???????????????????? ????????????????, ???????????????????? ?????? ????????????????????????????

?????? ???????????? ???????? ???? ?????? ?????????? ?????? ?? ?????????????? ????????????????

(Originally published on July 18, 2023, in the Smart BoardRoom Strategies monthly publication, which addresses the challenges that a board of directors faces in a high uncertainty context. If you are a board member, if you aspire to be part of one, or have a managerial role related to the board, this publication is for you. ? Click here to subscribe.)

??Only those who participate in the creation of the strategy have a thorough understanding of it.

However, in many organizations, the design of the strategy is considered a task that should be carried out by the management team and subsequently presented to the board for approval.

This approach isolates the board of directors, hindering their ability to understand the details and analyze the implications of the strategy in depth. Without active participation and a clear understanding, the board of directors won't have a sense of ownership of the strategy.

This can lead to various difficulties, including:

• Less influence on relevant matters,
• Misalignment of objectives,
• Poor implementation,
• Lack of proper monitoring and evaluation, among other aspects.

????"Good plans originate through the participation of all stakeholders. Without understanding, there is no acceptance, and therefore, implementation fails" - Albert Einstein

That which is not understood cannot be governed. Without a deep understanding of the strategy, the board of directors cannot effectively fulfill its governance role.

The strategy is the map that connects the company's aspiration with the actions required to achieve the desired results.?

The board of directors must play an essential role in this strategic articulation, establishing the company's purpose, vision, and values, overseeing the design to ensure its relevance, validating approaches, and ensuring its deployment throughout the organization.

?Once implemented, they should monitor the plan's progress and take corrective actions in case of deviations.?

The approval of the strategy lies with the board, while its implementation is the responsibility of the CEO and their team. A board that actively leads the strategic design acquires a level of understanding and commitment that facilitates their subsequent roles in strategic oversight, governance, progress evaluation, and metrics monitoring.

???"An effective Board of Directors not only establishes the right strategy but also ensures that the organization has the means to execute it successfully" - Ram Charan

?? Designing the strategy means deciding what to do and what not to do.

Strategy is an integrated set of decisions aimed at creating a competitive advantage and superior value over the competition, thus reducing uncertainty and increasing the odds of achieving our winning aspiration.

The definition of strategy is divided into four parts relevant to understanding the approach:??

• Decisions: Strategy is a set of decisions about what to do and what not to do.
• It is an integrated and coherent set of decisions that reinforce each other. It's not a simple list.

• Define the Territory in which the company is going to operate
• Win. The strategy defines a set of decisions and actions that will make the company achieve its strategic challenge in the defined Territory.

The strategy is not a rigid plan, but rather, it is composed of a series of principles that, when communicated and deployed, generate an integrated pattern of decision-making that guides the organization in achieving the Strategic Challenge.

No plan, no matter how good, withstands contact with the market, customers, and competition.

Although the term "Strategic Plan" is commonly used, it is important to understand that a plan can never replace a strategy. The plan consists of actions, while the strategy consists of decisions that guide the organization.

Without a Strategy, we run the risk that even if we meet the "Strategic Plan" milestones on time, if the results are not as expected because the reasons for why certain actions were carried out are unclear, it is not understood why they haven't worked. In such circumstances, no learning is achieved, responsibility often remains unclear, and attention is frequently diverted away from the organization.

The map is not the territory: the strategy is the map we draw to represent our best understanding of the territory (the market, competition, our customers, etc.), and it points out the route we intend to follow to reach our destination (our strategic aspiration or winning aspiration). The strategic plan is the sequence of actions and milestones we expect to follow to navigate the traced route.

????"Strategy requires thinking; tactic requires observation" - Max Euwe

The design of the business strategy is a dynamic and collaborative process that combines creativity and rigor. While it is crucial to distinguish correctly between different perspectives, it is equally vital to maintain a dynamic of progress and regression to refine decisions and ensure their coherence.

In the diagram below, the four strategic perspectives and a brief summary of the process are represented:

1??The board starts by defining the Company's Aspiration, which, as we mentioned before, establishes the company's purpose, vision, and values.

2??The Strategic Objective or Winning Aspiration is formulated, which is the expected outcome of implementing the strategic decisions.

3??Next, the Business Perspective is established. It represents the source of income; what the company does. It defines the products and services, customers, and markets, as well as the value proposition that describes the benefits our customers can expect from the products and services.

4??The Management Perspective specifies "how" the operations will be carried out. It includes costs and infrastructure. It includes the following aspects: key resources and alliances, personnel and capabilities, and key processes.

5??In the Sustainability Perspective, the company's material concerns and stakeholder issues are addressed. The aim is to create shared value.

6??Finally, the company's competitive advantage is confirmed, which defines what will enable us to win in this market: Differentiation or Cost Leadership.

Together, these phases comprise a Positive Impact Strategy that combines all perspectives, fosters innovation and value growth, and guides the company towards its Winning Aspiration, achieving lasting and sustainable results.

Is your board sufficiently prepared to pilot this process and achieve a positive and sustainable impact for your organization???