The board's involvement in strategy has been hotly debated in some quarters in recent years, especially as the focus of attention for business performance has moved from the chief executive to the board. Is strategy the domain of management, or of the board?
Thankfully, the extreme options (strategy is totally the responsibility of management or imposed by the board) are no longer widely supported. The discourse seems to be coalescing on the more collaborative options of a board-led, managment-led or a joint development process—although the merits of which one of these is 'best' continue to be debated.
Once directors and managers understand what strategy is (check the graphic), a decision to actively involve the board seems obvious. If the purpose of the board is to ensure the long-term performance of the company, in accordance with the wishes of shareholders, why wouldn't the board roll up its sleeves?
An increasing number of commentators are now nailing their colours to the mast on this point. For example, this article, published in Director (the Institute of Directors' magazine), recommends that all non-executive directors (NEDs) should be actively looking at all strategy options and be making strategic decisions. I couldn't agree more, but would add that all directors (not just NEDs) should be involved in the process, together. While this recommendation demands more of directors, emerging research seems to suggest the approach is not without merit.
Thoughts on corporate governance, strategy and effective board practice; our place in the world; and, other things that catch my attention.