Why Do Boards Continue To Struggle With Strategy?

SEP
5
2018
SEP 5, 2018

The Nagging Strategy Challenge That Is Becoming Chronic

(Originally appeared in the September 5, 2018 'Across the Board' publication, a Board Director, Board Advisor, C-Level, and Business Newsletter reaching 24,500+ exceptional business leaders in over 65 countries with articles focused on leadership, strategy, and governance topics - sign up here)

Boards of today continue to struggle with what 'strategy' actually means ...and it is deeply hurting the companies these Boards serve. How do I know this unbelievable and sobering fact? I work and consult with many of these Boards. No need for big data here to come to this conclusion. This lack of strategy understanding is true of both Directors' actions operating within their Board duties, as well as in their construct of guiding and supporting a company's strategic plan. But how can this be? Aren't all Board Directors experts at strategy & strategic planning, and at the very least, have an in-depth understanding of what it is? Sadly, no. When asked point blank the question, "What is strategy?", which I often do of Boards, it is extremely rare to get a correct answer. This lack of understanding leads to a whole host of problems, many of which a Board is instituted to safely assist a company to navigate.

BACK TO BASICS

Let's all take a moment to reset and get back to basics on strategy. As mentioned in a full chapter dedicated to strategy in my book, the true definition and application of Board strategy has changed under our noses in recent years. I try to capture it here by providing simple definitions:

 
Defunct Board Strategy Definition: 'Strategy is a careful plan or method, usually over a period of time, to achieve a specific goal.’

New Board Strategy Definition: ‘Strategy is a set of guiding principles that, when communicated and adopted, generates a desired pattern of integrated decision making’

It should be noted that what previously was the definition of Board strategy, which contained hard, tangible deliverables and specific outcomes, is now more of a concept and process including ‘desired behaviors.’ It is the Board’s role to foster an environment which ‘generates a desired pattern of integrated decision making,’ for both the Board, as well as the overall organization. This is fully in support of a more fluid and accommodating approach to continuously guide strategy on an ongoing basis – hence, what I like to call an ‘amorphic strategy’ due to its fluid nature.

HOW DOES THIS HELP ME?

Fact is, you need a little more information... This is because a new definition, although interesting, still doesn't clarify in simple terms what exactly strategy is and where you focus your thoughts and efforts to truly be 'strategic.' Let's solve that part now and make it as simple and useful as possible. Above is a simple diagram I drew for myself years ago to ensure that my comments, suggestions, and thoughts did not stray during so-called strategic discussions at the executive level as well as the Board level. Yes, I had to remind myself continuously of what 'being strategic' actually meant - and this subtle visual helped me immensely.
 
Many are surprised to see that strategy doesn't sit at either end of the spectrum, but takes up its home nestled in-between a company's goals and tasks. Strategy is the bridge linking the two. "The fine line between 'objective' and 'action' is a challenge for many Board Directors and continually tests their 'noses in, fingers out' mantra," states Albert V. Glowasky, a Board Director and financial advisor to CEOs. "Good governance demands that this delineation not only be clearly defined, but also fully understood by all Board Members."  If you feel so inclined, bring this diagram to your next executive or Board meeting (or strategic planning session) to test it out. In your meetings are you talking about individual tasks? Painful. Are you talking about company goals? Getting warmer. Are you talking about how the actual or planned outcomes of tasks are supporting the goals of the organization? Bingo! A two hour meeting was just truncated to 20 minutes - with increased efficiency and effectiveness. Next.

Interestingly, many corporate instances of what is believed to be failed governance is actually a manifestation of failed strategy. How is this possible? Well, when a Board doesn't fully understand what strategy is, where it sits in the flow, and how it is designed to support the goals, it is not possible to align any governance models effectively. In essence, you have to first know what it is you are governing before you can govern it effectively. Boards that don't understand this concept are typically talking about low-level 'tasks' during their Board meetings instead of how the actual or planned outcomes of tasks are supporting the goals of the organization. Might as well have a room full of project managers getting together (no offense to project managers). "We find some leaders are challenged to create an effective strategic plan with relevant objectives,” states Carl Cox, CEO North America of Cascade Strategy. "Many key executives in organizations want to include their maintenance goals and call them ‘strategic' so they can be counted in the process. If your objective is not moving you in a new direction, it is not strategy.”

Boards would do themselves and the organizations they serve a favor by 'refreshing' their knowledge and honing their skills in the strategic realm. After all, as Board Directors, aren't strategy and governance our main responsibilities?
 
How will you ensure your Board's strategic savviness?

Reach out directly to Mark A. Pfister to ensure your Board's strategic savviness with his 'Strategic Board Services' offerings and 'National Speaking Tours' on the topic.