My wife, Anne, and I have a cardinal rule with our family. Now that all five kids are through college, on their own, and independent of us, we never offer unsolicited advice.
Well, almost never.
When son Will got downsized out of his construction industry job in Greater Boston sixteen months ago and decided to head for California to seek his fortune, we said “It’s great that you’re going west for a little adventure, but leave your stuff with us. The job market is even worse there than here.”
What did we know?
Within two months of arriving in San Francisco, Will had found a similar project engineering job with the same pay and better benefits.
How did he do it? Ahh – he solicited our advice on the subject of networking. Success came – get this – when he connected for Sunday dinner at our suggestion with our long-time family friends who had relocated from Lexington, MA to Marin County. Their daughter, a high school acquaintance of Will, invited another of their relocated LHS contemporaries to the dinner. It turned out that she (the “other”) was dating the hiring manager for the hoped-for job that Will had discovered on line a week earlier.
Kismet – meant to be? Well, maybe. But success in job hunting most often comes from having a lot of well-networked irons in the job market fire. As we’ve discovered over the past 40 years, you just never know where the ultimate lead is going to come from. Will now knows what we know – even a tenuous connection is worth pursuing when you’re selling, especially when you’re selling yourself. His “win” was also a reminder that Mom and Dad have some useful tools in their toolbox of experience.
There are useful toolboxes carried around today by a lot of builders of successful businesses. Their tools – in the form of knowledgeable advice – can be especially valuable in helping you to build your business. One well-timed suggestion from an advisor who is committed to your success – e.g., “Your company has reached the point at which you really need an experienced manager as head of sales” – can make a significant difference, especially when it’s followed by “Let me tell you what I mean by ‘manager.'”
Chip Johns and Steve Clark, who over a quarter century successfully built and sold Vanguard Sailboat Company (Portsmouth, RI), retained me as their senior financial advisor in 1994. A year later we evolved the relationship into that of a four-person Board of Advisors, adding Ron Breault, an expert in manufacturing operations and marketing, for the final twelve years of their ownership. Last weekend, in considering the attributes of an effective advisory board, Chip (who is now deeply into the search for his next entrepreneurial opportunity) and I developed the following list of lessons learned in marshalling management advice:
- Choose advisors who will disagree with you and with each other constructively without believing that theirs is the only right answer. Personal chemistry is important.
- Find people whose expertise supplements, not duplicates, yours and who will serve as a helpful resource for your staff.
- Provide opportunities for your advisors to observe your management team in action. A four-hour morning presentation of key metrics and departmental progress each month gave the Vanguard Advisory Board context critical for decisions involving senior managers that afternoon.
- Pay your advisors enough that they will make a serious commitment to their role, taking on “homework” assignments and being available on short notice between meetings. [Vanguard’s retainer was $2,500/month for a full day of meetings plus supplementary assistance.]
- Meet frequently enough to ensure that the company’s operational initiatives and results are consistent with the long-term strategy and to provide a call for corrective action if not.
- Withhold information that is critical to your decision process, leaving your advisors wondering “Where is he coming from?”
- Be unprepared. Distribute primary materials (e.g. financial reports) in advance, and always work from an agenda, preferably one with some stimulating intellectual content.
- Summarily reject advice. You may discuss it, counter it, modify it, and ultimately decide not to follow it. But if it’s advice not worth considering, it’s time to find a new advisor.
- Make frequent changes to the team. The members need to develop a modus operandi with you and the other members of the group, which is difficult without regular meetings, regular attendance, and regular people.
- Tie them down with fiduciary responsibility as a named Board of Directors. They can be every bit as useful in an informal capacity without worrying about their liability for the short- comings of you or others in the company.
Will called last weekend to commiserate about the Super Bowl and to mention that he was temporarily having some roommate issues. It’s been a lot of years since Annie and I had roommate issues, so we once again opted to keep our advice to ourselves. Sometimes the advisor’s most useful role is just to listen and be interested…
“Unlike a board of directors, which has formal legal authority over a company and a fiduciary duty to its shareholders, an advisory board won’t make decisions for you and has no obligation to the owners or liability for the company’s actions. That said, ‘if you’re not willing to execute the advice of the board, then you’d better not put one together,’ warns Tony Eisenhut, managing director of KensaGroup, which forms companies to commercialize technologies developed by universities. ‘Because the greatest disrespect to a board, having given you a commitment of their time, is taking their time and doing nothing with it. Not only will you lose credibility with that board but with future board members as well.’
“‘The advisory board should be at the level you want to go to, rather than the level you’re at,’ says [Smith Barney financial adviser] Corey Hansen. Members, he adds, should have experience building a business, not merely running one. Don’t make the mistake of recruiting a highly visible executive from a big company. ‘You want somebody who’s beyond – but just beyond – where you want to be,’ says Eisenhut. ‘Billion-dollar experience might be great for attracting VCs, but if you’re going for $10 million in sales, you want some $10 million to $20 million experience.’ You’re looking for people who know how to execute with the resources you have available. ..
“A board should be made up of three to five outsiders. Two people ‘are always trying to find mutual agreement,’ says Ward. With three, an adviser ‘can afford to take chances.’ And ‘a group of more than five tends to dramatically reduce productivity,’ says Hansen. ‘With every person you add, it becomes a geometric increase in interaction; you want to keep things simple.'”
Source: Inc. Magazine, on line
Draining the Swamp
“GDP – Averaging 3% growth in ’10; strongest in the 2nd half
“Interest rates – Prime, 3.25% to mid- ’10; 10-year T-notes rising to 4%
“Inflation – 2% Dec. ’10 over Dec. ’09, down from 2.7% last year
“Unemployment – Peak around 10.5% in early ’10, but net ’10 gain of 1 million jobs
“Crude oil – Ranging from $75 to $85/bb. through Mar., barring disruptions
“Consumer confidence – Inching up, but far from normal”
Source: The Kiplinger Letter, 1/29/10