Increasing demands for services, reduced funding, improvements in technology and changing legislation are all good reasons for an organisation to transform itself.
But it won’t happen by accident. It requires deliberate actions and the willingness and courage to transform constantly. It requires a firm vision, clear direction and alignment across the organisation to achieve it.
And it begins right at the top – with the board.
The board firstly defines the parameters for growth. It asks: What kind of growth? How much? How far can we go?
Without this clarity, management will be paralysed by uncertainty or it will waste resources.
For one major not-for-profit organisation in the healthcare sector, an ambitious plan for significant growth that included a goal to become more influential and the first port of call for healthcare advice in the home has come to fruition.
The board recognised it needed to lead the change and outlined the parameters to guide management:
- To expand geographically and secure a national presence.
- To grow by diversifying revenue streams and developing new and allied businesses, thereby reducing over-dependency on certain income streams.
- To broaden models of care delivery and achieve greater scale.
In five years the organisation has grown from $50 million to $150 million and expanded into other states and New Zealand. Meanwhile acquisitions have enabled work to commence on new service delivery models as platforms for growth.
There are five important ways that boards can play a role in governing and guiding change. The board:
1. Sets the direction for transformation. As both ‘the keeper’ and ‘the shaper’ of the organisation’s long-term value, its role is to provide clarity by defining both the direction for the organisation and the parameters for growth and transformation.
2. Ensures total alignment. When key investment decisions are required, any lack of alignment can stymie important decisions and frustrate management. The chairman is responsible for testing continuously for alignment. Every director should ask questions and raise challenges to enable misalignments to surface and be resolved. An external adviser can often help this process.
3. Manages its own and management’s hunger for growth and transformation. Directors are usually successful business people in their own right with a strong appetite for growth. While valuable, this desire for growth must not interfere with the responsibility of the board to scrutinise and challenge initiatives brought to it by management to ensure it is in line with the strategy. At the same time, the board adds critical value by ensuring that the time and energy of the management team is directed to where it will make the greatest impact.
4. Reviews lessons learnt from transformation. Organisations will experience challenges in pursuing opportunities and it is the role of the board to ensure that lessons are learned.
5. Continually improves its own effectiveness. The board’s ability to lead organisational transformation depends on whether it is effective as a decision-making body. Investing in rigorous board performance reviews will ensure the board is able to deliver the objectives. Improving a board’s effectiveness is critical to good governance and successful transformation.
This is an edited extract of an article that first appeared in Company Director magazine.
In other words:
- Take the lead and manage, direct and monitor change
- The first step is to define the scope of the transformation project to help guide management
- Monitoring board effectiveness is also critical to successful organisational transformation
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