Part 1: Your not-so-secret weapon | Part 2: BYOB(build your own board) | Part 3: High-octane advice | Part 4: Enriching advice | Board models | What CEOs get out of advisory boards
“I never thought we could accomplish so much in two days!” CEO Paula Courtney had just finished The Verde Group’s first strategic-planning session, a recent meeting between her management team and advisory board, of which I’m a member. She was amazed with the progress that we had made in clarifying strategy and the next steps for her Toronto-based market-research firm.
In her own SWOT analysis of her company’s strengths, weaknesses, opportunities and threats, Paula had credited Verde’s advisory board as a key factor in the firm’s recent success. (The board’s other member is Bill Kennedy, president of QBML, an Ottawa-based consultancy for high-growth emerging companies.) “You guys helped me to create a plan and then stick to it,” said Paula.
Of course, she deserves credit for following the basic “best practices” of effective advisory boards — RITA:
Regular: Paula laid out a schedule of monthly meetings and then made them happen. There were agendas, preparation, minutes and follow-up;
Informed: she ensured that the board’s members were educated on the company and regularly updated;
Trusted: she built trust with us meeting by meeting, and added dinners and lunches to get to know us better;
Accountability: she accepted responsibility for the things she does and the things she commits to do. She was constantly asking us for advice on how to build accountability for herself and her team.
Verde’s sales and profits have each grown by 50% in the past year. But it wasn’t just “the basics” that helped the firm produce results so quickly. Certainly, my experience of advisory boards — I created my own as founder and CEO of College Pro Painters, and have been on many others over the past 20 years — has convinced me of their immense value. But my experience has also taught me that not all boards are equally effective.
The No. 1 key to a top-notch advisory board is the CEO’s commitment to making it work. In other words, it’s up to you, the business owner, to decide how effective your board is going to be. CEOs with an effective board, such as Paula, understand what it takes to get maximum performance from one. They know that you have to establish mechanisms that produce results — even if some of them make you a little uncomfortable.
Do you want to make your company the best it can be? Based on the exclusive research that fellow PROFIT columnist and entrepreneurship expert Rick Spence and I did with numerous CEOs across the country, here are five high-performance tactics that will turbocharge your advisory board.
Tactic 1: Have an effective, empowered, independent chair
Effective: The chair ensures that all the elements of RITA are there for every meeting. He or she also follows up between meetings to make sure the board is meeting expectations for both the CEO and the board members, and suggests changes as necessary.
Empowered: The chair is entrusted by the CEO with running the board, and is also trusted by the other board members. When the chair makes suggestions to either party, they listen. That special trust existed between John Armstrong, president of Toronto-based marketing agency Armstrong Partnership LP, and his board chair, businessman Walter Shaw. And it was crucial in allowing Armstrong last year to achieve the goal he had set five years earlier: to build a business he could sell for $25 million.
Independent: The chair is not a member of management nor a significant shareholder in the company. At 10% of the shares or less, the chair is likely to have only the best interests of the company at heart, and should not be a threat to the CEO.
Tactic 2: Enlist your board in strategic planning
Boards must get involved in company strategy sessions, and as early as possible. These would be separate from the regular board meetings, and ideally would include an informal dinner. The benefits? First, they educate the board about the issues facing the firm. Second, they let advisors and management interact and get to know each other. Best of all is the focus benefit for the CEO. As Paula said to me a month after our strategy session: “Having a plan removes the uncertainty of moving forward. I now know where to put my focus and energy — and, most importantly, so does everyone else.”
This first session, which will probably take at least one day, should identify the key strategic issues and options that require further work. A sound strategic-planning session should also include a SWOT analysis, development of strategic options, assessing the pros and cons of those options and selecting the most preferred option.
In practice, the process can get messy and complicated. A professional facilitator can keep meetings on track and ensure that the process meets objectives. It’s also good practice for the chair to ask at each subsequent board meeting, “Have any of the basic assumptions in our strategic plan changed? If so, should the strategy change?”
Tactic 3: Have the board review your performance
Few business owners find it easy to ask for performance reviews, but you’ll be stronger for it. Independent feedback is the “breakfast of champions.” If you don’t receive some kind of systematic performance review, you’re likely to get feedback when you least want it — such as in an important meeting with a key client, or on the day your No. 2 walks out over some dispute that could have been resolved much earlier.
The best process is a 360-degree review that collects feedback on the CEO from both subordinates and board members (and possibly even suppliers and customers). Input from the board is especially crucial. Even if they meet just three or four times a year, advisors get to observe CEOs in a way few others do — with their guard down, and sharing real fears and concerns. As well, advisors who sit on multiple boards can often pinpoint problems and opportunities in each CEO’s behaviour.
All this information is synthesized by the chair of the review committee and then compared with the CEO’s own self-review. I have seen a number of positive results from this process:
¢ The CEOs genuinely learn something about themselves, which they can either change or try to manage. I’ve often seen advisors identify unspoken conflicts on the management team, for instance, or “hidden” objectives that the CEO wasn’t previously able to articulate;
¢ Advisory-board members learn something about the CEO, which helps them to be more helpful, not only in terms of what advice to give but how to present it, and when;
¢ The example set by the CEO makes the management team more willing to be reviewed themselves;
¢ Management has a safety valve where they can let off steam if they have a problem with the CEO. While they should take this up with the CEO directly, talking first with a third party can often lead to a more successful conversation.
I had 360-degree reviews done on me both at College Pro and my most recent business, Arxx Building Products Inc. While sometimes painful, they were always enlightening. Even if you think you know the results, a good interviewer has a way of uncovering issues and expressing solutions that you might never identify yourself.
Tactic 4: Have your advisors meet without you
What? Encourage my board to meet behind my back?
This tactic is not for the faint of heart, but try it. No matter how honest and forthright we try to be, board members often speak more freely when the CEO leaves the room. When I was CEO of Arxx, I asked chair Frank O’Dea (the founder of Second Cup, who has since become Arxx’s president) to lead a session without me following each board meeting. The first few of these each lasted about 10 minutes, after which Frank would come to me and say something like, “No problems. We think you’re doing a great job, but perhaps you should think a little more about this issue¦”
Then, one day, the board met for 45 minutes. By the time Frank came to see me, I was a nervous wreck. But his advice was pure gold. My advisors had noticed some issues in my team and the way we worked together, and his comments helped me make needed changes.
In hindsight, I wish that these special sessions had been recorded (in a separate set of minutes) and followed up on formally.
Tactic 5: Keep the end in mind
We all talk about setting goals. The trick, with so many issues and so many meetings, is to keep your eye on those goals. I recommend this simple technique: the “dog-eared flip chart.” At the first meeting of the year, set down your goals for the next 12 months, ideally with the longer-term plan in mind. This sheet should be brought to every meeting and tacked up on the wall. Ask yourself, “How are we doing towards these goals? Are they all still relevant — and if not, why? Are they all still attainable? If not, why? Should we change any of them? Why?”
That single sheet is a great tool to keep you focused — and focus is the key to business success.
A truly great board
The research that Rick and I did made it clear that a beneficial advisory board can be as informal or as complicated as you want. The main thing is to identify potential advisors and start talking. But if you want to build a truly great company, you need a truly great board.
Being committed is half the battle. A great chair is the next 25%. Work with him or her to establish the basics (RITA), and then decide which of the top five turbocharging tactics you want to add. Keep in mind that if you want strong people to help you, you often have to give up some control.
Greig Clark (firstname.lastname@example.org ), the founder of College Pro Painters, now runs the Horatio Enterprise Fund in Toronto. He researched and wrote this article with assistance from Rick Spence (email@example.com), a Toronto communications consultant, writer and producer of the Canadian Entrepreneur blog at http://canentrepreneur.blogspot.com.