How Advisory Boards can help trigger a performance uplift

When it comes to business growth, companies with Advisory Boards consistently deliver stronger sales, productivity, and profitability than those without. Governance specialist and author Anthony Moss reveals why this surprising performance uplift occurs, from sharper decision-making and accountability to new thinking and expanded networks. The following extract explores the evidence and the practical reasons behind this competitive advantage:

Improved performance 
Of course, performance improvements will vary from business to business. Still, a 2014 study by the Business Development Bank of Canada compared the financial performance of a group of companies that engaged an Advisory Board with a pool of businesses that didn’t engage an Advisory Board. The study showed improved performance between those with and those without an Advisory Board, as well as improved performance pre- and post-appointment of an Advisory Board.

In fact, 86% of leaders believe that having an Advisory Board has had a significant impact on the success of their business. Areas of impact most often cited are company vision, innovation, risk management and profitability. . . From 2001 to 2011, the average annual sales of businesses with Advisory Boards were 24% higher than those of comparable companies. Moreover, productivity was 18% higher on average over the same period.

The study results are clear, companies that have Advisory Boards consistently outperform those that do not. Why is this so? A safe and confidential sounding board for the CEO
Earlier, I described CEOs who are Commercially Lonely. When independent advisers are appointed to the Advisory Board, it becomes a forum where the CEO can discuss any
issue of concern—particularly those that cannot be discussed with other staff members. These conversations might relate to strategies that will impact business performance, employment, leadership team capability, and even the navigation of difficult conversations with fellow shareholders/directors.

The CEO can explore and discuss potential initiatives without judgement. The Advisory Board can challenge, support, and offer alternative ideas that they can consider.
This is about ensuring that the CEO is focused on the important and not the urgent-unimportant. That said, they retain control. Seeking the counsel of the Advisory Board
does not mean that advice binds the CEO and they are free to decide the course of action.

Objectivity 
A CEO can’t be objective about the business, strategy, potential and capability. They are inevitably biased, not least because they are emotionally and financially entangled with
the business: the business is the creation of the CEO, and they see its success or failure as fundamental to who they are as a person.

Contrast this with the fact that an Advisory Board is by default objective. It is emotionally detached from the organisation but holds the success of the CEO and the business as its core reason for being. The Advisory Board can, therefore, provide objective counsel and alternative perspectives. It enables them to see how their natural bias impacts their decision-making. The Advisory Board is that ‘sense-check’ for CEO decision-making that a leadership team typically cannot provide.

Accountability 
Who is the CEO accountable to? If you are running your own business, it’s easy to change your direction or do something more slowly or quickly than perhaps originally planned.
That’s okay, except when you change your commitments for the wrong reasons or when a change of mind negatively impacts your leadership team and other employees. An Advisory Board ensures the CEO maintains perspective, stays focused and is less distracted than they might otherwise be.

New thinking 
Your advisers need to think differently from you. Your perspective is based on your life experience and your expertise. There’s a good chance that some, if not all, of your leadership
team members think like you do. Your Advisory Board can be the source of different thinking, pushing the boundaries of your collective field of vision. The Advisory Board’s diversity of thought enables the CEO’s thinking to break free from the shackles of a limited perspective and explore possibilities of greater ambition for the business.

Enhanced capability 
Adding an Advisory Board member with deep expertise in a critical skill gap (for example, digital marketing, strategic finance, global supply chain management) can provide access to the necessary new skills. This gives organisations access to a level of capability beyond what they could normally hire. The result is faster strategy execution, greater innovation, and stronger financial performance.

Access to networks (the little black book) 
Your Advisory Board members will all bring their ‘little black book’ of business contacts. These contacts can provide access to target market segments, international markets, or
supplier networks. The Advisory Board’s collective black book dramatically speeds up access to the right networks, accelerating opportunities for growth.

Clarity for the CEO 
When surrounded by their A-team, the CEO can clearly see the organisation’s enhanced capability and potential. Among the myriad things the CEO has to address, their focus becomes sharper on the key strategic issues, and their leadership style shifts from motivation (driving performance through external reward) to inspiration (eliciting drive from within).

In short, the evidence is overwhelming: businesses with Advisory Boards consistently outperform those without. Not because of luck, but because they gain perspective, accountability, objectivity, and new thinking that translate into better decisions, stronger execution, and sustained performance uplift.

Written by Anthony Moss.