Everyone has one and wishes they didn’t: the unwanted advice-giver who loves to stick his nose where it doesn’t belong and offer his unsolicited opinion. Whether he’s a successful CEO or your brother-in-law, he seems to pop up just when you’re feeling unsure of yourself.
Unfortunately, in business, the leaders who really need good advice are the most vulnerable to bad advice. Entrepreneurs usually don’t have high-quality boards, rarely have a wealth of industry expertise and may be entering new markets with no precedent to draw on. While a little helpful advice can go a long way, bad advice is worse than no advice at all.
Here are the people to watch out for and avoid taking advice from:
The know-it-alls: Know-it-alls are overconfident because they’ve seen situations play out as expected in their industry and assume their advice can work for any industry. These people may sound smart and have tons of experience, but you should avoid letting their opinion drown out common sense. When their experience comes from scenarios that aren’t applicable to your situation, their advice isn’t relevant.
The overly cautious: In countless industries, advisors have counseled successful firms to take few chances and focus on incremental innovation. In all these industries, those who played it safe suffered from continued erosion of their profit pools until they either went bankrupt or were acquired. Playing it safe is a fantastic strategy for maintaining the status quo in the short term, but you’ll lose in the long run to those who are willing to take calculated risks.
Those with vested interests: If you have to stop and think about whether someone has a conflict of interest, he does -- and his advice is tainted. Maybe he’s thinking of entering your market or stands to benefit if your competitor does well. He could even want to see your enterprise fail so he can hire you himself. His reason doesn’t really matter. If someone may have a conflict of interest, don’t take his advice.
So how do you get good advice when you need it most? Here are a few tips:
Ask highly specific questions. General advice is not your friend. When asking for advice, follow this format: This is the situation. Here is the decision point. What is your recommendation?
Find the right person. The right expert to ask is knowledgeable about your question, has no conflict of interest and is willing to speak to you in depth.
Give the right person a stake in your success. When you find the best advisor, bring him on as an official advisor. If he makes a concrete commitment to the board, give him an equity interest in making the right decisions.
Ask multiple advisors exploratory questions. Ask as many people as you can find for their view on a true “jump ball” strategic question. When you get differing answers, ask why the other’s answer is wrong. Ask how their own opinions could be wrong. Beware of people who say their answer is absolutely correct when the question truly doesn’t have a good answer. They are either naive or insecure.
Finally, don’t forget about the tools you already have. Launching a business can be daunting, and sometimes, very bright people who could do fine applying common sense will ask the wrong people for advice simply because they believe they need it. Trust your own judgment, and treat every piece of advice with a healthy amount of skepticism.