Governance Workshop: The Strategic Board

Transcription

1 Governance Workshop: The Strategic Board! June

2 Objectives The overall objective of this session is to consider the role of a governing body in the strategy process: Basis of governance body involvement Key decisions around involvement Strategy content Strategy process Strategic thinking What other objectives do you have? 2

3 Always remembering If you want to see God laugh, show him your plans! Woody Allen 3

4 Think about how strategy takes place at your organisation. What is working well, and what could we improve? What changes does this suggest? What s working What could improve Suggested changes 4

5 Proposed Agenda Time Session Person/Format 5:30-5:35 5:35-5:45 5:45-6:00 6:00-6:20 6:20-6:40 6:40-7:00 7:00-7:15 7:15-7:30 Introduction Objectives & Goals The board and strategy Strategy Content Strategy Process Strategic Thinking Strategy Implementation Wrap up and questions Glenn Poole Plenary Gavin Nicholson Plenary Plenary Plenary Plenary Gavin/Glenn 5

6 Why strategy? 6

7 Strategy: Within board powers The standard wording in most constitutions is similar to Replaceable Rule s198a, which states:! The business of a company is to be managed by or under the direction of the directors. 7

8 Strategy: A core board function At board level, there was little, if any, analysis of the future strategy of the company. Indeed, the company s strategy was not documented and it is quite apparent to me that a member of the board would have had difficulty identifying any grand design. If the HIH board discussed strategy at all, it was in the context of an annual budget meeting. But budget sessions are generally about numbers, and there is no indication that the board seriously grasped the opportunity to analyse the direction in which the company was heading.! Owen from HIH Royal Commission 8

9 Strategy: A core board function Boards are charged with: Setting the goals of the corporation Appointing the company s CEO Overseeing the plans of management for the acquisition and organisation of financial and human resources Reviewing, at reasonable levels, the company s progress towards these goals Rogers, J from AWA case 9

10 Yet, strategy is often the most sought after development area Strategy & business Strategy and planning business Financial management 10 Risk management Recruitment & rention (Board/MC) Fundraising Evaluation of Board/MC Legal compliance Org. monitoring Policy development External board/mc communications Director/Committee member duties Supervision & support of CEO Chairing and leading the board/mc Understanding org. and programs Working relationships (MC/Board and mgt) Delegations to mgt and cttees Working relationships (MC/board members) Meeting processes Source: Governance Development Needs of Funded Nonprofit Organisations (DOC and DSQ funded research) 5

11 Governors and Strategy 11

12 Evolution of Governance Entrepreneurial Capitalism Founder/founder and family Founder and family Reputation Managerial Capitalism Corporate/ Gov t ownership Professional management Resources and networking Control Present Institutional Capitalism Funds industry/ general public Board of directors Performance This is a model both through time and for individual organisations 5

13 Board Roles Conformance Performance Accountability and Monitoring Risk versus Return Developing & implementing the right strategy Taking and managing risk is at the heart of... value creation... Cohen & Peacock

14 Tricker s model Compliance Roles Performance Roles External Internal Provide Accountability Monitoring & Supervising Work with and through the CEO Strategy Formulation Policy Development Past and Present Future 14

15 S t r a t e g y Working with and overseeing the Key Executive Defines who to recruit & keep and what to assess Risk & Compliance Vast majority of corporate risk is strategic in nature Compliance largely defined by strategic approach Networking & Communication Strategy will define resources required Strategy defines both target and message of board communications Governance Governance systems should reflect strategy Ability to act in crisis depends on strategic insights 20

16 Board orientation Review Guide & Trigger Rubber Stamp Test Formulate 16

17 The engaged board Monitoring & Adjustments Goal formulation/ boundary setting Ideas/ options generation Detailed planning and feasibility Assumption testing and choice Implementation Information gathering & networking 17

18 Think about your strategic orientation and engagement (slides 16-17). What s working What could improve Suggested changes 18

19 Your strategic options 19

20 A basic Purpose test Do we have capacity? Do we have support from those we need? Does it advance our purpose? 20

21 Three elements of engagement 21

22 Strategic Content 22

23 Strategic hierarchy What services or areas should we operate in? Parenting Advantage Corporate Strategy How do we create value in these areas? Competitive Advantage Business Strategy Business Strategy What is the basis for this value? Functional Advantage Functional Strategy H.R. Marketing Operations Finance Etc. Geoffrey Kiel

24 Porter s five forces 24

25 Strategic Audit Political/Legal Economic Social Technological Environmental Opportunities Markets Customers Competitors Suppliers Capabilities Assets People and management Systems and processes Culture Threats Strengths Key Issues Purpose Vision Mission Values Goals Weaknesses 25

26 Blue Ocean Strategy 26

27 Balanced Scorecard 27

28 Simple questions! What is our purpose? Who uses our outputs? What do they value? What are our results? What is our plan? Source: Drucker! Do I understand it? Is it appropriate Is it sustainable? Is it feasible? Is there accountability? Source: Trudeau & Associates Advisers to Boards and Management. 28

29 Thinking about your strategy content What tools/content do we currently use? Benefits of this tool Disadvantages of this tool Ideas for change 29

30 Strategy Processes 30

31 The engaged board Monitoring & Adjustments Goal formulation/ boundary setting Ideas/ options generation Detailed planning and feasibility Assumption testing and choice Implementation Information gathering & networking 31

32 Integrated planning cycles 1. Agree roles and responsibilities Review Internal capabilities Aspirations External environment Implement Strategic options Budget and operational plans Preferred option Plan and measures Strategic Intent document Based on model developed by Kevin Hendry 32

33 Think about your strategy processes What is our current process Benefits of approach Disadvantages of approach Ideas for change 33

34 Strategic Thinking 34

35 Strategy in the Boardroom Strategy workshops/sessions during the year Agenda item on each board meeting Focused strategy reviews at specific times during the year Injections from external experts Encourage interactions regularly in a process Integrated into papers 35

36 Think about your strategic thinking What is our current approach? Benefits of approach Disadvantages of approach Ideas for change 36

37 Implementation: The (often) missing factor 37

38 Drucker on measurement*! What is our purpose? Who uses our outputs? What do they value? What are our results? What is our plan? 38

39 Control Orientation High Planning Influence (Centralised planning) Low Highly centralised Strategic Planning (Narrow delegations) Strategic Control (Mixed model) Financial Control (Broad delegations) Low High Highly decentralised Control Influence (Importance of meeting short term budgets) 39

40 Measurement Integrated into strategy, systems (e.g. budgeting and HR) and processes Qualitative, quantitative mix Measurement and goals drive behaviour (with or without remuneration links) Lead indicators Lag indicators Review of indicators Relevant benchmarks Time frames (short, medium, long) Trends and goals 40

41 Think about your measurement What is our current approach? Benefits of approach Disadvantages of approach Ideas for change 41

42 And so finally 42

43 Thinking points What three things can I take back to my board from this evening?