MANY company board meetings fall into a predictable pat-tern of procedure-driven activity, with excessive time given to reports from the audit, compensation, transactions, and other committees. Even in today’s Sarbanes-Oxley and liquidity-focused business climate, boards often make the mistake of fo-cusing too much on governance and not enough on strategy.
The 10 questions below are designed to help you energise your next board meeting and focus on the strategic issues that are vital to driving the best possible long-term performance. They are divided into two groups – three governance related, and seven strategically related. While a one-size-fi ts-all solu-tion does not apply to all boards, using these questions should help you to focus your board meeting on the things that really matter so that the board is truly adding value.
GOVERNANCE QUESTIONS 1. What is the dashboard telling us? The dashboard should provide you with key fi nancial and stakeholder metrics so that you have the key health and trend measures for the business from the angle of customer, employee, investor, and other key stakeholders. You need to make sure that you have good data, unfi ltered by management, so you’re not making ungrounded assumptions or decisions based on faulty premises. Consider a balanced scorecard approach so you’re not focused solely on the numbers. 2. Do we have ‘smoke detectors’ in place? Part of good govern-ance is preventing major problems. It is well worth a regular review to determine that your early warning systems are in place for key issues such as liquidity, product and legal liabil-ity, ethical violations, information security, development and project risks, and people risks.3. Do we have the right board composition? The board should ask itself if it has the right composition of skills and knowledge for where the company aspires to be in three years. There’s no substitute for the “been there done that” factor, when it comes to acquisitions, offshore expansion, funding, or anything else.
STRATEGIC QUESTIONS4. What’s changed since our last meeting? While you don’t need to perform a full-blown SWOT analysis at each meeting, it’s crucial to recalibrate, especially around changes in competi-tion, economic factors, customer preferences, and technology, and how these changes affect the business.
5. Do we keep the CEO? Consider whether, if the current CEO were applying for the job today, you would hire them. You want a chief executive (and management team) that is geared to where the business aspires to be in three years, not where it is today. Answering this question forces you to decide if you should fi re the CEO or pay them a bonus. This question has extra relevance for a founder CEO.6. How do we move faster? To achieve asymmetric growth, com-panies need to have a high tolerance for momentum despite the discomfort. You need to identify the impediments to growth and remove them. Acceleration needs to become a core competency. 7. Why? (To any proposal.) For any proposal, whether coming from the board or management, keep asking “why?” until you get to an answer that satisfi es the ultimate needs of your key stakeholders. For example – We will launch a new marketing campaign. “Why?” To drive the new product launch. “Why?” To increase revenue in Q3. “Why?” To support a higher valuation. “Why?” To enable acquisition funding. “Why?” To increase mar-ket share. “Why?” To gain long-term competitive advantage. “Why?” To drive superior shareholder returns. 8. How? (To any proposal.) Likewise for any proposal, keep ask-ing “how” until you get down to the level of granularity required so that all the involved parties know specifi cally what to do to implement the proposed change. For example – We will focus on increasing revenue in Q3. “How?” We will launch the new product and unveil our new marketing campaign. “How?” We will hire two new sales reps, target accounts in the northern region, and utilise direct mail and radio advertising. “How?” We will <insert specifi cs here>. 9. What should we stop/start/change? Based on analysis of the dashboard data, an understanding of important market changes, and an assessment of proposals and competing ideas, you should be able to identify the key changes needed to drive the business. Focus on no more than three major initiatives at a time. 10. How is our balance? Allen Procter, former CFO of Harvard University, says that the core question board members should be asking is if there is the right balance between mission enhancement versus mission sustainability? Operate within your narrow zone of mission comfort and you become a victim and your mission will fail. Grow too much beyond your core competence and you jeopardise your core mission.
Roger Branch is associate director of executive search fi rm Kinross Partners.
10 Questions For Boardsby Roger Branch
AAGENDA
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April 2009
