A recently published article identifies, in a practical manner, a series of common barriers to a board’s ability to exercise oversight over the strategic planning process. This is useful information given the increasing pressures placed on long term strategy development by the current environment of political, economic and regulatory volatility.
Six particular barriers have been cited by the National Association of Corporate Directors (NACD). Most prominent among these was not having enough time in meetings for strategy discussions, despite the increase in overall director time commitments to board service. Two related barriers were (i) the difficulty in confirming the validity of assumptions set forth in support of particular strategic directions; and (ii) lack of an “honest” set of performance metrics from which observations on corporate progress may be derived. Another notable barrier cited by NACD was too much focus, in terms of information flow, on past results and lagging indicators, and not enough focus on trends and forward-looking indicators. Not surprisingly given current developments, another cited barrier was lack of understanding of how the current industry or business environment affects strategy. The final cited barrier was the pressure on the planning process arising from an excessive focus on short term performance, as opposed to long term sustainability.
Many leading governance indicators are calling for increased board involvement in the identification of strategic issues facing the corporation, in the development and implementation of the strategic plan, and in the close monitoring of the strategic plan. This is particularly important given concerns that the “shelf life” of strategic plans is increasingly shorter, given the evolution of the health care industry. The general counsel is well-qualified to advise the board on its fiduciary obligations in this regard.