Thought Leadership Articles
How to build high performing advisory boards
How to build high performing advisory boards
Thought Leadership Articles
Published 20 April 2023
When faced with making a decision or navigating an unknown path in our business journey, we instinctively look to others to support our thinking. For many business leaders, this includes a “sounding board” style conversation with trusted peers or advisors.
From my personal experience, meaningful advice at the right time can change people’s lives. It did for me. Reflecting on the moments where advice was given (the advisor) and how I received it (the advisee) provides me with a small insight into what I term “the value exchange.”
My curiosity spiked when we started to explore the value exchange concept. Advice is meaningful when two things occur: the exchange creates new value, and the advice is valued. Both parties trust the exchange which leads to an increase in confidence in the advice.
Understanding the dynamics within the moment of the exchange between the advisor and advisee is a complex task, because there is a lot going on!
Picture this: you arrive at a meeting, are provided a broad synopsis of an issue and the advisee expects you to have a solution on the spot. Is this realistic? Definitely not. Is it common? Absolutely.
The advisor, in trying to help, falls into the trap of the “advisor’s curse”: trying to be the smartest person in the room and fix the problem on-demand. The issue is likely to be complicated, has layers the advisor cannot see, and it is likely wrapped in emotions. Providing a quick, off the cuff response is akin to an advice sugar hit. It feels great in the moment but a crash is inevitable. A quick fix is provided but the underlying issue is not explored and ultimately solved.
So how do you break the curse and move off the advice rollercoaster into a true value exchange? The first step is to reframe expectations on both sides from on-demand “fixing” to collaborative advising.
Skilled advising has been described this way: It is more than the dispensing and accepting of wisdom; it’s a creative, collaborative process – a matter of striving, on both sides, to better understand problems and craft promising paths forward. In other words, it is a Thinking System.
When the exchange is performed well, both advisor and advisee benefit where better solutions are created together than either party could have created alone. This can only occur when the advice relationship is underpinned by trust. When the advice shifts from a one-to-one engagement into a thinking system, it elevates the trust in advice.
Identifying the situation (the why) informs the type of advice structure required (the what). We see within an advisory board setting two common systems for advice. When a problem or situation requires specific expertise and recommendations from a knowledge source – logically it is an Expert System.
This is quite different in an environment where there is no single correct answer. Advisor Systems provide the space for exploratory debates and robust conversations to occur. The purpose is to build confidence in choice when there are various options to consider.
Advisory boards are the most common advisor system where members provide independent advice in a forum that stimulates debate with the aim of informing better decision making. Research reinforces the link between an advisee gaining independent advice from multiple sources and quality decision making. The Advisory Board Centre Global Research Council identified that accessing an advisor system like an advisory board enhances business owners’ confidence by over 30%.
Within the Value Exchange, when advice is compounded from three independent sources, greater benefits are gained. It is what we call “the power of 3”. This access or accuracy gain can shift a satisfactory decision to an optimal one. Most best practice advisory boards start with a powerful combination of three independent sources – the chair and two advisors.
At its core, the purpose of any advisory system is to build the confidence of the advisee in the decisions they make. Confident decision makers consider three factors: the available information, the advice received and their own ability to execute. Creating an environment to actively explore all three factors is important in an advisory board setting. There are no idle passengers, and everyone has a role in creating value.
The Advisor – The structure of the role of advisors in an advisory board system is very different to a one-to-one engagement. An advisor not only draws on their own knowledge and experience, they also have to consider the purpose, group dynamics, other people’s points of view, layered problem solving and personal bias. Advisors must elevate the conversation from recommending what a business “should” do, to exploring the options of what a business “could” do.
The Chair – For the chair, managing internal representatives and external advisors at the same time, requires skills and insight in such a dynamic environment because anything could happen. The role of the chair is challenged to manage the expectations of the advisee as well as promoting diverse thinking, healthy debate, and respect from the advisors. Knowing how to manage expectations and the conversation models that drive the agenda keeps the thinking system focused. Chairs who can adeptly facilitate conversations from generalist to specialist amplify the value generated in an advisory board.
The Decision Maker – Decision makers have to consider their own opinions and deal with personal bias when evaluating an advisor’s point of view. Decision makers must consider their own ability to take on the advice provided, make a decision and lead the execution phase within their organisation.
The most dynamic aspect of the Value Exchange when done well is the concept of regenerative value – with each conversation building on the next to continue to build new value. Without the right foundations in place the exchange is broken, and the potential value is unrealised. The ABF101 Advisory Board Best Practice Framework has an important role to play. Advisor systems, when applying best practice principles, amplify the value exchange and in turn, confidence in the way decisions are made.
Author: Louise Broekman, Founder of the Advisory Board Centre
In creating this article, we would like to recognise the following academic article and journal references.
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