Neville Christie is the chairman of six companies and currently serves on two advisory boards. He has been a CEO, Director and business mentor of low-tech and high-tech businesses. His business experience encompasses 40 different industries. He has chaired and directed start-ups, advisory boards, social and community boards, and IPOs through all phases.
In this Q&A interview with Alex Pirouz, Neville Christie discusses advisory boards, why they are important to a business, how to manage one and who should and should not be on the board.
Q: What is an advisory board?
A: Advisory boards are tailor-made to the unique and specific situations of each company and they will differ from a public company and a private company. The board is set up with different members who bring their experience, skill and business knowledge to offer their expertise and support to senior management, the CEO and other board members. They are best used for start-ups, private companies and fast-growth companies.
Q: Why should a business have an advisory board?
A: A business should have an advisory board so that they can provide a range of resources (not available full-time or as a consultant) to a company at a cost that is far more affordable. It is best used to fill in the talent, resources and skill that the founder, CEO or senior management team would not have.
If the business owner goes back to his/her purpose in business and then analyse what they have now, which is what I call their “present story”, to where they want to be “future story” and look at the gap in between, the advisory board should help fill in the gap for them.
Q: Who should be on the advisory board?
A: The CEO, the CEO’s mentor, senior executives and other members who are able to provide advice, expertise and experience that fill the gap where the business is requiring support in.
Q: Is there a limit as to how many people should be on the advisory board?
A: For practical reasons, the ones which I see work properly is usually between 3 to 5 members at max.
Q: Does the advisory board change depending on the size of your company?
A: Most definitely; there are many phases that a business experiences and to move from one phase to another successfully there are new skill sets and expertise required to make it happen.
Q: How do you determine whether someone is the right fit for the advisory board?
A: Very similar to how you find whether a person is the right fit for an organization; it all comes back to the personality and the needs of the founder/CEO, but over time very much to the culture of the organization. If the advisors’ values and interests are different and contradictory to the values, goals, strategies and culture of the business then obviously they are a bad fit.
Q: To get the most out of your advisors, what do you recommend?
A: I recommend an open and honest working relationship. I share a number of syndicates at the CEO institute and when a team comes together for a first time there is a natural tendency not to tell the whole story, to tell only the good bits or try to report on what you are doing well.
Q: What are the advantages of having an advisory board?
A: Well, there are lots of them. Extra talent, experience, networks, contacts and of course most importantly extra resources that typically the business could not afford or attract. The advisory board is usually at a much higher level than the company’s experience or maturity would warrant.
A: Having an advisory board can also help by opening doors, bringing in new contracts, opening access to more funds, adding to the bottom line by introducing new products and the overall power of a multiple mind.
Q: What are the disadvantages of having an advisory board?
There can be disadvantages if the wrong people are chosen; it takes up time to manage and typically the CEO/Founder is busy and very time-scarce; and there will be a cost. But again, the cost of an advisory board is far less than what people can imagine.
Q: What are the different ways to structure an advisory board? Is it by giving equity stake, monthly fees, etc?
A: I would recommend that equity should not be exchanged early on; like anything sweet equity should be gained on the basis of adding tangible value to the company. Just putting in time, that in itself should not be rewarded with equity. On a number of boards I share, we have a yearly retainer agreed on and that is paid and reviewed quarterly. And like I said before, sometimes a simple lunch is enough.
Q: For someone who has no clue about setting up an advisory board and they needed to for their company, what is the first thing they should do?
A: The quickest and best way is to find someone who knows how to do it.
Q: At what stage within a business should an entrepreneur set up an advisory board?
A: From day one the entrepreneur should start with a mentor who has experience setting up an advisory board.
Q: What are some reasons why an advisor would not join the board?
A: If their skill set and experience did not align to what the company needs, if they do not respect, like or trust management, the CEO or overall culture of the company and if they see the company does not have a prudent or strong financial management team.
Q: What are the dangers of not having an advisory board?
A: You end up growing alone, your company will grow slower than you would otherwise and you’re going to pay dearly for a number of mistakes which you definitely will make.
Q: For someone who is new to this topic, where do you recommend they go to start educating themselves on this vital topic?
A: Find a mentor who has done it before
Q: What is one piece of advice you have for an entrepreneur who is looking to set up an advisory board?
A: Do it.
Q: Why do you say that?
A: I have been a mentor, I have entrepreneured 44 businesses of my own, some with advisory boards and some without, I share syndicates with the CEO institute and I see over and over again the differences between those who are struggling to do it on their own, the mistakes they have made, the time it takes to build their business and the pitfalls they fall into compared to somebody who does have an advisory board and the difference is quite amazing.