Friday, February 16, 2007

The value of Boards

If you read our postings carefully, you might be inclined to accuse us of having a world view that could be summed up as “On the one hand . . . . and on the other. . . .” You would be right, but we wouldn’t really take it as a criticism. As we have said in several contexts, strategic planning is often about finding balance in complex situations – and you can’t do that unless you look carefully at one side and then the other, and the other, and the other, etc.

In an earlier posting we talked about the value of multiple perspectives in planning. We talked about inviting executive teams to bring their expertise and the perspectives of their constituencies to the process of planning and problem solving. This kind of active executive participation in the process of planning is one way to invite multiple views.

But when an organization is facing significant long-term issues or just very thorny near-term issues, even active executive participation in the planning process may not be enough. The executives are generally responsible for decisions that have been made in the past, and which they may feel they have to defend. In addition, the employee executives often have long experience with the organization or the industry it is part of, and may not have the kind of perspective that comes from being a less familiar “outsider.”

The Board can provide a different set of perspectives. The independence of Board members should allow them to speak openly to the organization’s senior executives and to each other. In addition, their expertise, developed in a variety of venues, should allow them to see the issues facing the organization differently from the way they are viewed by its own executives.

Whether the Board is structured as a Board of Directors with legal responsibility for the organization or as a less formal Board of Advisors, its greatest value to the organization will achieved if each member is willing to engage actively in policy discussions and bring to the discussion the full measure of his or her expertise. Each member will, of course, also need to bear in mind that his or her own experience may not be entirely germane to the organization’s situation. For example, it is generally not helpful if a financial executive from a for-profit organization insists that the profit implications of an option under discussion by a non-profit organization are the only important implications. However, it is no more useful for that Board member to refrain from insisting that sound financial analysis be taken it into account as alternatives are considered.

Similarly, in building a Board, it is important to include members who will bring a wide array of knowledge, experiences, and perspectives. A Board entirely comprised of people with similar experiences – whether those similar experiences are in finance, or marketing, or law, or anything else – will generally fail even to see (much less know how to assess) issues that may be readily apparent to someone with a different set of experiences and expertise.
No matter what an organization’s activities and goals may be, neither its executive staff nor its Board hold a monopoly on astute perceptions and good ideas. To make a plan that comes close to achieving strategic balance among the many issues faced by the organization, it is critical to make the most of all of the insights available to a broad variety of the organization’s experienced, committed constituents.