Strategy and the role of your boardEmma
‘Strategy’ is a term that can be confusing and, in some cases, may even strike fear into the minds of SME shareholder-managers and even non-executive and independent directors alike. A strategy is simply a series of manoeuvres designed to achieve a specific business outcome or goal. It is the set of steps that will get you where you want to go, factoring in the landscape you find yourself in and the inclement weather that might impact your journey.
Yet, the strategy itself is but a small slice of the whole strategic ‘pie’. Strategy is not just a list of manoeuvres – it is a framework of holistic strategic thinking that includes the formulation of the strategy, the implementation thereof and the continuous review and improvement of the steps taken along the way. In order to be as effective as possible in guiding strategy and creating value, a board must ensure it has oversight of this entire process. We refer to this combined governance and management role as ‘strategic management’: a strategic focus across the enterprise that ensures clarity on the strategic direction, and the translation of this clarity into improved overall business performance through management action and effectual implementation. This outcome is achieved by ensuring that the strategic position, opportunities, competitive advantage and plan are clear, concise, and can be effectively implemented into the business. This provides management with the capability and capacity to implement the specific projects and actions required to achieve the strategic outcomes identified and defined.
The Sirdar Management Compass is the tool that we created and use to evaluate and reflect on all the areas of a business that need strategic management focus and development in order to adequately formulate, implement and evaluate the strategies.
It has been our observation that too much time and focus is often put on the strategy document itself, and in the process, the real heart of strategy – its implementation and evaluation – is forgotten. Each strategy will have an impact on the enterprise in a variety of ways and will, in most cases, necessitate a host of changes as part of its implementation. The business must be able to translate the strategic plan into an operational business plan and associated budget that has considered all the aspects of change that may be required. Measurement and reporting then complete the loop by providing feedback on progress and supporting the team to make tactical adjustments en route.
Providing leadership and oversight of an SME’s strategic management is, in our view, is one of the most important responsibilities that a board has. Yet, strategy can also be far too broad – it is easy for a group of directors and managers to use ‘strategy’ as a catch-all for every discussion point on the agenda.
The value of the board process and the role of the directors is to distinguish between the enterprise’s strategy; the specific strategies that each unit, division, business or department within the enterprise must follow; and the holding of management to account for translating these strategies into effective operational plans and activities.
Photo credit: boxcarmarketing.com