It’s easier to be busy than strategic
There’s that old truism that any path will do if you don’t know where you’re going and sadly, it’s a maxim that rings true in too many companies and on too many boards when it comes to strategy.
— Governance Matters (@GovernanceMatt) March 2, 2018
For if there’s one thing I’ve learned over my long career, it’s that strategy without quantified measures of outcomes is, as Henry Ford would have said, bunk.
I recall talking to the managing director of a large Sydney-based company whose key responsibility was taking care of a philanthropic fund bequeathed to it and each year deciding which of the many worthy causes applying for a grant from an annual allocation of some $150-million would be successful.
Guest blogger and a Group Chair for the mentoring and business coaching group The Executive Connection and lecturer at QUT Executive MBA, Guy Hamilton looks at a board’s role in spotting and managing a maturing business
Philips, once an electronics and white goods powerhouse that today occupies a much more modest position in the global market, is but one corporate reminder that markets and customer demands do not stand still. And that a business model left unchanged will, with few exceptions, mature and eventually decline.
With executive management focused on day-to-day performance, it’s vital that the board actively reviews and discusses the status of the current business model to determine whether it needs to be refreshed or changed. A business in decline not only erodes shareholder value – which for most boards puts them at risk of not delivering on one of their core responsibilities – but has other associated challenges such as the ability to retain staff.
Three simple steps to developing good strategy
Guest blogger Guy Hamilton, who’s also a Group Chair for the mentoring and business coaching group The Executive Connection, and lectures at QUT on strategy execution, shares some common strategy development pitfalls before offering three key steps to getting it right
One need only to reflect on the parade of large corporates who have announced bold new strategic initiatives that end up being unwound five or so years later – and often under the guise of ‘divesting non-core assets’ to appreciate that the process by which some boards review, approve and track strategic initiatives is often sub-optimal.
I was reminded of this when a colleague recently shared a paper which quoted 2013 McKinsey research showing that only 34 per cent of 773 directors surveyed thought their board comprehensively understood their strategy, just 22 per cent understood how their firms created value and a mere 16 per cent felt their board had a strong understanding of the dynamics impacting their business.
When facilitating a strategy session, I invariably ask two questions – what exactly is your business and what does it include and not include? And what does good look like in five years’ time? Continue reading
Growth – A lot more than just a strategy statement
Governance Matters Associate Guy Hamilton talks about economic growth…..
Since 2009, a feature of both global and local economies has been a prolonged period of slow growth and reduced customer expenditure. Excess productive capacity that had to be reduced or re-purposed, (“resized” becoming a popular term), cost reduction and cost efficiency strategies became prevalent and yield and margin management became common conversations in board rooms and executive management meetings.
Signs of enduring economic growth are emerging and with it the question is whether it is time to become growth orientated and look towards building increased enterprise value over the medium to long term? Intuitively, the answer is now “yes”.
It is easy to say, “we are now going to move to a growth strategy” but for many it will be a challenge to deliver enduring value growth as an outcome. Simply, in flat economic conditions management mindset is founded on “more from less” whereas growth requires focused investment and re-allocation of resources to ensure “more from more”.
Exploding the ‘that’s the way the cookie crumbles’ myth
— Governance Matters (@GovernanceMatt) August 17, 2017
It’s a finding that is sure to have the tobacco tycoons coughing and spluttering into their ashtrays, the gambling gang seriously contemplating cashing in their chips and the munitions mob wondering where the target has gone and where next to take aim.
There are a good few others, to boot, the fossil fuel fraternity one that immediately comes to mind…
The finding I’m referring to is that of Responsible Investment Association Australia who, in its 2017 Responsible Investment Benchmark Report released in late July 2017, finally and irrevocably explodes the lingering myth that, when investing, you simply can’t have your cake and eat it.
Time to take a giant leap on the strategy front
— Governance Matters (@GovernanceMatt) February 16, 2017
Picking up on where we left off last time, may I start by saying that when we talk strategy these days, there’s a desperate need for us to take a giant leap.
Gone are the days of incremental change…the world changes rapidly and we must change with it.
A risk averse and compliant board tends to pull away from a risk-taking mindset.
And while strategy doesn’t always work out, boards need to have the integrity to invest in this.
Finbar raises the bar on risk and innovation
— Governance Matters (@GovernanceMatt) February 2, 2017
A recent blog, entitled ‘Success Comes from Seeing Ourselves as Others See Us’ and delving into board self-assessment certainly resonated with one of our readers.
So much so that he took time out to respond, initially with a short, sharp and succinct “nice article” and subsequently with some pertinent thoughts I think are well worth sharing.
You’ll recall the original blog argued the importance of self-assessment while warning against undertaking this exercise simply because it has become rather de rigueur to do so.
Sense and sensibility of strategy sessions
Our experience, through board evaluations we conduct, repeatedly tells us that more than 80 per cent of directors feel they don’t spend enough time on strategy or are as effective as they should be when it comes to setting strategic direction.
That’s a startling – and scary – finding, especially as strategy and strategic direction is one of the primary functions of a board.
What’s perhaps even more startling and scary is that boards, generally speaking, tend to continue to walk down the same ‘strategy path’ even when history tells them it’s not the cure-all, the magic bullet it’s made out to be.
We all love it when a plan comes together….
I’m sure there are a good few of you who remember, fondly or otherwise, that 1980s action adventure TV series, The A-Team, and team leader ‘Hannibal’ Smith, who reminded us all too frequently that he loved it when a plan came together…
Old Hannibal knew a thing or two about planning – and then working the plan. He knew that success was seldom a matter of chance and almost always came down to careful and methodical preparation.
Similarly, successful boards appreciate that astute planning is the bedrock of their organisations’ success, so you can understand why it baffles me that there are still so many boards out there that continue to attend to planning for the new financial year in a manner that can only be described as piecemeal.
Getting in with the “in cloud”
Something I read the other day immediately had me hopping onto my old hobby horse and I instantly thought it beneficial to take you all along for the ride. So climb up…
Yes, it’s the subject of just how vital, how non-negotiable it is for boards to act and operate at a strategic level, today, tomorrow and forever more. How essential it is for people in whatever their sector to be conscious of what is happening around them and, most importantly, how these developments could impact on the business and perhaps even threaten its very existence.
Find time for strategy – or face a ticking time-bomb!
It sometimes takes a change of environment to remind us that we don’t hold the mortgage on many of the prickly challenges we face in our board rooms, that they’re actually perennials, pretty much prevalent across the globe.
It’s also a refreshing moment when it occurs – and I was fortunate enough to again experience it just a few weeks back while visiting Thailand to host a number of in-house sessions with boards of some of the country’s largest and most respected companies.
Less is more with strategic planning
While there’s broad consensus that the primary responsibility of a board is to set the strategic direction of the organisation and so assure its future success, the same cannot be said for how boards go about their strategic planning.
There are those that attend to it during the annual board retreat, others that build it up over time and in close consultation with management; just as there are those that are favourably disposed towards hefty ‘quantity trumps quality’ documents that run to many tens of pages, others that prefer the tighter, more succinct approach.
Personally – and based on my experience over many years – I’m a firm disciple of the consultative style and an advocate of the ‘less is more’ approach that delivers a strategic plan occupying all of two A4 pages!