What is the the role of a board in examining strategy and how should a board prepare itself to examine the company’s strategy? The short answer is that it takes more work than some might think. The longer answer can be broken down into three main requirements:
- The right people
- The right dynamic
- The right plan
No board is “naturally” able to put a system for strategy examination in place
Why is it essential for boards to examine corporate strategy?
There are examples of company boards that adopt a “rubber-stamp” role when it comes to strategy – merely okaying what others have proposed as part of a simplified tick-box culture. It’s discouraged for one main reason: boards have a unique vantage point when it comes to strategy, and reducing that advantage to a simple “yes/no” exercise is a waste of time and experience.
In reality, all boards have – or should have – the ability to scrutinise strategy and ensure it’s setting the company on the right path. This requires the right attitude, a high standard of expertise, and the right combination of experience.
There are essential points to consider when building a board that is set up to examine strategy. Make no mistake: no board is “naturally” able to put a system for strategy examination in place. Work must be done to make it a capable reality.
A board can’t hope to properly examine its company’s strategy if it isn’t made up of experienced candidates.
The right people
In any context, its make-up separates a bad board from a great one. Was it simply thrown together, with little oversight, to assemble a rubber-stamp group, or was it carefully built to include all the relevant experience so that it will immediately demonstrate its ability to guide the company?
Finding the right board members for strategy examination needs the following:
Ensuring the right experience
The best strategies are fed by the track records of the experts overseeing them. A board can’t hope to properly examine its company’s strategy if it isn’t made up of experienced candidates. Therefore, these candidates must have a firm grasp on the market, know how to navigate it, and be aware of the common risks.
Ensuring the right leadership qualities
Examining a strategy is thoroughly inspecting someone else’s work; therefore, a board must have the right skills to deal with this. It’s a common leadership challenge: learning how to say the right things in the right way, but it’s an absolute requirement.
In a nightmare “rubber-stamp” scenario, a board will not only give a simple yes or no to the strategy they’re presented, but they won’t fully understand the document they have read or its place in the company’s journey. A good board must ensure it can take what’s presented to them, understand it, and sit back and ask, “what do I think? And how does it relate to what we’re trying to achieve?” Every time a board member sits down to examine strategy, it should yield results; even if the result is “this needs serious re-working,” at least there has been an engagement.
Know the risks
Board members who can dissect a strategy properly will know the industry’s risks. They may not be spelled out in the document or may need redefining or more depth, but they will always be present in the board member’s mind.
The relationship between a board and strategy will be different in every company.
The right dynamic
Examining a strategy is far easier when boards come prepared with the right experience and skillset, but this isn’t the whole picture. In this instance, a lack of communication with each other or management could let a board down.
Therefore, it is also essential to set up a system for examining strategy so that everyone involved knows what’s expected of them and when. Without this, the proper scrutiny may be too frequent, infrequent, or ill-judged.
Establishing the right dynamic
Before the examination begins, boards must discuss how they will be involved. This is especially important because, as already said, the relationship between a board and strategy will be different in every company.
Boards should cement, in writing:
- what they expect from their strategy
- what metrics they will use to measure its success
- how frequently they will examine progress
- how they will co-ordinate with management and each other throughout this process.
Ensuring the right dynamic – even in an emergency
Furthermore, boards should set guidelines on handling emergencies or any other time that might require more input. At these times, speed is just as important as thorough examination, so a board should know the process ahead of time. Who will take the lead? Which person’s skills align best with which kind of urgency? Under no circumstances should a board scramble through these fundamental questions when re-examining the company’s priorities is vital.
The right plan
Examinations require structure, so the board must provide it.
In the absence of emergencies described above, boards must consider the correct times to analyse a company’s strategy. If they don’t, they risk missing key findings or a false picture of what has been achieved.
Combine strategy with the company calendar
The board should focus on key points throughout a company’s yearly cycle. For example:
- year-end – to take stock and plan for the following twelve months
- and mid-year – to examine whether the current strategy is working – are common analysis points.
Boards should also consider when their company’s busy periods are because it may be more beneficial to examine strategy immediately after they finish, rather than at the end of the year. A delivery chain could do this after the busy Christmas period, a tourism company in the autumn – after the busy summer season has ended.
Again, how this works will be different for every company. It depends on the size, industry, board make-up, board availability, and the kind of strategy the company has in place.
Strategy is not something that, once it’s formed, can be left to guide an organisation on its own without adjustments. Nor is it a job that can be underestimated during the development phase.
An examination is everything, and since the board (usually) plays such a vital role in its development, it needs to be ready for that examination whenever it happens.
- What does culture eats strategy for breakfast mean?
- How to become an effective board member
Watch a short video below of Anne-Marie Taylor explaining what boards look for when recruiting directors.