Rediscovering advisory boards: 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.

• Author: Kenny, Roger M.

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.

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 intellectual, business, and social opportunities of advisory board service quite attractive.

Why an advisory board?

Why do companies create advisory boards today? The most common reasons are:

* Acquiring contacts that open the right doors. High-level advisors can serve as effective ambassadors for the company and meet other state and business leaders as peers.

* Gaining insight on policies and trends. How is the market for its services changing in the southeastern United States? Could a recession in California alter the way consumers invest for retirement in that state? Advisors who have their fingers on the consumer pulse from region to region and a good sense of the political and economic climate can help a company seize new opportunities and sidestep potential disasters. And they offer the company a way to continually test its business model.

* Permitting early-stage companies to reach high. Eighty percent of companies in the early stages of development fail after their first financing when they lack the expert leadership of effective, experienced board members who can mentor young inexperienced management. But emerging companies that attract high-level directors and take advantage of their hands-on operational, financial, and leadership experience have a 90% chance of succeeding. Advisory boards give new businesses the opportunity to attract prestigious executives who are unlikely to make a full board commitment, with its substantial time...