Rediscovering advisory boards.

• Author: KENNY, ROGER M.

Successful advisory boards don't just happen. They are strategically planned, carefully created, and closely managed. Here are steps that can help you form an advisory board that will add value to your company.

WHEN J.P. MORGAN'S CEO, Douglas Warner, wants support for a new business plan, merger strategy, or executive hire, he can always tap his board of directors for their ideas, experience, and contacts. But if he wants to know how best to do business in a particular country, or how the war in the Balkans and our current relationship with Russia could affect U.S. trade policies or European markets, he can go straight to his advisory board and individuals like former U.S. Secretary of State George Shultz, former Courtaulds Chairman and CEO Sir Christopher Hogg, and former Olivetti Chairman Carlo deBenedetti for expert advice.

As members of the company's more loosely formed advisory board, highly visible and well-connected people like Shultz and deBenedetti are available to consult, open doors, and lend their knowledge to the company. But they don't have to attend numerous meetings, only the infrequent but upscale advisory board gatherings the company hosts round the world.

Advisory boards, popular in the 1970s because of the international growth explosion of U.S. companies and their need to consult with foreign nationals on local strategies, were often lost or ignored by subsequent management teams in the restructuring of the '80s and '90s. Now, established blue-chip companies are rediscovering the value that these informal networks of influential allies can add to their competitive advantage -- and to the bottom line. Companies absorbed in mergers are creating advisory boards to gain much-needed visibility and credibility. Early-stage companies are using them to access business expertise they otherwise could not afford and contacts they would never make on their own.

When Salomon Brothers merged with Smith Barney and was then absorbed by the Citicorp-Travelers marriage, the company's independent board of directors evaporated, leaving Salomon's leaders without access to the kind of close personal advice and expertise a board provides. Today, Salomon Smith Barney's new advisory board provides both access and credibility without assuming financial and governance responsibilities. It's a happy solution all around. An incredibly high-level team has been brought together to have an impact on the firm's young, dynamic management to test and stretch their plans, and provide a dimension of credibility to their actions.

Call direct

Now, if Salomon Smith Barney executives should decide to explore new markets in consumer products, pharmaceuticals, telecommunications, or media and entertainment, they can call directly on advisory board members Al Zeien, former CEO of Gillette Co.; Ralph Larsen, Johnson & Johnson's CEO; John Clendenin, former CEO of BellSouth Corp.; or Tom Murphy, Capital Cities/ABC Inc.'s former CEO, for help evaluating business strategies or making high-level contacts.

Highly placed executives reluctant to devote the time or assume the liabilities of corporate boards will often consider serving on an advisory board. Meetings are flexible and infrequent, and advisors are not personally liable because the board is not a legal entity. Yet membership can provide valuable personal and professional contact with stimulating and successful peers in a variety of industries.

Most advisory boards gather no more than two or three times a year, and some never meet at all. In general, an advisor's service is largely tied to his or her schedule and, in some cases, may primarily involve consultation with senior managers on specific business issues, not requiring formal meetings scheduled in advance.

Top-level retired or soon-to-be-retired executives value the chance to stay involved, learn about new industries, and share their expertise with the next generation of business leaders. These advisors often find the...