Engaging your Board in Strategy
Ask a typical board member why they took on the role and what gives them most satisfaction,there is a good chance that they will talk about getting involved in strategy and bringing their experience and enthusiasm to bear on the future success of the organisation.
But as we will see, the reality is often very different. Recent regulatory developments, such as the Sarbanes-Oxley Act (SOX) have meant that many boards have had to devote most of their attention to compliance issues. Strategy has often had to take a back seat.
The problem is, however, this is a luxury that few organisations can afford. The dramatic increase in the speed of change – largely driven by developments in IT, globalisation and the shift towards a knowledge-based economy – has put boards and their organisations under relentless pressure to really understand the environment in which they are operating so that they can generate the options that will create future value and success.
The best planned strategy counts for nothing unless it is implemented successfully – boards have a key role to play in providing effective oversight. Not only this, but they also need to understand the attendant strategic risks so that they can seize opportunities and avoid adverse occurrences.
So how can boards address all these dimensions of the strategic process?
CIMA and HFMA believes it can offer one possible answer through its development of the CIMA Strategic Scorecard ™ – this is a tool for helping boards of any organisation to engage effectively in the strategic process – in spite of the numerous challenges in the way, such as compliance requirements, information overload and sheer lack of time.
What the scorecard does is to give the board a simple, but effective process that helps it to focus on the key strategic issues and – most importantly – to ask the right questions. This means that the board can work constructively with management to promote the future success of the organisation.
The uniqueness of the scorecard lies in the fact that it:
• Summarises the key aspects of the environment in which an organisation is operating to ensure that the board is aware of changing competitor, economic and other factors.
• Identifies the (key) strategic options that could have a material impact on the strategic direction of the organisation and helps the board to determine which options will be developed further and implemented.
• Charts for the board the significant steps or milestones in relation to the chosen strategic plans to be achieved in the coming period and then tracks performance against these.
• Highlights the risks facing the board in its strategic endeavours and moves these into manageable opportunities or mitigation plans.