UPDATED as of 03 July 2020.
Boards are essential for strategic success, but for them to add greater value into your strategy, they need to be involved. That means going beyond the yearly off-site strategic planning.
Insight: It’s the CEOs’ role to develop strategy, and if they’re wise, they would get as much advice and relevant insights they can from their board.
Data: McKinsey’s survey revealed that many companies are missing out on the value that boards provide, with 44% of directors stating board members just review and approve proposed strategies. (McKinsey)
Key Action Point: Engage your board in shaping your business strategy by first knowing the crucial elements of strategy that matter to them.
Strategy is all about making hard choices. We need to have a business strategy to make the most scarce resources like time, dollars, and focus. With a great game plan in place, we’d know where and how to apply these resources for maximum leverage.
To achieve this, there are three crucial elements of business strategy that should matter to you and the board.
A Business Strategy Must Be Purpose-Led
The entire approach to your game plan should align with your overarching purpose as a company. When interacting with customers, why do you do what you do? What trust are you aiming to develop in your customers that reflects the purpose and value set guiding your business?
At Step Change, we place great care in ensuring our clients are led by purpose and their strategy are in line with it. A genuine purpose grounds businesses and serves as their guide in developing their strategy. It places the people they want to help, their customers, at the heart of their organisation.
Not only does being purpose-led bring the right customers in, but it also increases staff retention (where your staff are 3x more likely to stay) and the perception. In fact, 89% of customers believe businesses that live out their purpose have higher-quality products and perform better. Also, purpose-led S&P 500 companies outdo those that don’t by a factor of 10.
A Business Strategy Must Be Contextually Relevant
Contextual relevance is also key to good business strategy. Good strategy arises from context. Ultimately, we have to remember that if the context changes, then the strategy also needs to change. So you need to ask yourself, “How are we tailoring our approach to the problems presented in our new context?”
Here, getting insights from your board will be very valuable. Decide with your board which particular challenges and opportunities have implications for your business and agree on how your organisation must respond to potential changes or disruptions in your context.
A Business Strategy Must Be Adaptive
We are operating in a world where the business environment constantly changes, where advantages are short-lived, and where there are ongoing changes in customer needs. Your strategy needs to be open to any changes that might occur but not dependent on those changes.
A flexible and adaptive strategy is not merely reactive — rather it acknowledges that in a changing context, being ready for change is crucial.
Having a great business strategy is the difference between a good company and a great company. As a CEO, tapping into the board of directors’ wisdom and expertise is valuable. Not only will this provide clarity and alignment, this also creates an opportunity to make bolder and well-informed decisions that will take your business forward.