Stimulate strategic board development to shape strategic success

I recently heard about a Board whose members are appointed with terms of 5 years.

And most directors were on their second term, so 5-10 years on the board.

While there is something to be said about maintaining stability and retaining knowledge amongst boards, it isn't the most important consideration.

➡️Regular renewal and updating of the Board's capabilities and thinking ability is critical to long-term survival.

Faster strategy cadence

Especially when the external environment is changing rapidly, and the organization's strategy needs to be adjusted more frequently, it is critical that the board's collective knowledge and experience reflects the organization's future needs.

To continue to be relevant in the future, organizations need to strategically invest in board development.

➡️When the strategy cadence accelerates, the board development cadence needs to follow.

Actually 'following' here is not sufficient, because for a board's and CEO's thinking and strategy to be ahead of the curve, requires foresight and early investment in new capabilities to be able to see how the organization needs to adapt for future sustainability.

While in reality the CEO and her/his team prepare the strategy, the board has a critical role to play in shaping strategic success.

The role of the director in strategic and transformational change

The board of directors, and specifically non-executive directors, role includes:

✔️Strategic thinking

• Separating operational perspectives from strategic perspectives
• Bringing independent thought and fresh thinking on strategy formulation
• Challenging conventions and assumptions and stimulate strategic discussions
• Spending sufficient time on strategic matters, instead of dwelling on operational items
• Actively engaging in discussions, asking probing questions and challenging assumptions
• Actively participating in strategy development, evaluating alternative paths and considering market trends

✔️Strategic insight

• Ensuring that all the major strategic issues affecting the organization's viability, reputation and sustainability are addressed
• Leveraging industry, business, strategic, customer or stakeholder knowledge to augment executive insights
• Validating that the organization’s strategic direction includes clear choices and is well communicated
• Considering offensive, defensive, and holding strategies based on stakeholder impact
• Advocating strategic shifts to align the organization with evolving market dynamics

 ✔️Risk-based decision making

• Aligning internal controls with risk-adjusted strategic choices
• Weighing risks and reward of strategic choices to maximize long-term value
• Ensuring that risk appetite aligns with the company’s objectives, balancing boldness with prudence
• Making risk integral to setting strategy, not merely avoiding risk, but evaluating strategic options smartly

 ✔️Long-term value creation

• Seeking impact beyond financial performance to include non-financial environmental, social or governance considerations
• Influencing long-term planning emphasizing value creation and sustainability beyond short-term gains
• Aligning strategic direction with the organization's purpose and values

✔️Championing strategy execution

• Aligning executive pay and incentives to long-term strategic impact
• Supporting the executive team in communicating the strategy to stakeholders
• Committing to the strategy and give it time to achieve its desirable results with persistence
• Keeping strategy monitoring high-up on the board agenda by tracking strategic performance measures.

For directors to continue to add value during the strategic process, they ought to continuously invest in strategic board development.

Strategic board development

Strategic change demands agility and responsiveness, from executive teams and their boards.

Strategic board development can include:

• Considering the implications of the company’s future business strategy for board experience and capability
• Annual board evaluations emphasizing the board’s ability in advancing strategic aims
• Continuous learning to equip them to lead organizations through strategic shifts
• Evolving the board to reflect changes in company complexity, diversity, and size
• Aligning board development with the company’s future business strategy
• Fostering innovation within the boardroom by external evaluations
• Board induction programs related to the strategic plan.

➡️For boards to guide strategy development effectively, they need to have an effective strategy for their own development.

So ask yourself:

• What are the future strategic capability needs of the organization?
• Do I believe in the organization's future ambition and goals and am I willing to commit to it?
• To what extent am I (still) of independent thought to be able to critically question assumptions?
• What new skills or knowledge do I need to acquire to be able to add value in strategy formulation?
• To what extent am I as a Board Director still the right person on the Board to guide its future success?

As (non-executive) directors we play a dual role as strategists to shape the organization’s destiny, and as catalysts for board development to elevate the board's strategic effectiveness.

➡️To achieve strategic success, requires the board to first look at their own future.

Be a strategically learning board.

#BoardDevelopment #StrategicLeadership #Transformationmindset #Boardsintransformation