Why Have a Strategy?
We all are familiar with the old adage of Boards being “noses in, fingers out” and can appreciate that the primarily responsibility of a Board is to NOT run the company. Far too many boards blur the line between management and oversight. Here, we present the concept that It is critical to differentiate between strategy and strategy implementation. Rather, the Board is responsible for ensuring an appropriate strategy and to ensure the executive team is running the company correctly and following the path outlined in the strategy. Moreover, there is the enduring obligation to represent and protect the interests of shareholders - we know this as a fiduciary responsibility.
We also know that the Board has a responsibility to ensure that governance is discharged effectively. One element of the governance spectrum of duties is to oversee the development and execution of a strategy for the enterprise. Depending upon the company, Board composition and industry, the development of Strategy can often be delegated to a Board committee or a hybrid model that includes corporate membership. There is not clear agreement about who makes the strategic choices that will shape the trajectory of the company. To clarify, the “noses in, fingers out” doctrine suggest that the Board is not responsible for the development of the implementation plan. They are, however, responsible to ensure one is developed, and then to evaluate the progress of the enterprise against that plan within the context of the strategy.
