The Board and Strategy

I’m teaching an 8-part course on corporate governance to board directors as part of my faculty role at the Directors Institute. One of the sessions relates to Strategy and the role of the board / NED.?

You look at me puzzled with the furrowed brow marring that perfect forehead expanse and go wut? I wut wut you right back. See the options -?

• The board sets the strategy and the CEO executes
• The executive chairman / promoter sets the strategy and is bushy eyebrows deep in execution with the CEO acting more like an operations head.?
• The CEO sets/proposes the strategy, the board ratifies and the CEO executes
• The CEO sets the strategy and executes and the board goes along for the ride without having a say?
• The board asks a Big 4 consultant to draw up a strategy and you follow it Willy nilly Tilly billy.?
• Sometimes an external party will impose strategy on you such as a regulator or your PPM or your investor or your new M&A master.?
• You’re a subsidiary and your strategy is set by the grand pooh-bahs at the group executive level and the grand panjandrums on the group board. In this case, the local subsidiary board / CEO are master of very little?
• Am I missing any other option?

But what actually happens? A long-term strategy is usually produced at the start of the business and rarely updated and then most people confuse the next year's budget process with the next year's strategy. Keeping a strategy active and updated requires resources. Also, boards as well as CEOs confuse the budget process with the strategy. Boards also don’t have the time to come up with a detailed strategy so don’t even try. Here’s a simpler proposal to the CEO to do 3 months before the financial year-end.?

1. book out 1/2 a day in your diary, darken the room and wrap a cold towel in your head because what’s going to follow is going to get those grey cells whirring and hair hurting.?
2. Prepare 4 sheets of paper. Title them 1.?customers and marketplace 2. Regulator 3. Staff 4. Others. These are people who care about knowing about your strategy or you need to tell them or will give you money for it or help you execute your strategy or will oversee your strategy.
3. You’re in October - think back on 2024. What did you say you’d do in 2024? List out 5 things on each paper for the customer, staff and regulator. These could be to grow revenue, new product launches, happier staff, new systems and improved processes, protect revenue, and deal with war (missile, tariff, competition..) How did you SMART measure them and how well did you achieve them?
4. Stick them up on the wall and stare at them. Go refresh the cold towel and go back and stare at them again.?
5. Go back to the sheets and now write a new section - 2025. Some of the objectives and strategies will keep on recurring such as reducing costs or increasing revenues, making staff happier, whilst some will drop away like new product launches or new systems. Write down 5 things you’ll do for your customers/prospects next year. 5 things for your staff. And usually, 1-2 for your regulators (improve compliance, do better investor onboarding, better controls blah blah blah?
6. Bring in your senior management team and tell them to leave their moaning and whingeing hat outside. This is about hope plans and strategy. Review and create a second draft.?
7. Summarise into 1 sheet of paper. Go sit with the chairman and have a chat over a cuppa tea. Make sure you’re serving digestive chocolate hobnobs/ Parle G biscuits- this is serious shit - strategy can’t be done over carrot sticks and kale salad. Present to the board, discuss, debate and get agreement
8. Feed into the budget process.?
9. Communicate. Communicate. Communicate. Did I mention communicate?
10. Board members - take a leaf out of what Eisenhower said - trust but verify. Ensure at every board meeting - the CEO updates you with reference to the 1 sheet of strategy paper. And then you support her.?

What do you think? Would this work on your board? At your firm? With your CEO? With your chairman of the board? Without creating a nuclear-powered paper clip? Simpler pragmatic way??