterly for half or full day working sessions. The meetings have an informal, collaborative structure with open discussions and brainstorming. Members ask probing questions, share hard-won lessons, and make introductions to their networks.

In between meetings, individual advisors make themselves available for phone calls or 1:1 mentoring with the leadership team. However, they have no formal authority over company operations or fiduciary responsibilities.

The Benefits of an Advisory Board

Advisory boards offer a wide range of advantages that can significantly impact a company’s strategic thinking and growth trajectory. Here are some of the top benefits:

1. Gain a Diversity of Perspectives to Broaden Thinking

As the saying goes, “two heads are better than one.” An advisory board multiplies that effect with 4-8 knowledgeable heads from various backgrounds.

Each advisor offers a unique viewpoint shaped by their functional expertise, industry experience, and management style. You will gain exposure to new ways of thinking that challenge your assumptions and blindspots. Their combined wisdom provides a more complete picture to inform major decisions.

Diversity of perspective is especially helpful when tackling complex or ambiguous challenges. With more data points to dig into, you’re less likely to overlook critical factors or make flawed assumptions. Bringing together people who approach problems differently fosters creative tension and innovative solutions.

2. Receive Unbiased, Honest Feedback to Stay Objective

Even the most skilled leaders have blind spots. When you’re deep in the weeds of day-to-day operations, it can be hard to zoom out and objectively assess the big picture.

Advisors have no agenda other than helping you succeed. They can be counted on to give candid feedback, ask tough questions, and point out issues that internal staff may be reluctant to mention.

Having the freedom to share constructive criticism makes the advice more meaningful. You can trust what they have to say knowing there are no political motivations or repercussions involved.

Unbiased feedback keeps you grounded in reality. It forces you to confront problems early before they spiral out of control. Advisory boards provide a safe space to discuss vulnerabilities and self-correct when needed.

3. Validate Strategic Plans to Pressure Test Thinking

Developing strategy requires exploring multiple options before deciding on a path. Bouncing ideas off an advisory board allows you to pressure test new initiatives with proven operators.

They will poke holes in half-baked concepts, reinforce solid plans, and suggest creative alternatives. Advisors also use their expertise to validate financial projections, timelines, resource allocations, and other key assumptions.

Having your proposals scrutinized from all angles ensures you’ve stress tested for weaknesses and considered potential execution risks. It builds confidence when moving forward knowing experienced leaders support the plan.

4. Gain Insights from Peers and Veterans for Mentorship

Advisors who are current or former CEOs understand the realities of leadership in ways that subordinates don’t. Fellow entrepreneurs relate to the constant challenges and stresses you face. Seasoned veterans offer wisdom gained from years of experience.

In a board meeting, you can pick their brains on anything from team dynamics to exit strategies. Over time, you establish close relationships with members who take an interest in mentoring you. Those personal connections are invaluable for support during difficult times.

It’s a rare opportunity to regularly access such a breadth of institutional knowledge. You benefit from others’ hard-won lessons instead of repeating their mistakes. Their guidance helps you level up as a leader.

5. Expand Your Network to Unlock New Opportunities

A good advisory board opens doors to an array of industry contacts and connections. Each member extends their professional network to you.

In some cases, they may facilitate partnerships, investments, and commercial deals. Advisors can also be powerful references and sponsors to raise your profile. The relationships often lead to further business opportunities even after the formal board engagement ends.

Network expansion is especially valuable for smaller companies looking to scale. Advisors act as bridges into markets and customer segments that are otherwise hard to penetrate. Their reputation and influence can open doors that would remain closed.

6. Increase Accountability Through Outside Oversight

Knowing you need to present plans and priorities to a group of trusted advisors creates accountability. It motivates you to execute on agreed goals and initiatives instead of slipping into complacency.

Setting a consistent meeting cadence provides a forcing function to drive progress. You don’t want to show up empty-handed after months of silence. Simply vocalizing commitments out loud makes you more likely to follow through.

The oversight is constructive rather than punitive. Advisors offer assistance when needed while holding you to an elevated standard. It’s a subtle yet powerful nudge to raise your game as a leader.

7. Break Down Internal Silos Through Cross-Functional Dialogue

Advisory boards provide a forum for open communication between functions that don’t normally interact. The outside presence and questioning breaks down internal silos.

Leaders across departments learn more about cross-functional challenges. Different perspectives lead to better collaboration and alignment after seeing the bigger picture.

Breaking silos also stems “group think” and stagnant viewpoints that sometimes infect close-knit leadership teams. The infusion of outside voices keeps everyone intellectually honest and objective.

8. Gain Confidence in Major Decisions with External Validation

When facing ambiguous situations or big judgment calls, it’s easy to second guess yourself. Doubt leads to analysis paralysis and delayed action.

Vetting decisions with an advisory board allows you to sense-check thinking and gain confidence before moving forward. Their collective stamp of approval reassures you’re headed the right direction.

Knowing you have the backing of experienced leaders who have faced similar dilemmas is empowering. You can act decisively without lingering uncertainty. It’s invaluable support for navigating high-stakes moments alone.

Creating an Effective Advisory Board

If you’re sold on the benefits, the next step is building a productive advisory board for your company. Follow these best practices as you put the pieces together:

Set Clear Goals and Expectations

Start by defining why you want an advisory board and what you hope to gain from it. Outline the specific strategic areas where you need advice. This clarity of purpose will guide who you invite and how you interact with them.

Be realistic about time commitments so advisors know what’s expected upfront. Limit meetings to quarterly half-days so you don’t overburden busy schedules. Make it clear the board serves in an informal advisory capacity, not governance.

Documenting goals and guidelines in a charter ensures everyone is on the same page. It also helps in recruiting the right advisors.

Recruit Members Strategically Based on Needs

Aim for 4-8 advisors who complement each other’s expertise. Seek out respected CEOs or subject matter specialists. Diversity of gender, age, and cultural backgrounds is a plus.

Look for members with experience relevant to your biggest challenges. For example, advisors skilled at M&As, rapid scaling, or turnarounds. Avoid recruiting personal friends who may just tell you what you want to hear.

Leverage your network for introductions to build rapport. Appeal to their desire to pay it forward by supporting an emerging leader. Offer reasonable compensation for their time and commitment.

Structure Productive Meetings for Maximum Value

Well-run meetings make the most of your advisor’s precious time together. Set a consistent schedule and location to minimize logistics. Distribute pre-reads on key topics so everyone is prepared.

Start with introductions and icebreakers to create connections. Facilitate open, engaging discussions by asking for opinions before stating your own. Park non-urgent issues in a “parking lot” document to revisit later.

Summarize action items and next steps before closing. Share post-meeting notes to continue conversations between sessions.

Keep the conversation focused on strategic guidance, not routine operational updates. Seek targeted input and recommendations that you can act on.

Solicit Ongoing Feedback Between Meetings

The advisory board shouldn’t just be a quarterly formality. Frequently connect with individual members for advice by phone or video chat. Ask them to review materials or proposals where they have expertise.

Occasionally invite advisors to company events or bring one along to important meetings. Maintain contact through holiday cards, updates, and networking invitations.

Make them feel their contributions matter beyond formal meetings. Advisors who have personal relationships with the team remain engaged over the long haul.

Review and Refresh Membership as Needs Evolve

Assess the board’s effectiveness at least annually. Consider whether you need to expand, contract, or change members based on the company’s evolution.

Aim for limited term lengths so you can gracefully refresh advisors over time. Bring on new perspectives while maintaining continuity and institutional knowledge.

Ask underperformers to step down if they don’t meet commitments. Don’t feel pressured to keep advisors who don’t mesh or engage.

Join Our Advisory Board for Non-Competing CEOs

I hope this overview has shown the immense value an experienced advisory board can contribute to strategic leadership and company growth. While they require effort to manage properly, the payoff in trusted guidance is well worth it.

Here at CEO Resource, we run a collaborative peer advisory board for non-competing owners, founders, and CEOs throughout British Columbia. Members rave about how much they gain from our quarterly working sessions and ongoing mentorship.

**We have a few open spots at our upcoming meeting. If you lead a private company and want to take your game to the next level, get in touch today to learn more and request an invitation.** Our group of seasoned entrepreneurs looks forward to welcoming you!

Key Takeaways on Leveraging an Advisory Board

Here are the most important benefits to remember:

• Gain diversity of perspectives beyond your own
• Receive unbiased feedback and objective advice
• Validate strategic plans by stress testing with experts
• Access insights and mentorship from seasoned peers
• Expand professional network and unlock new opportunities
• Create accountability through consistent outside oversight
• Improve cross-functional communication and alignment
• Make decisions with greater confidence and conviction

FAQs

How are advisory boards different from boards of directors?

Directors have governance authority and fiduciary duties. Advisors simply provide non-binding strategic advice without formal responsibilities

What should you look for in advisory board members?

Recruit respected CEOs, executives, and subject matter experts. Seek diversity of backgrounds and experience relevant to your needs.

How often should an advisory board meet?

Monthly half-day and full-day meetings are typical. Avoid overburdening advisors, but connect individually between meetings.

Do I need an advisory board if I have a board of directors?

Yes, they serve different roles. Directors focus on governance while advisors provide strategic guidance. The perspectives are complementary.