Overseeing strategy is a core board function. Company strategy lays the foundation for how the company allocates resources, structures operations, and measures success. When well executed, the right strategy creates significant shareholder value. In order for a director to effectively contribute to strategy discussions, he or she must dedicate sufficient effort, have the right information, and ask the right questions. Directors should also evaluate the efficacy of establishing the strategy as well as team buy-in and be willing to challenge the assumptions underlying management’s thinking.
Nearly four in five directors want to spend more time on strategic planning next year1. This is despite the fact that 59% said their time spent on strategic planning increased in 2012. Directors realize the importance of strategy discussions, and virtually all (99%) discuss the continued viability of the company’s strategy at least once a year.2 More than one-third (36%) discuss strategy twice a year and 42% do so at every formal board meeting.
Directors often want to understand how management devises the company’s strategy. Boards have high expectations about getting the right information from management so they can provide effective strategic planning oversight. Nearly three-quarters (71%) of directors are happy with information management provide about customer satisfaction data, but 29% are either dissatisfied with or don’t receive any information about competitor initiatives and strategy.
There are several leading practices that boards use to oversee their company’s strategy. We asked directors in 2012 which ones have been adopted by their boards. Here are some of the survey results that should help directors evaluate the effectiveness of their own approach3:
When it comes to external threats to the company’s growth prospects, CEOs and directors generally have the same concerns. However, one area where directors have expressed more concern is over-regulation. Eighty-five percent of directors are at least somewhat concerned with over-regulation, whereas 77% of CEOs expressed the same level of concern. On the other hand, 93% of CEOs expressed much more concern with the government response to the fiscal deficit and debt burden, as compared to only 82% of directors.
“Directors should insist that time is made for meaningful strategy discussions. Those discussions work best when directors bring their combined perspectives and experience to collaborate with management in exploring opportunities, push management to stretch in expanding products and geographic reaches, and help management navigate the pitfalls ever present in forging new paths."
—Catherine Bromilow, Partner, Center for Board Governance
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Learn what PwC has to say about Strategy and Growth:
Additional information about Strategy and Growth:
1PwC’s 2013 Annual Corporate Directors Survey, Strategy and risk management.
2PwC’s 2012 Annual Corporate Directors Survey, Strategy.