Strategic support.

• Author: Horton, Thomas R.
• Position: Some Things Considered - Role of corporate directors in strategic planning - Column

Here is how directors can begin, and productively conduct, a sound planning process.

Every observer of business would doubtless agree that the single most influential person to the success of any business enterprise is its CEO. It therefore follows that the most important single contribution that a board can make is its selection of the chief executive. If the board's choice turns out to be propitious, the company will prosper. Some years later, at the end of this CEO's successful tenure, the board will have the opportunity to make another such signal contribution, when it once again chooses a successor.

Meanwhile, however, between these two crucial times of succession, what other contributions can the board possibly make that could rival these in significance? I believe the answer lies in these two words: strategic planning.

By this I do not mean that the development of strategy is the board's responsibility, for it is not. The chief executive is also the chief planner. Still, it is up to the board to ensure that a sound planning process is executed and that the strategy it creates is followed. In effective boards, directors add substantial value to this process.

In this context, "effective" alludes to the presence on the board of strategic thinkers, individuals who can see beyond the horizon if not around the corner. Because it is a rare board whose every member possesses such talent, it may make sense to form an ad hoc strategic planning committee made up of those who do. In the long run, however, additional strategic thinkers should be recruited to enable the entire group to serve as a sounding board.

How can directors begin the planning process? First, by working with the CEO to agree on the clear, bright line that separates governance from management, beyond which the directors shall not venture. Second, to gain agreement that the board may, and should, aggressively challenge the plan so long as it does not cross that line. For example, directors should certainly question the assumptions on which the plan is based (and, while so doing, listen carefully to themselves, especially to the pronouns they use: Is it "your" plan or "our" plan that is being discussed?).

In addition, the board should review last year's plan and earlier ones, to compare them with the reality of today. Some time ago a Fortune 100 CEO asked his planning team to identify a company whose characteristics were projected onto a screen. No one could. "That, my friends,"...