Role of Board of Directors in Organizational Strategy

Just went through an interesting piece from Owning Up –  The 14 Questions Every Board Members Needs to Ask by Ram Charan. I thought it was quite relevant in many of the organizations of Nepal where the hierarchy is not well defined. The boards may be

  • Actively into management or
  • Passive part of the organization

In general the issues covered are the role of management, in particular CEO in educating the board of directors. The common cause of passive board is that they are believed to have little or no knowledge of the domain so they have no role in strategy formulation or implementation (which is true in many cases here in Nepal where the board is extension of management and vice versa). Some management don’t have board in strategy due to lack of knowledge that they should be a part too.

The truth is that the board should be a part of the strategy at three levels: company portfolio, strategic business units (SBU) and functional capabilities in the external context. In Owning Up, the suggestion is for the management to engage the board more in the strategy with the following process.

  • Discuss External Trends
  • Capture the Essence of the Strategy in Writing
  • Iterate the Strategy with the Board
  • Conduct a Strategy Immersion Session

After all since the board and management are on the same page, directors too need to be engaged in the corporate strategy. Especially in the ever changing environment, external viewpoints are equally important too.

What is your Strategy?

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