How to assess your strategy in the boardroom.
Strategic planning is intended to accomplish three important tasks:
- to clarify the outcomes that an organisation wishes to achieve;
- to select the broad strategies that will enable the organisation to achieve those outcomes;
- to identify ways to measure progress
Looking at the often packed board agendas, there are always a few critical issues of which directors must continuously be aware of. These issues may change somewhat from year to year, depending on external market conditions as well as shifting internal strategy.
Phyllis Deiso, a partner at RSM has written an article for the US-based National Association of Corporate Directors (NACD) magazine, highlighting five key questions that should be top of mind for every board to address these key high profile issues.
Deiso states that these are “evolving scenarios that should be frequently revisited to ensure boards remain on top of changing circumstances”.
1. Do we have a coordinated plan to deal with activists?
Deiso says that most boards understand by now that running and hiding is not an option where activists are concerned. They are here to stay and it is vital that boards think about a constructive engagement plan, and define roles and responsibilities that all board members understand and can adhere to. She suggests implementing a communications plan for regularly engaging with activists and all other stakeholders and paying careful attention to delivering a coordinated message through a designated spokesperson, such as the CEO.
2. Do we have a global investment plan?
Do we need one? While global supply chains mean virtually every company now has an international presence, Deiso says it is worth assessing how global investment syncs with the organisation’s overall business strategy before committing to any sort of global expansion. She says it is important to carefully set risk tolerance levels to understand what metrics and warning signs will alert to problems and help determine remedial measures, and at what point it would be appropriate to pull the plug.
3. Do we have the relevant expertise needed to ensure our strategy succeeds?
As strategies shift with some frequency, board composition should be regularly revisited to ensure alignment between the support the strategy requires and director skills and experience, says Deiso. She says with pressures to compete, make sure the board is a valuable resource to the CEO and operating team, with knowledge and expertise to ask the right questions, challenge management when needed, and provide necessary guidance.
4. Are we preparing for the unexpected?
Risk must be continuously planned for and assessed, either by the entire board or a specialised committee. For this reason, it is important to ask whether there is a process in place for both identifying major risk categories and developing a practical plan to address each, Deiso says. However, while cybersecurity may be the risk du jour, Deiso says it is imperative not to neglect others, including business disruptions related to global geopolitical issues, product recalls, terrorism, and weather and climate-related issues.
How do we plan against the moving target of geographic opportunity and risk? Wild swings in various markets are not uncommon and can be of particular concern when businesses operate globally. With a competent board at the helm and a panoramic view across the enterprise, Deiso suggests disciplined processes and early warning systems can be implemented to allow companies to plan for resource and capital allocation to prudently tap the markets that will provide future growth. “The global business environment is in flux, perhaps more than ever; however, that doesn’t mean your board has to be adrift,” she says.