The amount of time board directors spend on strategy has been rising for at least the last decade. And most directors we work with want to commit even more time to this type of work. But CEOs need something other than the annual planning process and off-site to involve their directors in shaping strategies. They need what we call dynamic engagement.
How dynamic engagement works
Whether it’s monthly, bimonthly or quarterly, the CEO and board carve out regular time to work together on an ongoing, prioritised agenda of strategy issues and opportunities. At any point in time, this entails one or more of the following:
- Deciding which particular issues and opportunities have potentially strategy-changing implications for the company, and which need to be addressed now.
- Agreeing on how to frame each issue/opportunity (a well-framed statement, based on an agreed-upon set of facts, that calls for a rethink of the strategy in some important way).
- Generating alternative responses to each particular issue/opportunity (the ideal number of alternatives is two or four – an even number to prevent defaulting to a middle-of-the-road fudge, and no more than four to avoid getting bogged down when presented with too many options).
- Choosing the criteria that will guide how alternatives are evaluated.
- Agreeing on whether the alternatives have been evaluated well enough.
- Selecting the alternative that’s best for the company (the question is not “What is the right thing to do?” – it’s “What is the best thing to do?”).
- Deciding on how the company’s strategy and plans should change in response to the issue/opportunity, given the selected alternatives.
Working on these things together with the CEO is what it means for the directors to be actively engaged in strategy. Consistent, open discussion of each one minimises the chances that directors and the CEO will hold different views on a company’s direction without knowing exactly why.