Strategic thinking defines the longstanding purpose of the organisation and prepares the organisation for future uncertainty. It is a key governance responsibility for Boards to think strategically and to set the strategic direction of the business; however Boards often focus more time on the organisation’s operations rather than its strategies.
The Association Management Center (AMC) in the USA describes this as the ‘Three Ls’:
- Little Board time
- Lots of trivial issues
- Lack of progress.
In the life-cycle of a typical community organisation, most start out with a Board of volunteers, who are actively engaged in the day-to-day running. As the organisation matures, roles previously carried out by volunteer Board members are delegated to paid staff and the role of the Board shifts from operational involvement to strategic oversight. This transition can be tricky. Board members who are used to operational activity in their day-jobs may also find it harder to switch focus away from the operational details.
Failing to focus on strategy can have serious consequences, particularly during the current extended period of NFP reform. ‘Scenario planning’ can be a great way to develop a range of strategies, when it’s hard to predict what the future might bring. Operationally focussed Boards can also experience strained relationships with paid staff, who may perceive the Board as interfering or micro-managing.
The AMC suggests one way to measure and improve the strategic focus of your Board is to manage the time spent at Board meetings. Apply a filtering mechanism to decide if an item deserves to be on the agenda:
- Is it strategic or operational?
- What’s the magnitude, in terms of dollars, impact, reputation?
- What are the potential positive or negative consequences?
- What are the potential risks or opportunity costs?
- Could this item set a precedent for the organisation?
- Will this set or change the course of the organisation?
The AMC also suggests grouping your agenda items into four categories:
- Reports and updates – these do not require a decision or direction, so they can be dealt with quickly, with minimal discussion
- Mandatory items – including minutes, government actions, financial requirements and governance items
- Environmental scanning and strategic discussion – typically unframed and unfiltered, seeking trends and directions, not firm decisions
- Decisions and action items – generally well-framed, providing direction for the CEO, maybe in response to a crisis or a contentious issue; issues requiring a position; issues regarding the Strategic Plan and core objectives.
You can probably tell, in a well managed Board meeting, the time required for discussion increases as we move down the list. If your Board has trouble sticking to alloted timing for discussions, you may want to consider experimenting with the order of your agenda, to tackle categories 3 and 4 first, then tackle category 2, and maybe try to avoid talking about category 1 altogether, unless there’s an important exception or query.
It is the Board’s duty to make strategic decisions to carry out the mission, vision and values of the organisation. The mission and vision set the foundation of the organisation, and literally define the reason for the organisation’s existence, so it’s important to ask:
- Are the mission and vision well defined and understood?
- Do the organisation’s activities reflect and align with the mission statement?
Once the mission and vision are defined, the Board can focus on developing important elements of the organisation to achieve its goals in a strategic manner. It is the Board’s responsibility to review the organisation’s activities to ensure they are acting in line with the mission and, if necessary, review and update the mission statement.
All organisations try to balance lofty ideals with practical realities. In the community sector, most organisations rely on government contracts and grants to at least some degree, which typically impose a range of constraints and conditions. Sometimes the aims of funding providers may not completely align with the organisation’s mission and this can create a range of tensions within the organisation, often leading to ‘mission-drift’. This means the Board of directors must make some hard ‘category 4’ decisions and set clear directions to ensure a positive future for the organisation, while remaining consistent with the organisation’s core values and reason for being.
Most Boards are aware they need to be strategic; but it’s easy to become distracted by other activities. In other situations, Boards may think they are being strategic when in actuality, they are not. Without strategic planning, the Board is not maximising their governing potential and are not being as effective as they can be. Does your Board prioritise strategic thinking? Does your Board plan for the future or is most of the focus payed on operational management? Has the Board set a clear vision for the future? Does everyone in the organisation understand the shared mission and how their individual roles support that mission?
If you would like to learn more about strategic thinking, scenario planning, or Board self-assessment please contact Jonathan Smith on 6242 0300 or email email@example.com