Company strategies evolve and shift quickly today, due to acquisitions, new competitors or emerging technology adoption. So boards need to take a fresh look at how they think about strategy. This can help the board contribute to the success of the company's long-term strategic plan.
All of this boils down to understanding how your board goes about overseeing strategy. There is no “one size fits all” approach to choosing and executing on a strategic plan. Different processes and different approaches work well for different companies. But no matter what the approach, the board’s role in oversight is critical. How the board executes that oversight can contribute to the success of the overall strategic plan by helping management out-think competitors, address obstacles, bypass disruptors and fine-tune its direction.
Connecting board composition to strategy
The board’s composition ties directly to board succession. If your board doesn’t have the right people in the boardroom for the strategy discussions, it should be considering bringing in the right board members who can really contribute.
Balancing the short-term and long-term
It’s important to think about the state of the company in terms of optimization and reinvention: how to optimize the business today and how to reinvent it for the future.
Finding the right frequency to discuss strategy
Strategy changes all the time, so your board needs to supplement any dedicated annual meetings with regular discussions throughout the year.
Measuring progress and knowing when to pivot
It’s helpful to think about two types of strategy discussions: those in a normal operating environment and a crisis environment.
Information from management
Boards need to do their own homework and determine what information they really need and how to get it—especially if what they get from management is not enough.
Challenging management’s assumptions
The board should ask about assumptions related to the company’s abilities, the competitive market and the broader economic picture, as well as other external factors that management’s strategy relies on.
Risk: the other side of the strategy coin
It’s important for the board to have a comprehensive analysis of risks associated with the company’s long-term strategic plan.
Playing the disruption game: offense and defense
Management and boards alike should think about disruption in two ways. How could we be disrupted? And how could we be a disruptor?
Executive compensation checks and balances
Boards should understand how their plans support their strategy—and what needs to be done if the strategy shifts. It’s important for the board to make sure that performance targets and incentive plan goals are aligned with the strategy.
Engaging shareholders about strategy
Directors should be able to explain how the company’s executive compensation plans incentivize the achievement of the strategic goals.