May 1, 2019
Omnipotence cannot be next to godlinessContact
There comes a time in any company’s life, when those in charge realise they cannot do or know
everything, i.e. they are not omnipotent and therefore, they must seek external advice.
The type and level of advice is usually in proportion to the age and complexity of the company. At the beginning, the needs can be relatively simple. However, as a company grows, the range of needs increases. External advisors can bring tremendous value to a business and long term, they can even become part of a management’s ‘kitchen cabinet’; conversely, appointing the wrong advisor can be a detrimental force.
In this article, I look at the pros and cons of external advisors, with some recommendations on how to choose the right one and get the best out of them.
So, why would you hire an external advisor?
- Expertise: the prime reason for seeking external advice is because it is not present in-house. Typically, as a Company grows, the management need to focus their time on driving the strategy, so other technical aspects need to be outsourced to people who focus on that one area for a living.
- When choosing an advisor, ask about their expertise, what companies they are working with and ask for third party references.
- Experience: external advisors tend to work for a number of different companies and/or sectors and therefore have a broader view than any one management team might have. This may provide additional context and solutions to existing issues or to those that might not have even been thought about.
- Does their experience match the stage of development of your company? Are there case studies that reflect what you want to do?
- Network: External advisors tend to have broad networks, which could be relevant to and useful in the future development of a business.
- It is worth finding out how willing they are to share their contacts e.g. organising network events etc. Also, ask what other third-party advisors they rate to help you with your choices – it will make life much easier if your growing stable of advisors like and respect each other, and also have a working relationship in place.
What are the disadvantages of hiring an external advisor?
- Loss of control – with any delegation of responsibility, there is a level of control that is lost which can be particularly difficult for founder/CEOs. Any advisor worth their salt should manage this through regular discussions with the client, feedback and provide evidence of a job well done. The key is trust and building a good working relationship from the start.
- Cost – Budgets come in all shapes and sizes, so work parameters must be clear from the start. In the life sciences industry, cash is usually ring-fenced for the understandably ‘important work’ of developing new therapeutics and technologies. If money is to be diverted on other areas, the ends must be worth the means. Decide how much you are willing to spend beforehand; get several quotes for comparison and see what flexibility there is with respect to phasing of projects to ease cashflow demands.
- Mismatched expectations – this is the biggest reason for frustration on both sides – generally caused by poor understanding and/or lack of communication between parties. The business need should be agreed beforehand, along with clear KPIs, and there should be regular conversations ensuring that what is being delivered meets the needs of the agreement. Communication is the watchword – if there are issues, these should be identified and discussed as soon as possible.
In my experience, the most productive client relationships have been where there is regular and honest communication from the very start: an understanding about where the company wants to go, how it wants to get there and therefore what it needs from its communications. At the same time, a successful advisor has been clear with their advice, including taking a contrary view if necessary, managing expectations of what is achievable, at what cost and over what time.
The core to all of this is a good personal chemistry; where the third party supplier(s) not only becomes a trusted advisor within the ‘kitchen cabinet’, but becomes a friend for the long term.
By Melanie Toyne-Sewell, Instinctif Partners