Archive for the Advisory Boards Category
Scenario:
You are on the advisory board of a company that has not weathered the recession well. While competitors are rebounding the company continues to experience declining revenue and customer loss.
Questions the Advisory Board Should Ask the CEO:
- When was the last time the company did a full review of operations?
- What telling signs have appeared but been ignored?
- When was the last SWOT analysis completed?
What & Why a SWOT Analysis?
An honest appraisal of the company and staff is needed…time to conduct a company-wide SWOT analysis. Click here to see an overview of a SWOT analysis.
The Process:
- Involve key management and staff in examining what internal factors are supporting or hurting growth and what external factors can be maximized to support growth or minimized to not impact potential growth. Many times those serving on the front-lines know more than you think. If you’ve never asked them, now is the time to involve them.
- Talk to customers that have been loyal and those that have left. There is information to be shared…your customers just weren’t sure you were open to hearing it.
- Brainstorm what success looks like. You would be surprised how often people don’t recognize success.
- Scenario plan. If success is 100% what does 50%, 75% or 90% achieving the optimum look like and can the company thrive? You are trying to determine the range of options so you can be prepared.
- Report out the key metrics on a regular basis to front-line staff and advisors.
To learn more about establishing an advisory board in 90-120 days: Advisory Board Kit: A Comprehensive Guide to Establishing an Advisory Board. Do you serve on a nonprofit board of directors? Then see my blog posts on governance over on the Nonprofit Toolbox site.
If you are on the advisory board of a start-up that needs to raise money or an existing company going for a loan or investment here are ten questions the CEO and other senior executives must be able to answer when presenting:
- What is the product or service?
- Who is the proposed market? Primary? Secondary?
- How do you know there is a market, i.e. what type of market research has been conducted?
- Who is your competition and how will you differentiate yourself?
- What positions your company to be the best to meet the market demand?
- How will you market & promote the product?
- How will product/service be priced and what can the market afford?
- What resources do you need to start, to succeed, i.e. human, capital and financial?
- What are potential follow-on products?
- How will the investors get their money back?
Just one more item on the list of advisor responsibilities. As an advisor you are in the unique position to be a taskmaster making sure the answers to the above questions are on the tip of the CEO’s tongue. It is important the CEO be articulate, able to think on his feet, and doesn’t get flustered when asked a question about the business model. The phrase “don’t let them see you sweat” should be his motto and all members of the team should work to see that this happens.
To learn more about advisor roles & responsibilities consider the Advisory Board Kit: A Comprehensive Guide to Establishing an Advisory Board. You will learn how to set-up an advisory board in 90-120 days.
Do you serve on a nonprofit board of directors? Then see my blog posts on governance over on the Nonprofit Toolbox site.
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- Marty Zwilling: Eight Questions Every Startup Hopes You Won’t Ask (huffingtonpost.com)
- 20 Questions To Ask Yourself Before Raising Money (eladgil.com)
At some point the CEO will need to dismiss an advisor. The hope is that it can be done graciously but… Here are five situations to anticipate:
- Becomes a competitor. In the roles & responsibilities I recommend you ask the each advisor to sign, it specifically states that this is grounds for termination. Unfortunately an advisor often resigns after they’ve acquired some of your trade-secrets. A client of mine invited a serial entrepreneur to serve. The world of social media was taking off and she was using the advisory board to review one of her strategies. He thought her idea was so good he added it to his company’s service offerings. She found out through one of her clients he tried to poach. She promptly informed him his advice was no longer needed.
- No longer relevant. During successive meetings the advisor has added little, is not prepared and no longer seems engaged. When you observe this it’s time to relieve the individual. I had a client experience this. She created a little farewell ceremony to honor the individual’s past contributions at his final meeting.
- Misses meetings. When there are only 3-4 meetings a year and they are scheduled in advance there is really no excuse short of a family emergency. After 2 consecutive meetings it’s time for the CEO and advisor to discuss if the arrangement still makes sense.
- Disruptive to meeting flow. Occasionally you will get an advisor who just can’t keep her mouth shut. They speak so often and long that the others shut down. These people need to be individual contributors. The CEO needs to have a candid but graceful conversation about how the advisor can continue to contribute. Failure to do so may cause the loss of other advisors and/or prevent the important synergy between advisors’ ideas from developing.
- CEO doesn’t follow advice. If the CEO is not following any or most of the advice received then it’s time to let go some or all of the advisors. Clearly the wrong individuals were selected or the company’s issues have changed dramatically requiring different skills and talents. This can be avoided by conducting an annual evaluation of how the advisory board collectively as well as the advisors individually are doing.
To learn how to draft advisor roles & responsibilities or conduct an evaluation consider the Advisory Board Kit: A Comprehensive Guide to Establishing an Advisory Board. You will also learn how to set-up an advisory board in 90-120 days.
