Overview

The inherent flexibility of advisory boards means the structure can be adapted to support a variety of business priorities.  The most effective advisory boards are built upon a robust and well considered best practice foundation, then tailored to fit the particular needs or use case of the organisation.  In this series, we explore the various use cases of advisory boards and key considerations for implementation and facilitation.

Each situation is unique and the information provided is general in nature.  If you are looking to implement an advisory board for the first time, or are searching for support to enhance the effectiveness of your existing advisory structure or governance system, we strongly recommend engaging the support of a Certified Chair™️ .  Our tailored Advisory+ service can help connect you with the right advice for your organisation.

WHAT IS AN ADVISORY BOARD?

Advisory boards are a structured collaborative method for organisations to engage external advisors. The structure, role and operation of an advisory board is influenced by the organisation’s:

• Operating environment
• Legal requirements
• Strategic direction
• Leadership system
• Available resources
• Capacity and capability
• Regulatory environment

How can advisory boards support a business to SCALE UP?

Scaling a business means to grow or expand in a proportional, and usually profitable way, to reach full potential.

The OECD defines a scale up, or high growth firm, “as enterprises with at least ten employees at the beginning of a three-year period that saw average annual growth of over 10%”¹.  Additionally, OECD research groups the main growth drivers for scale ups into three key areas:

• Innovation -including research and development, digital adoption, or business development
• Investment -including in physical capital, skills or intangible assets
• Network expansion –in domestic or international markets, through cooperation and strategic partnerships, or by using digital platforms

These scaling up growth drivers were found to be highly interconnected and mutually reinforcing.  The 2023 -2025 State of the Market Report² included research into the barriers to scale for organisations including:

• Delegation threshold- when and how a Founder begins to leverage other people’s time and expertise
• Network access– connection opportunities to access and actively engage with trusted advocates, advisors and funders
• Business investment literacy– knowledge to navigate funders and financial arrangements to improve the overall financial position of the business.
• Execution gap– closing the gap between knowing and doing to ensure intent meets action.

A business does not scale of it’s own accord.  The second part of the scale definition, “to reach full potential”, is closely linked to the ambitions of the business founder or owners. Potential, in the eyes of the owner may include non-financial impact measures such as personal satisfaction, self determination and balance. Individual business owners seeking to measure scale may wish to explore both financial and non-financial performance measures.

Balancing the ambitions and motivations of the business owner(s) alongside the growth potential and obstacles for the business, is where an advisory board can add value in the scale up journey.  There may be many different options to explore on how a business may achieve scale and the role and contribution of the current owners.

An advisory board comprised of trusted and experienced advisors can provide insights to the business owner to inform their strategies, operational decision making and resource allocation.

Advisory Structure – BEST PRACTICE CONSIDERATIONS

The ABF101 Advisory Board Best Practice Framework highlights key organisational considerations aligned to the best practice principles.  While all options need to be carefully considered for a particular use case and operating environment, the following list provides a starting point for your discussions:

1. Advisory board structure options
2. Purpose and intended impact
3. Investment and return
4. Roles and selection
5. Impact measurement

References

¹ Financing Growth and Turning Data into Business: Helping SMEs Scale Up

² State of the Market Report 2023, Advisory Board Centre, Global Research Council.

Case Story

Earth Tech Advisory Board

Ant Moorhouse – Founder 

The Earth Tech Advisory Board was set-up in the first half of 2020, during the pandemic. Immediately prior to the set-up, Earth Tech had hosted and funded the Earth Tech Challenge on Richards Branson’s Makepeace Island. The Challenge brought over 20 impact ventures from around the globe to a forum where they could meet successful entrepreneurs and impact investors in order to learn how to scale their business and get funding for growth.   

With the pandemic setting in, we had to review how the business would operate and grow in a constrained environment. We were in the US talking with impact investors when borders started closing and we knew we had to move the model in the short-medium term. 

 Our scale up challenges were made more complex because we were introducing a new concept to an already fragmented and largely boutique marketplace, of highly skilled organisations. We knew we would have to constantly re-educate the market while disrupting old patterns at the same time.  

We set up the Earth Tech Advisory Board with several goals in mind:

• Define the strategy to capture the opportunity of being an impact ‘investment connector’ and finding a better way for VC to operate without the high volume of failures present in most VC markets 

• Define the product market fit and help shape the direction of the product 

• Pressure test, scrutinise and coach on business performance 

• Engage Advisory Board members individual networks to help build brand, educate and open up pipeline opportunities 

• Prepare the business for a formal Governance Board in the future 

• Provide input to Investment and Impact Committees 

Our Advisory Board was successful in that it helped us shape product, define clear market strategies, guided us on where to invest our resources and kept our focus in a world of over proliferation of new and shiny ideas to chase. 

The most significant impact of the Advisory Board was guiding us to pivot when markets did not respond, and helping us call time on failing initiatives while supporting us in new. The best example of this was when the AB pushed us to pursue the corporate impact space as a way to educate the market in a manner they understood, while solving some of the biggest problems they could not solve themselves. This also meant we can use our platform in new and innovate ways.  

We disbanded our Advisory Board in 2023, as in the word of our Certified Chair, Craig Manson, “Advisory Boards are there for a season or a reason, not forever”. We had gained an immense amount of direction and growth from our AB, and it as time to halt this particular version and simply deliver. Then review and either set up another, or move to a Governance board, depending on where we end up growth wise.  

We are grateful to our AB members and we are still very connected to them. We would recommend an Advisory Board for any business that wants to scale and needs to access the skills, experience, passion and wisdom of those that have done big things in their career.