MSP Chat Episode 02: The ESG Opportunity and Winning with Advisory Boards
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Erick and Rich discuss the emerging MSP opportunity in ESG services and how to improve profit margins by avoiding project scope creep. Then they’re joined by Louise Broekman of the Advisory Board Centre and Annette Taber of BOARDSWAP to discuss the power of advisory boards for vendors and MSPs. Trust us, you only *think* you know what a well-run advisory board is and the impact it can have. That’s followed by one last thing: a new class of smart textiles called SMART ePANTS that turn ordinary underwear into a surveillance tool.
Discussed in this episode:
Why Advisory Boards Are a Successful SaaS Vendor’s Secret Weapon
Transcript:
Rich: [00:00:00] One blast off, ladies and gentlemen, welcome to another episode of the MSP chat podcast, your weekly visit with two talking heads, talking with you. Services, strategies, and success tips you need to make it big and manage services. My name is Rich Freeman. I am chief content officer at Channel Master, the company responsible for this fine program.
I am joined by your other host. My colleague, my friend, the chief strategist of Channel Mastered, Erick Simpson. Erick, how
Erick: are ya? Rich, I wish I could say I’m doing phenomenal, but I’m trying to get past a little bit of a head cold here. So apologies for the, for the nasally audio output today. But excited to join you.
For today’s episode of the MSP chat podcast,
Rich: It’s funny we, it’s still summer. It’s summery outside as we’re recording this, but football is back and people are getting cold. So it feels like we’re racing into autumn maybe just a touch prematurely. You sound fine, feel better.
Let’s plunge right in. We’re going to talk about our story of the week in a moment here. I will just preview. And in part two of the podcast this week, we’re going to be talking with a couple of different people about advisory boards. Very interesting conversation that might change your perspective on what those are and what makes those valuable.
But first, Erick, let’s dive right into our story of the week. And a little bit like on the last episode of the show, this is not driven so much by a news announcement as by some research that I’ve been looking at recently that I think is worth calling attention to because. It highlights a, an emerging opportunity for the MSPs in our audience and we’ll begin with some research published just a few days ago by IDC about what they’re calling purpose built sustainability services.
And basically, they’re just talking about professional services that are 100 percent focused on environmental sustainability goals or ESG goals they are projecting that global spending on ESG business services will grow at a 14. 9 percent compound annual growth rate through 2027 from 37.
7 billion this year. To 65 billion globally in 2027. Now, before I dive into some of the specifics here a little bit, I’ll just acknowledge up front. Anytime you’re hearing numbers like that especially if they are worldwide numbers, most of that spending is coming from Europe, and most of it is coming from larger businesses.
But this is changing Erick. Let’s talk with the European part of that. Canalys posted some ESG research not too long ago. They asked people to what extent are ESG regulations impacting your IT spend and not surprisingly, 69 percent of the respondents in Europe said some or very significantly, but 47 percent of the respondents in North America said the same thing, almost half.
This is already a significant number here in North America, and that number is growing. Now, again we’re probably talking chiefly or more heavily about enterprise even in North America right now, but this too is changing. We are seeing, based on some data from Logicalist, Which is a big time MSP, coast to coast MSP here in the States.
They have some research that said 20 percent of their customers, who they surveyed recently, are factoring sustainability in when choosing an MSP. When we’re talking about MSPs, obviously, we’re solidly in the the SMB zone. And 40% of ESG service engagements. Will require a managed services component.
So there will be some managed services involved in those engagements by 2025. Now, what kinds of profit opportunities are there for the MSPs in the audience right now? Those range from things like reuse and recycle. So there are programs from vendors like Cisco, for example. You clear a a pretty easy training requirement.
You got a certification. If you’re making a networking sale to one of your clients and they’re replacing existing equipment, if you return that equipment to Cisco and they’ll pay for all the shipping and all that, you return the equipment. They will give you 7 percent more discount points that you can either keep for yourself, share with the customer if you prefer to make that deal a little bit easier to make.
There are refurbish and resell opportunities. There are the opportunity as well. [00:05:00] To work with a distributor like Ingram micro, for example, has an IT aspect asset disposition program. It works somewhat similar to the Cisco deal there, where if you are, for example refreshing PCs that are three years old according to Ingram, those devices still have something like 20, 30 percent of their original sale value on the used market.
And Ingram, if you return those devices to Ingram, they will share that some of that with you. And again, you can pocket it. Or share it with your clients as well. There are also, it’s worth pointing out plain old product repair opportunities there, good old fashioned turning a screwdriver, Erick, which I’m sure MSP still wind up doing maybe more than they would like if you help a customer.
Extend the lifespan of the device as opposed to having to replace it and dump something in a landfill potentially or have some sort of a resource extraction impact on Mother Nature. That’s a little service revenue for you and it will help companies with their sustainability targets.
And last point I’ll make is just I was referencing sustainability regulations before Erick, and that is one of the drivers for a lot of businesses, but there’s also just this growing recognition. I think this is particularly true in SMB. That employees, people like to work for companies that are environmentally responsible.
People like to buy from companies that are environmentally responsible. I’m talking more and more often to MSPs who will get that question from their customers. What do you do with the old hardware that we’re talking about here? There are opportunities to make money. There are opportunities to drive recruitment and retention with your employees.
There are opportunities to drive. Loyalty and engagement with new customers around ESG and emerging opportunity, Erick, but one that is growing and now early is always the good time to get it on, get in on the next new thing
Erick: And what a next new thing it is, rich, right? This is a movement now. It’s not simply an opportunity that folks are using to, just do good on their own, but it’s being influenced.
By, I know here in the U S right. The current administration is really fueling incentives and things like that to help organizations move in this area. And in fact you can get products and services cheaper in many industries, if they can be proven to deliver some level of, ESG.
Metric, right? So I know that, in the oil and gas industry, for instance, we have a mutual colleague. Mark Smith, who is, started it in organization all clean connect. That’s all about helping measure these types of things. And then if you can prove that you’re delivering those oil and gas or those energy services in a cleaner way, then that’s more valuable.
And so there’s opportunities there, but I think From a distinction perspective, I’m really interested in the comments you made in around businesses wanting to do more work with more ESG aware and ESG friendly organizations. The bell in my head rings immediately to say, Holy cow, this is an opportunity for MSPs to move in that direction, to adopt some of these programs that vendors and distributors.
So that they can then begin promoting that in their marketing and in their sales approaches to differentiate themselves from their competitors. And even if an organization, an SMB, isn’t really looking to, buy services that are more, ESG aligned, it is still a distinction and differentiation, which may get them to re evaluate how they make these purchasing decisions.
Have this, enhance and amplify this movement for, cleaner energy and cleaner services and things like that.
Rich: No, it’s a really great point, Erick. Two, three years from now, being ESG conscious and marketing that, that probably won’t be a differentiator here in North America. I think a lot of people will be doing that, but it’s a differentiator now.
And it will both, as you said, attract customers who already know they want this from an IT provider and also just give you a way to separate yourself set yourself apart from competition. So again, just one more reason to get in early on this with the other reasons being that, okay, two years from now, lots of people are doing it, you’re going to be two years ahead of them basically, and the sophistication of what you do and how you do it.
Yeah, this is something for folks to definitely check out. I will point out that Joe Panetteri, the great Joe Panetteri of MSP Mentor and VarGuy and ChannelEDE fame, his current venture he just recently launched a new online publication, I [00:10:00] think it’s called Sustainable IT Partner or Sustainable IT Provider, something like that.
I’m sure you can find it if you go to Google and look it up. And so he’s writing about this market opportunity pretty much every day. And that’s a good place, maybe to get started, familiarize yourself with some of the names and and the trends and so on.
Erick: Definitely. It’s an opportunity.
And as you say, Rich, get in early, and lead and don’t be seen as someone that has to react. Belatedly when others have taken market share away from you because you did not move fast enough in this arena to, to gain that market share as an MSP. So it’s better to lead right then to fall behind.
What is that a line out of Talladega nights? If. You’re not first.
Rich: You’re last. Okay. We’re talking about a new profit opportunity for MSPs there. Profit has something to do with your tip of the week Erick, so why don’t you dive right into that?
Erick: You’re right, Rich. And today’s tip of the week is all about managing your MSP projects in order to overcome scope Creep.
And scope seep, which equals improved profit margins. So I want to talk about a couple of different concepts, rich. Um, I learned from the enterprise before I started my own IT practice and later transformed it into one of the first MSPs in the industry. And this is the idea of never doing anything for free and never trialing and erroring, if that’s the term, a new technology or product or service on your, on the, on your time and your dime for a client.
I remember early, and we’ve all done this, I learned it in, in, in the enterprise, I colored outside the lines until I said, okay, let me get back to what really works. And I’m talking about when we are faced with a client that says, Hey, we want this. And this thing, Rich, being a product or service that me as the MSP has no experience in and has never done before.
Now, Rich, as typically when an engineer is asked, to do something that they find too risky, their answer is typically going to be, no, we don’t do that. Or if we are going to do that, here’s the process. And it becomes. What a sales professional may call a sales prevention tactic.
So when a sales professional is asked by a client, Hey, can you guys help me with this again, this being something that we’ve never done before and don’t have an experience in sales professional is compensated and encouraged to sell at all costs. And they are typically going to say, yes I won’t say for everybody, but I’ve seen it happen rich, all too often.
And then. The technical department is left to figure something out when, we have to start from zero. And of course, when there is a large ramp time to deliver a product, service, or solution that first one we did look deliver typically is at a loss, rich. So I want to introduce the first concept is a concept of selling a proof of concept.
Or what we’ll call a pilot program. And what this allows the MSP to do is to say to the client, listen and be completely transparent. We’re in this together. We’ve never done anything like this before, but we have several resources that we can collaborate together with to deliver a proof of concept to you.
And those additional resources will typically include. A vendor or vendors of choice, maybe a distributor, strategic partner. It could be another MSP that is experienced in this type of thing. You’re not going to, if you’re not going to do this a lot, I don’t recommend spending the time training and certifying your team to, achieve something that you’ll sell once a year, maybe rich, but if you’re doing, if you’re doing it more than it’s a different strategy.
And this helps in both those cases. You’re going to surround yourself with folks that want, that can deliver that service. So I’ll tell you a real life true story, where this happened in our MSP. So we had, one of our clients was an offshoot of the LAPD. They were benefits are of the LAPD and they had a, shooting range and for the cadets and a restaurant and banquet facilities and things like that.
And they said to us, Hey, we need a new liquor control system. You guys do that. And of course our sales professional says, of course we do that. And then came back to us and said, you guys know what a liquor control system is? And we said, what? Luckily we had, [00:15:00] we were, we had a very close connection with Microsoft.
They aligned us with a partner that did these types of things. And so we were able to do a proof of concept and we said, Hey, we’re going to deliver this, we’re going to do it as a proof of concept, which means you pay us. So that we can deliver and see if it will work, see if it will integrate. Cause it had to integrate with their point of sale systems.
It had to integrate with a couple of other of their internal systems. And again, this was maybe new for, our strategic partner that was doing it as well, but we wanted to, build a proof of concept. And they said, yes, we will pay you. This rate to do the proof of concept with the understanding that.
If the proof of concept is successful, then we will roll out the full. And that’s exactly how we did. So a proof of concept or a pilot program is a way for you to position your services so that you get paid. To do the research and everything that’s necessary and you’re billing the client to do this with the understanding that you will quote them When you’ve figured out whether it’s going to work or not And of course if the proof of concept fails, we’ve had that situation happen as well rich where okay that solution is not going to work Here’s solution b and then we do it that way until we actually did one, engagement I think we went through four different solutions for a client Until we found the right one.
Can you imagine Rich, if we had just said, Oh yes, we do that. And then tried to roll out any of the three that wouldn’t work and the egg on our face, and then trying to recover that reputation, all that lost labor and potential profit, et cetera. So proof of concept pilot program one, the second tip I will give here is to have a kickoff meeting with your client.
Once you understand you’re going to roll the project out. And make sure that everyone understands their role in helping deliver that project. In many cases, we fail as MSPs to have, to establish and hold accountable everyone in that project. The client and their team is critical in helping us deliver that project.
Because they may have someone that’s the, let’s say it’s we’re replacing a, an application or something like that. And there’s a guru, right? Someone that knows that application that, that works for the client, that’s going to help us test against, the new solution against their one that we’re replacing.
There may be clients, vendors that are involved, other team members of the client that are involved, our vendors are involved, so we need to have an understanding during the meeting of who’s responsible for what. And what is everyone’s responsibility and the decision maker that you’re selling this to their primary responsibility.
Is to approve change quickly, we expect there to be change in any project. I’ve never done a project where there hasn’t been You know some change that have that has had to happen Whether we have decided to build a client for that or not, there has been some change that’s been necessary. So we establish what change looks like when we determine, when we detect the need for change, we will alert and inform everyone that it impacts, we will investigate options to get around to, to address that need.
And then we will request approval for that change again, whether we’d bill for it or not. So for instance, if we find that, one component of this new. A solution that we’re putting in or a process or something that we expected falls outside of scope. Then we have to let the client know immediately and let them know, look, we have to deviate from the established project plan.
And here’s why, and here’s what we recommend. We don’t give them choices of, oh, choose these three options how you want us to move forward. We choose the best option forward. We get the client to approve and authorize it. Including the extra budget if necessary. Sometimes you don’t have to charge them.
Maybe it’s just a schedule change or something like that, but it’s better to do that and have an established framework for change and get the client to understand that their job is to approve change quickly so that we can meet the objective of the project is to have the project completed according to the success criteria by the forecasted date and never sell a project based upon staying within budget.
And staying within a target completion date. Because those things will change. I guarantee it. So those are a couple of quick tips on how to reduce scope creep and scope seep and to make sure that you get paid to do the work that’s required to identify how to, whether a product, service or solution is suitable for a client when you don’t have the experience to do that.
Rich: Yeah. And there are a few things I really like about this advice and you finished on one of the things I was going to highlight. Which is actually a larger point that we don’t really have time to get into in depth, but just the idea that you are not doing work that you don’t get paid for, because there are a lot of MSPs enjoying the [00:20:00] show right now who do assessments, network assessments, vulnerability assessments as a way to get their foot in the door with a new client, potentially, and a lot of them will give that away And there is this idea that really you shouldn’t be giving anything away if that assessment has value, you should be getting paid something for that.
So there’s that. I also love just philosophically the idea that you are never going to, I shouldn’t say never, but basically you’re going to make it very unlikely that you ever have to say no. To the client. So even if they’re looking for something that you don’t do or haven’t done before, this proof of concept idea is a way for you to go ahead and do that anyway.
And the third thing I’ll highlight, and this was a question that was forming in my head as you were going through that, but you answered it. Which is just, okay that the customer tells you we need a liquor control system. The salesperson has never heard of that before. One way to approach that situation is to basically say, oh, you bet.
Liquor control systems, we’re all over it. We’ll be back with a a bid for you tomorrow on that. I love being more transparent with the customer about that. We haven’t done that before, but we take on new needs for clients all the time. We work with people who are really good at this kind of thing.
Let’s get started on a proof of concept. So you’re kicking off that engagement, that relationship with transparency and honesty, as opposed to this approach of just pretending you know everything and then maybe missetting expectations and suffering the consequences.
Erick: Yeah, you’re right. I’m quite rich and it builds a lot of trust and team building between you and the client when they understand that they are part of this project, like they’re shared responsibility on both sides. And, the last couple things that I’ll throw in that, that I didn’t mention, of course, are, we’re going to have phase reviews, at each phase of the project, we’re going to phase the project out.
So we have a very clear ability to establish. The milestones for each phase of the project, and then we can say it by we’ve successfully completed this phase of the project. Here’s the demonstrated proof of that. Would you agree? Yes, we do. Please authorize that you agree that we’ve met the success criteria of that phase.
And if you have a project that’s five phases, it could be many more, but let’s say it’s five phases, the way that you, you have the kickoff project kickoff agreement with the client. It indicates that should every phase of the project be. Approved and authorized as being completed according to the success criteria of that phase, which is typically a technical outcome or a business outcome.
Again, not a budgetary outcome or a time frame outcome. The technical or business outcome should every phase of the project be approved and accepted as complete. And pass. And by default has met the criteria for success, then upon the final phase being signed, that project is now deemed complete. And this is another thing that MSPs struggle with, is the client feels like they determine when the project is over.
Wait a minute, we didn’t do this, we didn’t do that. No. This is what we’re doing. These are the phases. These are the success criteria of each phase, and once we complete each phase and you approve that they have been successfully completed according to the success criteria, That means that the project can now deemed, be deemed complete.
And if there’s change orders along the way, they want extra stuff, we handle that through change management.
Rich: Okay. I like it, Erick. Thank you very much. Folks, we’re going to take a break now. When we come back on the other side, it’ll be time for our spotlight interview segment for this week’s show. We are going to be talking with a couple of folks about advisory boards, and I’ll just say, if you think you’re familiar with advisory boards, you know all about partner advisory councils, for example, I think you’re going to find there’s a lot more to the topic than you realize, and we will bring that for you when we come back.
From this break.
All right. Welcome back everybody to the spotlight interview segment of our show this week. If you are an MSP or a vendor, if you live in the world of managed services, you probably think, what you need to know about advisory boards. You may even sit. On or chair a partner advisory council.
We are here to bet that you don’t actually know as much as you think and are maybe not taking as full advantage as you could be of this very powerful tool. And that is why we are excited to be joined this week on the show by Louise Brockman from the advisory board center. And I’m going to give her a chance right now just to introduce you and the advisory board center and help you all appreciate what’s going on.
Why she is more qualified than anyone else we could pro possibly bring on the show to really help you understand how to get value from an advisory board. Louise, welcome to the show.
Louise: Thanks, Richard. It’s lovely to be here.
Rich: So tell us a little bit about yourself and a little bit about the Advisory Board Center.[00:25:00]
Louise: Well, Rich, I’m probably the most biased person you could meet with regards to advisory boards and the power of them. I’m the founder of the Advisory Board Centre, and that’s the the global professional body for the advisory board sector. So our organisation as a professional body is to raise the standard of advisory boards worldwide for the professionals themselves with credentials, and then in turn for the organisations they serve.
I started the advisory board center quite a few years ago as a professional body, because in my previous business, I had an advisory board and it was life changing for me and it made an incredible impact on the business itself. So when you do it, when you do it well, it’s incredibly impact, not only impactful, not only on the organization, but on the individuals themselves, so that’s why I do what I do, Rich.
Rich: And this is a a global organization that you lead and you are based in Australia.
Louise: Yes, our support office is in, in Australia, but we operate in about 25 countries with about 600 members globally and as the professional body, it’s all about best practice and ethical frameworks so the advisory board structure that gets implemented, it’s done well, it’s impactful, but then it’s also safe.
From a governance perspective so to navigate the executive team and the directors and other stakeholders, advisory boards when they are done well they’re incredibly powerful. So as professional body, it’s really about ensuring that we’ve got those frameworks in place for really impactful advisory boards and right, making it really interesting as a profession for those that serve on advisory boards as well.
Okay.
Rich: Now you alluded to something a few moments ago that I wanted to ask you about because when we had a chance to meet before today you said then too that before you got involved with the advisory board center you had an advisory board in a former role and it quote unquote changed your life.
So tell us a little bit about that story.
Louise: Thanks, rich. And it is really deeply personal. So I had a successful business based in Australia and we had the opportunity to really grow that business globally. And I was making decisions as a business owner in a bubble. I was isolated and we had the opportunity to really build a very strong global business.
And I thought the way that I was making decisions on my own for the business wasn’t good enough. So I decided I needed good quality people around me so that I could really road test my thinking and be really very deliberate in the way that I was making decisions. And so I built an advisory board around me, actually didn’t know what one was.
So I’m like everybody else. I made it up. And and then in that particular business, we grew it to 135 offices in eight countries in a five year period. And the real value for the advisory board is to really help support me to be confident in the decisions that I was making. I didn’t want a governance board.
I didn’t want to lose control of the asset that I’ve worked so hard to do. And I wanted To be in control of the decisions that I was making, but to have people that I really deeply admired and respected around me so that I could step up and be the best I could possibly be, was really what I was looking for.
And when you make a decision, you want to make it a good one so that you don’t second guess it after you’ve made it and go, Oh, I’m actually going to change my mind. And for me that, that value in that confidence in the decision making for me was just absolutely invaluable. What when I sold that business Rich I decided that, look, if it could do that for me what can it do for other people?
I came from a research and development and intellectual property development background. So I decided to invest five years to research, test, validate advisory board structures around the world really look at where the ethical boundaries were from advisory boards to governance boards and to executive teams and the whole stakeholder engagement.
And that’s when I found there was no professional body looking after the advisory board sector at all, globally. But their directors are being looked after by their specific institutes accountants and lawyers as professions are being looked after by their professional bodies in the advisory board sector where advisory boards have been around since the beginning of time.
We’ve been receiving advice whether we like it or not, but when we see that there’s actually no professional standards around advisory boards, it just absolutely doesn’t make sense. We decided six years ago to build the first professional body for the advisory board sector and and here we are today.
Erick: Wow. That’s that’s an amazing story, Louise. And I always appreciate when someone is very passionate about something and then discovers the value for themselves. So I really love that personal connection you have, the difference that having a professional advisory board made for you and your business.
And now you’ve [00:30:00] identified, I think a niche. For many business owners that don’t really understand the need for a structured formalized approach to getting the assistance they need. I think most people in our audience, either may have a partner advisory board or Rich mentioned. Maybe are part of a partner advisory board and these are loosely thrown together from what I can tell.
I’ve been part of some of these organizations in the past. Help folks understand the difference between kind of this informal or ad hoc internally built approach to an advisory board and what you’ve built which is more formalized, structured, and a professional approach. That you offer to your members and clients.
Louise: Thanks, Erick. And, it’d be interesting to get your experiences on those advisory boards too in this conversation. So an advisory board may be informal and it could be totally appropriate for the environment it’s in. I don’t discount that at all. When you start to formalize your advisory board, it doesn’t mean create constraint around it, but to create absolute purpose around the advisory board.
And so most businesses, when they’ve never had an advisory board before, will generally start with an independent certified chair. And that certified chair really understands best practice about what the advisory board is there to do and what it’s not there to do. So an advisory board. With a very clear charter and purpose with carefully selected advisory board members that have been chosen fit for purpose and who are independent.
So it doesn’t undermine trust in the conversations that are had around the table. Then really clear processes and structure. It doesn’t mean constraint, but structures that make it really fit for the environment that it’s in. The meeting cadence really quality frameworks of which, which has been put in place, but also measurement of impact.
And so when you put together an advisory board or any new discipline, you want to ensure you get return on investment and understanding that it’s going to be impactful, otherwise why do it? Really clearly outlining. What the advisory board is there to do, what good looks like, what are the KPI measurements that’s going to be the measurement of success and measuring impact on at least an annual basis.
All of those things are really clear, but simple frameworks that ensure five key things around the principles of advisory boards. Best practice standards don’t actually exist in advisory boards because a standard is a process driven environment. Advisory boards are inherently flexible. It can be it can be structured in a way to make it really fit for the environment that’s in.
So a best practice standard doesn’t work because there’s not just one way of doing things. So best practice principles really drive quality advisory boards. In its own way. So it’s around having clarity of scope, which is all around purpose. It’s about having structure and discipline and measurement, which is all around process and around the people.
It’s around ensuring people are independent and also fit for purpose in that environment. And those principles really drive a quality advisory board that’s right for an individual situation. And when you get that right and you the establishment phase is really key. Carefully considered, then everything else will follow.
So there are two key things that I see are success factors for an advisory board, a quality chair and a quality charter. Get those two things right, then you’ve got the frameworks and the establishment, which is why credentials around chair certification for advisory board professionals is really where the sector really needs to evolve to continue to professionalize the sector.
Erick: Yeah, that’s really great insight. I was going to ask you about best practices and KPIs and you encapsulated that there. I’m really struck by, the awareness around, the two primary factors that you mentioned, having a quality chair and having a quality charter, I think that, a lot of the boards and partner advisor boards and groups that.
I’ve seen and been a part of some of them really haven’t focused on those two real critical components in the way that you’re prescribing. I would say that, they ask for volunteers, right? Show of hands who can help. And then they have a vague kind of direction. Hey, we’re trying to solve this problem, but there isn’t.
A real structure around making sure that we’re tying the investment in time that everyone is contributing to those actual goals that ROI that you mentioned and also the fit for the chair of the advisory board. Like I say, sometimes it feels like a big peer group in some instances, so I appreciate you [00:35:00] sharing some of that.
I’d like to ask you about this state of the market report your organization recently published. And it indicated in there that advisory boards are becoming more and more popular. We’ve. Intentionally more and more popular. What are some of the factors that are driving that, that motion?
Louise: That’s a really good word around intentionally. Erick advisory boards as we discussed earlier have always been around, but they’re growing. In demand from both the supply and the demand side organizations are looking for independent thinking. The world has changed and yet our management disciplines and structures haven’t.
So how are we actually making decisions? And so governance boards themselves, a board of directors, becoming more and more constrained in the state of the market report. We produce it every two years really uncovers. The governance dilemma where governance board directors are becoming increasingly more constrained, more regulations, and their agendas, the things that they have to cover off as directors is becoming bigger.
And so more constraint, bigger agendas means that how do they get their head across everything that they need to? to make a decision on and agree on which is very tricky when you’re trying to also promote diversity of thinking. And so it’s just not sustainable. So what do directors do? Do they work harder?
Do they bring on more directors? Do they bring on more executives? Do they bring on consultants? They load more committees into their structure, or do they build new thinking systems through advisory boards to inform the governance board in the way that they’re making decisions. So that way we’re talking about governance systems now, not just governance boards.
And this is the, this is a new role for advisory boards in the market. Traditionally, the business sector, the 1. 5 million To 100 million revenue, business owners is being the key market for advisory boards. And that continues to be very strong in the market. And so the stakeholder economy continues to drive more advisory board activity, in particular project advisory boards.
So the market has always been very strong for all of business advisory boards, where a business owner would say, I don’t want a full board of directors. I just want an advisory board around me to support me in everything about my business. That’s traditionally where advisory boards have been. Now advisory boards, 53 percent of new advisory boards and now project advisory boards, instead of being about the strategy, it’s about the strategy.
So an advisory board, it’s really fit for purpose about a particular strategy, which may be around the customer. It may be around the supply chain. It could be around entering new markets could be around cyber or sustainability, which is another key area as well. And so it depends on. On which part of the organization they’re really wanting to really target that’s going to supplement both the directors as well as the executive team doesn’t replace it.
Nor does it defer accountability to them, but it creates this thinking around it. And Procter and Gamble have done it really well with regards to their project advisory boards, particularly around sustainability, where the head of sustainability says we want to break the circuit that we have as our executive team.
We want to bring the outside in to make sure that we are really challenging the way that we think about our organization and the decisions that we make. So all of these things are driving increased advisory board activity from an organizational point of view. And then we get the individuals, the, these the professionals who have very special roles.
Rears or built successful businesses. I have something to contribute and to give back. And so there’s a demand there from individuals saying, I want to be involved in problem solving for the future, but I don’t necessarily want to be a director. So that, that liability that sits with directorship when we’re trying to think about, problems for the future in a new way, there needs to be a safe zone to have conversations that are non binding.
And so individuals are also going into that place to be able to say, I can contribute. I don’t need to retire. Many people say, I never want to retire now that, or I can’t retire. But it’s all of those things that are driving it both in the supply side. As well as in the demand.
Erick: Excellent. Thanks, Louise. Rich, I know that there’s a couple of additional questions that, that we’d like to cover here, but I like the, one thing that I would also add, Louise is this interesting concept of, what happens to folks that are, at a point in their career. I think you touched on it real quick.
[00:40:00] That says, hey, I could be useful to others. I could, become an advisor and grow my. Or continue my usefulness. And I know a lot of entrepreneurs that I work with love giving back. So I think this is a really great opportunity for folks to, to continue, like you said, look, I’ll never retire well, some folks, don’t want to retire, but here’s a great way to, be impactful for other organizations.
And also continue earning, a great living.
Louise: Absolutely, in a flexible way. But we all need a sense of purpose in our life. And I think it’s a shame when we sell a business and we think, I’ve sold my business and then there’s nothing. Where’s my sense of purpose in that? I’ve left an executive career.
Build all this knowledge and experience and connections to be able to use that to help other people. It’s just an incredible way to, to live your life and have the right to, to continue to earn a living.
Erick: Yeah. And I also think it’s very interesting how you describe the different purposes of an advisory board and Rich, I’d like to get into a little bit more on that topic where, there are purposes for advisory boards.
It isn’t to solve every problem. Every problem that an organization has, whether that’s strategic or maybe it’s a PR situation. Oh, wow, we had this happen. We’ve got to, get a group of people together to overcome that. But, I guess my question would be, have you seen an organization have more than one advisory board based on different challenges in a larger kind of an organization?
Does that work?
Louise: Absolutely. So instead of bringing more directors on or more executives it’s bringing the thinking advisory boards as a thinking system. It’s not a doing, doing system. So where is the thinking taking place and advisory board could be a 90 day advisory board. It could be an ongoing advisory board.
So it’s and again, making it fit for purpose so that you understand. When you’re sitting on an advisory board as an advisor, where the ethical boundaries of when you should be providing advice and when you shouldn’t. So some are generalist in nature and really promote the diversity of thinking, whereas others have have diverse expert views on a topic to be able to problem solve in a more specialist nature.
And this is where an advisory board. It needs to be really carefully considered, which is why certified chairs have a very important role to play to ensure that advisory board is being structured, considered and established in the right way. And if it’s got a useful period for a period of time and the job is done to close it down or to refresh it.
So this is where customer advisory boards are exciting because it’s not a stale sort of committee structure where you’re just going through the same motions all the time. It can be really fresh, it can be invigorating, it can be very exciting when you bring different voices around the table at different times.
Erick: Yeah, it just sounds like a very interesting, unique and exciting opportunity for, folks that are, ready to, to participate and contribute.
Rich: I wanted to ask you about something cause you used a phrase earlier on that I wanted to ask you about. It came up in the report as well.
And that was basically the stakeholder economy. You said one of the issues that’s driving increased interest in and adoption of advisory stakeholder economy, which I think. Is going to be especially relevant to a lot of the vendors in the audience right now. What is the stakeholder economy and how does that sort of tie into the importance of advisory boards?
Louise: Rich I think this is a really important trend that’s not going to go away and potentially it will change the nature of management itself. So today, Corn Ferry and Financial Times have both described the advisory board sector, referring to our last state of the market report as the, it’s the hot new governance trend.
I think because of stakeholder economy and the way the market’s going with having engagement of stakeholders within the decision making cycle, not actually being decision makers, but being considered in the way the decisions are being made, is going to be the hot new leadership trend. In the future and I think as a management discipline that stakeholders themselves, which include investors, which include employees and and the general public for executives and boards to be more considered about the impact.
That organizations have on others on the stakeholder. It’s not just financial performance. This is nothing new. It’s just a constant evolution. We look around customer advisory boards. It’s a very smart. Commercial conversation with the customer when you can co create your product and service with your customer or [00:45:00] your supply chain, like it just makes really good business sense.
And it’s great to hear within your own ecosystem, you’ve got the adaptation. Of of advisory boards in the co creation of product and service in that feedback loop. It just makes really good sense within any SAS based business to have a a a stakeholder. So advisory boards as a service is just a very smart thing to do.
It’s not just a good thing to have. I think it would be a necessary thing to have in the future. And so when we look at markets, say in Australia, where I am from in December this year, Advisory boards have been regulated for the very first time in the aged care sector because vulnerable customers through different royal commissions and investigations into sectors.
Just haven’t got a voice. So where is the voice of the customer? Both because we want the customer’s input into the product and service delivery and co create it. But also we want to ensure that our customers are safe because of the work that we do. Aged care sector, disability services child care, banking.
The energy sector, all of these, I think must have a considerate approach to a vulnerable customer. And this is just the starting point to the value of stakeholders in the broader decision making cycle. It’s not just about making good decisions. It’s making optimal decisions and having businesses that we’re all really proud of by really being inclusive in the way that we think about the work that we do.
Rich: Now, a lot of the member organizations in the Advisory Board Center are consultants who work with businesses to both design and then actually operate successful advisory boards. We actually work with one of those member organizations called BoardSwap at Channel Master to help our clients with their advisory board needs.
Tell folks a little bit about the services that a, an advisory board professional can provide and why, in your view, it’s important to have somebody with that kind of expertise involved in creating and running the board.
Louise: Yeah. Thanks, Rich. And it’s good to, to have Annette on this call as well from BoardSwap.
The advisory board sector as we talked about really thrives. Based on credentials for for chairs. So the chair certification is something that we provide to people who are business professionals who have a proven track record. We select less than 10 percent of those that apply to join us to complete the credential.
And then they are certified in the processes of establishing the protocols of establishing an advisory board. Establishing a best practice advisory board that implements all the frameworks of what good looks like to to evaluate independently the structure structures that could work for an organization to then support the organization in the way that they profile and then engage with their advisors and then managing the protocols of The advisory board itself, which includes the advisory board meetings on an annual basis, followed by measurement of impact.
Setting up an advisory board without those protocols and giving it to an executive, which sometimes happens saying, I want you to set up an advisory board. Off you go. And then all of a sudden, somebody says, Yes, I know how to do this. It’s it’s fraught with danger by not by giving it to somebody and just making it up as you go.
So it is a profession on its own. And and then doing it setting up as a management discipline so that it is adding value and not detracting value from the governance board and from the executive but bringing more value to the organization. This is where the certified chair community is really important in, in ensuring that these advisory boards are done well.
Rich: As you said, Louise, we are joined by Annette Tabor of Boardswap on this call, and we would be remiss not to take advantage of that fact here. Annette, as an advisory board center member, as somebody who helps organizations run advisory boards, Just give us your take on why it’s so beneficial to vendors or other organizations in the I.
T. industry to work with somebody like yourself on an advisory board.
annette: Having spent about 15 years running advisory boards for multiple organizations, I can say it’s getting back to the structure, the discipline, the clarity of scope, making sure you have that charter, and making sure you can assess.
Your executive team for the gaps that they have in meeting that charter and then finding those executives for your advisors that can fulfill that gap. It’s something that I would say in our industry today, it’s lax with all due respect. It bounces from the sales organization to the marketing organization, and these folks typically have full [00:50:00] time jobs.
So being able to outsource the entire process, not having to worry, working with your certified chair to really understand the challenges of the business and make sure that you’re developing board charter. To be specific so that you can measure those results, both at the front end and at the end of the year.
And if that charter changes. You board swap out the advisors and you bring in the new advisors to meet that new charter and you don’t miss a beat. You just keep moving.
Rich: And that’s the kind of thing somebody who has not worked with boards before is not necessarily going to recognize on their own. That it is time to swap out members, that this board has fulfilled its purpose, that there is a different purpose that maybe requires a different board.
You really do need input from somebody with With the experience that you have you ran boards for CompTIA, if I remember right.
annette: That’s correct. I had 10 different boards for CompTIA over the last 12 years. Seven of them were running simultaneously. Those were really more project based boards, as Luis mentioned earlier.
They were content development for different technologies, categories like ai, blockchain, drones, cyber, whatever. And so those are an example of project-based advisory boards. But, working for an all of business advisory board, you’re really getting into product management, sales, tech support, customer service.
I recently worked with a client where they had a a crisis situation to be honest. And so they had to regain trust of their customers and we brought in 14 of their best customers and we hosted a two day meeting in Denver and it, it turned out great. So different types of situations all can be acknowledged.
If you’re building a community, if you’re building a new partner program if you’re trying to test neat products if you’re exiting the market, if you’re looking to move internationally advisory boards can be used for multiple purposes. So yeah, it’s really an exciting time to be an acceptor.
Rich: All right. Annette, thank you so much for joining us. And thank you as well, Louise, Annette actually introduced us to Louise. We thank her for that. And Louise Brockman from the Advisory Board Center, we thank you for joining us today on the show. Thank
Louise: you. It’s been a lot of fun
Rich: being
Louise: here.
Rich: Okay.
We’re going to take a break and when we come back, we’ll wrap up the show in our final segment. Stay tuned.
And we are back for the final segment of the MSP Chat Podcast here. Great, really illuminating conversation with Louise and Annette there Erick. And I hinted at this before we did the interview segment there before, When I first specifically when I first met Annette I was one of those people who thought I understand this advisory council sort of thing and what that’s about and where the value of that comes from.
And just getting to know her and then through her getting to know Louise has really opened my eyes to the difference between doing this in a very professional way. And doing it in a very casual way and the impact that doing it in a very professional way can have on the companies who are involved with it.
It’s this whole new space, field, opportunity for vendors and the MSPs they work with that I really didn’t fully appreciate until quite recently.
Erick: Yeah I understand exactly how you feel, Rich, because I felt the same way, it’s something like, Oh, there’s a process for how to do this, right?
It’s if you think, Oh, it’s an advisory board, we’re all going to get together. We’re going to throw some ideas around. We’re going to get some feedback. Maybe we’ll do a, some surveys, maybe do some focus groups and we’ll come up with some recommendations. It is as far away from that as you can imagine in how the structure An advisory board and the charter and what it’s meant to do.
And what, one of the things that really struck me, Rich is how, I assume that an advisory board is on as long as an organization, is in existence, right? We’ve seen this, but in reality, there’s all different types of advisory boards, you can have an advisory board spun up just to execute.
A particular goal or a project, which I thought was very interesting, and then have the ability to swap in and out different board members as the charter of the board is achieved, and then a new one is established. I thought that was that’s a really fascinating and valuable way to get the maximum outcome.
Out of these [00:55:00] experts that you bring on in an advisory board. You’re not stuck with someone beyond, what their capabilities are to deliver. It’s something that is fluid in time. So it’s like running a project with a bunch of experts to accomplish a certain goal. And then as that goal is achieved, then you adjust for the next challenge.
And then you may keep a few of those advisors based upon them. Their abilities and then you may swap in some new ones. So I thought that was what, was something that I had never even thought of and never experienced before. So I thought that was really unique.
Rich: No I agree.
It’s a a great point. And I’ll just quickly reference one use case for that particular opportunity here before we move on. And this may apply more to the larger MSPs in our audience. If you’re north of 5 million EBITDA a year or something like that. But if you are approaching an exit think about forming an advisory board of people, or even people who are recruited for you who have gone through that process before, wouldn’t it be great in addition to working with a consultant who can advise you on the process to work with other MSPs or XMSPs who have sold the business and can help you evaluate deals and strategies and so on.
So something to to think about folks. Now, Erick, that leaves us with time for just one last thing. And it it comes to us from the world of of technology. So the the folks at I forget the name of the organization that’s doing this, but it’s like DARPA for the intelligence community here in the United States.
They have an initiative going right now where they are soliciting proposals. On products that are basically clothing with integrated audio, video, and geolocation sensor systems built into them. And the idea is if you are a spy and you’re working overseas, wouldn’t it be convenient to be able to record audio or video or reports at your location without having to have a phone or another device in your hands.
You could just discreetly be doing all that from your clothing. And I’m looking so basically the acronym for this kind of textile that they’re talking about works out to be Electronic Pants, E Pants, and because these are smart textiles Erick, the name of the program is the Smart E Pants Program, Smarty Pants, the Smarty Pants Program.
Erick is an opportunity for organizations to create textiles. That will snoop on you and and other folks. And by the way they have received a bunch of proposals already. One of them is from MIT. People are taking this very seriously already.
Erick: Boy, rich for a minute there. I had to check the calendar to make sure it was not April 1st, because that just smacks as, some humorous story that you would hear as an April fool’s joke.
So many things come to mind when. When you think of something like that, we’re actually wearing garments that are recording audio, video, and all kinds of other things with sensors. And I just think back on, the challenges that we have today with just the technology in our smartphones, where the batteries will expand and catch fire.
The adage jumped to mind, liar, pants on fire in the worst case scenario there. But, just adding to the humor.
Rich: These these textiles are apparently solar powered. But, if you are one of the many people who have nightmares about privacy already, keep this in mind as something that could be coming along relatively soon.
It’s bad enough there are echo devices all over your home, listening in on everything you do. The guy next to you in the plane, basically, could be recording your your rebet through his shirt, and you would basically not know.
Erick: To position it, in, in a different manner, I think the article explains that, who’s the target audience.
Really? It’s like first responders. It’s law enforcement and EMTs and things like that is what I took from the article. But of course, anybody, could get their hands on this stuff and just, become. A spy, you know in any situation and
Rich: That is the target market spies.
It’s basically undercover operatives so All righty. You know what folks that is, all the time we have for this week’s show We thank you very much for joining us. We’re going to be back again with another episode of the program for you you can check out the video version of this podcast on youtube at the channel mastered channel You can check out the audio version at channel mastered Google, Apple, Spotter, Stitcherfly, wherever you get your podcasts, you’re probably going to find us there.
Please, when you’re checking us out, rate, review. It’s going to help folks find the show and enjoy it just as you are. Our producer is the great Russ Johns. Thank you, Russ. You can learn more about him at russjohns. com. He is also, by the way, part [01:00:00] of the Channel Master team. To learn more about Channel Master, you’re going to want to go to www.
Dot channel master. com. As long as you’re doing that, why don’t you go to www. channelholic. news? That is my blog. If you want to see my take on what’s happening in this industry every week, that is where you’re going to find it. So once again, we thank you very much for joining us. We will see you again in one week’s time until then folks, please remember.
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