Making Time for Strategy
Late one afternoon I received a phone call. It was the CEO of a UK company asking me if I could help facilitate the board with strategy setting for the next three to five years. The usual frisson of expectation rose in me because this is the area of work that galvanises, challenges, and excites. However, in the short conversation that ensued the excitement died. It transpired the CEO had planned for a two-hour strategy session, in the company’s head office, immediately following a board meeting…..and was I available next Thursday!
Sadly, the above is not unusual. Strategy, and the discipline of the strategic process, is often treated simplistically, and summarily, by leaders. In the above example this CEO was expecting to get a ‘result’ in a couple of hours that he believed would help chart their course for the next five years.
It is not just this singular (but by no means untypical) incident that prompts this article. One of my current roles is as a program leader for a large business institution. Over the last eight years I have had the privilege of working with over two thousand directors on strategy and leadership. One question I regularly ask is: “As a board, how much time do you spend on your organisation’s strategy?” The vast majority of responses (>90%) fall between 5% to 10% of their time. Arguably this is nowhere near enough – especially in an increasingly complex world.
The Companies Act, governance codes and reviews, plus a variety of other board guidance sources, all point to the board’s (and directors’) role as being to ensure ‘the long-term success of the organisation for the benefit of its members and other stakeholders’.
I would argue that the boards of organisations should be spending a great deal more time on strategic thinking, setting, monitoring implementation, and adjusting (where necessary). Strategy should be a board calendar topic with a rhythm throughout the board year. In addition, separate ‘away days’ each year should be set aside for a thorough review of the current strategy. If the current strategy has suffered significant strategic drift more time will be required if it requires changing. Each board meeting should have time set aside for a ‘strategy check’ with any hot topics being updated by internal and/or external subject matter experts. In short, good, strategic boards, should find ways to keep all directors fully sensitised to all matters strategic, on a continuous basis.
As a counterpoint to my opening example another company (£23m revenue) recently acquired by a private equity (PE) firm, embarked on a more rigorous approach. Operating in five regions with three distinct, complex, engineering product/service offerings, they had been about to commit to the previous Chair and Founder’s expansion desires. These plans were arrested. Four weeks of robust and detailed analysis ensued (using two external and two internal analysts). This was followed by two weeks of interviews with major customers, regional partners, key suppliers and technical co-developers. A presentation to the PE majority shareholder outlined a new approach. Among other things, the marginal Middle East operation was shutdown (it had been about to be expanded). An unhappy Indian partner who had originally been allocated only the commoditised, low margin product/service, was given the other two premium product/service lines. Additionally, the Indian partner was much better connected in the Middle East so they were given this market to operate on behalf of the company. The cost of the strategy process was more than fully recovered in month one and repaid many times over in the following months of the new arrangements.
As for the CEO in the opening paragraph…..I respectfully declined his kind invitation.
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