Advisory Board – a newcomer, but what is it?

I wish an Advisory Board was available when I started as CEO for the Fund Management Company (Storebrand Fondene AS) in the Storebrand Group in Norway.

It is cold on the top – always cold on the top, they say. And where it is cold just a few people will stay, and it is lonely. But we think we can do something with that…

Well, whether you just have started a business, or you’ve been around for several years you always come around with the need to make choices and decisions. And when doing that is often a lonely period of life.  People around you don’t see the whole picture or they simply shouldn’t get the whole picture, at least not just yet. 

This is an example in life as a Manager where an Advisory Board could be very useful.  We sign a standard Non-disclosure Agreement (NDA) and off we go discussing your situation and alternatives.  Just that simple.

The Advisory Board concept is a newcomer in the Nordic Region and relatively new also in Europe.  I came across the concept discussing alternative solution with a Manager in an American company – and here we are.

I have started The Advisory Board inside my consultancy business and invited really good and insightful people I have worked with during my career as Executive and Management Consultant.

The Advisory Board is there to be a discussion partner on both the Strategic as well as the Operational level.  Both myself and my co-members of The Advisory Board have extensive experience in one or both.  About 20 years of my consulting career have been as Management / Executive Consultant and I have met a large number of people whereof about 15+ of them are asked to be part of The Advisory Board – hence made available to you and your company for a short or long period – you decide.  The first 30 mins are also free-of-charge!

In what concrete examples do we see an Advisory Board to be the solution?
The simple answer is IN ANY! It can always be the solution whenever you want someone to discuss with!

Like many have its personal physical trainer or mental trainer, this is like having a personal advisor with a huge network to support when necessary.  It is just as useful both on short term and in the long perspective. 

What is an Advisory Board?

At its simplest, advisory boards are groups of subject matter experts. The role of an advisory board is to provide a company’s leadership team with guidance on company vision, innovation, risk management, processes, IT, project management, profitability and other subjects that matter to the company.  There is no limit to which topics to discuss as long as the advisory board can give positive attribution to it.

But according to Wikipedia – a more scientific definition, an Advisory Board is a body that provides non-binding strategic advice to the management of a corporation, organization, or foundation.  Scientifically simpler.

Many new or small businesses choose to have advisory Boards in order to benefit from the knowledge of others, without the expense or formality of the Board of Directors. Though they provide management with advice, they do not possess the authority to vote on corporate matters

So, what is the real difference between an Advisory Board and a true Board of Directors? Isn’t it in fact two forums with different names?

  • An Advisory Board is optional whilst a Board of Directors in some cases is needed due to legislation
  • An Advisory Board can have but not necessarily, a commitment towards the Corporation
  • An Advisory Board gives – as the name itself indicate, advice. Whilst a Board of Directors has the necessary authorities and governance to bypass decisions made by the Administration and/or CEO
  • Members of an Advisory Board have no legal responsibility
  • The fee structure is different

Consequently, should  you choose an Advisory Board or a true Board of Directors?

  • Whether it is an Advisory Board or a Board of Directors, the true difference comes down to the persons you have selected. A group of people with no commitment and engagement have no value in either of the settings whilst a committed person is valuable wherever he/she is
  • An external discussion partner is essential when it all comes down to strategic questions, business plan, business model, growth strategy (or not), M&A, HR and a lot more topics. An Advisory Board could definitely be the solution in these cases.
  • A good guideline can be to use Advisory Board for
    – an unbiased discussion partner with no agenda but your best
    – SMB Corporations and/or newly established companies
    – project/program related parts of the Corporation for example implement new markets, new lines of business, new technology etc
    – where the owners want to have a seat in the Board of Directors, an Advisory Board can be a perfect solution to ensure external discussions
  • Another generic guideline is that whenever you have “something” in the pipeline the Corporation often will benefit from External competence

The informal nature of an advisory Board gives greater flexibility in structure and management compared to the Board of Directors (BoD). Unlike the Board of Directors, the advisory Board does not have authority to vote on corporate matters or bear legal fiduciary responsibilities.

It is also interesting to see that according to a Wall Street Journal article, 50 of the Fortune 500, including General Electric, American Express, and Target, have set up digital advisory boards, typically comprised of six experts under the age of 50. These groups coach management on everything from new marketing tools to emerging digital trends. Typical trends where the younger experts can give more contribution than the more experienced ones – on the other hand they have a lot of experience that can be very useful in other typical holistic subject areas.

So, how does it work?

Very different from Advisory Board to Advisory Board but we have chosen our solution based on what we have seen working and how we ourselves are using the forum in our own businesses.

After a free-of-charge 30 minutes session where you and/or your Management Team go through your situation and potential challenges with me, we will together discuss whether it might be of any help and if anyone in the network should be initiated (that can also be done later). It might also be an option to continue only with myself – and then reconsider later.

Scope and Meeting frequency is agreed, and we take it from there. I am there to be your discussion partner and to set up a long term fixed agreement is not viable in this context. A NDA and a General Agreement is what is needed and we have them ready for you to be signed.

We set up your Advisory Board according to your needs!

Our meetings can be physical or

they can be in the cloud using Teams/Zoom or a mix

In most cases these talks are all done using Teams. In some cases it can also be the preferred solution to have meetings on-site but to save time and money and be as effective as possible, the cloud is used more often.

Step 1 – Identify your needs
A 30-minute session with only me from our side where you freely can go through your need and goals. Either in the session or immediately after I will let you know whether I think we might be of value to you and then it is all up to you and your company to decide if you want to proceed.
This session is FREE

Step 2 – Planning and Scoping
The second step will be to set up a plan to identify more in details, your needs to achieve the goals together with the Advisory Board. The more specific, the better — a measurable strategic outcome is ideal. This is where you decide on “what’s in it for me and my company?”

Step 3 – Advisory Board, Live
The third and final iterative steps is the Advisory Board meetings. Iterative because they will continue until the company/you decide that the goals are met or for any other reason need to stop the sessions. Each session is estimated at 2 hours with necessary specialists involved.

Step 4 – Evaluation
After concluded the Advisory Board we would very much like to have an evaluation session – a 30-minute session with only me from our side where you freely can go through your feedback to us.
This session is FREE (of course).

And that’s it!

How do I find the right Advisory Board for myself/my company?

In our case, we have done it for you. In addition to myself I have a menu of about 15 different specialists from the Nordic region (primarily) to chose from, where all of them would like to be your external discussion partner as part of the informal advisory group.

If you have someone yourself that you would like to add to the Advisory Team, that can be discussed, case by case.

The ideal number of people in the Advisory Board would be between 1 and 6 external members. But, again – what is “ideal” in this context? It all depends on the scope for the Advisory Board and that is all up to the Company. The number of participants from the Corporation is all up the Corporation itself but it is important that they all have a necessary saying and influence

If you are uncertain on whether or not to have a Board of Directors, an Advisory Board could be a good idea to test out as a pathfinder to finally set the right scope for the Board of Directors.

What does the Compensation model look like?

One of the fiercest debates around advisory boards is around compensation. While professional advisors suggest rates in tens of thousands per meeting and/or decent equity upside, entrepreneurs and retirees looking to “pay it forward” or “no result – no pay” often insist a cup of coffee is adequate. Like most things in life, the truth and our solution lie somewhere in the middle.

All prices exclusive of VAT and preconditioned that the sessions can be conducted using our Teams accounts.  Detailed and updated information on this can be found here.

Furthermore, to finalize the transparency we strive to achieve the fee structure for the specialists is a bit different. They are paid by us and the cost for them is inclusive in the session costs. Some of the specialists are employees today and not working as consultants and they can choose between sponsoring an organization of their own choice or paid out as a normal fee.

So, what’s next?

If you, based on what you’ve read and your current and/or future needs and challenges think this could be it for you – just invest 30 mins of your time reading about it (link above) or you can:

If you would like to know more, please do not hesitate to contact me here

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