Board Resources

A Look Inside the Book


Directors are the custodians of corporate value.

Close to 90% of large companies report using “strategic planning’ as a key management tool, but few do it well. Management adequately assesses strategic risk in even fewer companies. For those facing dramatic change, corporate renewal is often delayed or avoided until problems reach crisis proportions.

    Clearly, this presents a threat for shareholders. As the shareholders’ custodians or corporate value, boards can have a greater impact by providing oversight of three critical strategy processes: strategic planning, risk assessment, and corporate renewal...
Chapter 1:
TThe Board's Role In Strategy, Risk Assessment, And Corporate

Strategic planning, risk assessment and renewal needs to be done at the business unit level. The board of directors with management must decide if it wants to just oversee the results of the business unit analysis and decisions or actually participate in the processes at the business unit level. Boards of larger corporations must oversee the performance and plans of a portfolio of businesses.

    Chapter 2:
Different Approach To Strategy And Strategic Planning...
The board needs to be sure that the people accountable for implementing the plan are those that developed and presented and believe in the plan. Motivated people who believe in the plan are the key output of any successful planning process. The planning and risk assessment processes need to be blended to meet the unique needs and capabilities of the organization.
    Chapter 3:
Board Oversight Of Benchmarking And Objective Settings...
The output of the strategic planning and risk assessment and renewal process must be easy to communicate. Without effective communication, plans cannot be effectively implemented. Planning is primarily a communications tool needed in all organizations.
    Chapter 4:
    How To Review A Strategic Planning, Risk Assessment, And Renewal Process...

Senior management working with the board of directors must adapt the planning process to the skills and capabilities of the management group and the board. A planning effort can be too advanced or too basic for the challenges and capabilities confronting any organization. It is up to the board working with the CEO and management team to develop an appropriate system of processes for the challenges the organization faces, given the skills of management and the board.

    Chapter 5:
    Board Oversight Of The Environmental Intelligence Process...
Directors and management need to have open debate on the plan and how it reflects the realities of the internal and external environment. At some point leaders need to stop debating and start doing. Knowing when is based on experience. Organizations in deep distress need to have a strong leader with a cash flow focused plan. Organizations that are earning far above their cost of capital need to focus on growth and innovation to maintain their lead.
Chapter 6:
    Strategy Risk Assessment With Scenarios

Directors need to encourage management to install a process to quantify the magnitude and likelihood of alternative strategies and risks. Asking "what if...” is a tool for encouraging management to run alternative scenarios. Scenarios are like exercise, they help prepare the organization for the future.

    Chapter 7:
    Board Oversight Of Execution...
Plans that cannot be executed are meaningless. Execution is where the rubber meets the road. Directors cannot allow a strong leader to take the organization down the wrong path. All too often a strong CEO, Chairman and or lead director with the wrong vision and or strategy can destroy the in organization.
    Chapter 8:
    When Execution Fails: Renew...

When execution fails to earn an acceptable return on capital, directors need to encourage management to dig below the surface and renew the organization and strategies. Renewal may require a special board meeting to investigate and discuss the issues or hiring a consultant to evaluate alternative strategies and alternative business models. The key to renewal is understanding alternatives and starting early, not after 3 years of losses.

    Chapter 9:
    Board Oversight Of Disclosure Of Strategies...
In order for strategies to be effective they must be communicated up and down the organization . Strategies that are held secret from shareholders’ will not add to the shareholder future value expectations. Strategies that are secret are unlikely to motivate employees. Disclosure of strategies, risks and renewal efforts need to be appropriate for the situation.
    Chapter 10:
    Strategic Process In Family-Owned And Non-Public Businesses And Advisory Boards...

Directors need to remember that for-profit businesses such as family-owned and non-public corporations (not listed on any stock exchange) require different approaches to strategic planning, risk assessment and renewal. Understanding and incorporating the risk and return goals of the ownership group into the planning process is critical. The size, degree of success or distress, and ownership structure do matter, but are secondary to the goals of the owners. This principle applies in both family enterprises seeking to employ family members, and in private equity investee companies seeking to "go public."

    Chapter 11:
Board Oversight Of Strategy, Risk Assessment, And Renewal In The Political And Not-For-Profit Organization...

Directors need to remember that not-for-profit and governmental organizations, such as hospitals, commissions, and boards of trustees, should use different approaches to strategic planning, risk assessment and renewal. While these organizations must have a balanced budget, they are focused on serving a non-financial mission. Directors may be heavily involved in strategy development and in the planning process, depending on the size and financial health of the organization.

Chapter 12:
    Effective Directors, Boards, And Audit Committees Monitor Fundamentals...

Directors must continually monitor progress against plan and support efforts for continuous improvement. Directors must remember that management cannot manage what they do not measure. Measuring the fundamental attributes of the key.