I'm a Director.
How do we sustain growth?
From governance to a value-creating board
The evolution of the Board of Directors from the traditional governance role to that of a value-creating board requires a shift in mindset to be effective. The Board is responsible for more than advocating a growth strategy, you are intimately involved in the elements that make a growth plan successful. Governance in the U.S. has evolved significantly over the past fifteen years. Yet many Boards still believe they can collectively and individually enhance the contribution they make to building valuable, sustainable organizations. Our construct, of a Value-Creating Board, is based on our experiences as Board members and Chairs and as counsel to Boards, and fits squarely in the goal of Directors to contribute better and CEOs to leverage the asset that can be, and should be the Board.
Any organization shifting its strategic focus toward growth needs to have its Board of Directors deeply engaged in the development of the new strategic focus and aligned on the elements of resources and time required, and with the ability to monitor leading indicators that might signal the need for mid-course adjustments.
To be effective in its oversight of growth initiatives the Directors and the CEO must agree to a high-level governance construct we call the Value-Creating Board. This requires a commitment by management that its Board is an asset that management intends to leverage. A Value-Creating Board has members that demonstrate:
Competence. Have the right mix of experience and expertise to understand the enterprise and contribute to both the 1) protection of the business; and 2) guiding the organization to realize its potential
Character. Able to give candid counsel to the C-Suite and function as a trusted advisor
Commitment. Willing to dedicate the time and attention to knowing the enterprise
The CEO shares information on a timely and complete basis to keep the members informed—e.g. First Light CEO—that is, one who keeps the Board aware of opportunities and issues early and completely.
Operationally, to be able to execute its responsibilities, the Board must operate as a Decision-Ready body—that is, one which adds value, but does not interfere; it works on the “big things,” not everything. A Decision-Ready Board is:
Capable. The right members with relevant competence and experience; and the proper attitude
Knowledgeable. Understand the company’s business (strategy, risks, and operations), its market and competitive forces, and the capabilities of its Leadership Team, and
Adding Value. Assist management, actively, but do not pre-empt management’s role, except in crisis
To fulfill its fiduciary responsibilities, the Board must be engaged and prepared along these two dimensions. Sage's role is as an experienced, trusted advisor. We work shoulder-shoulder with our clients to help you to evolve into a Board that is engaged, knowledgeable, and able to contribute—a Value-Creating Board—the goal of an effective Management-Board relationship.
Opportunity Strategy is Very Different from Modern Risk Management
Create Opportunity or Stagnate
Our job is to help the enterprise be more capable and more effective than its best competitor when it comes to recognizing, selecting, developing and commercializing opportunity. Opportunity might lie within the boundaries of a competitive strategy or it might be the genesis of a new one. The bottom line is that growth is the superior strategy for creating value. Do you know what your growth premium is? We do!
The Role of Leadership
The role of leadership is to design the “opportunity game plan,” the overall, integrated approach to accomplish this job. It involves gathering the necessary capabilities and processes, organizing them, and making sure the job gets done. The world is blessed with an abundance of tools, techniques, models, approaches for various forms of creativity, decision making, problem solving, resource allocation, culture shaping, and so forth. This is not where the gap is. The gap, in our experience, is the creation of the opportunity game plan, managing its effectiveness and fixing it when it goes off track. Our role with management is to help design and establish an organization that is the “opportunity creation muscle” with the power and resilience to deliver opportunities for value creation.
Skillful Opportunity Management is central to the competitive success of an enterprise. If your company is not better than your best competitor at Opportunity Management, your market value will diminish and your shareholders will lose confidence.
The Board's Opportunity Role
The role of the board is to assure that management and the organization are up to the company’s ambitions and challenges and to lend appropriate input and insight. True value-seeking boards take an active role in overseeing the enterprise’s “opportunity strategy” and balancing that with Risk Management. Our role is to help Boards, CEO’s and senior executives balance the Risk/Opportunity scales and to ensure that strategies do not fail because of the inability to find opportunities and bring them to life.