How should directors evaluate proposed strategies: there are some simple techniques that can be used to produce a much higher quality analysis and board discussion.

• Author: Coyne, Tom
• Position: BOARDS AND STRATEGY - Column

MOST OF THE board strategy review meetings I have participated in over the past 30 years could best be described as "awkward." On one side of the long, polished table sits the management team, which has worked hard to devise the strategy being presented and frequently has a desire to present a confident, united front to the board. On the other side sit the directors, aware of their fiduciary duty to properly vet the proposed strategy, yet also wary of coming on too hard and appearing to usurp the role of the management team. The colorful description of such meetings as resembling "two porcupines mating" is often not far off the mark.

This situation is further compounded by the number of issues today that make demands on the limited time available on board agendas. Too often, growing pressure on directors' time results in strategy reviews mat leave mem reeling frustrated, particularly in light of the difficulty of exercising their duty of care in an environment that is more complex and uncertain than ever before.

Having sat on both sides of that table during my career, I have prepared this short, practical guide for directors who are faced with the challenge ot evaluating a proposed strategy. I divide my suggestions into two parts: First, how to assess the strategy pre-reading package a director should receive before a board strategy review meeting. Second, systematic techniques a board can use during its meeting with a company's management team to test and improve a proposed strategy.

Before the meeting

When looking through my strategy briefing materials before a board meeting, I check to see if seven key issues have been logically addressed:

1. A restatement of the purpose of the organization--i.e., why it exists. Over the years, I've found that clarity on this point is critical for guiding the evolution of strategy, and driving the long-term survival and success of organizations.

2. Assumptions about the future environment--for example, macro political and economic environment, regulation, technology, industry growth and segmentation, customers, competitors, suppliers, investors, etc. What I'm looking for in this section is a coherent analysis of the key factors that will affect the company's performance, how these factors are related to each other, and different ways they could evolve in the future (with special emphasis on the potential for significant discontinuities to occur). I also ask if major trends or uncertainties have been left...