Value-creating boards effectively balance their obligations of both conformance and performance. Directors of these boards understand they must meet their many and varied compliance commitments, but that these commitments cannot crowd out value-adding strategic conversations.
We call these conversations ‘strategic dialogues’, in the Socratic sense of dialogue. Socrates was a master at asking questions to stimulate critical thinking, draw out ideas and challenge assumptions. Competent directors, like Socrates, ask probing questions to explore ideas, expose issues and identify implications.
But they must be given time to do so.
Agendas that don’t include regular strategic dialogues short-change the organisation of the value that an effective board can bring.
Strategic dialogues are not a time for long-winded PowerPoint presentations by management. Rather, it is a time to explore major issues and opportunities through discussion and, in doing so, strengthen understanding.
There are five steps that organisations can implement to improve the effectiveness of board and executive strategic dialogue.
- Allocate sufficient time at the start of the agenda
Even with the most effective Chair, board discussions can run over time. If the strategic dialogue is the last item on the agenda it will likely be crimped as directors scurry off to another meeting or to catch the next flight home.
Make the dialogue the first agenda item and allocate 30-50% of the meeting time to the discussion. That’s a significant commitment, but so is the performance of the organisation. Too often, boards allocate insufficient time and, as a result, major items become tick-and-flick considerations.
- Use the strategic plan to identify the issues to be discussed
A focused plan identifies the issues and opportunities to resolve over the planning horizon. Strategic issues will have a 20-30% impact on the overall performance of the organisation and will be of such magnitude and complexity that even defining them will take time, let alone understanding them.
A quote, attributed by some to Einstein, comes to mind:
If I had an hour to solve a problem, I would spend 55 minutes thinking about the problem and 5 minutes thinking about solutions
It is the same in strategy, and board time spent exploring, challenging, questioning and debating strategic issues not only adds value, but it also allows directors to gain stronger insights into the organisation and its operating environment without delving into minutiae.
Note that dialogues are not about changing the plan or direction of the enterprise at every discussion and while the strategic plan is one source of topics, there will be others.
For example, disruption is or should be on every board’s agenda. ‘Where is it likely to come from?’, ‘Who will disrupt us and in what ways?’, ‘How can we disrupt ourselves?’ may be starter questions to initiate the debate. Are Blockchain, Artificial Intelligence or Augmented Reality discussed in your boardroom? Do directors and management have even a basic understanding of how these and other technologies might enable or disrupt the enterprise?
- Make your annual board calendar strategic
Many board calendars only list out meeting dates and compliance commitments. More valuable is to use the issues identified in step 2 to create an annual schedule of strategic discussions. You might choose to have strategic dialogues at each meeting, bi-monthly or quarterly. The frequency will depend on board appetite and executive ability to prepare for the discussion. As the board and executive strengthen their strategic muscle, the frequency usually increases. However, don’t under-estimate the preparation required for a productive dialogue.
- Prepare in advance
The value of a strategic discussion relates directly to the quality of the preparation. The groundwork necessary is not yet another PowerPoint presentation laying out descriptive information – some boards have banned PowerPoint.
The executive should prepare a briefing paper that provides context and poses questions rather than answers. To be useful for directors, the brief should do more than merely describe a situation or opportunity. Insight will come from second-order thinking that identifies implications and how the issues will impact the organisation in the achievement of its Purpose.
As the dialogue is intended to spark debate, rather than close it down, the pre-read information should avoid making recommendations. Such an approach is counter-intuitive and contrary to most board requests and CEO preferences. But the key here is exploration, not immediate and potentially ill-informed resolution.
- Allow the CEO to bring unresolved issues to the discussion
Successful CEOs mark their career by identifying issues, developing solutions and taking action.
However, to make a dialogue work, the CEO must be given licence to bring unresolved issues to the board. That is, issues or opportunities for which the CEO does not have a clear way forward. This is where directors, drawing on their complementary experience and different perspectives, can introduce new ideas and challenge entrenched ways of thinking.
Time may be the new luxury, but strategic dialogues are not an indulgence – they afford boards the opportunity to participate in value-adding, productive conversation. Understanding issues, challenging ideas and debating outcomes leads to informed decision-making.
John Barrington is founder of Barrington Consulting Group, a boutique management consultancy. John has more than 20 years’ experience advising boards and executive teams on strategy and is working on the intersection of Artificial Intelligence with corporate strategy and governance
 Jeff Bezos of Amazon banned PowerPoint in his Senior Team (known as steam), explaining his preference for 4-6 page memos over PowerPoint in an email titled No powerpoint presentations from now on at steam, "because the narrative structure of a good memo forces better thought and better understanding of what's more important than what, and how things are related. Powerpoint-style presentations somehow give permission to gloss over ideas, flatten out any sense of relative importance, and ignore the innerconnectedness of ideas” http://www.businessinsider.com/jeff-bezos-email-against-powerpoint-presentations-2015-7?IR=T