Just like you need different types of boards to ride surf, snow or street, you need different boards to help guide different stages of your business. While solo entrepreneurs can get by with an informal cadre of advisors, other organizations need more disciplined boards of advisors or formal boards of directors. The key is to evolve your board as your organization's needs change similarly to how you must lead differently as your team grows.
Rob Cochran has been through several of these stages at his #1 Cochran auto dealerships. His father started the business and was, in many ways, a "first generation sales-focused entrepreneur" who didn't really have the patience or need for structured critiques of his business.
When Rob took over the business in his 20s following his father's untimely passing, he knew he needed an "advisory board to hold me accountable." Now, after a couple of decades running the business, he's much less worried about that than he is about providing different perspectives to his core management team. Down the road, Rob expects his advisory board will help transition the business to the next generation.
There are three different board stages and structures:
1. Informal ad hoc advisors
2. More formal, disciplined boards of advisors
3. Official boards of directors
Informal Ad Hoc Advisors
Almost everybody has someone they turn to for advice: lawyer, accountant, priest, friend, spouse, local bartender or the like. These early advisors generally have a personal connection to the leader. Hopefully they have relevant, valuable expertise as well.
As Rob was putting together his initial advisory board, he looked for people with competency and character he could trust. At first, he started with those who had a connection to himself or to one of his key constituents. Over time, he's learned to strike a balance on his board between people with direct, automobile industry experience and those with complementary experiences.
While he was younger, he needed his board members to be "more supportive and somewhat paternal." Now he looks to the board to provide an outside view, help refine the strategy, and push him and his leadership team to get better. The best advice he ever got from a board member was when he was told that "there are certain times when opportunities, situations arise where the right answer may create short term pain and a tough week, month, even year, in exchange for hopefully a better 20 years."
Rob compensates his advisory board members in two ways. First he gives them a stipend for the three meetings they come to each year, each lasting a day and half. But that's really to let them know he's serious about their involvement. It's the second part of their compensation that's most valuable: the learning and connections they get from being involved and the feeling of satisfaction from helping someone they like and respect.
At some point, he expects the board will help him transition leadership to the next generation.
Boards of Directors
- Know what you want and are trying to do. Be clear on whether you need ad hoc advisors, a more formal board of advisors to help you, your leadership team or the next generation, or a formal board of directors.
- Know the roles. Filling the board with people you trust and value who have a personal commitment to the organization, its leadership and mission. (Stay away from those purely motivated by compensation).
- Build the team. Treat your board like a team if you want it to act like a team. Pay attention to its composition and chemistry.