Another critical dimension for boards
to take into account is time
. Mindful of
current and future demands, boards
help ensure that
near-, short-, and long-
term strategies
converge seamlessly to
map the best course. By stepping back
to gain a broader perspective, boards
can bring strategy into high definition.
Today, for example, boards can help
management examine the triggers that
might propel the organization and its
marketplace beyond the
new normal
.
Boards also can explore for
promising adjacencies to
their current core business-
es. Or, boards can help
management prospect for
new white spaces where
green shoots
can take root
and change the course of
the enterprise.
Since strategy lives in
the moment with an eye
toward the future, flexibili-
ty is key. An
adaptable strate-
gy
can mean the difference between an
enterprise being temporarily detoured
or permanently derailed. The board
helps management refine strategy by
considering alternative paths that can
meet the demands of short- and long-
term trends.
As risk manager and scenario plan-
ner, the vital skills for the board are:
imagine and anticipate.
Effective risk
management and scenario planning
enable an enterprise to quickly adapt
its strategy to changing conditions.
Better still, they can move an organiza-
tion from merely
reacting
to the far
more assertive posture of
initiating
and
driving
. Taking bold but prudent risks
by activating a scenario from your
playbook may result in first-mover ben-
efits—leaving competitors with the
daunting task of keeping up with
you
.
While these operations also are
owned
by management, boards play a
critical role by imagining and anticipat-
ing the unknown. Through oversight
and input, boards identify potential
roadblocks and evaluate their impact. If
necessary, boards can serve as a GPS
that says,
recalculating
, in a calm yet
firm voice—followed by suggestions
for a new path. Boards also look beyond
the horizon to anticipate emerging
Exceptional Boards
E
XCEPTIONAL ORGAN
-
izations know
where
they’re going; of course,
getting there takes
teamwork
. Manage-
ment is ultimately responsible for
strat-
egy
and execution, but
boards play
eight vital roles
: 1)
steward of the enter-
prise
; 2)
model of values and core beliefs
;
3)
guardian of strong governance
; 4)
strate-
gist
; 5)
risk and scenario planner
; 6)
public
face
and
market maker
; 7)
custodian of cap-
ital markets
; and 8)
global advocate
.
Two of those roles—
strategist
and
risk and scenario planner
—point organi-
zations in the right direction, on the
way to their ultimate destination. By
playing these two roles, boards pro-
vide important counsel during strategy
formulation, rollout, and ongoing
adaptation to market developments.
In the strategist role, the vital skills
for the board are: ask, listen, assess.
Boards help define and champion an
organization’s identity. Since boards
are not tasked with daily operations,
they can focus on the long-term and
broad-based implications of actions
proposed by management. This per-
spective is central to the board’s role as
strategist. Boards help management
develop and refine strategy. Chairmen
and directors serve management as a
sounding board and advisor (ask, lis-
ten, and assess). Boards engage in dia-
logue with management to confirm
that strategy aligns with the vision,
mission, and core values. These con-
stants reflecting
who we are
as a busi-
ness must underpin any determination
about
where we are going
. While organi-
zations periodically refresh and adapt
their strategies, exceptional organiza-
tions develop strategies consistent with
an enduring
organizational genome
.
As skilled strategists, boards can
leverage their
non-operational
vantage
point to help management examine
complex issues. For example, in asking,
listening, and assessing, boards can
evaluate management’s strategy for
key outcomes—such as the impact that
short-term decisions can have on long-
term concerns as employee trust,
recruiting, and retention.
threats and opportunities that may
drive course corrections. Or, boards can
advise taking the business
off road
to
test various scenarios under controlled
conditions—and propose options that
save time, improve productivity, and
yield competitive advantage.
Determining
where to go
in good times
is easy—the stakes rise exponentially
when times are tough. That’s when a
board’s ability to point an organization
in the right direction is of greatest value
to management and stakeholders.
For example, when I was a senior
leader with Deloitte Consulting LLP,
our board and senior executives heard
rumblings about the deteriorating
financial condition of another profes-
sional services firm—and the potential
for certain of its assets to be sold. The
board and C-suite began planning,
resulting in a successful
bid and purchase of a por-
tion of our competitor’s
practice, immediately
tripling our scale and cat-
apulting Deloitte into a
position as one of the pre-
mier providers in that
marketplace. Looking
back, we considered our
actions to be
risk
intelligent
—referring to
thorough risk assessment as a
prerequisite for informed decision-making
.
Boards that scan the horizon or
imagine
the unimaginable
can better recognize
emerging issues and the potential risks
and rewards they carry. Anticipation
can mean
developing a playbook of respons-
es
through calm and careful deliberation
or reacting hurriedly in a crisis.
Culture and strategy are key assets.
Intangibles
such as
core beliefs
,
values
, and
corporate identity
comprise one side of
the ledger.
Tangibles
such as
strategy
and
risk and scenario planning
comprise the
other. Through oversight and input,
boards play a vital role in determining
where both sides of the ledger meet.
Gandhi once said: “
A small body of
determined spirits fired by an unquenchable
faith in their mission can alter the course of
history
.” He could have been talking
about a board’s ability to point an orga-
nization on a path of enduring good.
By acting as a
small body of determined
spirits
, with
an unquenchable faith in their
mission
, boards can better serve others.
By playing their role as strategists and
risk and scenario planners, boards can
assist management in mapping a firm’s
ultimate destination.
LE
Punit Renjen is chairman of the board of Deloitte LLP.
Visit
ACTION: Create an exceptional board.
by Punit Renjen
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M a r c h 2 0 1 2
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