The first module I covered in the NEDonBoard masterclass was the duties and responsibilities of NEDs as outlined in the companies act 2006. The second module covers Strategy. I was looking forward to starting this module because I wanted to learn the balance between the contribution to the strategy from an executive standpoint vs a non exec. This module did not disappoint.
Strategy in Action provided an overview on what an effective strategy looks like, what is sustainable leadership, how to put your strategy in action, and how to check results. If you follow my blog, you would have seen some of my posts on putting strategy in action: Bridging the Gap between Strategy Design and Delivery. A series of 10 articles exploring the 10 guiding principles from Brightline Initiative. So how does that differ from the role of a NED in their company’s strategy?
The module was presented by Karen Brice, Director & Executive Coach at Grant Thornton UK LLP and Sarah Bell, Partner at Grant Thornton UK LLP.
For a strategy to be effective, the company must have a framework to assess its set up and progress. A 3 dimensional strategy is ideal and means that:
- The strategy can be assessed
- It protects all stakeholders
- It has scenario planning built with in
In other words, a strategy must exist to clearly define the company’s direction. It must take into account all stakeholders. Yes, stakeholders and not only Shareholders. In this modern approach, shareholders form one arm of the stakeholders but not the only arm. Stakeholders also include employees, communities, governing bodies, and so on. I won’t go into details about the effective strategy here. You can read my posts on Turning Ideas into Reality with Brightline Principles. So how does a NED balance their support to the strategy and be practice their non executive contribution?
A key thing to keep in mind is that a NED is not the doer of the strategy. The executive team led by the CEO are responsible of mapping our and implementing the strategy. Like any team, there needs to be a sense of affirmation and support provided. This is where NEDs come into play. The Board must practice their independent judgement (Duty 173). This means that NEDs must bring their experience and expertise to the table and share this knowledge with the executive team. In my very short experience as a NED, I noticed that there can be some form of resistance, or perhaps not resistance but rather reservation when it comes to the interactions between execs and non-execs. Personally, sometimes I ask questions not because I object what the strategy is aimed at. I ask the question because I want to assess the level of belief the executive team invests in their strategy. Yes, challenges are important, yes bringing new view points is important to consider different aspects, but ultimately, if the executive team does not believe in the strategy, then how are they going to deliver it. And if they cannot deliver the strategy, how am I as a NED expected to practice my duty of promoting the company’s success (Duty 172).
The Executive team believes fully in the strategy. How can you provide support and ensure the strategy remains relevant and valid. Strategy in Action provides three horizons to look at the strategy for NEDs:
- Horizon 1: Management
- Horizon 2: Enterprise
- Horizon 3: Innovation
Horizon 1 – Management: In this horizon, the NEDs are assessing whether the strategy explores the known markets and technologies available. As a NED reviewing the strategy, ask yourself:
What should the business stop doing to raise capital for what is working within the strategy?
This approach is really interesting because it ensures that NEDs pause and think. The idea is to review and assess whether there is some work being carried on that is not benefiting the progress of the business. This way you remove the ‘waste’ in efforts, and help the business focus on what is bringing value. This way the business can proceed within doing better things that could enhance their stakeholders.
Horizon 2 – Enterprise: This horizon aimed at assessing new markets and solutions. In other words, the growth and expansion of the business.
How can the organisation deliver expansion and profits?
What role will stakeholders play today in helping the business reach there?
As you can see, these questions, even when answered clearly, will require the first horizon to be robust so the business can proceed with putting these initiatives in place.
Horizon 3 – Innovation: And finally, the innovation horizon. The question that made me stop and think is this:
What are the unknown markets we are not tapping into?
This is where the real innovation comes in. Basically, the strategy should look at potential unknown solutions and technologies that would give the business the first move advantage say in 5 years, if the business invested in them today.
Don’t get hung up on ‘unknown’ as I did for a while. I read a book called Powered by Change by Jonathan MacDonald. The book explores the concept of change through the phrase: ‘when the wind blows, some build walls, while others build windmills’. The book introduces a theory of 4 key pillars that enables business to build that windmill of change. The simplest way to tackle the unknown is by keeping your ear to the ground. Make sure you are always knowing the latest trends (as well as those you might think are fads). Stay connected to your customers and stakeholders and understand how they are responding to such trends/fads. Keep an open mind and you will start being exposed to the ‘unknown’.
Powered by Change. Book by Jonathan MacDonald can be purchased online from any book store. Highly recommended.
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If you want more details on NEDonBoard MasterClass, you can check it out here. If you would like me to put in direct contact with the team, please do reach out.