Leveraging the Strategic Value of Your Advisory Board or Board of Directors in a Tough Economy
As the founder and managing partner of ABA, I have an incredible opportunity to meet with and speak to some of the brightest minds in business today. I have been hearing more and more from our advisors and clients that they are recognizing unique opportunities in this tough economic period. Many feel that these opportunities are the types that come once in a century. In all of our recent board meetings, we have been focusing on this and working with our clients in leveraging their advisors expertise to help our CEO's and their management teams recognize and maximize these unique opportunities. These meetings have been focused less on survival and more exclusively on how to put themselves in a position to capitalize on their competitor's lack of forward thinking. While their competitors are cutting back and "waiting" for change, our advisors and clients are identifying new market opportunities, understanding their customers' needs and the value they provide, strategically aligning themselves with the right vertical and channel partners, and running a more streamlined and profitable operation. The ideas that our clients have realized from these meetings are ultimately going to help them realize increased revenue and market share. They are actively preparing themselves to be in a far stronger position when economic conditions change. In this post I will give you some actual examples of how our clients have leveraged their advisory boards recently.
In addition to the examples I will give you from our direct experience, you can find great examples of this nationally in the recent financial institution failures. In one of the worst financial environments since the Great Depression, companies like JP Morgan Chase and Bank of America have become mega financial institutions due to missteps by their competitors. They had the ability to recognize the opportunity (with a sweet deal from the Federal Government and the backing of our tax dollars) and take advantage of it. It looks as though they are not only going to weather one of the worst economic storms in their industry, but they have come out stronger than they ever could have imagined before the meltdown. The smartest companies seem to understand that if you are not growing, your strong competitors are and by not focusing on growth, even in tough times, you are increasing the risk that your organization will not survive in the long term.
Analyze WHO is on your Board and WHAT Value they Bring
The obvious first step is analyzing "who" is on your board and determining "what" value they bring. How you do this is a subject that we will tackle in future postings, as ABA feels this is the critical component most often missing from both corporate and advisory boards - we could write forever about it. If you don't have members that have been where you are going, it is hard to get strategic advice and insight from them. Right now a group of high powered "names" that are not helping you with specific strategic initiatives or who are just focused on the regulatory aspects of the board is not going to provide the type of advice a company needs to grow. In addition, understanding how to leverage a strong group of board members is extremely important and a common problem that we often see in dysfunctional boards. This also is another subject of future blogs that we will discuss in depth. Now, more than ever, having the right board members, understanding how to leverage their expertise and analyzing the strategic value that your board brings to your organization in helping you identify and capitalize on opportunities is critical to your growth during these times.
Client Examples of Leveraging an Advisory Board
One of our clients is a Human Capital Solutions (recruiting and staffing on steroids) Company. Our client has an advisory board made up of top human resource executives from some of the largest corporations in Colorado. The advisory board has been helping this client reinvent themselves into the type of "partner" the advisors would like to work with. They have helped them develop a unique and scalable process to attract, hire and retain top employees and a value added pricing model. Both of these developments add tremendous value to their clients (these advisors should know) and, most importantly, few if any competitors have developed anything like them. They are coming off of their biggest year in revenues in 2008 and their question to the advisors was how to keep that momentum going into a tough hiring environment in 2009? The advisory board recommended looking at an industry vertical that was not contracting and was poised for rapid growth, and thus it was decided that the company would target that industry for growth this year. Subsequent advisory board meetings revealed that the advisors already had established and valuable contacts in that industry which they introduced to the company for further ideas, due diligence and potential customers.
The only question for them was do their value adds in their current industry verticals translate into the targeted industry? This was a question that could not be answered by their current advisors who do not have this industry expertise. So ABA is working on developing an advisory panel made up of senior executives with expertise in the targeted industry to help them define themselves before they actually launch into it. By doing this, the company will realize potential cost savings by ensuring their launch is smooth. The opportunity to continue their impressive growth while their competitors are struggling gives them instant credibility and contacts in a growing vertical that otherwise would take months or years to develop.
Another one of our clients is an e-commerce focused company. Their advisory board is made up of Managing Partners and "C" Level executives from large organizations that could be good potential clients or vertical and channel partners. One of their major issues was growing their culture and client base from smaller companies with more constrained budgets to much larger organizations with larger budgets, more resources and bigger projects. In addition to helping retool their marketing, proposals and presentations to address their value add propositions, the board has also been working with our client in positioning them internally to be able to handle the larger projects they have been acquiring. The solution that the advisory board proposed was to find a more seasoned business development staff that had more experience in pitching, winning and executing on these larger projects. The person that was needed to head up this group was found through a direct introduction from one of the advisors. It is highly unlikely that our client would have found someone of this caliber without the assistance of the advisory board. This individual has made an immediate impact and has the support of the advisory board in such a way that the advisors have agreed to attend some pitches with the company. Given their positions, the direct participation of advisory board members will give credibility to the client that may have taken a new business development staff months to develop on his own.
These are just two very brief but specific examples of how ABA is working with our clients to leverage their advisory boards for growth even in this environment. By leveraging the ideas, expertise and introductions provided by their boards, these companies are positioning themselves to grow when most of their competitors are slowing or even shutting down.
This type of strategic board activity can only come when:
- You have the right board members.
- You know how to leverage their experience and contacts.
- You have set clear expectations and provided feedback and accountability to your members.
Bob Arciniaga
Managing Partner
Advisory Board Architects
