Board Involvement in Strategic Planning


How should the Board be involved in strategic planning? This is a frequently asked question. The key objective of strategic planning is to identify the sound course and direction for the organization that optimizes the organization’s future potential. Setting the strategy is the responsibility of the senior management team — the team is responsible for the success or failure of the strategy. This team is close to both the customers and the internal workings of the company and is best suited to determine the course and direction for the company.

How can the Board play a role?

While the Board is not responsible for setting strategy it can often give valuable input before the strategic planning process begins and act as a sounding board as part of a review process. Hence, the Board can play an important role during several steps of the strategic planning process:

Before the process starts — the Board gives guidance including an overview of future environment along with specific opportunities and issues to be considered during the strategic planning process. The Board will often have a broader vision, enabling the team to consider more choices before selecting the optimal course and direction.

After strategy development — the Board provides a review function; review of the strategy to make sure that it is internally consistent and that there are concrete implementation plans for key strategic objectives.

During the year — the Board should monitor progress to ensure the strategy stays on track or changes when business conditions necessitate change.
Some Boards participate in all three steps — others in steps two and three. In the case where the Board is not close to the business then the process should include just steps two and three. If the Board has members who do have broad business experience and understand the industry than participation upfront is often beneficial.

Board Involvement before the Strategic Planning Process Begins

Typically Board members work through the following steps:

Industry Scenario — this allows Board members to give the strategic planning team their insight into industry trends.

Winner’s Profile — Board members may see characteristics of the Winner that team members may not see (Board members may have a better understanding of what a company will look like at $100 million than the team members of a $50 million company looking to grow to $100 million.).

Opportunities – to be evaluated — the broader make-up of the Board may uncover additional opportunities to be researched.

Threats/Issues — the Board members may have a broader vision of what the risks are in the business.

The Board should be providing guidelines and suggestions rather than edicts. The senior management team should then use the input as they work on the strategic plan. Some ideas may be incorporated into the strategic plan — others, while considered, may not make it into the plan. This does not mean that the ideas were not good, it just means that with limited resources the team had to select the few items to work on rather than choosing a large number and becoming unfocused.

This is a general format for Board involvement before the process begins — however, due to the individual nature of a Board’s relationship with the senior management team we continue to work with companies to design programs that work for their specific requirements. The key thought is that Board members often have wide ranging experience and you need to ask yourself the question: How can we best leverage their expertise when developing a strategic plan?