Widespread recognition that active engagement in strategy is a critical obligation of any board is a relatively recent phenomenon. Traditionally, a board might review a strategic plan completed annually by management, then evaluate the CEO on results achieved from executing it – and that was the extent of the board’s involvement with strategy.
However, escalating complexity and uncertainty in the business world, combined with a spate of governance scandals and corporate failures in the last decade, have transformed contemporary views on the subject. Most boards today recognize the need to oversee strategy and strategic risk. But we have found that how they do this varies widely, and many boards wrestle with determining the right approach. In particular, how can corporate board members ensure they provide strategic vision and oversight, yet avoid usurping the roles and responsibilities of the CEO and top management?
Based upon our experience and research, we have observed a handful of activities boards can undertake to make a successful contribution to strategy. In essence, effective boards collaborate actively with management at critical stages throughout a carefully orchestrated strategy development process.