What role should your company’s board play in formulating strategy? Should it take control of formulating strategy? Or should its job merely be to approve or reject the CEO’s decisions?
Writing for Harvard Business Review, Roger Martin believes the answer to both questions is a resounding ‘No’.
“If the board feels it needs to do strategy for the company, it is prima facie evidence that it should fire the CEO,” writes Martin. If it exists merely to approve or reject the CEO’s strategy, it is redundant.
The wise CEO will take control of formulating strategy, but will involve the board in a three-step process, garnering as much advice as possible from board members.
THE THREE-STEP PROCESS
1) The beginning. Before you start formulating your strategy, meet with the board and discuss the challenges to address.
“Whatever the specifics are, the CEO has the opportunity to both gain important insights from and align with the board,” writes Martin.
2) The middle. Once you have brainstormed potential solutions to the challenges discussed with the board at the beginning of the process, return to the board and ask for their advice and feedback. Make it clear you are not seeking their approval but their opinion.
This is an opportunity to test out which potential solutions resonate most with the board; whether they have any serious concerns; and how your potential solutions could be modified to address those concerns.
3) The end. The final step will be the same whether you have followed the first two steps or not: you have to present your strategy to the board. But, having consulted the board in both the beginning and the middle of the process, that strategy is more likely to be in line with board members’ expectations.
FIND THE RIGHT BALANCE
Your must take charge of strategy without alienating the board. “A CEO clearly in charge with a board helping to provide sage advice is the perfect combination for boards and strategy,” concludes Martin.