02/07/2013 04:00 pm ET Updated Apr 09, 2013

About Leadership: Getting Advice on the Advisory Council (Part 1)

External advisory groups (these are to be strictly distinguished from governance boards) are popular in some companies today. And they have a lot to recommend them. But in my experience there is a lot to think about before you start. In BP I spent a time working on and with something we initially called the Technology Advisory Board (bad name, only The Board should be using the name Board) and later called the Technology Advisory Council. Later I served on several advisory groups for companies, universities, and government agencies. Today I chair one for a venture capital fund.

Where to start? Before you put something like this into place, the fundamental question to answer is "Do we want advice?" This is not a question with an obvious answer. Companies certainly take advice from consultants, both individual and firms (and see my essay on Getting Advice from Consultants on this subject). But from a committee? And with consultancies we usually are asking for advice about a specific problem, while with a standing committee or council it is on-going advice. So do you really want any advice? Because if you don't, and you have told people that is why you have them, they are going to get frustrated pretty quickly.

Of course, there are other reasons for having an advisory council. The usual one is reputation. Getting a group of distinguished individuals (Nobel Prize winners are excellent for this purpose) together and publishing their names on your website and in the annual report is thought to be an excellent technique for reflected glory and credibility enhancement. This is a favorite technique in the world of venture capital-backed companies, especially in biotechnology.

And this is not all fluff and PR. It can have a substantive role in corporate reputation. Getting the members of the advisory council committed to the company can make them excellent ambassadors. A good group of advisory council members can help deal with reputation issues around stopping major research projects, closing a laboratory, or relocating work from one country to another. They tell friends and colleagues exciting things they have heard about. They help on promoting the positives and minimizing the impact of the negatives.

Connections and relationships are another reason for having an advisory council. The right group of individuals can open doors in other companies and in universities. While this might seem to be an individual activity -- one member introducing the company to another -- there is something about laying out challenges to a group that leads to better generation of networking ideas.

But suppose you really do want ongoing advice from your advisory council. What is the next thing to think about? You have to decide to whom the council is advisory. For example, if it is a technology advisory council, does it advise the chief technology officer, or his/her boss, or the CEO and managing directors? It is very useful in bringing members on to the council to make it clear to whom they are accountable.

Understanding who the ultimate recipient of advice is does not preclude others also receiving some. For example, while the CEO may be the person to whom the advisory council reports, this may only happen once or twice a year. In the interim, quite a lot of useful feedback might be given to the functional leader -- CTO, CIO, etc. who interacts with the advisory council more regularly.

If the format for meetings is one of presentations by staff, followed by discussion, then feedback to those who present is an important component of deriving value from the existence of the advisory council. This should be structured, and it should be clear to those who present that they will get the feedback.

Advisory councils, properly organized, can provide advice to a number of different levels of the organization. In a subsequent column I will discuss membership and logistics of advisory councils.

About Leadership:

About Leadership is a series of 52 columns on corporate leadership -- essential skills, leading teams, managing your career, the strategic and business practices to make a company and its leader distinctive from competitors. These columns will be of interest to people leading small and medium sized companies today, many of whom have not had much formal training in management skills and techniques; for the many people in big companies who aspire to senior management; and for anyone who thinks: Give me a hint, how can I do this better?