What is the best way to approach a strategy rethink?
It’s a topic many high-performing boards struggle with, particularly in tough times when traditional, long-held assumptions about organisational vision and purpose are being questioned.
Clarity of purpose drives alignment. Without it, external circumstances and internal activity can shift an organisation’s focus, with varying results. Many organisations have a single purpose statement. Others have added one to traditional vision and mission statements. Vision is aspirational — what the world will look like when you’ve been successful. Mission is your contribution to achieving the envisaged world.
Purpose is more fundamental. It is crucial for guiding strategy, motivating employees and making powerful connections with all stakeholders, most importantly those you aim to serve. Purpose defines a problem you are attempting to solve. All things flow from this.
At key points in the evolution of an organisation you’ll encounter major changes that call for a fundamental shift in why the organisation exists. More often, you may need to sharpen the expression of purpose to more appropriately respond to a drift in circumstances over time.
Drive change
As guardians of purpose, directors should drive any change. To sharpen purpose, the Company Directors Course “Five whys” exercise can be useful. Identify the problem, then ask why it’s happening? Repeat. Keep asking why, until you reach the root cause — usually within five “whys”. You’re looking for something that transcends your current thinking about [the company’s purpose] which will resonate more effectively with stakeholders.
A more forensic model is to create a Venn diagram of what is needed in the market or community, what your organisation is good at and what unique value you bring. Your purpose will sit at the centre of need, capability and resources.
Refresh your strategy
Your strategy should always be evolving, never static. Reasons for a refresh include to ensure your strategy is aligned to a newly clarified purpose. A portfolio review using a four-quadrant model, with axes representing profitability and purpose, is useful for aligning to purpose. This is especially true for NFPs, as while something may not be profitable, it may be highly aligned to purpose. Other things may be profitable, but low in alignment to purpose.
Stress test your strategy
I’ve found this sort of analysis useful where external circumstances have shifted. Look at how well the existing strategy addresses the change in circumstances and at how it will respond to likely future challenges or opportunities.
Learn your lessons
It’s good to initiate a regular process of review at senior leadership and board level. This is particularly useful for learning lessons from strategy implementation. It should be timetabled and focused, with particular areas for review. Consideration of stakeholders is vital to successful strategic thinking. You must be clear on why and how you’re seeking input from stakeholders. The IAP2 public participation spectrum (iap2.org.au/resources/spectrum) is a useful tool.
Dive in
Your board should spend time with management to understand how any strategy refresh will be executed, the metrics for revaluation of success and where review and intervention are needed. Make an honest assessment of internal capability and capacity, as well as the risks to execution. If your board brings clarity and driving alignment of strategy to your purpose, with sufficient consideration of stakeholder views, then it will be a good guardian of that purpose.
Andrew Donovan FAICD has been a company director for 30 years and founded the board advisory organisation Thoughtpost Governance. He has also authored and facilitated many of the AICD’s core curriculum programs.
This article first appeared under the headline 'The Fix: How do we initiate a strategy refresh?' in the June 2025 issue of Company Director magazine.
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