Try a Little Tenderness.

These days, papers are full of the demise of dot-com companies that were the IPO darlings of a year or two ago. Before the bubble burst, these companies seemed so lively, so bright, so new, and so exciting. So, it's worthwhile to ask ourselves, "What happened?"

Admittedly, a number of these companies never had much of a chance. They were founded on a fanciful but impractical idea that could not work in the real world of complicated markets, fickle consumers, and hard-nosed competitors. It just took too long and cost too much to get established.

We've known forever that something like 90 percent of new startup companies fail, so this is nothing new. The difference this time is that many of these businesses became public companies with their financial ecstasies and agonies fully exposed to view. It's too bad, but that's how the free enterprise system works.

But there's another factor of considerable importance, in my opinion. Many, or most, of the CEOs of these failing companies were young and had little experience in managing a profit center, much less a public corporation. The business became more complicated than they could handle and change came too fast for them to adjust. They didn't have tested professional teams under them to help overcome the obstacles. They worked hard and creatively, but it was an uphill battle in too many cases.

Compounding the problem, the boards of these fragile new companies were often composed of the venture capitalists and angel investors who led the financing. These directors were not skilled, experienced executives who knew how to manage an enterprise and to cope with myriad business problems. The virginal CEO had no place to go for advice and counsel. And, even when the founding CEO was replaced with a more mature CEO, it was often too late to turn the burn rate into positive cash flow. When the well of new funds dried up, so did the companies.

One of the possible remedies to this problem lies in the formation of advisory boards to bring these vigorous young CEOs the counsel they need to help them make logical operating decisions. These advisors are usually mature or retired executives or respected individuals who can mentor the CEO objectively. They know the practical aspects of marketing, operations, and control and they've been around the block many times. Because they're only advisors, they have no real concerns about director liability. They usually cost little and will often take their pay in phantom or real stock options.

Why haven't more of these startups used advisory boards? Well, they get caught up in the euphoria of fantastic business plan projections and wait too long to make corrections. Or, some of the new era executives think it's old-fashioned to spend a lot of time building customer service programs, policing accounts receivable, and managing the hum-drum activities. Unfortunately for them, these activities often make the difference between profit and loss, success and failure. Sometimes, the company founders and its investors simply don't know how to form and operate an advisory board.

One of the supplementary functions of an increasing number of boards these days is counseling/ teaching/guiding the CEO so he or she does the most effective job possible running the company. This often requires a somewhat different type of director from that of an established operation, but it's worth while seeking out persons who have these talents.

The job of the CEO is often a lonely one. The new CEO, especially, has a host of new problems and new challenges. He has few people he can talk to who understand his situation and can be rational and objective in their comments. The CEO of a fast-moving, fast-changing dot-com needs to pause occasionally to see where he is, where he's been, and where he's going. And, with the current rash of CEO firings and changes, it may not be just the dot-com CEOs who need help and advice. It could be that every new CEO could use some tender loving care.

Formerly CEO of F.&M. Schaefer (1972-1977), Robert W. Lear is chair man of CE's advisory board. He taught at Columbia Business School, where he was executive-in-residence until June 1999. He has been a director of many companies and is on the advisory boards of five small firms. He is a partner of Lear, Yavitz and Associates corporate governance consultants.