Elevating the Boardroom Discussion

We often hear from readers looking for ways to elevate their boardroom discussions to a more strategic level. That makes sense. Strategic discussions are more interesting, forward thinking, and robust than those that drill down into the minutiae of operations.

When the agenda and reading material don’t reflect the organization’s high level strategy - instead being filled with pages of execution detail and ‘busy work’ metrics - is it any wonder directors slow the meeting down with operational questions? They’re just responding to what’s put in front of them.

Directors work on what you give them. If you give them an agenda focused on committee reports, they’ll spend their time listening with minimal input. In fact, if you don’t give them anything to work on, they just might work on you.

Instead, the key to achieving a consistently elevated board discussion – one that engages directors at a strategic level - is a relentless year-round effort, led jointly by the board chair and the CEO, to ensure directors arrive at every meeting informed, educated, prepared, and ready to participate.

The meeting agenda is the primary tool that enables the board chair and CEO to plan intentionally for discussion of strategic topics. Much has been written about strategic board agendas, consent agendas, and other tools for structuring effective meetings. These tools contribute to more streamlined board discussions, freeing up time for directors to add value and making better use of their collective skills.

While better agendas contribute to making progress on strategic items, other actions are needed to elevate the discussion. Well-constructed reading material goes a long way to improving the conversation. One practice that I’ve seen work quite well is for the CEO to embed strategic questions in the board pack for directors to consider as they do their meeting PREP.

The CEO has the opportunity to keep the agenda and board pack focused on strategy at every meeting. It’s to their advantage to work with their management team to produce crisp, focused, and concise pre-read material. In this meeting preparation phase, it’s important to make sure board and committee chairs are engaged and have an opportunity to review the material before it’s distributed.

It takes purposeful work by management to create a concise, impactful, background document where every sentence and all data are strategically relevant. The payoff comes in the form of the collaboration and valuable advice they get from their board.

Focus on Strategy

Many observers have noted that disruptive conditions arising from the pandemic have resulted in more frequent strategic discussions out of necessity, making it more important than ever that board discussions are focused at the right level.

“[The board’s strategic rhythm has become] a journey involving frequent and regular dialogue among a broader group of executives. To remain relevant, boards must join management on this journey, and management in turn must bring the board along — all while ensuring that strategic co-creation doesn’t become confusion or, worse, shadow management.” - McKinsey

Whether your board and management team are planning for a regularly scheduled meeting or a special strategy session, here are three questions from the McKinsey article Tapping the Strategic Potential of Boards to help you elevate the discussion:

1. Does the board understand the industry’s dynamics well enough?

Through their research, McKinsey found that relatively few directors have a complete understanding of the dynamics of the industries their companies operate in or even of how those companies create value. To deal with this, boards need time — including time without management — to better understand the structure and economics of the business and how it creates value. With greater understanding, they can get ahead of issues rather than feeling a step behind or simply accepting management biases or ways of thinking.

2. Has there been enough board–management debate before a specific strategy is discussed?

Once armed with a clearer understanding of industry and company economics, boards are in a better position to have informed dialogue with management, with the goal of helping management broaden its thinking by considering new, unexpected perspectives and additional options.

3. Have the board and management discussed all strategic options and wrestled them to the ground?

McKinsey observes that robust discussions about the business, its economics, and the competition shouldn’t represent the end of the debate. Instead, management should take time to formulate a robust set of strategic options - including the resources required for each – and then bring them back to the board for discussion and decision making.

Personally, I’ve seen this approach used very well in non-profit organizations where the CEO and the management team did a tremendous job engaging board members and stakeholders in the process of developing a strategic plan. A higher degree of buy-in and support resulted from the process, and management was forced to level up their consultative skills and invest wisely in how they spent their time.

“Developing strategy has always been complex — and becomes more so with a board’s increased involvement, which introduces new voices and expertise to the debate and puts pressure on management teams and board members alike to find the best answers. Yet this form of strategy development, when done well, is invaluable. It not only leads to clearer strategies but also creates the alignment necessary to make bolder moves with more confidence and to follow through by committing resources to key decisions.” - McKinsey

To get there, all participants must strive toward having a similar level of background information and a common understanding of the key issues and opportunities – whether preparing for a board meeting or the next strategic plan.

Fill the Knowledge Gap

The responsibility to develop the pre-reading material for the board meeting rests with the CEO and the management team. That said, accountability for the quality of what the board receives remains with the board. It’s simple - you get what you ask for.

Savvy directors are good at finding ways to encourage continuous improvement of board meeting material. If you’re thinking about this as an opportunity to extract greater value from your directors and management team, you’re definitely not alone.

A major barrier to elevating the board discussion is directors’ lack of knowledge. Keep in mind that knowledge about any topic is not evenly distributed among board members.

New board members, those who missed the last meeting, or board members who don’t read their material or pay close attention may find topics that you take for granted to be quite perplexing. Other issues may be quite technical, requiring specialized background or expertise.

Without an adequate knowledge base, directors either sit on the sidelines and refrain from participating or ask questions that slow down the pace of the discussion and frustrate others. When this happens, the meeting can get bogged down in endless questions and requests for all sorts of information, ultimately deferring a decision.

In the article Preparing Board Members for Strategic Discussions, Starboard Leadership Consulting provides some simple advice:

• Consider each topic on the agenda and ask, “What information, education, or explanation will board members need in order to fully participate in the discussion and make a decision?”
• Think specifically about the newest board member and consider what they will need in order to fully participate.
• Send out reading material in advance. This works well only if everyone is expected to do their homework and come prepared.
• Consider incorporating an educational presentation into a meeting - either at the meeting when the topic will be discussed or at the prior meeting.

Facilitate the Board Experience

It’s easy to find advice on how boards can improve their oversight effectiveness, but far less has been written on how CEOs and boards can work together to enhance their relationship for strategic benefit.

How can CEOs engage the board to be a strategic asset in challenging circumstances?

The Deloitte article Seven Steps to a More Strategic Board – What CEOs Need to Know describes a collaborative shift between boards and their CEOs that is driving toward elevating boardroom discussions. Their research places the responsibility for initiating this shift squarely on the shoulders of the CEO.

“Most boards are not naturally positioned to drive this shift. Many, in fact, are looking for guidance and leadership from the CEO.

“… The CEO, among all of a company’s top executives, is in a position to exert the greatest influence over what boards focus on and the intangibles of how they do their work. Using this influence, CEOs can set the tone for the relationship between the board and management, establish the tenor of dialogue, set standards for communication, play a role in defining expectations for board composition and education, and more.” - Deloitte

The Deloitte interviews indicate a need for the board and CEO to actively work toward a partnering relationship – one based on mutual respect, trust, and support. A strong relationship encourages transparency, honest communication, and consistent information sharing. Sharing information between board meetings is important because it reduces the risk of unpleasant surprises that can sour the board’s relationship with the CEO.

“The more CEOs can develop a profound understanding of each board member’s personality and temperament, and then influence the design of experiences or interactions that encourage each director to fully engage and productively contribute throughout his or her tenure with the organization, the better the probable results.” - Deloitte

Curate the Information

One critical aspect of the board experience is the amount of information that board members have to absorb. The most vehement complaints that Deloitte heard from directors were about the seemingly impossible volume of information they are expected to digest.

And so a critical aspect of improving the board experience is the thoughtful curation and preparation of that information. The advice from Deloitte is to curate information, then curate it again. They found that some CEOs have started to experiment with different approaches to keeping the board informed.

“One CEO told us that, instead of slides, he now writes short white papers up to three pages long when he requires the board’s perspective on a topic. “In the paper, I try to point out why we need their attention, the types of options we have, and the decisions we have to make. When you read a … summary instead of a deck of slides, you get a much stronger flavor of the CEO’s position and what it is that the CEO wants to discuss.” - Deloitte

To continuously improve information quality, many CEOs touted the value of asking explicitly for feedback after every session: “What’s working? Are you getting the right information? If not, what do you need? What information should we be taking out?”

Think Strategically

Elevating the boardroom discussion is easier when directors are geared toward high-level strategic thinking in the first place. Who better than the CEO to help inform the work of the Nominating and Governance Committee when recruiting new directors with the skills, experience, and thinking style that will help focus board discussions at the right level?

“Great strategy is aided by diversity of thought and attitude. It needs people who have experienced failure as well as success. It needs people who have a great imagination. It needs people who have built their resilience in the past. And most importantly, it needs people who respect one another for their range of qualities, something that is often going to be most difficult for the proverbial smartest person in the room.” - Roger Martin

Provide the right directors with the right information to help them get ready for the next board meeting. Then watch the level of meeting satisfaction rocket its way upward, supporting the CEO’s team performance along the way.

Your takeaways:

• Leveraged in the right way, boards can—and must—transcend their oversight role to become a vital strategic asset for management.
• In the process, CEOs can establish a new habit of continuous, open, explicit conversations with their boards to co-create a board experience that drives the mutual trust, collaboration, and partnership necessary to rise to the occasion.
• Elevating board discussions is directly correlated to the quality of the pre-read material, including strategic questions for directors to consider as they prepare.
• The potential for board members to elevate the strategic level of discussion is only as good as its weakest link - the unprepared director.
• If CEOs and their management teams embrace the work involved to simplify a complex subject for board discussion, the payoff could be huge.
• Investing quality time to prepare concise, impactful background material enables directors to up their game and minimizes unnecessary questions.

Resources:

• Seven Steps Toward a More Strategic Board – What CEOs Need to Know. Vincent Firth, Benjamin Finzi, Maureen Bujno, and Kathy Lu. Deloitte Insights. July 2019.
• Tapping the Strategic Potential of Boards. Chinta Baghat, Martin Hirt, and Conor Kehoe. McKinsey Quarterly. February 2013.
• Preparing Board Members for Strategic Discussions. Starboard Leadership Consulting LLC.
• The Strategic Board Agenda. Scott Baldwin. The Savvy Director. March 21, 2021.
• A Strategic Board Agenda: The Hidden Tool for Effective Governance. C. David Gammel. McKinley Advisors. October 2020.
• Why Smart People Struggle with Strategy. Roger L. Martin. Harvard Business Review. June 2014.

Leave a comment below to get in on the conversation.

Thank you.

Scott

Scott Baldwin is a certified corporate director (ICD.D) and co-founder of DirectorPrep.com – an online hub with hundreds of guideline questions and resources to help prepare for your next board meeting.

Share Your Insight: As a savvy director, how might you support the CEO in their efforts to prepare board materials that facilitate higher level strategic discussions?