The strategy standoff: Who owns it?
Who’s strategy is it? What do you do when there is a misalignment between the board and the CEO? Navigating the ownership of organizational strategy can be a challenging task, especially when there's a disconnect between the board and the CEO. The debate often revolves around how to get meaningful board perspective on strategic priorities without encroaching on the CEOs responsibility to craft, own and execute the strategy.
It's no surprise that this divide exists considering the stark contrast in the amount of time board members and executive team members dedicate to the business. The average board member spends 150-300 hours per year on the business through board-related activities where executive team members spend between 2000-3000 hours per year in the business on operations.
We’ve worked with a many boards and executive teams over the last year who all want a winning strategy and the “who owns the strategy” struggle has come up again and again. We see this especially when organizations are facing transformational change – either to refocus after significant wins or to reset after some setbacks. We were recently working with an industry leading organization to refocus on its next strategic choices after the opportunities that led to its success were no longer available. In other cases, organizations facing sector disruptions and transformations, digital evolution, transformational business models, and shifting stakeholder expectations call for a reset on strategy. Here are some of the factors that contribute to the strategy divide:
Different Time Horizons: The Board often takes a much longer-term view of the organization considering the future of the organization, governance, risk management and stakeholders. Management has a shorter-term view ensuring execution and operations create the necessary results in the business plan and annual goals.
Focus of Discussion: Where the board and management spend more of their time on current business reporting and less time discussing future and emerging trends, misunderstandings around strategic priorities and expectations can arise.
Resistance to Change: Executives may face resistance from the board when proposing strategic changes that challenge the status quo or require significant investment. Similarly, the board may face resistance from executives when proposing transformation and evolution leaving executives feeling misunderstood, that their efforts to date where wrong, or can be married to their past strategic approach leading to iterative changes instead of innovation and transformation. The executive can get comfortable and lose passion and drive for evolution.
Risk Appetite: Differences in risk appetite between the board and executive team can lead to disagreements on strategic initiatives. While boards tend to be more risk-averse, many are recognizing the need for strategic risk-taking to adapt to evolving market and stakeholder dynamics.
We often find ourselves working with the Board, CEO, and executive team in a dual role as strategic facilitators and team coaches slowing down the strategic process to ensure alignment. Doing so speeds up the strategic process later on. Here are some of the steps you can take to address these challenges and create greater alignment on strategy:
Clearly Define a Strategic Process: Establish a process where all stakeholders can play a meaningful role in providing perspective to the strategy. This should include 1) seeking input on the key risks and opportunities facing the organization, 2) meaningful discussion on strategic alternatives, 3) presenting the strategic narrative that links the organization's purpose, shared vision with its current context, priorities and critical objectives
Enhance Engagement and Communication: Develop open and transparent communication between the board and the executive team to ensure mutual understanding and alignment of strategic objectives, progress, and challenges. Regular communication around emerging trends and strategic objectives is crucial to bridge the communications gap.
Develop a Shared Vision and North Star: Engage in deep discussion together to create alignment on the vision and north star before progressing to the next steps of the strategic process. Without alignment and buy-in by the ELT and Board on vision and north star, the rest of the strategic process will be a struggle. It can be difficult to stick with this stage as it can feel ambiguous and “unproductive” where this hypothesis of the future and critical choices to get there create the foundation for the rest of the strategy. Agreement and buy-in on the desired future are essential to crafting the strategic priorities to get there.
Expose Dynamics and Realities & Explore Evolving Trends: Provide opportunities for board members to gain a deeper understanding of the industry landscape, competitive dynamics, and operational realities faced by the organization. Invite opportunities for exploration of evolving trends and potential future disruptions for executive to consider innovation, evolution, and transformations.
Align on Key Metrics: Collaboratively define key performance indicators (KPIs) that align with the organization's strategic goals and regularly review progress against these metrics. Commit to retaining these metrics throughout the strategic period instead of chasing better metrics every year which is a sign of engagement and communication gaps.
By embracing open communication, defining clear processes, and developing a shared vision, organizations can bridge the strategy ownership and development gap between the board and the executive team. With a focused effort to engage in meaningful discussions, explore emerging trends, and align on key metrics, organizations can navigate the complexities of strategy with collaboration and alignment. Ultimately, it's through this collaborative partnership between the Board and CEO that organizations will ensure a winning strategy for sustainable success in an ever-evolving landscape.