Strategic Planning

Definition
Strategic planning is a cyclical process for determining the future direction of a company based on an accurate assessment of its current business situation. Specific objectives should be developed to guide the company’s future path. Risk assessments should be conducted on those objectives to determine their viability.

Current Context

• Powerful environmental pressures are encouraging boards to become more involved in strategy oversight.  At the same time, CEOs, wary of being micromanaged, continue to resist what they see as over-involvement in by boards
• Strategic Planning and Oversight was ranked as the #1 issue facing boards today according to NACD’s 2006 Public Governance Survey
• In a recent McKinsey survey, only 32% of senior executives thought that directors had a complete understanding of the corporate strategy.*

Recommendations

• Hold a candid discussion about the level of confidence in the CEO’s ability to develop and implement a sound strategic plan
• Focus on defining the nature of the board’s involvement in the strategic planning process rather than on activities that are presumed to be the board’s responsibility.
• The nature of the board’s involvement can be described as a ‘board type’, such as:

1. Hands-on decision makers
2. Crisis interventionists
3. Arm’s-length strategic advisors
4. Political and cultural mentors
5. Disengaged observers

• Review risks associated with both the plan quarterly.
• Conduct an annual SWOT analysis to analyze the competitive landscape.

* Source: March 2006 McKinsey survey,"What directors know about their companies." 1,468 responses from a worldwide representative sample of business executives from publicly and privately held businesses across a full range of industries.