I am thrilled that a significant outcome of the October 2014 NACD annual conference is the release of the Report of the NACD Blue Ribbon Commission on Strategy Development. According to NACD, the report “emphasizes that corporate directors should not limit their engagement in strategy development to annual discussions with management or crisis situations. It recommends that directors recognize that board engagement on strategy is a continual process, and issues related to strategy should be the central focus of board activity year-round.”
For the past 10 years, it’s been a key focus for me and my Board clients, to understand the importance of being involved in strategic planning, and to be fully aligned on strategy. In fact, I took a trip down memory lane and found that on an early version of my website, in 2006, I wrote:
One of the most important roles of the Board of Directors is to insure that the company has an effective process for the development of a Strategic Plan and that both the Board and Management are aligned with the organization’s strategic direction. Additionally they should be clear and in agreement on the Goal, Objectives and Premises for supporting a common strategic direction. It is therefore important that both Management and the Board have the opportunity to brainstorm together and bring clear focus to the issues that limit the organization and the possibilities that can fuel shareholder value and market growth.
It’s critical for the Board to fully understand the strategic planning milestones so that, together with the CEO, the Board can identify essential strategic priorities, alter the strategy when necessary with some pro-activity, more fully engage in deliberation about the strategy and be better prepared for course correction.
NACD states that Board engagement in strategy shouldn’t be an annual discussion. I concur and further suggest that it needs to be minimally an annual discussion, which sadly, isn’t the case for all Boards. Boards must consider creating a “strategic committee” as needed, as well as holding a strategic planning session on an annual basis—or at least every other year—so they can be fully aligned on exactly what the strategy is.
These sessions enable the Board, with its CEO, to assess progress and/or lack thereof, and ideally includes key executives from the Executive Team.
This is very effective. I’ve had first-hand experience planning and leading strategic sessions with varying configurations of constituents (Boards and their CEOs, Boards, their CEOs and selected members of the Executive Team, etc.) to ensure that the members of what I call the Pivotal Leadership TrioTM (Board, CEO and Executive Team) are fully aligned on strategy. I invite you to read a couple of case studies that I have planned and led to align the board and the executive team on strategy. Case1 Public Company in Changing Market and Case2 Private High Tech Company in fast growing market.
This report is a wonderful contribution to further evolve Boards’ perspectives and responsibilities regarding strategy. The Report of the NACD Blue Ribbon Commission on Strategy Development is exclusively available to NACD members and can be found at www.NACDonline.org/Strategy.
I invite you to watch NACD Blue Ribbon Commission: The Board’s Role in Strategy–