It’s that time of the year again to prepare for the annual fall board meeting. In many boards, this meeting has its focus on strategy. Some of these may last only a couple of hours, while some boards will take a two day retreat to dive deep into the depths of strategic futures.
The trend is clear: Boards are taking more time and an increasing role in strategy development and risk management. Brad Feld, in his post The Best Board Meetings, says that a board’s time is better spent working on “forward-looking” issues such as strategy and risk, but board culture is often locked on “backward-looking” issues such as results.
Adding to this, Margaret Hefferman in My Best and Worst Board Meetings, warns against “unfettered exploration” in the boardroom, or that precious time should be organized in order to extract value through constructive arguments. To free up time for the strategic conversation, Feld suggests that you get the administrative procedures out of the way first and fast. Send out documents beforehand so that the formalities can be finished before the complexities of scenario planning emerge.
Enter Scenario Planning:
Scenario planning puts forth a range of possible futures that an organization may find itself operating in. This method for strategy development and risk analysis takes a long-term approach focusing on corporate longevity. In scenario planning, the conversations about the future are disciplined and delimited so that real strategic options can be framed and vetted.
Board members are chosen for their brainpower, and those brains need to be put to use. By using board time to confirm and expand assumptions and possible trajectories, the board will have the advantage of maximizing the opportunities and confronting the challenges of the future before they emerge. Finally, the board will feel appreciated when their anticipations are heard, their time is used wisely, and their brainpower is flexed.
Suggestions for scenario planning in the board meeting:
1) Before the board meeting, practice and refine your scenarios with your day-to-day strategic staff. Undertake the process to ensure that critical uncertainties are relevant to today’s business idea and the industry.
2) Present the board with the exercise and a hollow uncertainty matrix. If there are more than eight participants at the meeting, split them into groups to discuss the content of the scenarios.
3) Assign the scenarios to people to present in under 5 minutes. After each is presented, ask the questions: “What events lead us to this future?” and “What can we do to maximize our impact in this scenario?”
4) Frame the remaining prominent agenda items in the context of the conversations that have just taken place and postpone those that do not fit for a board meeting that is not focusing on strategy.
source: McKinsey Global Survey results: Governance since the economic crisis