Advisory Boards have a daunting array of tasks. This includes advising CEOs and business owners how to overcome challenges at a particular time. Those challenges will change over time, depending on

  • market conditions,
  • the economy,
  • industry,
  • competition, and
  • other factors.

Those challenges are in a constant state of rapid change, making the role of the advisory board that much more difficult.

There are many reasons advisory boards fail to provide good recommendations to companies.

  • Advisory board members have a limited amount and quality of information.
  • They are generalists, meaning the average advisory board is unlikely to have all the expertise it needs at any given time.
  • CEOs or small and medium business owners pick advisory board members based on an unknown set of factors
  • Stakeholders have no information about how decisions are made or how individual advisory board members perform. boards, for the most part, are created and operate under a premise that has proven, over time, to be ineffective. That premise is that advisory board members can be one-size-fits-all, without recognizing the huge differences across companies, industries, and business cycles.

Most advisory board members are say-on-pay or independent advisors. This may be good value proposition for business owners and CEOs, but in reality, this model may actually destroy value. The fundamental problem with a company having an advisory board of independent advisors is that the advisors are individuals.

Boardroom Metrics proposes a better way: permitting independent firms, such as BRM, to provide advisory board services. This is one of the services we provide to small and medium businesses. In this capacity BRM acts as an Advisory Board Service Provider (ABSP), a relatively new term used by the business community around the world to describe these types of professional service providers. It’s more of a mainstream term, and one that is getting center stage in a lot of discussions about advisory boards.

The idea is that a private company hires another entity, call it Boards-R-Us, to provide advisory board member services. This replaces the hiring of unrelated individuals to provide advisory board services.

Companies provide almost all the goods and services in our economy, including professional services such as accounting or law, because they offer some well-known advantages compared with sole proprietorships. For instance, providing advisory board member services as a group would allow Boardroom Metrics to deploy experts as needed to address particular problems as they arise, just as consultancies, accounting and law firms do.

Allowing advisory board members to be under the same roof would reduce this problem. Finally, Advisory Board Service Provider firms, such as Boardroom Metrics, have reputations that exceed those of individual members. When an individual acts alone, only one reputation is at stake, but when a firm acts, it is effectively betting the reputation of the firm each time it provides its services.

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