Step-by-step for advisory boards

Advisory boards are the corporate world’s most misunderstood creatures: vaguely respected and frequently misused everywhere. They sit in a strange limbo… important but powerless, influential yet unaccountable… dispensing wisdom without holding the steering wheel. In theory, they are a handpicked group of outsiders selected to think clearly when insiders can’t. In practice, they can be anything from a secret weapon to a well-catered talking shop. Their superpower is flexibility; their kryptonite is the same. With no legal muscle and endless scope, advisory boards can sharpen strategy – or quietly fade into background noise, if no one is paying attention.

The foundation of any effective advisory board is clarity. Before names are discussed or invitations sent, the organisation must be clear about the purpose of the board. A written advisory board charter is essential, not as a compliance exercise but as a strategic tool. The charter should clearly outline what the board is expected to achieve, over what period, and how success will be evaluated. Vague ambitions, such as ‘guidance’ or ‘mentorship’, are insufficient. Whether the objective is shaping long-term strategy, providing technical or scientific expertise, testing customer assumptions, opening business-development doors or solving a defined project challenge, the purpose must be explicit. Advisory boards fail most often because expectations were never clearly articulated.

Once the mandate is clear, attention must shift to the composition of the board. Selecting advisory board members is frequently treated too casually, relying on familiarity, convenience or personal networks. This approach weakens the board before it even begins. The right starting point is a clean assessment of the skills and perspectives required to deliver on the board’s mandate. It is better to list the needed capabilities rather than the people you know. When you approach established experts, the quality of discussion improves and signals the seriousness of intent. Many experienced professionals are willing to serve, motivated less by money and more by the opportunity to contribute, build something meaningful, and share hard-earned experience. For the start-up SleepAlfa, we just implemented this process.

Structure keeps advisory boards from sliding into polite chatter. Size must be intentional, small enough to invite debate yet large enough to challenge thinking. Ideal boards will have ownership, provocative questions and serious accountability. Meetings could usually be quarterly, but monthly for early-stage start-ups. Wherever possible, in-person sessions beat screens, building trust, openness and productive friction. Preparation matters just as much. Advisors must be briefed in advance with crisp agendas and recorded decisions. Discipline is respect for time, attention and intent. It signals that advice here actually matters.

Leadership on an advisory board demands a different kind of authority – one rooted in direction rather than control. Unlike fiduciary boards, advisory boards rarely have an independent chair wielding procedural power. The CEO, founder or project sponsor usually convenes the group, sets the agenda and anchors the discussion. This is deliberate. It preserves the board’s role as a thinking partner to management, not a parallel power centre. But this structure comes with a risk: when leadership talks too much, advisory boards turn into applause galleries. Their real value lies in friction, not flattery. So, one must actively invite dissent, tolerate intellectual debate on issues and demonstrate that advice is acted upon. Remember, advisory boards that do not challenge assumptions are doomed to fail.

Compensation is where many advisory boards quietly lose credibility. Purpose may motivate advisors, but eventually, plan to compensate them with sweat equity or other kinds of shares that may not have voting rights. Pay must be deliberate, transparent and matched to organisational maturity and success-based. Large companies may offer retainer fees, while start-ups can plan equity to ensure shared long-term commitment. No need for substantial stakes, just symbolically showing your commitment. Advisors value influence, impact, networks and intellectual challenge – not just money. Most senior executives consider advisory roles as a springboard to future fiduciary possibilities. Thoughtful compensation signals seriousness, accountability and mutual respect – sans lower quality advice or suggestion.

Advisory boards don’t fail from lack of talent; they fail when treated like corporate jewellery. A real advisory board isn’t décor for pitch decks but a working engine that demands intent, structure and follow-through. Done right, it expands leadership bandwidth, punctures groupthink and spots risks early. Done wrong, it becomes a polite meeting with snacks. The rule is simple: an advisory board that never changes your mind isn’t advising you; it’s entertaining you. In uncertainty, this difference defines resilient leadership.