At a board meeting with new board members that I was facilitating, the first things the new members asked for was a detailed explanation of the current financial position, the status of performance on major projects and initiatives, and what the major risks facing the organization were. That’s a great perspective for any board member to have, especially when joining (or before joining) a board.
I want to wrap up this series on how a board (or executives and owners) can provide more effective oversight of strategy by talking about perspective.
Figure 134.1 Strategic Oversight Framework
One of the most powerful learnings from the Institute of Corporate Directors course is that the board’s main function is to provide perspective to strengthen management’s analysis and recommendations. Perspective comes from four directions: hindsight, oversight, foresight, and insight.
- Hindsight — Reviewing what happened, comparing it to plans and expectations, what was different and why, what can we learn.
- Oversight — Overseeing current performance and higher level issues that management may be too busy to deal with, or just not focused on, such as asset health, protecting the balance sheet, compliance with important regulations and covenants (we want to know the trends as they’re happening, and not hear of problems after the fact), protecting the customer base, protecting our talent, and protecting our reputation.
- Foresight — What are the strategies and opportunities for the future, major risks such as technology (“if you haven’t been hacked, you will be” according to the IT gurus), competitor positions and strategies, customer positions and strategies, attracting and retaining talent.
- Insight — This is the real value of a high functioning board where they combine their experience, expertise, and distance from the day-to-day to see issues and opportunities that management might not be able to see.
A high functioning board manages the information flow and the agenda to ensure they are spending most their time on the future, not the past. Where is your board focused? How can your management team provide better information, faster, to your board?
As a director or company owner of a privately-held company, how is your organization obtaining perspective in the areas of hindsight, oversight, foresight, and insight?
The Board Manifesto
I’ve written a ten-point manifesto for boards and business owners who want a board, want to improve their existing board’s performance, or don’t want a board but want to ensure all their bases are covered. If you’d like a free copy, please give me a call or send me an email at [email protected].
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