In my last article – Is it time to bury the annual strategic planning retreat? – I spoke about the importance of developing a 365-day-a-year approach to strategy to better meet the complexities and rapidly-changing nature of a modern world.
I suggested that strategy should emerge from all areas of the organisation, rather than being driven top down.
This resulted in a many of you asking: “Does this make the board’s role in strategy redundant?”
I wasn’t entirely surprised by the question given that the majority of Australian organisations generally adopt a highly ‘directive’ approach to strategy and have long been used to having the board and/ or executive leading the strategy development process.
With an ‘emergent’ approach to strategy, while the board and senior executives set the core framework and critical elements such as purpose, mission and values, the strategy ideas and the application of these ideas come from people on the ground or at coalface.
Directive Vs emergent strategy
To better explain the difference between the two approaches, let’s consider how strategy is brought to life in the first place.
In any organisation the strategy is realised through the actions of the people who work there.
With a directive approach, the success of the strategy is measured by how well those actions support and achieve the objectives set by the board and executive. A ‘successful’ strategy is one that achieves or exceeds most of those objectives.
This directive approach requires the board and executive to set clear objectives and then develop systems and processes to control the actions of the workforce.
Alternatively, with an emergent approach, a ‘successful’ strategy is one where the actions of employees are aligned with the organisation’s purpose and move it toward the future vision. Here the board and executive must set a clear purpose and vision and give staff the freedom to act in a way that best supports the vision. The board and executive focus on the broader vision and leave the objective setting to staff.
This approach is more suited to today’s fast paced world where there isn’t time to wait for the next board meeting to consider new ideas … especially when the likely outcome of that meeting is further deliberation.
Today, strategy needs to be realised through a quicker process comprising many small, incremental changes, occasionally punctuated by significant shifts, rather than working intensely for three years to achieve pre-determined objectives.
Freeing staff to act in line with the vision (rather than more constrained objectives) means they can ‘experiment’ and collaborate more.
Many of these experiments will create little or no change (or may be seen as failures) but a few will be successful and create growth and opportunity for the organisation.
Does an emergent strategy approach diminish the role of the Board?
While an emergent approach will mean that more strategic decision-making and objective setting will happen at the coalface of organisations, it doesn’t make the board’s role redundant, merely different.
The board still has a critical role to play in ensuring the success of this approach to strategy. Keeping the organisation headed in the right direction.
In organisations where strategy development is a daily event, the board must:
- Focus on a strategic framework not objectives. The board and the executive should be the keepers of the purpose, broad vision and what the organisation holds important. They set the ‘why’ and the ‘how’. Working within this framework, everyone throughout the organisation then focuses on the ‘what’.
- Create an inquisitive spirit throughout the organisation. The culture of the organisation should foster a sense of engagement in the core purpose and a willingness to explore opportunities to do things differently. The board will continue to set this ‘tone from the top’, celebrating success and not taking a punitive approach to failures.
- Become a learning body. Successfully adopting a daily approach to strategy requires ongoing insight and information, on both the internal and external context of the organisation. The board and directors must be continually seeking information to anticipate change, using their wisdom, networks and knowledge to see what is on the horizon.
- Seek different insights. The way in which the board receives information from the organisation (style and frequency) will need to change. Board papers that present current performance against pre-determined metrics will not work. Instead the board must increasingly focus on emerging trends, sector insights and activity metrics. Information is also likely to come from a wider variety of sources.
- Be prepared to act quickly. As winning strategies emerge from the organisation the board will need to make decisions and act quickly to support those strategies. This will require the board to, at times, be nimbler than the traditional fixed monthly meeting.
So, in answer to your original question, will board’s role become redundant as businesses increasingly change the way they do strategy … no, not redundant, just different.
For some, changing their approach to strategy will be uncomfortable but vital to navigating the uncertainties of our modern world!