In the recent article, “Improving CEO Decisions,” it was noted that CEO’s operate in a climate of constant interruptions and short attention spans. A number of suggestions were offered to help small company CEO’s improve their decisions. One idea was to consider starting an Informal Advisory Board. This suggestion was intended primarily to help companies with limited resources effectively increase their available “people and time” resources to help the CEO as the key decision maker in most small companies. (The topic of Advisory Boards was also discussed in a different article: “How Advisory Boards Help Small Companies.”) Another group that helps CEO’s and business owners improve their business decisions and better run their businesses, is a Peer Group.
Peer Groups vs. Advisory Boards
Advisory boards are helpful to CEO’s dealing with specific company issues. So, advisory team discussions and ideas are offered in the context of how they might benefit a specific CEO and company. Peer groups, on the other hand, also known as business owner roundtables or CEO discussion groups, differ in that they benefit all of the CEO/business owner group members.
These facilitated groups bring together CEO’s and business owners who mostly learn from each other (called peer-to-peer learning) about topics that might apply to a wider range of companies or situations. With 8-10 members, peer groups, often tend to be slightly larger than advisory boards, at 4-6 members, however, there is no set membership number for either.
Peer groups are flexible and can be comprised of members from different industries, or non-competing members from the same industry (e.g., geographically diverse). Confidentiality is extremely important to these groups and most require a signed participation and confidentiality agreement in order to join. Since members learn from each other, minimum attendance is required, and non-attendance, as spelled out in the participation agreement, can lead to removal from the group.
Peer Group Benefits
Exposure to New Ideas and Best Practices. The primary benefit to members of peer groups is that they are continually exposed to new ideas and best practices from the perspective of different companies and/or industries. While discussions can and do get into the applicability of a given topic to a specific member company, that is not the main goal of the group (i.e., the purpose of the group isn’t to discuss and solve only the problems of a particular member company.)
Voices of Experience. Because of the importance of the contributions of its members, CEO/owner peer groups often require members to have a certain amount of relevant experience before they will be permitted to join.
Cross-Pollination. The in-depth discussions and cross sharing of ideas among experienced owners and CEO’s can result in changes and improvements to identified best practices. It’s not unusual for a CEO who has introduced a best practice to the group, to take back to his/her company an enhanced version.
Sounding Board for Your New Ideas. Since the introduction and consideration of new ideas is encouraged, members feel free to bring their new ideas to meetings where they will receive candid feedback about the viability of the idea. This feedback can invaluable to CEO’s of smaller companies because it helps vet ideas and avoid wasting limited resources.
A Good Place to find Advisory Board Members. Not surprisingly, peer groups can also be a great place to find potential advisory board candidates to help CEO’s address specific issues at their companies, including customizing and implementing ideas and solutions learned from the peer group.
Ability to Perform a Deeper Dive. If desired by members, the group’s facilitator can invite outside speakers and experts to address specific topics of particular interest to the group. Facilitators may also recommend additional resources for individual members.
On-site Visits. Members may occasionally visit each other’s companies to obtain a more thorough understanding of a particular member’s company and to provide on-site feedback.
Informal Advisory Boards are a great way to help CEO’s deal with issues related to their specific companies. Facilitated Peer Groups, on the other hand, utilize the collective knowledge and experience of its members to expose CEO’s to new ideas and broader-based learning opportunities that can be applicable to more than one company or industry. Peer groups also allow member CEO’s to test drive new ideas, find potential advisory board candidates, and take deeper dives into specific topics and also visit each other’s companies, if desired.
James F. Hart, MBA, CPA, CIRA, founder of Lightfoot Group, LLC, assists business owners and their key advisers with advisory board and business troubleshooting services involving critical business challenges, dispute resolution, and management and ownership transitions. Jim has decades of experience as a business adviser, court-appointed receiver, turnaround consultant, and interim manager including operating and selling companies and assets, resolving disputes, and assisting family-owned businesses.
© 2018 James F. Hart, Lightfoot Group, LLC