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How Boards Shape Strategy

Recently I was considering how to proceed on the development of a strategic transition project for an Association re. how engaged should the board be in the development of such.  I came upon a statement in Ram Charan’s book Boards That Deliver that was helpful. He says: “Boards need to understand strategy, but it is not their job to create it.” They may challenge management’s ideas for strategy, but it’s not up to them to define alternatives. The board’s real value comes from helping management test that the strategy is grounded in reality. They do this by insisting that management answer fundamental questions. Key questions for a board to ask may be:

  • How will money be made, how will we pay for this initiative?
  • Does the company have the resources financial and human to execute the strategy, and are these allocated appropriately?
  • Have the external factors and assumptions been addressed?
  • What will be the competitor reaction?
  • How will our members reflect upon and support our actions?