By Johnson Manyakara

Corporate Strategy should also keep Board members awake at night. I expect a violent push-back on this, shouldn’t I? The likely source of the push-back is the majority of us still holding the traditional view that “CEOs should just get on with the job. A Board should merely choose and appoint a CEO, evaluate his/her performance and fire him/her, if he/she doesn’t deliver. Involvement by the Board in corporate strategy just confuses accountability.”-the role of the Board being restricted to approving next year’s budget and blessing the company’s long term plan. Please invite me to these “Blessing Ceremonies”!

Missed Opportunity

Aren’t Board members that hold that view missing an opportunity to guide the shaping of the business’ future through this rather “hands off” frame of mind? The majority of today’s Boards have people with loads of knowledge, experience, perspectives and contacts-assets that are not brought to bear on the crafting of corporate strategy.

Crafting of corporate strategy largely centres on deciding where and how a company should compete in this ruthlessly competitive global village. Key choices are considered with the following being some of the questions to be answered:

• What line/s of business should the company be in?
• How will the new line/s of business add to shareholder value?
• Who should be the target customers/markets?
• What should the company’s value proposition to the market be?
• Which winning capabilities should the company build to compete?

Should the making of such strategic choices be left to the CEO and the EXCO?

“Off-Site” Boards

One developing trend is the holding of “Off-Site” boards, once a year, over a day or two, involving the Board, the CEO and the EXCO. The primary objective of such retreats is to engage directors in deep soul searching about the business, questioning key assumptions, looking at and deciding on strategic issues and opportunities that need to be addressed during a given planning period and which ones can be deferred until later.

Typically, the “Off-Site” board will look at:

• PESTEL Trends (PESTEL is an acronym that stands for Political, Economic, Social, Technological, Environment and Legal factors in analysing environmental trends);
• Competitor Landscape;
• Market Developments; and
• Possible market expansion and M&A

Often there are interesting outside speakers that may be shareholder activists, depending.

After All

The turnaround and long term success of any organisation depends, to a large measure, on whether the organisation has a live Strategic Plan-a plan that sets the organisation’s strategic direction and strategic priorities. The plan, in turn, informs high level Key Performance Indicators (KPIs) for the Board and the CEO, performance contracts for Board members and the CEO as well as Senior Staff KPIs and performance contracts- prerequisites for driving the strategic performance management system of the organisation.

The Public Entities Corporate Governance Act 2018, in Zimbabwe, for example, has provisions for “tight marking” of State Enterprises and Parastatals Boards and CEOs on Strategic Plans and Performance Contracts with some fairly tough sanctions for non-compliance.

Can Board members, therefore, afford to leave corporate strategy strictly in the hands of CEOs?  Boards can add big value to corporate strategy and, therefore, corporate strategy should keep Board members awake at night.