Establishing a Scientific Advisory Board
Duane J. Roth, Executive Director, CONNECT
There has been a great deal of attention recently paid to the role and structure of corporate boards of directors, primarily due to the Sarbanes-Oxley Act of 2002. As a result, the role of the corporate board has shifted towards more focus on the financial reporting, internal controls, compensation, and disclosure.
For many companies, especially science and technology-based businesses, there is now often less time given to a broad discussion of the technical aspects of product development. Historically, many of these kinds of businesses relied on an advisory group, such as a scientific advisory board (SAB), established to augment a company’s internal scientific expertise and to enhance credibility of corporate technology. Perhaps it is time for growth companies, especially those based in the sciences, to refocus on the benefits of a SAB.
In the early days as science and technology companies were being formed and pursuing IPO's, the SAB was often considered as validation of the science and technology. Over time, the SAB evolved into a more useful role as both a support system for internal scientific management and as a way to provide corporate board directors with oversight of the progress of the science and technology. They also provided contact with the progress of academic research and competitors. The SAB plays an important role in evaluating new intellectual property and accessing its market potential.
The decision to establish an SAB can be stimulated by a variety of corporate needs. Therefore, determining first the mission and role for an SAB is critical and should be established by the CEO, reviewed by the head of research and development, and approved by the board of directors.
Once agreement is reached to establish an SAB, a number of factors should be addressed including:
- What is the desired expertise of the SAB?
- What is the expected diversity of the expertise?
- Who will recruit the members?
- How many members should be recruited?
- Who will be the chairman of the SAB?
- Who will staff the SAB?
- To which internal persons or groups will the SAB report?
- How often will they meet?
- How will they be compensated?
All these decisions require some advance planning and agreement among the key constituents prior to recruiting the SAB. It is important that the rationale for and expectations of the SAB are also communicated internally and there is "buy in" support for establishing the SAB among key company leaders.
A strong SAB can be of great value in advancing the corporation. Some of the traditional functions of a SAB have been to:
- Provide an objective overview of the progress of the science and technology.
- Offer experience in a focused area of development that may not be internally available.
- Recruit consultants to assist the company.
- Act as ambassadors for the company and its technology.
- Assist in the evaluation of the internal management team.
- Evaluate new technologies or intellectual property.
- Assist in recruiting key science and technology mangers.
As today's directors’ agendas are more and more consumed with compliance and financial oversight, there is less time to devote to the corporations key asset – its science and technology. One way for an entrepreneur to be certain that a standard for review of these assets remains at the forefront is to establish and empower a first-class SAB.
© 2006 Duane Roth. All rights reserved.