Saturday, 12 September 2020 05:19

5 questions you should always ask before taking anyone’s advice

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Phil Lewis

I am a consultant and I will tell you that a lot of the advice that consultants offer is not worth listening to, let alone acting on. I’m not singling out consultants, either: the same is true of most advice on offer, period.

Advice is, indeed, cheap—for the simple reason that it is typically given by people who, to paraphrase the author Nicholas Nassim Taleb, have no skin in the game. Bad advice can have horrendous consequences for those who take it. But for those providing it the downside will, at worst, comprise some sort of (usually localized) damage to their reputation or a smaller than expected cheque. The risk asymmetry is stark.

Of course, no advice is ever guaranteed to create success. And no advisor worth their salt would make such a guarantee. So, as a leader, how do you know whose advice is worth listening to?

Here are five questions, drawn from over 20 years’ experience on both sides of the table, that will help you separate the sages from the snake-oil salesmen.

Q1. Is the advisor’s experience directly relevant to my situation?

Taking advice from someone about a situation of which they have limited or no direct experience can be a high-speed road to ruin.

No-one who has spent a lifetime in salaried roles is fully qualified to advise an entrepreneur about their mindset or outlook. People in, say, retail might not always be best placed to understand the challenges faced by those working in financial services. And, no, the fact that you once attended a music concert does not give you special insight into the music industry.

Beware, then, those who believe that general experience is a substitute for specific experience—or that all situations are somehow analogous. Beware also generalised claims of advisory success. Sometimes, of course, circumstances can be reduced to their lowest common denominator, and reframing problems can help advisors and clients find common ground. But the more directly relevant the advisor’s experience is to the matter at hand, the more useful the advice on offer will be.

Scrutinize the experience of your potential advisors for relevancy before listening to a word they have to say.

Q2. Are our incentives aligned?

Incentive misalignment is rife in business—yet barely examined in the course of most organizational activities, let alone advisory relationships.

Start with money, and Taleb’s point about skin in the game. If your advisor is incentivized to keep the invoices landing, then the client who is motivated by budgetary constraints or cost-efficiencies in delivery should be wary.

One blindingly obvious problem with self-serving advice is that it is never framed as such. This is one reason to be wary of anyone who is actively engaged in “selling” advice for a living—as opposed to simply explaining his experience, values and competencies, and allowing you to draw your own conclusions.

At its barest essence, this question can be re-expressed as follows: “Does the advisor have my best interests at heart?” This doesn’t mean that they’re automatically advising you for free; it does mean that the driver of the relationship should be your prosperity. Counterintuitively, perhaps, this is actually better business for advisors: people tend to keep trading with those they trust (see Q4).

Action prompt: how could you make sure your and your advisor’s incentives are aligned?

Q3. Do we share similar values?

Advice is only useful when it is in service of a shared set of values. Someone seeking advice on, say, fostering diversity will not be well served if his advisor believes in strength through conformity. Similarly, someone who cares deeply about customer service excellence may not receive helpful insight from an advisor who cares deeply about maximal short-term profits.

This is not to sound judgemental about any specific values, but it is to assert that checking values alignment upfront with your advisors is essential. This is one reason why, in my practice, we have made our website a love-it-or-hate-it distillation of our core values and behaviors. If the website doesn’t resonate with you, we are unlikely to be good advisors for your organization, and you are likely to be put off on first contact—a fact that should provide comfort.

The problem is that someone’s values are often hidden from view. How to identify your potential advisor’s true (as opposed to stated) values? Start by asking these three questions.

Q4. Do they have a strong track record with me and my business?

Advisors who have a strong track record of delivering results for your organization (or you personally) are the ones whose advice is usually worth the most.

Obvious, isn’t it? Now pause to consider how often proven advisors—consultancies, agencies, mentors—get cast aside for shinier, newer replacements who seem to offer an easy solution to a trenchant problem. There’s also the fact that familiarity can breed contempt. And finally, you might consider western culture in general, which often devalues experience at the altar of youth.

This is not to argue that fresh perspectives aren’t valuable—and sometimes vital. But it is to suggest strongly that past performance is often an indicator of future value.

Here’s some gold-plated advice: care for your proven advisors the way that they have so often cared for you. Loyalty brings countless rewards.

Q5. Are they telling me something that I don’t want to hear?

Our best advisors are rarely our best friends—and in fact sometimes a healthy advisory relationship can be characterized by a high degree of conflict or dissent. It often falls to advisors to tell us the things that we don’t want to hear which are holding us back from achieving our goals. One sign of good advice is that you may not enjoy receiving it.

A close relative of Q2, this question merits special mention for the simple reason that it can sometimes be hard to tell the difference between uncomfortable but essential advice and misaligned incentives.

Consider, for example, a situation in which a consultant explains that, having thoroughly investigated your problem, you might need to spend far more money fixing it than you had budgeted. Is she being greedy, or acting as a responsible partner by trying to foreground a potentially uncomfortable scenario rather than continue in the cynical belief that the bigger the sunk cost, the larger the incentive for additional spend?

Again, understanding intention is key. A useful way to check this is by reference to the other questions. Does the consultant have analogous experience that underscores her trustworthiness (Q1)? Do you share similar values (Q3)? And does her track record with you justify continued underwriting (Q4)?

These five questions will almost certainly save you considerable amounts of wasted time, money and effort if you routinely ask them before seeking or accepting advice.

But they are useful for advisors too, as a benchmark for when your advice is valuable and when it is not. A good advisor, wrongly deployed, can easily turn best of intentions into the worst of outcomes. Genuinely bad advisors might be a rarer commodity than bad advice. Context is always king.

 

Forbes