Many business owners have not thought about getting an advisory board. They have a solid track record of success, the business is doing okay, and they have put together a good team that brings in all the skills the company needs.

Given all that, why do they need an advisory board?

Ideas are what power businesses grow. If you want to climb you need to be active and enthusiastic, looking for new horizons or new ways to achieve them. Most of those ideas are going to come from you — after all it’s your business, and you know where you want to take it.

There’s also value in looking elsewhere for ideas, though.

Looking back to when I worked for the water utility in Western Australia, my biggest question at the time was why they had picked me to manage their transformation into a commercial organisation.

I had spent my whole career in the private sector, either engineering or investment banking. I’d never worked for a government body or had anything to do with water and I wondered, out of all the people they could have headhunted for the job, I was it.

When I raised this point with the managing director, he told me that he had no shortage of people who knew everything there was to know about water. All his general managers had been in the water industry for at least 30 or 40 years

But he didn’t expect me to know anything about what they did, because he wasn’t hiring me to move water around Western Australia.

Essentially, he hired me to challenge every aspect of how they worked, to challenge the status quo, because he knew that would increase efficiency. My role at the water utility was to look at things from an outsider’s point of view, without the preconceptions their own people would have and to bring different skills to bear.

Albert Einstein famously said, “Insanity is doing the same thing over and over again and expecting a different result.”

Just because that’s the way you’ve always done things in your business doesn’t mean it’s the best way; it just means it’s good enough that your business has survived.

The Value Of A Second Opinion

The experience brought by a good board has other benefits as you work to develop your business. You have lots of ideas, but as you grow beyond your experience, you won’t always be able to evaluate those ideas as well as you’d like or should. You can discuss them with your team, of course, but that isn’t always a perfect solution.

It’s unlikely you’ve surrounded yourself with “yes men,” but people will still find it difficult to be fully objective. For a start, they’re all insiders. They share your corporate culture.

Often they’ll have helped develop your ideas, and their evaluation of them is likely to be similar to yours. They might also have a natural reluctance to challenge the boss. You might have the best relationship in the world with your senior staff, but it’s a fact that in a hierarchical structure people are rarely happy about passing bad news up the chain.

When you’re testing your ideas, it’s always best to have a sounding board which can bring that fresh perspective to the question. It’s even more useful if they can analyse your plans through the lens of their own experience.

If you have a well-chosen group of advisors to bounce your thoughts off, you’ll get the unvarnished truth. Some of your ideas will turn out to be great; others might benefit from some refinements. An advisory board will help you spot the difference without testing them on your business in the real world.

Tailors and joiners both have an old saying: “Measure twice, cut once.” This applies to implementing business ideas, too.

It’s better to get a second opinion, from a trusted advisor with deep experience of the topic, than find out once you’ve implemented your plan that there’s a flaw you couldn’t have anticipated.

Staying open to new ideas, and benefitting from the experience of others, are powerful multipliers for a business. Most business owners are well aware of this, and happily accept inspiration when they find it.

The question is, where should you find it? My belief is that you should look for it through an advisory board.

Since I became involved with advisory boards, I’ve seen them achieve remarkable things for my clients. I’m convinced that a good board is an invaluable asset to any business that wants to grow and thrive in the rapidly changing and challenging modern economy.

It’s also a very cost-effective way of bringing new thinking and expertise into your business without the cost of hiring expensive employees. The annual cost of an advisory board is less than employing a receptionist, and it will have a much greater impact on your overall performance.

I believe that over the next few years advisory boards will become the norm for the most successful small and medium businesses. In today’s environment any edge is vital, and as the concept becomes more widely understood I think many businesses are going to adopt it to give them a competitive advantage.

If you want to be a leader, instead of scrambling to catch up, I think you’ll be interested in what advisory boards can bring to your business.