A good corporate vision statement is aspirational. It’s okay to have a rather lofty vision statement because it gives companies room to set short- and long-term goals when they’re in the middle of strategic planning. The vision statement should speak to the type of business, the markets the company serves and how the company differentiates itself from other companies. A strategic plan is a road map that aligns closely with an organization’s mission that takes the organization from where it is to where it needs to go. Within a strategic plan, leaders should identify the objectives and resources that it will need to carry out the plan, as well as any obstacles that could hinder the plan’s success. The board’s role is to assess the senior management team’s strategic plan, give it their stamp of approval, and continue to monitor and oversee it.
Areas of Oversight for the Strategic Plan
Boards should be aware that there are two parts to the strategic plan — the situation analysis and the SWOT analysis.
Corporate leadership has little or no control over the areas covered in the situational analysis. It covers such things as the economic environment, the competitive environment, the technical environment, the regulatory environment and the societal environment. Corporate leaders must be able to navigate changes that occur in all these areas.
A SWOT analysis is a standard part of a strategic plan. “SWOT” stands for strengths, weaknesses, opportunities and threats. Organizations need to develop strategies to help them build on their strengths and minimize their weaknesses. It’s just as important to take advantage of its opportunities and to defend against its threats.
Board directors should play an active role in reviewing the situational and SWOT analyses as presented by the management team and they should be prepared with meaningful feedback on both accounts. Both sets of analyses should be reviewed by the board and the CEO on a continual basis to determine whether the right strategies are still valid despite changing conditions. Boards should also look for an executive summary, written by the CEO, to get a better grasp on the plan moving forward.
Strategic plans are designed to be fluid documents. As part of the board’s oversight, they should be questioning the CEO about whether they are reviewing it and monitoring it. It shouldn’t be shoved into a drawer or cabinet and forgotten.
Tips for Assessing the Senior Management Team’s Strategic Planning
Part of the board’s role during the strategic planning time is to stretch management’s thinking process. Board directors should try to get managers to think about issues that may not be on their radar. This means that board directors need to be bold and have the courage to give feedback on strategies that have a low probability of success, or those that are too risky or that don’t fit well within the strategic direction of the company.
Rather than accept the status quo, boards should question whether the strategies, goals and objectives are realistic and achievable or too lofty and unattainable. Beyond looking at the goals and objectives, boards should ensure that all goals and objectives include a list of the steps that the organization must take to achieve those goals and whether the steps are the right ones to lead to the goal.
Boards should also consider whether management is continuing to try to accomplish the same things with different results. Does the strategic plan look like you’ve already been there and done that? Bear in mind that ineffective strategies will continue to be ineffective. These circumstances call for questions about the development of new strategies. If no strategies are viable, board must challenge the goal, or the path to the goal.
In assessing the senior management team’s plan, it’s important for boards to question how the organization’s competitors are likely to respond or react. The answer to that question leads directly to a new question about how the organization can defend itself against its competitors’ response and plan for that as well.
One of the pitfalls in strategic planning is getting stuck in strategies that just don’t work. Boards should be pressing managers to let go of losing strategies that do nothing but waste valuable time, energy and resources.
Part of the assessment process means evaluating the management leadership team. When an organization suffers from a poor strategic plan year after year, it may be the management staff that needs to be replaced. Boards must be able to ask hard questions about whether the current leadership team has the experience, skills and mindset to be able to execute the strategies and achieve the plan’s objectives. The board may decide that it needs new leaders who can bring fresh, new ideas into the boardroom.
Do all the elements of the plan support each other? Is there a good balance between finance, customers, internal business processes, employees and learning goals? What questions can you ask managers and what feedback can you provide to help them put the plan into better balance?
Boards should also be on the lookout for the things that aren’t in the strategic plan. Are there any gaping holes or things they haven’t addressed? Is there enough support for all events and activities contained in the strategic plan?
Finally, are all parts of the strategic plan clear? Sometimes thoughts and phrases make complete sense during the planning process, but when re-reading them later, you may find that some statements have lost their clarity. Review action steps, goals and objectives to make sure that every statement makes sense now and in the future. Some boards find that it’s helpful to have a third party review the new strategic plan for clarity and consistency.
It’s not only managers who should be accountable for not stashing the strategic plan away in a drawer. Boards should also keep the strategic plan accessible and give it time on their agenda at various times throughout the year to monitor its progress. That’s one of many benefits of the Diligent Boards board management software system. Boards can get it on their calendar and set up automatic notifications for reviewing and monitoring the strategic plan. This is the safest, most secure way for board directors and managers to have access to their strategic plan around the clock.