Not long ago, one of us (Paul) was working with a client, helping them develop a strategy execution system, and he recommended involving the company’s board of directors in the process. Since monitoring corporate performance is one of their key fiduciary responsibilities, it seemed like a good idea. As a first step, Paul suggested a short training session on the principles of strategy execution, focusing primarily on the necessity of quality metrics for gauging execution. The CEO hesitated and then said, somewhat sheepishly, “I don’t think that’s a good idea. They may think that (training) is beneath them.” Paul protested, but ultimately the idea was scrapped.
On other occasions, we’ve worked with organizations whose boards, while not submitting to the indignities of training, have allowed their executives to review key performance measures with them. For the most part they sit, bored, nodding their heads occasionally, maybe asking a rote question to appear engaged, but seem perfectly content to move on to the next item of business.
We feel this sort of behavior is an enormous lost opportunity. Consider the principal obligations of a corporate board: to approve and monitor strategy, approve major financial decisions, select and evaluate executives, counsel the CEO, and of course ensure compliance with applicable laws and regulations. How can any board be expected to carry out these tasks without insight into the value-creating mechanisms of the organization, and the key metrics used to track execution? The answer — they can’t. Little wonder that a full two decades after the Enron debacle we’re still witnessing issues of board negligence.
Referencing such calamities, Jay Lorsch, a governance expert who teaches at Harvard University, has suggested that regardless of who is responsible for epic failures such as at Enron and WorldCom, the events clearly reveal that boards need well-organized and accurate information in order to be effective. Metrics from a Balanced Scorecard or OKR can do just that.
Here are three ways to get your board on board with strategy execution.
- Educate them
Even if your board is comprised of highly accomplished and esteemed figures, chances are most of them will not be familiar with the finer points and subtleties of strategy execution techniques such as objectives and key results (OKR) or the Balanced Scorecard. Frame the education as an opportunity for them to fulfill their responsibilities by harnessing the power of proven systems, giving them additional insights into how the organization plans to demonstrate its strategic differentiation. - Involve them in the process
As you develop your key objectives and metrics, share them with your directors, soliciting their feedback along the way. This ensures they are engaged from the outset, and you enjoy the benefits of their wisdom throughout the process. After all, your board most likely represents decades of collective knowledge that you can tap into when making decisions on how best to measure your success. - Have the board develop their own measures of success
Challenge your directors to create performance measures that gauge their collective success. The chosen metrics could range from improving their own skills and knowledge of the company and industry to monitoring ethical or governance-related violations to monitoring executive succession.
The global consulting firm McKinsey once reported that 44 percent of directors do not fully understand the key drivers of value for the organizations they govern; and 43 percent cannot identify the key risks facing the company. Involving them in the strategy execution process from the outset can go a long way to remedying that deficiency.
