Strategy is one of those terms, like “leader,” that is used in broadly varying, and often misleading, ways. Sometimes it refers to what are actually tactics, other times to any sort of plan at all.
But strategy is actually best thought of as the highest-order planning of a firm. It originates in the corporate identity and the business model developed from that. Strategy is the plan designed to give the identity and model expression in broad circumstances, geographic settings, and time frames.
Strictly speaking, strategy is not something managers should develop; it is something they should be assigned to execute. But in the real world, that process should unfold interactively. Practicing, experienced managers, particularly at the senior level, have too much to offer to strategy development to be left standing outside the door waiting for deliberations to end. They have unique and distinct ideas that need to be taken into account about what should or can be done and, in particular, how to get it done.
There are two basic ways this participation can take place. First, managers can develop strategic plans themselves, and present them to the board for formal review and approval. In such an event, the board is serving to critique and help refine the plan – a role deemed as suitable by many current management observers.
However, they should not passively approve – or even limit their consideration to – whatever management presents them. They need to see themselves – and management needs to see them as well – as the ultimate source of the plan. So, directors should be prepared to send management back to the drawing table if they are unsatisfied with the general thrust or practical ramifications of the plan.
This approach places the center of effort (but not ultimate responsibility) in the management team. A second, and generally preferable, system would be to have that center placed in the board, which is then responsible for design, assessment, and selection of the strategic plan. This can be done with the aid of outside consultants, and even of management, to help ensure the development of a meaningfully diverse array of practical strategic alternatives.
In this approach, however, the primary role of management is to act as a critical advisor to the board to help it assess the strategic choices under consideration. This is, more or less, a reversal of how CEOs like to think of their relationships with boards, today. In particular, it should be noted that both approaches give primary responsibility for development of strategy to the board, varying only in how and to what degree the elements of that process are delegated.
But the key point in all of this, in the context of our current discussion, is the subtle but still fundamental role of management in strategy development. The CEO is no longer singly responsible de facto or otherwise for strategy – but he or she nevertheless remains a key strategist deeply involved in its production.
After all, management is going to be carrying it out. We’ll look at that side of the strategic equation, tomorrow. Please do stop by.
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Today’s tip: Corporate blogs are becoming more prevalent, and more relevant to the various purposes to which they are put. This is in interesting and promising development, albeit one with a peculiar set of important concerns. Please see this excellent discussion of the topic by Valeria Maltoni, at Conversation Agent.
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