In our previous two blog posts, we presented recent studies investigating the changing role of the Chief Strategy Officer (CSO) in the organization and the importance of the CEO in communicating corporate strategy. Today we would like to take a closer look at board directors and the question of how they contribute to strategy work.
The consulting firm McKinsey has recently conducted a global survey on the subject among more than 1,100 board directors from various industries. The key results: many boards view strategy as the main focus of their activities, both in terms of the time they dedicate to it, as well as in regards to the value they believe it generates for the company.
Last year, board directors spent on average 9 days on strategy. This is an increase by one day compared to the last survey from 2013, and more than in any other management area. However, considering the relative value of strategy to their companies, many board directors say they would like to “dedicate even more time to strategic issues.” More than half of respondents (52%) indicated that they want to increase the time they spend on strategy in the next two to three years slightly (27%) or significantly (25%).
The survey results show that, in general, board members believe that the decisions and actions of their boards have a high or very high impact on long-term value creation (36%). However, many still see room for improvement when it comes to board effectiveness. The authors of the study identified three key factor that enable boards to successfully take on their strategy responsibilities:
- Successful boards are very effective at certain strategic tasks, such as setting the overall strategic framework for the company, formally approving strategy as proposed by the management, and adjusting strategy continuously, based on changing conditions in the internal and external business environment.
- Successful boards maintain a culture of trust and respect where board members and the management team can constructively challenge each other. They also evaluate themselves on a regular basis.
- Successful boards aim to improve continuously.
The full study can be found here.