Mike Richardson & Udo Doring

Advisor Insights

Published 20 June 2024

Mike Richardson. is an independent facilitator and coach for over 20 years now focusing on agility in the C-suite. He is a Certified Chair™ and Chairs the Americas community for the Advisory Board Centre.  In this Advisor Insights session, Mike is joined by Advisory Board Centre Udo Doring to explore the role of advisory boards in board governance.

KEY INSIGHTS

  • The importance of advisory boards in navigating the volatile, uncertain, complex, and ambiguous (VUCA) world.
  • Leveraging different types of advisory boards, such as informal boards, peer advisory boards, and best practice advisory boards.
  • Emerging trends in advisory boards, including their prevalence in the emerging business sector and the corporatization of advisory boards.

Read the transcript

Mike Richardson:

Alright, well why don’t we get started udo and begin our journey together. Everybody, as you can see here, we’re putting a spotlight on the USA today and considering the role that advisory boards play in the future of board governance and in particular drawing on insights from the 2023 State of the market research report, which the Advisory Board Center publishes every two years, and that’s the most recent one. I’m Mike Richardson. I’m here in Southern California, beautiful area called Temecula Valley Wine District, and I’ve been an independent facilitator and coach for over 20 years now focusing on agility in the sea suite. I’m also a Certified Chair for a couple of years now with the Advisory Board Centre and I chair the Americas community for the Advisory Board Centre and we are lucky, lucky today to have Udo Doring here with us as our special guest. He is the CEO and executive director of the Advisory Board Centre and of course he’s also a Certified Chair himself and he’s on the global faculty.

He’s responsible for driving thought leadership for the future development of the advisory board sector globally. He holds board roles across Australia, Asia, and the United Kingdom. He was previously the CEO and president of the Australian Pathway Education Group based in Shanghai. And before that he was the CEO and executive director of the Australian Chamber of Commerce in Shanghai. So he has lived and worked all over the world. Everybody, not least of all, has spent time in London before now and that’s where he is right now. And not least of all, he did an executive MBA from Oxford University. So Udo welcome, it’s great to have you here. Thanks for being with us.

Udo Doring:

Thank you very much Mike. And that’s humbling. It absolutely shouldn’t be about me, but I’m really happy to be online with you today, Mike, and I’m looking forward to it. We’ve had the great pleasure of sharing some microphones and podcasts and webinars before and I think we can dive into some really interesting stuff.

Mike Richardson:

Let’s just tee this up a little bit, udo and put it in context for you, everybody on the next slide here. We live in a VUCA world, do we not everybody, volatility, uncertainty, complexity and ambiguity accelerating all the time. Some people call it the exponential age, not least of all because of artificial intelligence fueling the next phase of disruption. And the work that I do, everybody is to remind you that as artificial intelligence rises up in criticality in your businesses, human intelligence will also rise up alongside it. It won’t get less, it will get more critical. And the convergence between those two becomes what we call collective intelligence. And what I invite people to do is to go on a journey of a five level reset of that convergence to end up at the top level with an intelligence advantage of collective intelligence equals human intelligence plus artificial intelligence.

And to go on that journey, level one is about developing a peer advantage, a turbocharge form of teamwork. A cultural advantage is level two, which remains so elusive for so many businesses. Level three of course is the core of my work an agility advantage. And level four is what we’re here to talk about today, everybody, which is an advisory advantage, the likelihood that you can have in house inside all of your four walls, all of the insight and foresight that you need to stay future-proofed as we go forward here and an accelerating VUCA world is getting less and less and less. You are going to have to have external advisory input to have an advisory advantage over your competitors. And so it’s that element everybody that we’re double clicking on today and Udo, we are just delighted to have you with us to take us on a speed tour of how on earth do you develop an advisory advantage.

Udo Doring:

Thank you. Thank you Mike, and a wonderful setup. What I’m going to endeavor to do today is give everyone an overview in terms of what’s happening in the advisory board sector globally and then with myself dig specifically into the US or the North American experience and some of the on trend pieces that we’re seeing in the market. To give a little bit of context around where we come from and where the data and opinion will come from today, the advisory board center is the global professional body for the advisory board sector. So the work that we do is on both sides of the ask. We help organizations scope and establish advisory boards and we’ve helped over actually those numbers need to be updated. So we’ve helped over 2000 organizations in 29 countries at scope and established advisory boards. And on the other side of the equation we work with individual advisory board professionals.

So those that are in this sector and actively engaged in the sector, we’re very proud to say that we’ve got members in 29 countries now and that continues to grow. We’ll talk about the growth of the sector, but I think what’s important to really get a handle on is everything that we speak about is based in real world data and research. So the crux or the foundation of the presentation today leans on the state of the market report. It’s a longitudinal study of the advisory board sector. It’s released every two years and it essentially is the deepest dive into the advisory board sector to our knowledge globally. And what we look to do is really unpick what is happening in the sector. And one of the caveats that I think is really important to understand in this sector is unlike governance boards, advisory boards, broadly speaking, are not regulated in the vast majority of jurisdictions in the world. And so what that means is there is no obligation to report and or to file. So much of what happens in the advisory board sector is behind closed doors and when they work, it’s behind closed doors and when they don’t, it’s behind closed doors. And so what we really actively try and engage with is really understanding what is happening, what is happening at the coalface of the sector. Yeah,

Mike Richardson:

That’s beautifully said Udo. And one of the things I like to say about this, everybody, and we’ll get into all of this as we progress here in this hour, is that the USA market in particular from an advisory board point of view is simultaneously mature and immature. It’s mature in that advisory boards are very prevalent in the USA for venture capital funds or private equity funds, et cetera, but they’re not necessarily, as you’ll hear everybody best practice advisory boards behind closed doors. It’s really difficult to know just how best practice they are. And that’s what we’re going to shine a light on today. Thanks so much.

Udo Doring:

So the Global Research Council is part of the Advisory Board Centre. It’s our research institute if you will. And so the remit that we have is really looking at the relationship between the two axes that you see on the slide here, which is a high growth potential and organizations with good governance. And it’s what happens in between that white space, which is that realized potential. So when those two axes are aligned, good things happen. And so that forms the foundation of a lot of our research. And the other tenant is the value exchange of advice, so the advisor and the advisee. So how does one give advice and ethically and repeatably give advice and how is it received? And so that exchange is a really important foundation as well. The state of the market report, like I said, is based on real world data. So it’s a thorough deep dive. I won’t go through every bit of the data set, but I guess it’s suffice to say nothing that we report on is not based on real business facts. So it’s not theoretical observation, it is actually based in a real business experience or organizational experience.

This is a bit of a scene setter I think. And one of those things that we’re really conscious to reference and that is that Korn Ferry lists advisory board as the new governance trend. Advisory boards have been around for a very long time. We like that Korn Ferry has come to the realization a little bit further on, but what it does denote to us is the prevalence of advisory boards perhaps in non-traditional sector. So what we’ll look to do today is really unpick, where are advisory boards being used, what type of organizations and what sort of interventions they’re having within those organizations. And talk a little bit about a few mega trends that we’re seeing in the sector.

Mike Richardson:

Yeah, that’s beautiful. And you know everybody, when the likes of Korn Ferry and the financial Times start to spotlight these trends, not least of all by referring to the advisory board center’s research, then we know that something real is taking shape here.

Udo Doring:

So the first mega trend that I think is worthwhile diving into is one that has been evolving over the last couple of years but has certainly come into prevalence probably in the last 18 months. And that is a term or a concept that we’re terming governance systems. So just very quickly in terms of the distinction between a governance board and an advisory board for those that perhaps aren’t in this space every day, a governance board is what one traditionally thinks of or one thinks that a company board or an organization board. So directors are tasked with either endorsing strategy or creating strategy. They make decisions on behalf of an organization and they are legally liable for those decisions. Now I speak in generalizations because there are jurisdictional nuances, but broadly speaking, that is what a governance board is tasked with doing. So you’ll hear language around looking at insurances and audit reports and financial performance solvency.

So making sure that an organization is ticking the boxes in terms of what an organization must to be compliant with regulation and legislation. Now, governance boards obviously do far more than that, but really in essence there is an obligation for those things. On the other side of the equation, we talk about advisory boards. And advisory boards are problem solving bodies, so governance boards, decision-making bodies, advisory boards, problem solving bodies. And so an advisory board will traditionally challenge a strategy. They’ll road test a strategy, they’ll make suggestions, they’ll share previous experiences, they’ll make connections, but ultimately it is opinion, it is not decision. And so the organization or the executives will make the decision on behalf of the organization. So the liability exposure is different, but the types of conversation that one has in an advisory board meeting can be different as well. And so that really is an important mix to,

Mike Richardson:

And there’s a bright line of fiduciary responsibility right down the middle udo correct

Udo Doring:

A hundred percent. And it’s something that anyone that’s stepping into this space for the first time should really understand because even if one doesn’t have the label of a director, one can find oneself in a position where you have shadow directorship. So you have the function of a director and therefore you have the liability of a director. And so it’s a space that is really important to understand. Now, the governance system and the engagement of advisory boards is a concept of we used to see language around organizations saying, I have a governance board, or we have a governance board, or we have an advisory board. And what we’re increasingly seeing is sophisticated organizations looking at engaging at both. And there’s a couple of reasons for that. So the conversation has shifted from one or the other to a governance board and an advisory board, and that’s a really interesting governance system. Let’s unpick it a little bit further in the following slide. So Mike, I think you read this slide resonates with you.

Mike Richardson:

I love this slide. Yeah, I love this slide. Perhaps I’ll talk about it a little bit. So because of what Udo has just been talking about every, because of all the VUCA coming at us in the future, the agenda that the governance board is having to deal with is just getting bigger and bigger and bigger and heavier and heavier and heavier with higher and higher and higher stakes, more risk, more regulation is coming into the board equation. And so the board constraints are also getting bigger. And so there’s this squeeze going on in between of the governance board being squeezed. And if you’re not careful how many times, whether it’s a public company governance board or a larger private company governance board, how many times do we hear, and I’ve been on governance boards and advisory boards, how many times do we hear in the governance board side that the agenda is just stacked with stuff on which we have to play defense? Whereas the conversations we really want to be having are conversations of how we play offense, how we get ahead of the future, how we have the agility to find the opportunity inside of vuca, not just defend against the threat inside of vuca. And so the squeeze is on and it really is causing these advisory boards to pop out as a supplementary part of the governance system. Udo

Udo Doring:

Absolutely, and I think there’s data points that I’d refer to. So the average side of a governance board globally now sits at seven members, seven directors. 10 years ago it was 11, it was 11.2. So what we’re seeing is the governance boards are shrinking, so you’ve got less people and they’re having to deal with or process larger agendas to Mike’s point. So the issues that they’re dealing with are not just the financial obligations of an organization, but they’re having to become experts in public health, in geopolitics, in artificial intelligence and digital transformation. And so the obligation for these individuals, these directors is staggering. And so I think sometimes directors can find themselves in a situation where it’s a really tough job and because the agenda is so big, there is very little room for that organic conversation. One of the other things that we note is if anyone has been exposed to a governance board, the meetings are absolutely minuted.

And more often than not their legal record of decisions made and taken. What that means is they are often not scripted, but they’re very well-formed meetings and agendas. So you walk into a room and oftentimes decisions have been lobbied and more or less been made before one walks into the room. Now that absolutely works for efficiency and proactive management on a governance setting where it doesn’t work is where we have some of this VUCA that comes into play, some of these wicked problems where we don’t actually know the answer and sometimes we’re not going to know the answer. And this is where that interplay with advisory boards is coming in to say, how do we go a little bit deeper? How do we not expose ourselves by having this obligation to have every piece of this meeting minuted because it’s not that we’re trying to conceal, but being able to have permission to say, I’m not exactly sure what that is yet, or we haven’t formed an opinion yet.

I can be a really difficult thing to say in a governance board meeting. Whereas in an advisory board meeting, it absolutely is the role of an advisory board to really wrestle with some of these issues. And so because of that, we’re seeing more and more of this and we think it is a concept that we’ll see increase. We’ll talk a little bit more about some of the larger organizations that are dealing with governance challenges by engaging advisory boards. It’s not just the big players, it’s not just government. You’re also seeing this play out in family held businesses and privately held businesses where they’re saying, actually we need to thrash these ideas out a little bit more and this gives us a forum to be able to do it with some smart people.

Mike Richardson:

Well said Udo, I was on the board, the governance board of a family business in the greater San Diego area for 15 years and it was in the automotive industry, the consumer end of the automotive industry during one of the most tumultuous times yet in that industry. And of course we haven’t seen anything yet with what’s about to come. And what we found was that we had to keep spinning out these supplementary conversations outside of the governance board meetings themselves because we just weren’t able to process and digest and discuss enough outside of the rigor of the governance board agenda that we had to get through.

Udo Doring:

And I think it’s a terrific example, but I also think one of the things that it’s worth noting as well is this can also support a governance board in demonstrating good process and decision making as well. So just because you haven’t landed on a decision yet doesn’t mean that a decision isn’t coming. And so matching that obligation of the things that must be taken care of in a governance board meeting with also demonstrating due process on some of those bigger issues, some of those trickier things, some of those future plans, it’s a really good mix. So it’s a concept that we think will absolutely continue and develop. The next megatrend that we’re certainly seeing across the board is the stakeholder economy and the way that advisory boards are being engaged to deal with organizations and their obligations to the raft of stakeholders that they have some of the triggers or market context for advisory boards in this space, political and one absolute driver that we are seeing, and this is geopolitics.

So where we’re starting to see geopolitics and political decisions in one market affect another. How do we keep abreast of what those things are and our response as an organization. So one of the key drivers for this was certainly during Covid where there were increasing restrictions around some supply chains, but what we’ve seen since is issues and challenges in Ukraine and Russia in the South China Sea and some contingency planning in the Middle East. And so there’s certainly a lot of this happening where organizations are having to respond and trying to find a way to be able to stay proactively engaged with their stakeholders around those issues. Economic drivers are certainly some of those as well. So looking at managing profits and super profits with vulnerable stakeholders, with staff, with suppliers. So starting to see this language creep into a number of organizations of saying what is a responsible way of being able to run a business where there are multiple groups of stakeholders and we have to manage the solvency of an organization, but also then an over performance of an organization and what is socially acceptable now in that space?

Technology is a massive driver when it comes to advisory boards and we’re seeing an absolute exponential increase in engagement of advisory boards when it comes to artificial intelligence and digital transformation. You have organizations wrestling with this technology framework or platform that is just evolving so quickly, but what does it look like for data? What does it look like for copyright? What does it look like for our employees? How do we engage and make sure that we are supporting them in the way that we’re engaging? And so that’s certainly a theme that we’re seeing. Environmental is a consistent one and very much around the energy transition, so less around ESG and more around that energy transition is the terminology that we’re seeing a lot more. And then finally in the legal space, so certainly a thematic in the advisory board space that is prevalent now. This gives everyone a bit of a snapshot in terms of advisory boards and their activity or penetration in different parts of the world.

And so it’s noticeable that I think one of the key takeaways from this slide and the data is the sector has doubled in size in terms of active advisory board professionals since 2019. So if you look at that prevalence now, we hazard a guess in terms of ongoing data that we continue to collect. That number was as of 2023. We think we’re going to see the same incremental increase again in 2025 when the next state of the market report is released. So it’s certainly an increasing space. Mike, I know that you have got some observations when it comes to this as well.

Mike Richardson:

Yeah, hot trend, everybody as you can see. And of course not least of all, the biggest number by far is that 54% in the USA. And that’s back to what I was saying earlier that the USA is simultaneously mature and immature, and so there’s a great opportunity there everybody for advisors to get engaged in more best practice advisory boards and organizations and companies to spin up best practice advisory boards to supplement their governance boards in that expanded governance system concept to play defense and offense all at the same time. That’s the opportunity that’s here for everybody.

Udo Doring:

And I’d echo that, Mike. I think one of the interesting elements here is that those numbers have actually stayed stable in North America, so 60% of global activity in the advisory board space, and that’s despite the growth. So you’ve seen the rest of the world increase in numbers, but that concentration is very much there. So just a huge market for the advisory board space and very willing adopters of advisory board. So yeah, interesting. We’re going to look at the advisor landscape and this is a model that we term the advisory engagement model. So where do organizations engage advice and how do they look at engaging advice? And so you’ll see the axes here. We go from informal to formal. Now the first is friends and family or peers in business. So this is that element of either being that person within a professional network where people tap you on the shoulder and saying, look, I’m dealing with this issue.

What do you think I should do? So we’ve all known that person or we are that person that people do come to and that can be in a family setting or in a professional setting. And as we work our way up the spectrum, we’ve got business networking groups. So think about chambers of commerce and peer business groups as well. So a really fertile space of advice and exchange. As we move further up, we have the individual advisors. And so if I group accountants, business coaches and mentors, consultants and independent advisors, these are specific skill sets often. So they either have very specific experience or they’ve gone on the journey before. In the business sector, accountants are absolutely trusted, so they tend to be the absolute. And as we evolve and the complexity of a business increases, that’s where we’ll start seeing organizations branch into individual specialty areas. If we go further than that, you’ll start then seeing advisory boards being engaged and we will dive a little bit further into advisory boards and what a best practice advisory board is. But then you’ll see on the final level of formal advisory engagement is a governance board. So it is the most formal of advisor engagement.

This is a bit of a snapshot that into the advisory board space. We dive a little bit deeper because not all advisory boards are created equal. So again, you’ll see the scale, it’s informal through to formal. So the first is an informal advisory board. This is a collection of individuals that oftentimes a business owner will establish more often than not unpaid. So it’s a group of peers that will sit around a table and talk around what’s happening in the business. Now what we do observe here is left to their own devices. These compete around and it’s because there’s a lack of structure there. So we deal with a potential issue, but in terms of the ongoing management of the advisory board meetings, sometimes that can run out of puff, that’s always, but we certainly do observe that, that you’ll see six, 12 months and then perhaps they become less frequent in cadence.

The next is on demand advisor panels. This is something that we’re seeing increasingly when it comes to digital transformation or crisis succession planning. So organizations are identifying what could be coming up in the next 12 months and saying, well, how do we get in front of the engagement of our advisors so that we understand who we want to engage with if and when we need that service? We have an idea of price as well so that the format of engagement so that when the need arises, it’s a quick conversation that we’re able to have as opposed to having to go to market increasingly seeing that in high growth organizations where they just know they’re going to need the advice. So a really interesting development that we’re seeing there. Peer advisory boards, really effective engagement, being able to get a group of CEOs or like-minded businesses together and talk about the challenges that they’re facing in the business or in their respective businesses. The key in this area is having a really good chair and where you have a really good chair and facilitator of those meetings, the value that can be extracted is terrific. Mike, I know this is part of your world, but it

Mike Richardson:

Is, yeah, I’ve been in this field for 20 years. Everybody facilitating peer advisory boards, peer advisory groups, and as Udo says, it is a major way in which you can get an advisory advantage, but here it is on the arc of the curve. And so what we’re talking about is continuing up that arc to get even more of an advisory advantage back to you Udo.

Udo Doring:

So when an organization perhaps progresses from a peer advisory board and maybe wants a little bit more individual attention, sometimes you’ll see that move towards an advisory board of one, so a chair perhaps working with an organization to prepare them for the establishment of an advisory board. So that can be a transition through to an individual focused advisory board on an organization. The next is popup advisory boards and what we see here, popup advisory boards, three months individual strategy really focused. So we’re dealing with a particular crisis or we’re dealing with a particular strategy or we’re dealing with a product launch or a market. So quick, sharp focus, sprint of work, and again, really quite effective project advisory board, similar in nature longer term. So you’ll see project advisory boards be a longer term engagement, so think anything from three through to about 18 months.

So that’s a deeper dive in a particular strategy. And then we move to best practice advisory boards. So this is what we see, or when we see an independent chair more often than not, two or more external advisors and then two internal representatives from the organization, there will be a charter, so a formal document outlining the way that the advisory board engages, there’ll be agendas and there’ll be impact measurement. So at the start of an advisory board engagement, there is a measurement, and then on an annual cycle there is a measurement to see what impact and effect an advisory board is having. That’s broadly what we define a best practice advisory board. Yeah,

Mike Richardson:

Sorry. Yeah, everybody. These are two of my favorite slides as well because they show the two arcs of going from informal to formal. And keep in mind everybody that every business on the planet gets advisory input. That’s not the debate in some way, shape, or form. At the low end of these curves, these arcs, they’re getting advisory input. But remember where we started, it’s about how can you get an advisory advantage over and above your competitors? So if your competitors are neck and neck with you somewhere on these arcs, what can you do to step up to the next level, potentially all the way up to the best practice advisory board to leverage an advisory advantage over and above your competitors to be more future-proofed, more future ready, more agile. I often like to call advisory boards agile advisory boards because as Udo knows, I believe that is agenda item number one or an advisory board is how do we future proof this business by assuring we’re always future ready no matter what VUCA is coming next with the agility required. So how do you keep moving up these curves everybody and leveraging an advisory advantage better than your competitors? Back to you Udo.

Udo Doring:

Yeah, thank you Mike. And we’ll dive into market trends now. So look at where advisory boards are being engaged at different markets. I want to make a point and my thank you for identifying it. I think the chat is now open in terms of the permission. So if anyone doesn’t have any comments or questions, please feel free to jump in and ask them emerging trends of what we’re seeing in the different sectors. So we will dive into some of the ways that advisory boards are being engaged. The first emerging trend is in what we call the emerging business sector. So organizations that are pre-revenue through to 1.5 million. Now the currency here, they tend to be magic numbers. So for North American participants, 1.5 million US dollars, that tends to be the range for Brits pounds for whatever reason, that’s a magic number for Europeans Euros, it tends to match relatively accurately.

This is 29% of the global advisory board market. So they are significant adopters of advisory boards. There is a high volatility rate in this space. Now, when someone hears pre-revenue three to 1.5 million, they often think an immature business, they can certainly be immature, but they can also be incredibly well funded. So I think technology companies think medical biotechnology companies, so these organizations can be very sophisticated, but working towards revenue and or early stage revenue. So there’s a bit of diversity within the sector. Advisor panels are used quite heavily here in this space. For anyone that’s looking at stepping into the advisory board space, what we recommend here is anyone that comes from a corporate background may not enjoy working in this space all that much because that volatility rate means you’ll see spurts of activity and energy and then you might see something not really happen for a couple of months. And then again, it increases. So that corporate cadence doesn’t exist quite yet in this sector. They’re responsive, they’re reacting to the market.

The next is a sector that we term the business sector. So that is 1.5 million to about a hundred million. Now, I would make a disclaimer here to say in the US we’d certainly see larger numbers at the higher end of this. So think 200, 300, even up to 500 million oftentimes privately held organizations. So whether family held and businesses, this is where you see the most common structure around best practice advisory boards that two internal directors, so representatives from the organization, so C-E-O-C-F-O or family members. So the oftentimes directors and independent chair and then two external advisors. Most common establishment of an advisory board at the revenue mark is 1.5, but the average is 20. Now it skews lower because of that activity concentration, but what we’re seeing is it increasingly is increasing, sorry, that’s awkward language or clumsy language. We’re seeing it scale up in terms of the revenue size, which is interesting.

Average investment for an organization in the first year of establishing an advisory board ranges from about 40 to $70,000. And what we know is that in year two, that increases in terms of the investment that an organization makes, one of the things that we’re really conscious of doing is making sure that we try and identify impacts and positive and negative. It’s really important to get an idea of what are the impacts that advisory boards are having with the organizations that they’re working with. Now, as far as our research tells us 90% of organizations that engage with an advisory board experience positive impact. And that is the two metrics that we look at. Sorry, three metrics that we look at is revenue, profit and business confidence. So they’re the three criteria that we look at in terms of impact. So 90% of organizations in that 1.5 to a hundred million dollars turnover experience a positive impact in the first year of establishing an advisory board.

The counterargument is also true though. So there are 10% of organizations that experience a negative impact when it comes to the creation of an advisory board. The number one key and common issue within that 10% is cashflow. And so one of the things that our research tells us is where cashflow is the number one issue in an organization and advisory board may not be the intervention. And so it’s an important one for us to continue to examine because advisory boards are absolutely versatile, but where there is an absolute crisis point when it comes to cashflow, you may need a different intervention, a different way of being able to engage in that

Mike Richardson:

Issue. Yeah, we see that a lot in the peer advisory boards that I do. If someone’s in financial distress, a peer advisory board is not the relevant thing that you need. I love the idea of, as you said, revenue profit, but also I love the bottom line idea of confidence. What’s the sort of confidence index that we have about the future? How well do we feel composed in the face of craziness that we’ll not only survive, we will thrive and we can feel cool, calm, collected and confident about that because of the rhythm of the governance system supplemented by the advisory board that we have back to you Udo.

Udo Doring:

And internally we refer to this as every percentage point of business confidence is a percentage point of sleep that a director and owner business is getting. And so I think it’s a really tangible way of looking at it. Now, of course, this is more in the business sector that we’re talking corporatized advisory boards are the next trend that we’re certainly seeing an increase in. So the examples here of corporatized advisory boards are those household names that are engaging with advisory boards are, but a fraction of what we’re seeing or a fraction of the organizations that we’ve been engaged with to support the establishment of advisory boards. So we’re seeing this in technology companies, we’re seeing it in pharmaceutical companies, we’re seeing it in large logistics companies. We’re seeing it in government and university. And so corporatized advisory boards to us is defined by an organization that has a well established governance framework, so a governance board and is using advisory boards to supplement or support that system. Now that can be supporting the board or it can be supporting an executive. And so there’s a lot of examples now that are flowing through in a really tangible way, an effective way of being able to positively impact outcomes and decision-making where you’ve got some really complex issues. So again, the governance issue is, or that governance dilemma is certainly a driver for this. Organizations trying to deal with that volume of content and issues and trying to really work through those.

Mike Richardson:

And I always say everybody, when the big companies weigh in, something is really happening because imagine the quality and quantity of advisory they can pay for in all of its different forms on those slides of those arcs that we saw earlier. And yet they’re forming advisory boards to supplement the quality and the quantity of conversation flow that they need to be playing offense to be ahead of the curve, to be future proofing themselves because they know that it’s more complex than the other forms of advisory input that they can get.

Udo Doring:

Yeah, absolutely. And I think Mike, it’s just touching on a couple of the questions that I was seeing in the q and a,

The identification of talent in corporatized advisory boards or any advisory board at all. It’s one of the things that is absolutely key, but what we find is there is a process that an organization must go through to truly identify the interventions that they’re looking to make. Oftentimes an immature organization will go to who can we get to sit on the advisory board? A mature organization that plays through a process will look at what are we trying to achieve, who is this advisory board communicating with and engaging with within our organization? And then what are the skill sets that we potentially need to be able to identify? So there are stages to that conversation, and what you’ll see is increasingly the larger end of town are spending more time in those first couple of steps because what it means is that it sets you up for success in terms of the engagement.

And I can talk to a couple of examples that we’ve supported larger organizations working through that. One other observation that we certainly would make in the corporatized spaces, the establishment process takes a little bit more time. There’s a lot more stakeholders, so there’s a lot more communication that’s required to make sure that it isn’t just a flash in the pan, that it actually is an engaged and entrenched intervention that helps and supports, does its job as opposed to creates more noise. This talks to some of the triggers for corporatized advisory boards. I mentioned digital transformation and technology before. We are working with, it’s an ongoing engagement with a very large pharmaceutical company and they have established a digital transformation advisory board. And the goal of the advisory board was to support their long-term technology planning. And it’s not just the investment in technology, but it’s also their human resource planning.

So the digital transformation advisory board touches 11 key departments and their technology champions within those departments. Any of the considerations that come out of the advisory board sent and communicated directly with the governance board. So it is an unvarnished consideration that the governance board are able to refer to when they’re making longer term and larger decisions. So it supports the CTO and their representation to the governance board, but it also informs the governance board. So it’s a really interesting demonstration of the way that they’re using an advisory board and external advisor. So those that aren’t caught up in the inner workings also that aren’t trying to sell anything beyond the advice that they’re providing. So they’re not trying to find the next consulting gig. They don’t come from a large technology company. They’re providing advice from previous experience and their context and the way that they see the world, their industries perhaps. So non-aligned industries. And that’s the value that that’s adding.

Two really key roles we are starting to see become more prevalent, and that is advisory board managers. So the internal representative of organizations, larger organizations that are responsible for the management of the logistics and communications of an advisory board. So this is separate to a chair. It really is the inner workings, it’s the engine room of the advisory board, excuse me. The other is a professional independent chair. So in corporatized advisory boards, it’s really important to have someone that really understands independence, but also has a facilitation ability to be able to bring people together but also push something forward, push an agenda forward as well. So a really important skillset and something that is really important to understand if you’re looking to get results.

Project advisory boards we spoke about before, so three to 18 months now, increasingly as well, we’re starting to see a lot more engagement in the corporatized space of how do we actually drive a particular strategy or a particular piece we’re working, excuse me, with an air authority, so air traffic control and air services for a national presence. And they’ve got a number of advisory boards that they’re looking to establish. One is dealing with noise across the country and having an external reference point to be able to deal with that. The other is a culture and, excuse me, making sure that they’re proactively managing their culture of their air traffic controllers across the country. So using project advisory boards to be able to inform and engage that internal piece,

Mike Richardson:

Especially important given what Boeing is going through right now.

Udo Doring:

Yeah, absolutely. Absolutely. So the triggers that we’re seeing when it comes to project advisory boards, market testing is one. So organizations that are looking at engaging with new markets or reinvigorating markets, we helped a large technology company, global brand establish advisory boards in two key markets. So one was Korea and the other was Turkey, and they were looking at engaging essentially a re-engagement of their service offering in those markets because their revenue or performance are dipped. So the advisory board, project advisory board was very specifically around how do we actually engage in that market, how do we make sure that we’re performing and setting ourselves up for success? New business models, sustainability, capital raising, succession planning. So where there’s a specific goal and a term, we’re seeing organizations engage.

So this not only represents where we’re seeing advisory boards, but it also it represents where we’re seeing advisory board professionals. One of the key observations that we certainly are aware of is advisory board professionals are working beyond one market. And the reason why I think that’s an important piece to note is increasingly businesses international. And so just because an advisor is based in one jurisdiction doesn’t mean that they’re not working in others to support those businesses that are perhaps in their own backyard that are looking at different parts of the world. And so that’s something that certainly is a consistent theme as well.

If we talk about the characteristics of advisory board professionals, so the individuals that are actually looking at delivering this type of work, the first, if you look at the advisory firm professionals, so think lawyers, think accountants, think advisors. So those that have been professionally engaged at providing advice, they’re certainly, they’re very visible potential advisors that you’ll see in the market the next of those that are looking to build out a professional portfolio career. And so think senior executives that have worked within organizations and grown organizations and are looking to add value in a different way. So not necessarily through just one job, but perhaps different interventions and different engagements.

Mike Richardson:

And that’s very much my own case study. Everybody. I left the corporate world 22 years ago to develop a portfolio career as a portfolio professional, as a coach, facilitator, mentor, board member, board chair, speaker, writer, those kinds of things. And so yes, great example, Udo

Udo Doring:

And Mike, if I may say that they can include different elements as well. So it can be that coaching and mentoring, it can be advisory board, work governance, board work, lecturing, investment. So it can be all manner of engagements. Exactly.

The next category that we see here is transitioning professionals, and this is perhaps a view, and perhaps it’s an earlier stage of what Mike was referring to, but those that are actively engaged in an individual role that are looking to transition over time. So they look to build out some experience in the advisory board space as they look at building out a portfolio longer term. So that can be two years, it can be five years, it can be a longer time horizon, but building capacity and experience is an important element in that. And then finally we see internal chairs and advisory board managers. Now this is something that we’re seeing an increase of absolutely, which is individuals that are being asked to deliver this type of work internally within their roles. So they could be senior executives within organizations that are being asked to set up an advisory board or chair, an advisory board for their organization. So they’re doing it already and they may or may not want to externally provide those services, but they’re doing it as part of their job.

We conduct research on our global membership. So we, like I said, have members in 29 countries, and this is a bit of a snapshot in terms of what they experience. So they on average will have six engagements at any given time, and the intent of increasing their advisory board engagement is higher than the intent of increasing their governance board engagement that we think is a representation of perhaps the liability mix. So it’s a different type of work, but it has a different risk factor perhaps in the work. That’s not to say that they don’t enjoy doing both of the pieces. So the majority of people that I speak with enjoy the governance board work that they do, but they also really enjoy the advisory board work that they do. So there’s a bit of a balance there that they’re really happy to have and different skillset as well. So similar but different.

So coming to the end of my content and very conscious, really happy to dive into questions, but this is the ABF 1 0 1, so the best practice framework. So when we talk about best practice advisory boards, there’s some principles that are absolutely necessary in the space, and they’re listed here in front of you. So the advisory board center launched the A BF 1 0 1 in 2020, and the framework has been used by thousands of organizations, large and small in many countries. And one of the things that is really key in the absence of regulation in the advisory board space is that it is a principle led framework so that there is some sort of guidance around what does good look like and how do you perform advisory board work ethically, repeatably and impactfully. So that really is the core. The ABF 1 0 1 and the supporting guide are available on our website and really happy to share that with anyone that is interested in reading it. But it’s a fantastic reference point and if you’re serious about the advisory board space, it certainly is a really valuable reference to have and being able to engage with.

Mike Richardson:

Yeah, beautiful. So as we begin to land the plane, do you have another slide, Udo?

Udo Doring:

Yeah, there you go. Exactly. That’s the QR code. So thank you, Mike. That’s a good point.

Mike Richardson:

Yeah, so if you’d like to go and get that best practice framework everybody, then there’s the QR code for you right there. And please type any other questions you have or comments in the chat everybody while they’re doing that Udo, how else could they get some follow-up resources? Where can they find the state of the market report? Where do they go to learn more about the advisory board center and things like the concierge service and things like that? Can you just point them in the right direction? Yeah,

Udo Doring:

Absolutely. So the advisory board center.com is our website. I recommend if anyone off the back of this conversation is interested in this space. I highly recommend referencing and reviewing the state of the market report. So again, it’s a report, it’s downloadable on the website. We we’ll make available off the back of this, we’ll share a link so that everyone is able to see the state of the market report, but it goes through a bit a deeper dive in terms of what we covered today. So it gives that reference point. The advisor concierge service is a service that we provide to organization that supports organizations in establishing an advisory board and it’s a complimentary service, so there isn’t a cost. If anyone is interested in establishing an advisory board for their organization, then please feel free to reach out either to Mike or myself. I’m really happy to have that conversation. And I think beyond that, if anyone has any questions or would like to dive into a deeper conversation, again, Mike, I’m going to volunteer your time, but Mike and myself we’re very available on LinkedIn and the channel, so please do reach out. I’m always happy to have a conversation

Mike Richardson:

Whether you’re an advisor looking to get involved in this space or you are a company considering spinning up an advisory board or all of the above. Yeah, please don’t hesitate to connect with us. And I see a question in the q and a from an anonymous attendee in the us, one of the primary or typical sources of qualified advisory boards members or chairs, and is there a set of standards applied? That’s an interesting question. It’s really hard to know everybody. There are obviously lots of recruitment organizations that focus in the space of boards, governance boards in particular, and perhaps more of them around advisory boards. There are some other online platforms that focus on advisory boards. The degree to which they have a set of standards that they work to is really difficult to know. What really attracted me to the advisory board center two or three years ago when I was surveying the landscape, very passionate about advisory boards over and above governance boards, and I’ve been on both. What really attracted me to the advisory board center was the quality of its research based best practice facilitative approach, and some of the concepts that you’ve seen today, the two arcs of a progression from informal to formal advisory input and always as a compounding of those different kinds of advisory input that you can get. So of course, as you heard, I’m very active in the peer advisory board space and now in the business and corporate advisory board space and each compliments the other and everything else that you saw on those arcs.

Udo Doring:

Mike, if I can add very quickly to that, I think that the advisor concierge is a really interesting concept or service to unpick for organizations that are looking for advisors because the service where an organization is looking for an advisor or a chair, the advisory board center will broadcast to our global community. So organizations have a level of confidence that they’re dealing with people that really understand best practice and just a phenomenal skillset and range of individuals. So I think it’s an absolutely terrific service to have in mind if you’re looking to establish an advisory board or find that talent and certainly one that we think is really worthwhile for organizations to engage with. The other point that I’d make just very quickly is organizations that are establishing an advisory board, it’s over 80% of organizations establishing an advisory board are doing so for the first time according to our research.

And what that means is they know the intervention that they’re looking for, but they don’t necessarily know how to do it. And so remembering governance boards very well regulated and legislated. So it’s follow the bouncing ball. There are things you must do in advisory boards. It essentially is the wild west. So when they’re looking to engage a chair or advisors, more often than not, they’re not just looking for the advice. They’re looking at how do I do this? Take me on that journey. And that’s an important element to have in your mind as well to say it’s not just the process of saying, well, this is what I know. It’s how do I support you and setting up an entity, an intervention that is going to be sustainable in us being able to get the best of those opinions and follow a really good agenda and make sure that we’re respectful of your current situation. So it’s an added element that I think is also really important to have in your mind if you’re exploring this space.

Mike Richardson:

Beautiful and take you on the journey, everybody of progressively leveraging that advisory advantage, which is where we started today. We’ve been so blessed to have you with us Udo. Thank you so much. We’ll be getting udo back in the future, everybody, to keep a surprised of everything that’s taken shape. We always love to land the plane on time. Everybody, when we do these sessions, it’s on the hour right now. And so thanks for being here. We had a USA spotlight today, the role of advisory boards in the future of board governance with insights from the 2023 state of the market research report. Go to the advisory board center to find out more. Thanks for being with us everybody. We’ll see you next time.

Udo Doring:

Thank you very much everyone. Thank you, Mike.