Given the volatile and fluid business environment ahead – managing remote workforces, employee activism, digital transformations and other accelerating megatrends, building more-resilient supply chains and strengthening connections with customers whose behaviors, preferences and expectations are changing – take time to reassess the board’s engagement in strategy. Review the alignment of corporate purpose, culture, values and strategy. And identify specific practices to drive quality boardroom discussions about strategy and the future.
A fundamental question for every board is whether boardroom conversations are, in fact, conversations. Does the board allocate sufficient agenda time to meaningful, two-way discussions between management and the board about forward-looking issues – challenging assumptions and considering scenarios (likely and unlikely) – versus reviewing historical, compliance-related information which, while essential, can crowd out valuable agenda time?
Effective engagement in strategy discussions (which investors expect) increasingly calls for a collaborative mindset: How can the board help management think through the implications of pressing and potentially existential strategic questions and decisions? And is management helping to set the context, providing meaningful materials to the board to prepare directors for those critical conversations and maximize the board’s contribution?
In our discussions with experienced directors over the past year, a number of elements and practices were highlighted that may be helpful:
- Encourage management to revisit the strategic planning process. Is the process adequate in light of the speed and impact of megatrends – and does it capture the risks and potential disruptions on the horizon? Does the process challenge the validity of key assumptions that the company’s strategy and business model are based on? Is it an iterative process – with milestones and opportunities to recalibrate – and does it bring in perspectives from throughout the organization, beyond the inner team?
- Develop a vivid picture of the future. This is never an easy undertaking, and it’s particularly challenging today, given the level of uncertainty and transformational changes underway. Where are the company’s industry and competition (both industry competitors and those in adjacent industries) headed? What might the business look and feel like in two, five or ten years? Make time for the board to have meaningful “what-if” discussions in a focused and urgent way – including devoting time to less-likely scenarios (without getting overly theoretical). Risks and scenarios related to climate, ESG, human capital and supply chain should be front and center.
- Make resilience part of the strategy discussion. Full resilience is not only the ability to bounce back when something goes wrong; it’s also the ability to get back up with viable strategic options for staying competitive and on the offensive.
- Understand the value of the board’s lens. Management is immersed in running the business, looking around the corner and staying competitive – as they should be. Board members are likely picking up broader perspectives and signals from their activities – and may be seeing and hearing things differently than management.
- Consider your purpose: What’s your purpose/vision? How have you articulated it? Is it clear for your stakeholders: your people, customers, investors, etc.? Does it explain what you do, who you are, what you stand for?