Earlier this year I wrote Corporate Governance Trends 2009. I thought it appropriate to expand on some of the trends discussed. For this post I will review Corporate Strategy and the importance of the Board in not just reviewing the strategy but becoming active participants in its formulation. At its essence Corporate Strategy is rigorously defining “where we are, where are going and how we will get there”.
In the past, the CEO and the strategy team would develop the corporate strategy, send it to the Board members and meet at an offsite location. The C-Suite would present the plan and the Board would usually accept it. Well the world has changed dramatically and has become far more complex. This static strategy process does not work in this new corporate world.
A McKinsey survey indicates that Boards want to spend more time on Corporate Strategy matters–
What is causing this increased attention?
According to Frost and Sullivan—
Factors in current business environment shaping Corporate Strategy and Corporate Development plans in 2009
Respondents identified the following as the top five environmental factors:
- Global economic downturn (51%)
- Increasing need for product/service innovation (32%)
- Intensifying competition (26%)
- Emerging global markets (22%)
- Corporate restructuring (21%)
So what should be the roles the Board should play in Corporate Strategy?
An excellent report “Engaging the Board in Corporate Strategy” from Oliver Wyman – Delta Organization & Leadership provides an overview —
The key role and the one missing most in the past is Strategic Thinking.
Boards cannot leave this vital role to management. Their independent insights and viewpoints ensure that development of the strategy will not become a product of group think. Boards in companies such as UBS and United Technologies are already engaged in Corporate Strategy development.
More on this in a future post.