I once spent some time on a board of outside advisers for a company that had a failing division. Try as he might, the CEO just couldn’t turn things around in this one area.

When he finally turned to the advisory board, I connected him with a noncompeting company that I knew had dealt with similar problems. In no time, our CEO had learned enough to correct the division’s problems and make it a success.

These types of stories abound in the business world, leading to a mystique about outside advisers. They’re thought to be endowed with supernatural powers or to possess more and special knowledge about a wider range of topics than those inside a business. In addition, outside board members are assumed to be ready to make command decisions as needed.

All of this is pretty much nonsense, of course. Insiders work 50-60 hours a week in the business, and outside advisers visit for a few hours each quarter. Even so, I think there are good reasons to consider assembling a board of outside advisers.

Outside advisers have probably been a few places you haven’t and may know some people you don’t. They not only offer advice based on their own experiences but can connect you with resources to which you wouldn’t otherwise have access.

As a result of their independence and objectivity, they’re also able to address topics that other employees can’t or won’t. Outsiders can uniquely add value when a CEO has an underperforming division and doesn’t want to talk about it or when an acquisition fails to live up to projections but no one is asking for a review.

They have no favorite solutions to most problems. They tend to be less informed but more objective. They know they are a part of a team and not the leader. And outsiders can proffer safe paths of communication between different levels of executives.

An orderly process

One of the most important areas where outsiders can aid an enterprise is succession planning. This is a huge challenge to all businesses, small and large. The exercise is fraught with danger, and many CEOs have not experienced this before.

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Outsiders should not pick the next CEO, but rather run a thoughtful and orderly process so the best choice will be clear. Here the experience of outside directors at other companies and their objectivity comes directly into play.

I don’t have any magical advice on how to choose an outside adviser, but I can say this: Consider thoughtful people who have been around business, know a wide range of people and are bold enough to say necessary but difficult things. They won’t live up to the mythology that’s out there, but they’ll be assets when tough decisions need objectivity.

James E. Schrager is clinical professor of entrepreneurship and strategy at Chicago Booth.

This column is part of the Chicago Booth Insights series, a partnership with Crain’s Chicago Business, in which Booth faculty offer advice for small businesses and entrepreneurs on the basis of their research.

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