Many young companies list a variety of industry known experts as part of their ‘advisory’ team. What that is supposed to mean is the management team (or perhaps just the CEO) is regularly receiving vital input from the advisors about key company decisions – perhaps product strategy, perhaps sales and marketing strategy. The customer feels good about companies who have these types of advisors as it indicates the chances of a company making fatal mistakes are reduced. Is any of this really true?
I’ve been part of companies who have had these lists of Advisors, and more recently, became an Advisor myself as part of my post PlateSpin career. Do us Advisors really reduce the chance of a company making fatal mistakes? I doubt it — a lot of the value an Advisor brings is lost if the company does not actually engage the Advisor — something that happens commonly from what I can see. The companies I was with that had formalized advisor relationships hardly ever met with them, and if they did, they could only discuss extremely high level and somewhat generic issues so as to be of little value to anyone.
An ideal Advisor relationship would see sufficient contact with the company so as to be able to consult on real issues that affect the Company even in the short term. In my view, this means the Advisor and the CEO (or management team) have to be willing to communicate at least every two weeks, ideally every week. The format of the encounter can be informal where the CEO outlines key issues which get discussed as needed. The Company keeps the Advisor up-to-date on key issues by including them on appropriate internal communication including the bulk of material that would otherwise go to the Board (this assumes confidentiality is properly protected). Once this type of dialog is established, the CEO and Advisor for a bond that can greatly benefit the health of the Company. As with all relationships, value is only gained if both parties put the effort into effective communication. They fail when either one party is unwilling or does not believe the other can provide value or the two parties drift too far apart for any connection to be meaningful when they do communicate.
I think most startup CEOs need mentors and Advisors that can help avoid the many pitfalls that wind up being obvious to the experienced Advisor but not so to the people who have their nose up against the tree.
If you are a CEO or an Advisor and are looking for more detail on how to make this type of relationship successful, please take a look at http://www.insidespin.com/governance-advisors.php — feedback is welcome.