Advisory Board ABCs — Part 1
Well, if I haven’t convinced you already through my 80+ posts describing the benefits of Advisory Boards — consider this: Advisory Board Counselling (ABC) incorporates all the 3 opening letters of the English Alphabet… And as they say: “Only the leading dogs enjoy their view, the rest of the pack gets to smell the leading dogs…”
Granted, all the “whats, whys, whos, wheres, whens, and hows” of the Advisory Boards vary significantly as companies mature and evolve. But my message to the CEOs of all such companies remains the same. It reflects the “wisdom” incorporated in Nowadays lyrics of Chicago The Musical:
“You can like the life you’re livin’, you can live the life you like”. And the life in a fast-lane certainly can be: “grand, great, swell, and fun” — until it isn’t…
The Difference Between The ABCs & The BODs
Years ago, I coined a simple tag line that gradually became a part of my email signature: “BODs Serve Investors, Competent Advisory Boards Are CEOs’ Best Friends”. And I truly believe in what I say!
Bringing competent advisers on board is a smart move! A good adviser will help reconsider the validity of the CEO’s assumptions and a good Advisory Board (AB) improves the decision-making process. It helps the CEO considering different perspectives — hence, many advisers become the proverbial Sounding Boards to the CEO.
For such a reason, I always recommend that the BODs insist and mandate CEOs to establish an outstanding Advisory Board of their choosing!
And as mentioned in my LinkedIn post To Do What It Takes: every CEO should have one!
Now, it’s not that the CEOs are “genuinely confused” about the difference between the ABCs and the BODs. I’m yet to find a CEO who doesn’t understand that the BODs will offer guidance and advice, too — but first and foremost, all BODs need to focus on their fiduciary duty such as Corporate Governance, Financial Controls, Investor Relationship (IR), Public Relations (PR), etc.…
Because of the ABCs’ informal nature, the advisors can offer more extensive guidance than companies’ directors. And since not all the interactions between the CEOs and the ABCs need to be documented inside the corporate minutes, the advisors can focus more on growth & development strategy, rather than on risk mitigation — which takes a considerable amount of BODs’ time…
In addition, since many investors desire to join the BODs right after parting with their precious cash — one needs to keep in mind that the number of seats at the BOD table is… limited. Therefore, the CEOs may not have the luxury of expanding the BODs at will. As a result, the BODs may not include all the right industry mentors or experienced entrepreneurs who have been through similar issues in the past.
And to convince the CEOs that they need to pay attention to BODs & ABCs — I often offer the following analogy: think about the need for ABCs & BODs the same way you need a pair of reliable windshield wipers AND a rear-view mirror while driving a car.
While ABCs may add a much-needed clarity going forward, you still need your BODs to constantly check if it is safe to make a turn or switch the lanes. And more importantly, if there are no flashing lights and the ear-piercing sirens of the police cruiser, behind…
So, for now, let’s put the ABC/BOD semantics aside and conclude the above comparison with my final thought aimed at all CEOs: “That’s how it goes, and everybody knows” — RIP Leonard Cohen…
Not All ABCs Are Created Equal
Even if you decided to take full advantage of the ABCs, there is still plenty of confusion to sort out. I strongly recommend to all the CEOs to have a FORMAL advisor at their side — in addition to embarking on occasional INFORMAL consultations.
Friends and acquaintances are a great source of informal advice — but you can tap their brains only so often without abusing the goodwill. Perhaps, one or two introductions from a friend is a good thing. Asking for one, or two introductions per week… “is not so much” — to paraphrase Borat’s wisdom.
The same goes for reviewing your business collateral such as Corporate Presentations, Investor Presentations, BOD Reports, Business Plans, Press Releases, Targeted Pitches, or the ever-evolving Mission Statements.
My recommendation: stick to the formal ABCs as soon as possible. After all, you’ll need to address many issues, repeatedly. Bringing RAPID & SUSTAINABLE PROFITS is not about how to score one hit. It’s a process to beat the odds and it requires a formal commitment.
Considering today’s unpredictability, many CEOs recognize the need to rapidly re-assess new circumstances and quickly adapt. Others do not. Hence, a formal ABC can help the open-minded companies to overcome the uncertainty and many challenges such as:
• Running OUT OF TIME
• Running OUT OF MONEY
• Lacking SUSTAINABLE BUSINESS MODELS
• Uncertainty about STAYING IN BUSINESS
• Inability to RAISE MONEY FAST ENOUGH
• Losing significant revenues from EXISTING CUSTOMERS
• Unable to gain NEW CUSTOMERS FAST ENOUGH
• Unable to enter NEW MARKETS FAST ENOUGH
• SHUTTING-DOWN ANXIETIES, etc., etc.
The Proverbial Potato, Potahto, Tomato, Tomahto Of The ABCs
And to add to the ABC’s confusion, one can often see Advisors defined as Mentors, Coaches, Consultants, Counsellors, Trainers, etc. Personally, I think that there is little merit in placing your advisor into any rigid category — the same way I don’t recommend choosing an advisor as a strategist, and a consultant as a tactician. The bottom line is this: you need BOTH to succeed.
As mentioned in my post: World’s Best Reinvention Officer, one can’t separate Strategy from Execution, or Leadership from Management. And it begs the question:
“Is it possible that Moses came up with the world’s greatest strategy summed up in just 10 short commandments? Perhaps he did. However, letting the Israelites wander for 40 years in a desert before reaching the Holy Land — does not strike me as an example of the world’s most brilliant execution”.
Now, I’m not sure that your next Advisors can part water, but they must deliver on both fronts…
Yet the most important questions are: what are the CEOs exactly looking for in the ABCs and what kind of expertise they need the most?
In essence, the ABCs should always complement and extend the existing expertise of the CEOs and their teams. Adding ABCs’ proven industry experiences to the mix is as important as their contacts and prior relationships. And the ABCs’ abilities to handle the growth and the developmental challenges — are needed at both, granular as well as strategic levels. The mutual goal remains the same — to deliver:
· Exponential revenue growth
· Rapid scale-up
· Access to untapped & unconventional capital pools
· Innovation monetization
· Disruptive marketing strategies
· Radical brand enhancement solutions
One More Thing…
So, by the time you figured out what kind of advisors your business needs and all your one mile long checklists are ready — there are still many valid questions of how exactly are you going to compensate the ABCs? What hourly/daily/monthly rate is appropriate? What level of equity needs to be offered, if at all?
Truth be told, you can develop a great ABC plan to follow, and yet, remember what the military says about the preparations and the planning: “no plan survives contact with the enemy”. And this of course is idiomatic to saying that “there will always be unexpected elements that require improvisation and deviation from the original plan”. So why even bother and try so hard to land a perfect advisor?
If Artificial Intelligence (AI) teaches us anything, remember this: I would rather start working tomorrow with an advisor that fits the bill at about 80% accuracy, instead of searching for a perfect fit of 99% — for the entire year. And if it didn’t work-out after 2–3 months — well, it’s time to pivot. And that has been my AI KISS Principle for years…
For such reasons, after starting to receive between 5–10 ABC requests each week (all in exchange for a vesting equity compensation) — I was forced to develop a more resilient approach going forward…
I, therefore, emphasized that my engagements can be viewed as a substitute for bringing FIVE experienced C-level executives on board — to tackle strategic innovation, disruptive marketing, operational efficiency, brand authenticity, and JV growth capital. So, to start the ABC engagement:
• Canada Green ESCO (CGE) executes a Strategic Advisory Agreement (SAA) for a minimum of a 3-month term.
• The SAA can be canceled and/or extended at any time and the clients are not locked-in
• We require an Expense Coverage Deposit (“ECD”) at the time of signing. Based on the selected ABC level — our monthly ECDs vary as well
In similarity to a new CEO that prepares his/her 90-day post-acquisition plan on behalf of the Private Equity group — I offer the following path leading to my engagements:
· Advisory Board Nomination Phase — my assistance starts at the Advisory Board level as AB Chairman. Since “trust can’t be promised, it must be earned” — my goal is to help at the AB level and to be invited to the BOD as an Independent Director. When the invitation to become a Director materializes, I’ll know that I earned the trust. No ifs or buts…
· Getting To Know Phase — in as little as 90 days, I will ask many questions, listen to the answers, and thoroughly understand where the company is now and where it wants to be in the future. Based on such an assessment, I will recommend how to get there.
· Next Steps Phase — after gaining a better understanding of What & Why the CEO is doing — I will Propose, Design, Structure, Finance, and Deploy state-of-the-art Joint Ventures to bring RAPID & SUSTAINABLE REVENUES. And it is not about how to score one hit. It’s a process to beat the odds — just as I did w/ Verizon 20 years ago.
In the past, CGE used to offer success-fee services linked to the financing of utility-scale renewable energy projects. In some cases, we worked for 3–6 months with some of the largest insurers and pension funds, to deliver a binding term sheet to our clients. And yet, quite often, the clients still chose inferior financing from their past contacts or family ties.
Besides, without monthly expense coverage, some of our clients would disappear for weeks on their trips to China or other geographies — leaving us unable to communicate with urgency. This reflected poorly on our professionalism in front of the pension funds and other lending institutions. We were not compensated for our efforts and decided to never again let CGE face such a precarious situation. And now, you know why…
As BusinessAI™ veteran w/ 30-yr hands-on AI expertise, I deliver unbiased AI investment advice to separate the wheat from the chaff.
By joining Advisory Boards, I help VC/CVC/PE funds to turn their unicorns into stallions… instead of little ponies.
I am on a single mission: to Reinvent Corporate Prosperity. My goal is to stop the Dreams of Wealth from becoming Nightmares of Poverty.
And I reached the stage in my life where I don’t care about office politics and water-cooler gossips. Nor do I offer fake flatteries to CEOs. All I care about is how to solve problems and deliver results — by managing change and uncertainty, resiliently.
