Part Two – It’s essential for boards to be proactive in managing strategy
“Organizations are created, powered, and led by people. To lead organizations well, we train people in disciplines such as marketing, finance, and leadership. But uncertainty presents a special challenge since few of us have received training in how to deal with it. As a result, although we may call for innovation, transformation, and change, most people back down at even the hint of risk, falling into a series of behavioural traps that limit organizations’ ability to grow and adapt. The challenge is that all growth, change, and transformation inevitably come paired with uncertainty. We have to go through the uncertainty to get to the possibility.” [1]
During times of uncertainty, it’s essential for boards to be proactive in managing strategy to ensure the long-term success of the company. Here are a few best practices for boards to consider:
1. Stay informed
It’s important for the board to have a clear understanding of the company’s industry sector, competitors, governments and external environment. This includes keeping track of trends and developments, as well as changes within the company. By staying informed, the board can make more informed decisions about strategy. To stay informed, the board should regularly review relevant data and analysis, such as market research reports, industry publications, and company financials. The board should also consider seeking input from external experts, such as consultants or industry thought leaders, to gain a broader perspective.
2. Be agile
During times of uncertainty, the board should be flexible and willing to adapt their strategy as needed. This might involve making quick decisions or pivoting in response to changing circumstances. To be agile, the board should be open to new ideas and approaches and be willing to take calculated risks. This might involve exploring new markets, launching new products or services, or entering partnerships or collaborations. The board should also be prepared to make difficult decisions, such as streamlining operations or cutting costs, if necessary.
3. Foster a culture of experimentation and innovation
Encourage the company to embrace new ideas and approaches and create an environment that empowers leaders to use their experience to solve problems they care about personally, and where employees feel comfortable suggesting and testing out new initiatives. [1]
Innovation is particularly important during times of uncertainty, as it can help the company adapt to changing circumstances and find new opportunities for growth. To foster a culture of innovation, boards should ensure that organisational structures enable, rather than block, people from experimenting and innovating are created to encourage a continuous improvement mindset, and provide resources and support for employees to develop and test and learn from new ideas. [2] The board should also establish processes for evaluating and prioritising new ideas, and allocate resources and funding as needed to support their development.
4. Utilise scenario planning
Developing different scenarios and considering how the company might respond to each can help the board make more resilient and forward-looking decisions. Scenario planning allows the board to consider a range of potential outcomes and develop contingency plans to prepare for them. To conduct scenario planning, the board should identify key drivers and uncertainties that could impact the company and develop a range of plausible scenarios based on different combinations of these drivers. The board should then consider how the company might respond to each scenario and develop contingency plans to prepare for them.
5. Engage with the senior executive team
The board should work closely with the senior executive team to understand the company’s current situation and explore potential strategic options. The board should also provide guidance and support to help the leadership team implement the chosen strategy. This might involve setting clear goals, establishing performance benchmarks, and providing resources and support as needed. To ensure effective communication and collaboration, the board should hold regular meetings with the senior executive team to discuss progress, challenges, and opportunities, and establish clear channels for communication and feedback.
6. Monitor progress and adjust as needed
“Assessing the reasons for a given outcome isn’t always easy. We may not be able to tell if a poor result was a noble failure, just as we can’t tell if the great result was blind luck. Was it a case of best efforts on a good bet that were foiled by a bad roll of the dice? Was it a more pernicious failure of planning or execution? Was it, perhaps, just a bad strategy to start with? Uncertainty doesn’t only mean we can’t see around the next corner; uncertainty also invades the past.” [3]
It’s important for the board to regularly review the company’s progress and adjust the strategy as needed. This might involve revising goals, shifting resources to different areas, or making changes to the overall strategy. By monitoring progress and adjusting as needed, the board can ensure that the company stays on track and is well-positioned to navigate times of uncertainty.
To monitor progress, the board should establish clear performance metrics and benchmarks, and review them regularly to assess the company’s progress towards its goals. The board should also solicit feedback from senior executives and stakeholders to understand how the company is performing and identify any areas for improvement. [2]
Summary
In summary, managing strategy during times of uncertainty requires the board to stay informed, be agile, foster a culture of experimentation and innovation, utilise scenario planning, engage with the senior executive team, and monitor progress and adjust as needed. By following these best practices, the board can help ensure the long-term success of the company and navigate times of uncertainty with confidence. It’s worth noting that while these best practices are applicable during times of uncertainty, they are also good practices for boards to follow in any situation.
References
[1] N. Furr: Strategy in an Age of Uncertainty, June 2022 [https://hbr.org/2022/06/strategy-in-an-age-of-uncertainty]
[2] G. Morgan: Four Steps for Boards to Set a Digital Business Innovation Strategy, August 2021 [https://mpti.com.au/boards-can-embrace-digital-technologies/]
[3] C. Bradley, M. Hirt and S. Smit: How to confront uncertainty in your strategy, March 2018 [https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/how-to-confront-uncertainty-in-your-strategy]
About: Gary Morgan is an experienced board director, chief executive, consultant and corporate advisor with deep strategy, innovation and scaleup experience in the health tech, aged care, agtech, information security and research sectors. Gary is a Fellow of the Governance Institute of Australia, a Member of the Griffith University Industry Advisory Board for the ICT School and has co-authored papers and reports that have been published in leading entrepreneurship and medical journals and presented at international conferences.
Acknowledgment: This article was composed in part with the aid of OpenAI‘s ChatGPT AI technology.
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