In today’s volatile, uncertain, complex, and ambiguous world, a well-executed strategy matters more than ever. But boards and management must now ensure they interact productively when defining and refining their companies strategies.
The latest Deloitte Director’s Alert – Through the eyes of the board: key governance issues for 2015, considers whether the concept of strategy is dead, or whether it is even more important in today’s fragile global economic environment.
It identifies a well-executed strategy as essential in helping a company to achieve superior financial performance over the long term. However, it also highlights the need for agility and flexibility in how companies adopt such a strategy given that the factors on which such decisions are made are based on external forces that are ever-changing.
But how often should an organisation revisit its strategy and the underlying assumptions on which it is based? The paper suggests the right timeline will depend on the “clock speed” of the industry in which the company operates, citing the technology industry as having a much faster “clock speed” than most.
It is for this reason that it is essential for boards and management to work collaboratively on the success of a company’s strategy, the paper says. While management is responsible for setting, refining, and executing the strategy, the board’s role is to provide oversight and guidance to the direction of the strategy and to weigh its inherent risks.
The paper urges boards and management to interact productively when defining and refining strategy. It adds that in a productive relationship, the questions the board asks should be purposeful and legitimately probe and advance the strategy without grandstanding or attempting to “one up” management.
It also urges boards to connect regularly, visit the organisations’ business units, meet with management, and engage industry and subject-matter experts so they can better understand, assess, and challenge the strategic choices made by management and the assumptions that underlie those choices.
The full report can be found here.
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