What role should a Board of Directors play in the development of strategy? I've heard many responses when I've asked this question—ranging from "rubber stamp the CEO's plan" through to "actively create and implement the strategy".
The best answer lies between these extremes. The Board should be fully involved with the development of the strategy and oversight of execution, but it should not become involved with implementation because that is the job of management (the Board should "create, decide and monitor" but not "do"). There seems to be widespread agreement amongst researchers(*) that this level of involvement is appropriate, and importantly, that this level of involvement is associated with good company performance. And it makes sense—after all, the Board (not the CEO) is ultimately responsible for the performance of the organisation. Given this argument, why do so many Boards steadfastly remain passive when it comes to the development strategy? They are doing their companies and their shareholders a gross disservice.
(*) Please contact me if you'd like a list of references.
Leave a Reply.
Thoughts on corporate governance, strategy and boardcraft; our place in the world; and other topics that catch my attention.