by Tom Cotter (Digoshen Exploring Leaders Communication Leader, Board Member with a third sector housing association and 30+ years in the construction industry)
The Digoshen Board Community Network held a Live Exchange with a group of international board directors, and business executives with board roles, on the topic “Boards role in Strategy in a Changing Environment“.
The event was facilitated by the Digoshen team. Tom Cotter set the scene and presented some interesting information and data on the topic for the group.
The presentation was structured around the following heading:
- What is Strategy
- Strategy Process
- Changing Environment
- The Boards Role
The presentation started with why organisations exist, i.e. their Purpose and how the strategy, values and behaviours support it in delivering on its purpose.
The Ashridge mission model 1)
The presentation also set out what we mean by strategy:
“Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.”
“Strategic positions can be based on customers’ needs, customers’ accessibility, or the variety of a company’s products or services.” (Michael E. Porter 1996) 2).
“…the determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for those goals.” (Chandler, 1962) 3) .
Chandler’s definition of strategy is very much aligned to the 3 stage strategy process (Sensing, Pivoting and Aligning resources) 4) 9) developed developed in a research project including Digoshen Founder Engstam, INSEAD Professor van Der Heyden and KTH Professor Magnusson and Digoshen Partner Torre. . The facts below highlighted the room for Boards to improve the strategy process:
Sensing – 46% lacking a good process to foresee changes and impacts.
Pivoting – 49% lacking to take balanced risks ensuring corporate renewal.
Aligning– 51% lacking to balance short – and long-term value creation.
The presentation then focused on the changing environment and the need for boards to scan the horizon for changes in the broader environment (Sensing).
“Strategy rarely warrants a “set-it-and-forget-it” approach” (to quote another sports and infomercial erudite) Forbes 8 September, 2021 5) .
The former heavyweight boxing champion Mike Tyson has famously said, “everybody has a plan until they get punched in the mouth.” Research by Harvard Professor Clayton Christensen6) noted that of the graduates who started businesses, 93% of those with successful strategies evolved and pivoted away from their original plans.
The Covid-19 pandemic led all organisations to quickly revisit their strategy. The current global economic headwinds are also ensuring that “gold medal boards” top priority is the focus on long-term strategic planning, Harvard Law School 9 July, 20227) .
The presentation then went on to talk about the Boards role in Strategy in a Changing Environment. Tom highlighted the Boards role in agreeing the risk appetite of the organisation with the executive team and balancing risk with opportunities. Samsung Electronics being a good example where strategic risk management is taken a stage further than in many organisation to not only identify risk mitigation measures, but also new business opportunities.
Bob Tricker in his book “The Evolution of Corporate Governance” © Bob Tricker 20208) , summarised the work of the board as follows:
Harvard Law School 9 July, 20227) identified that gold medal Boards prioritise their time as follows:
- Amid a global pandemic, economic turbulence, and societal upheaval, Gold Medal Boards continued to stay focused on value-creating work: strategic planning, operational performance, M&A, and capital allocation.
- Gold Medal Boards know that challenging times create opportunities to acquire weaker competitors, complementary firms, or key partners who have run into trouble and are looking for an exit.
- Board leaders and board members collectively need to ensure that their board stays focused on what matters most:
- Forward-focused and value-creating agendas – setting strategy, overseeing operational excellence, making sure M&A is strategic and successful.
- Driven to perform – Board performance reviews.
- Successful succession events – long term CEO succession planning.
The presentation was followed by a poll during the exchange with the participants reflecting on their own situation, with the following results:
- Our strategy process, and the boards role, is clear and contributes well to our value creation agenda
- The changing environment has impacted our strategy and response
- Our board has become more involved in strategy over last years
“You cannot direct the wind, but you can adjust your sails.” (Dolly Parton, Cora L. V. Hatch in 1859)
RRS Discovery – took Captain Robert Falcon Scott to the Antarctic and back in the early 1900’s.
Recommended Pre-reading for the live exchange included
Work Cited, References
- The Ashridge Mission Model
- What is Strategy, Porter
- Strategy and Structure, Chandler
- Innovation also disrupt boards, INSEAD, IMIT
- Why a Successful Strategy Depends on Listening to your Employees, Maylett, Forbes
- Strategy Research Prof Clayton Christensen, Harvard
- Gold Medal Boards Prioritize their time, Harvard
- The Evolution of Corporate Governance, Tricker
- Governance of Corporate Renewal and Sustainability, INSEAD
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