The panel was stellar, with names well known to board and strategy watchers: Thomas O’Neill, Krystyna Hoeg, Stephen Bear, and Ken Smith (bios in Post 1). Overall, I found it a great overview of the most obvious answers to the seven questions, peppered with relevant examples and a few deeply insightful remarks.
The bottom line for me? The board members totally “get” the need to be engaged in strategy formulation; however, there was not much conversation about execution. Granted, it was not specifically called out in the abstract but I had hoped it would get more mention. The jury is out for me on what to make of the fact that it didn’t.
Question 6: Is scenario planning more popular now?
Of course, Stephen Bear kicked off, sharing his deep experience from McKinsey. He noted that, when done well, this is an important strategy formulation tool and that it provides a way to manage the sometimes “schizophrenic tension” between short-term performance expectations and ensuring health over the long term. It is a tool to ensure that we are investing in both at all times.
I confess, I lost a little traction with the note-taking here. I am sure Ms. Hoeg and Mr. O’Neill commented, but I caught myself reflecting that this all still falls short of the high-level oversight on realization of results (that I read into “board oversight of growth strategy”) that I was hoping for. I realized that my own biases had shaped my expectations.
Question 7: What is the relationship between management and the board regarding strategy development? Do we expect management to resist and object? Do we expect them to say, “It’s my job. If you don’t like it, fire me”?
Ms. Hoeg referenced her experience at Shoppers Drug Mart and noted that it was not long ago that the board brought Domenic Pilla into the president and CEO role. They had done so, realizing that a strategic refresh was in order, and recognizing that he would need time to learn the organization and prepare that plan. She noted that management went shopping for a strategic advisor and prepared two or three plans. The board was engaged in these processes. A five-year plan was produced that looked at what the organization could do organically and, alternatively, through mergers/acquisitions. This really served to put the board in a “ready state.”
Thomas O’Neill noted that “down the hall” at Loblaw, where he is a board member, they were looking at their strategy. They recognized that the grocery industry had peaked a couple of years ago and was stabilizing around three companies (i.e., “it was time to do a deal”). Loblaw made a bid for Shoppers and the acquisition is underway.
Mr. Bear weighed in with the observation that sometimes board members end up asking a lot of questions, sometimes the wrong questions. He cautioned that this can waste precious time. He also noted that, at times, the role of the chairman and CEO is to work with the board members to focus.
Mr. Smith invited each panel member to have a “last word” before he opened the floor to questions:
- Mr. O’Neill summarized with: “Search for growth in the core business or adjacencies; if one cannot grow, one must evaluate all other options.”
- Ms. Hoeg suggested: “Evaluate the board and the senior management team.” Her comment reminded me of one of her earlier remarks—that she looks for the “cheerleaders” and the “naysayers” and the need to weigh input from both.
- Mr. Bear noted that when considering strategy, “data deliberation can skew the outcomes.” He recommended considering whether “we are stretching enough.”
All in all, this event was well worth the time. The opportunity to see how board members think was fascinating and to hear some of their “war stories” was intriguing. I will be attending more of these events.
Our interest in such matters tends to track along with the economy. Given that the recovery is in full swing, we are well into transformational growth strategies. Acquisition announcements, such as Sobeys’ purchase of Canada Safeway, Loblaw’s purchase of Shoppers Drug Mart, and many other dramatic shifts, are examples of growth strategies that have our attention.
As these proceed into execution, we will have an opportunity to shine the spotlight on the board’s role in this critical step.
Presently, I come at this from the perspective of an investor in institutional funds that buy into these corporate strategies. The very sharp point of my own motivation is to gain from these strategies—and when they fail (as they did wildly in the sub-prime mortgage crisis) I know I bear the risk. Chances are, you are in the same boat. I also bring 20+ years of strategy execution experience to the table. I know, viscerally, how difficult this is. What I wonder is, “do boards?”
I believe there are ways to provide boards with efficient and insightful means to track execution and to require the organization to build change agility. Here are some examples that would focus their diligence, bring their deep experience to bear, and deepen the organization’s—and the board’s—capabilities:
- Search for and retain a member(s) with deep strategy execution experience. Tap his or her experience and insight.
- Identify the most strategic initiatives and require management to provide quarterly updates (including not just the standard plan against actual, but also candid risk tracking, and updated insights based on competitive, regulatory, etc. market movement).
- Establish a Strategy Realization Committee. Just as boards run Compensation, Nomination, Audit, etc. committees, perhaps they should run a committee with oversight on delivery of the most strategic of initiatives. BMO runs such acommittee that looks remarkably as described.
- Prioritize change agility (the capability to deliver strategic initiatives in rapid iteration, and adapt so concurrently as to appear fluid) as critical organizational capability. Require management to develop a plan to develop and embed this. Require quarterly reporting.
Over the next several months, the role of the board in Strategy Execution is a theme I will continue to pursue.
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“A rising tide lifts all boats”—John F. Kennedy
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- What is the board’s role in Strategy and Strategy Execution? Post 2 of 3
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