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One Secret to Long-Term Success

Written on December 17th, 2007 by Ryan Lee in Franchising Developments.

Over 40 some years of business I have studied hundreds of companies, some big, some small and a lot in the middle. I have been hired to turn companies around, find the weak link, improve performance, develop strategic and operational plans and grow all kinds of companies to a new level.

For 5 years, other than my work with franchisors, all I did was install management systems in companies of all types. Starting with three-day retreats we would take 12 to 15 executives, often company presidents, and teach them a basic management program as we also studied their companies and learned what made them successful. These retreats involved hundreds of companies over the years and improved management and operations of thousands of executive managers.

There was one thing that made some companies stand out. That one thing is what I call the “One Secret to Long Term Success.” The One Thing was a well chosen board of advisors. A small, dedicated group of several outside advisors who met with the company on a regular basis, from quarterly to monthly depending on the company.

First we need to make a distinction between a Board of Advisors and a Board of Directors.
• A Board of Advisors is two or three well chosen outside advisors that meet with the CEO and top managers and give advice and hold them accountable.
• A Board of Directors are voting members who can hire and fire the CEO, set policy and are personally liable for their actions.

The Board of Advisors do just what the name says, they advise the CEO and the top management team on key elements in the growth of the company. They are a sounding board, the truth detectors and a resource when things don’t go as planned. They are contacts and referrals, a source of business and an additional face to the community. Sometimes these relationships can last for years, even decades, as trust builds and good advice continues to enhance the company. One of my advisory positions has lasted for over 22 years as the company has gone from a local upstart to an international giant.

The Board of Advisors must be carefully chosen, you want people who will bring fresh ideas, be independent thinkers not yes people, and have a value to bring to the company. They should be paid, fairly compensated for their time and effort. They should not be your attorney, your accountant, or your best friend. It’s possible that they could be an accountant, or an attorney, but not your accountant or attorney.

As the CEO, you need to manage your Board of Advisors, use good meeting skills, keep the meetings on track, send information ahead of the meeting so they can be prepared and let them hold you accountable. A good CEO and Board relationship does not mean that everyone is the CEO’s best friend, it means that they have mutual respect and work together to meet the goals of the company while protecting its values.

WHAT SHOULD A GOOD BOARD OF ADVISORS DO FOR YOUR COMPANY

• Be a resource that management can call when they need something.
• Be a sounding board for new ideas.
• Bring new outside perspective and ideas to the company.
• Bring connections and opportunities to the company.
• Hold the CEO and top managers accountable.
• Bring years of experience to the meetings for the CEO to draw upon.
• Be an outside review presence where managers have to report their activities and be held accountable by someone they don’t work with every day.
• Should the business ever experience a calamity, catastrophe or serious
threat to its existence, be someone who may be called upon to assist.
• Assist in developing long term plans with an outsiders view point.

Boards of Advisors are meant to serve closely held companies, not public companies. The Board is there to support the CEO, to make the Chief Executive more successful, increase the value of the corporation and to assist in improving cash flow.

So my advice to companies is to have a good board of advisors, one, two, three people who have vast experience in business and bring the CEO a fresh perspective. They may have some specific expertise the company needs but they should also bring a generalist approach and understand the macro picture of the company and its business.

For more information, or advice on having a great Board of Advisors contact Jack Eberenz at jack.eberenz [at] brandexpansion.com or 602.625.5106.

Jack Eberenz is brandEXPANSION’s director of franchise development. Click here to read more of his weekly blog.