Strategy and the board – who is getting it right?

“Mustapha. Sorry, Mr Strategy, what exactly is the role of the Board in strategy? I have seen many boards just review and approve the strategy. As a CEO, how do you create ownership of the strategy by the board and win with the board members in implementing the strategy?” asked a CEO of a local manufacturing company.

How to involve the board in strategy, is a question I get asked often.

The board is responsible for going concerned (strategy and execution) and oversight (risk management and compliance), in addition to its fiduciary duty, among others.  Since 2014, I facilitate over 10-15 strategy retreats annually. Some strategy retreats bring together the board and executive committee members. While some retreats only the executive committee members craft a draft strategy and then submit it for board review and approval.

My experience has been that where the board is involved in the strategy process early, ownership of the strategy and approval process is swift. On the other hand, when the executive committee (EXCO) formulates the strategy and presents it for board discussion and approval, the process tends to drag on and on with a series of questions being asked. Often it turns out to appear as them (board members) vs us (executive committee team).  The CEO may get disappointed, as many members continue asking questions. The cause of the misunderstanding could be due to the different schools of thought of the Board and executive.

At one company, I advised the CEO to request the Chairman of the strategy committee to attend the strategy sessions. The member replied that they did not have time for a two-day retreat. Given the competitive nature of the business, the company adopted a new strategic approach – the blue ocean strategy instead of the conventional approach of vision, mission, goals and objectives, analysis (internal and external), etc using models like PESTLED and the 5-forces model by M. Porter. When they presented the new strategy for approval, the board could get to terms with the processes. They expected the old approach. And could not allow the CEO to first take them through the Blue Ocean approach. Approval of the strategy took longer than it should have.

We know, strategy is needed when two conditions are present – i) to solve a strategic challenge and ii) to tap into an opportunity — in both cases amidst scarce resources. If the company has all the resources they need, it probably they do not need a strategy. However, we know that no company can tap into an opportunity if they have unresolved strategic challenges. For that reason, the strategy requires you to make a choice concerning your challenges and how you solve them.

The CEO is the owner of the strategy formulation. However, outstanding CEOs involve the board early on by asking them about the strategic challenges and opportunities they see. That creates ownership and gets them to know the process has started. Thereafter, the CEO needs to continue checking in with the board via email or otherwise to keep them informed. That way, the strategy is owned, and everyone understands how it came about.

If you can, get one or two board members to attend your strategy sessions as contributors. If that fails, check in with the board at the commencement of the strategy process about where they see the business heading, the challenges along the way and how such challenges could be addressed. Summarize and share, and then craft a draft strategy for their review and approval. It is better and more own.

Copyright Mustapha B Mugisa, Mr Strategy, 2022. All rights reserved.

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