Strategic Leadership

One of the board’s major roles is strategic governance, setting strategic direction, helping to plot the organisation’s path through an uncertain future, and ensuring the organisation achieves what it should.

A board which provides strategic leadership will have:

a process for defining the organisation’s purpose, desired strategic outcomes and values, and ensuring these are constantly kept ‘in the frame’ and relevant;
a positive vision of the future which channels energy and resources, and motivates directors and staff;
a process that can engage all directors, regardless of their level of experience or expertise, in the organisation’s operational activities;
an orientation towards the future that reduces commitment to the status quo and encourages a broader view;
the commitment and confidence of key stakeholders on whom the organisation depends, be they members, donors, funders or the like;
a basis for effective governance by keeping both board and staff focused on what’s important;
a process for identifying and reconciling conflicting expectations; and
a framework for monitoring and assuring performance accountability.

“...most of what boards do either does not need to be done or is a waste of time when the board does it. Conversely, most of what boards need to do for strategic leadership is not done.” – John Carver

There are many reasons why boards aren’t more effective in their direction-giving role. Typically, they include:

The board doesn’t appreciate the importance of its leadership role and responsibilities, in particular its ultimate accountability for organisational performance.
The board reacts in an ad hoc way to the immediate issues. It is diverted from the more important longer-term challenges.
Setting a clear future direction for the organisation would force the board either to confront fundamental philosophical differences between directors or to challenge one or more dominant individuals who are either anti- planning or who have ‘bullied’ the board into a particular stance with regard to the future.
There is active resistance to looking forward because:

– “if it ain’t broke don’t fix it”; or

– “survival is the name of the game”.

The board does not know how to start.
Individual directors are genuinely more interested in how the organisation goes about its work the (means) rather than what it must achieve and why the (ends). They are more comfortable dealing with matters that are specific to their personal interests and experience.
Directors have been disillusioned by the nature and results of past strategic planning in which they felt they were ignored.
A critical mass of board members are task-oriented and become impatient at having to deal with time-consuming discussion and analysis of issues, the answers to which they feel are obvious; and
The board is held back by the attitude and/or inexperience of its chief executive and staff.

Define the main strategic challenges

The board and the executive team should periodically work together to identify the main strategic challenges facing the organisation.

It is interesting to ask what is considered ‘strategic’. Its connotations include those of:

a plan, direction, guide or course of action into the future, a path to get from here to there;
a decision-making pattern ensuring consistency in behaviour over time;
the deliberate determination of particular services or products in particular markets; and
a perspective, an organisation’s way of doing things.

Most boards use the word ‘strategic’ to mean ‘of relative consequence’. A board is likely to consider a matter ‘strategic’ if it:

goes to the heart of why the organisation exists;
concerns major barriers standing in the way of the organisation achieving its aims;
involves a significant commitment of resources;
might move the organisation into a whole new realm of activity;
could produce a significant change in relationships with a key stakeholder;
is likely to have a lasting impact on the organisation;
will be a long time before the outcome of an important decision is likely to be known; and
cannot easily be dealt with within the normal business and operational planning and budgeting processes.

Determining the organisation’s strategic direction

The need for boards to give direction

Before the board can hold its chief executive (and the chief executive can, in turn, hold staff, volunteers and contractors, etc.) accountable for organisational performance, the board must have done its own job of specifying what must be achieved.
The board, in conjunction with the chief executive and senior staff, should regularly address such questions as:
What is our purpose, our reason for being?
If this organisation didn’t already exist why would someone have to create it?
What is our vision for the medium-to longer-term future?
Is this consistent with our current direction and priorities?
Who are the beneficiaries of our work? Are these still the right people or groups?
What is the ‘essence’, ethos or spirit of this organisation?
What is important to us?
What do we stand for?
Where does the organisation stand in terms of its desired achievements?
Where could we be going?
What should we be doing or becoming?
How do we want to interact with each other and the outside world?
Have we fulfilled our purpose? Is it time for us to close the doors and move on?

The next step is to convert or translate these answers into more specific outcomes or key results to be achieved. Until there are answers to these questions the effective monitoring and evaluation of performance are, at best, difficult.

Defining outcomes

The Policy Governance model that this Nine Steps process is broadly based on makes clear that the board establishes the organisational ‘ends’ or outcomes, and the chief executive and management establish the ‘means’ or methods for achieving the ends. The establishment of organisational ends is premised on the questions:

For whom does this organisation exist? (Who do we serve?)
What benefit do we provide or offer?
What are the costs associated with providing that benefit, economic costs, i.e. the budget allocation and priorities, and what social costs, e.g. who will miss out as the result of our decisions?

By answering these questions the board and management are forced to look outwards to their clients, customers, shareholders, members, participants, etc. rather than looking inwards and focusing on bricks and mortar, staffing and finances. The reality is that the organisation exists to serve an external clientele, not its own internal interests. Sports organisations exist for participants in one form or another, not the staff. Sometimes this can be forgotten.

Focus on results, not methods

A board should ensure its strategic intentions are expressed in the form of outcome statements specifying the results to be achieved and the recipient of the benefit, i.e. statements of ends, not means. Here are some practical tips to help do this:
Avoid descriptions of the activity that is to be undertaken; it helps to remove active verbs, e.g. ‘assisting’, ‘producing’, ‘enhancing’, ‘facilitating’, ‘coordinating’, etc.
Focus on the benefit and who is to receive it.
Ensure the statement looks outward, beyond the ‘walls’ of the organisation, i.e. this isn’t about what we will do but how someone else will be better off.
Avoid wishful thinking and relativities.
Write as if the result has been achieved.

For example:

“We will help children, under the age of 12 to learn to swim” draws attention to our efforts rather than the participants’ achievements. It is about our actions, and thus the measure of effectiveness could easily be construed to be the amount of ‘helping’ we have done regardless of whether or not participants have actually learned to swim.

Alternatively:

“All children aged 12 will be able to swim 200m” is clearly about an outcome for participants. It answers the question, “What benefit will we provide and for which people?” The measure of success is unambiguous – are all children aged 12 able to swim 200m, yes or no?

This makes it clear what the result is and who the target to receive the benefit is. Accordingly it specifies the ‘ends’ (the board’s role) but not the ‘means’ (the management’s role).

The board’s high-level purpose and outcome statements should generally have a longer-term focus, creating a framework within which the chief executive can prepare shorter-term (e.g. one-to three-year) business plans.

Strategic thinking comes before strategic planning

The board should involve not only its chief executive and senior staff, but also key internal (e.g. regional sports organisations, clubs and individual members) and external stakeholders should be engaged as appropriate. Given the relatively small size of most organisations, it is recommended that all staff be engaged in strategic thinking at some point. If these discussions are effective, they build commitment and ownership throughout the organisation and lead to better decision making.

A set of strategic thinking tools is included in the online resources.

The structure of the board’s statement of ‘strategic intent’

The language of strategic thinking and strategic planning is surrounded by jargon. It’s good to keep the strategic direction framework as simple as possible. The following framework is consistent with commonly accepted definitions of key terms and is offered in an order designed to provide a logical, cascading train of thought.

Purpose statement – the most powerful single statement a board can make. The purpose statement describes the organisation’s primary reason for being in terms of the benefit to be achieved and the beneficiary(s). Two good starting questions are, ‘‘If this organisation did not already exist why would we create it?” and ‘‘What benefit do we provide to which people?”

Vision statement – can be useful as a statement of the ultimate future the board wishes the organisation to achieve.
Values – cherished beliefs and principles that are intended to inspire effort and guide behaviour, encouraging some actions and activities, and constraining others. There’s an important ethical dimension to this. A good starting question for a discussion on values is to complete the sentence, “We believe in/that...” In essence, the values define an operating philosophy for the organisation.
Key Result Areas or KRAs – these provide a framework for identifying the sets of outcomes the organisation wishes to achieve. They are the organisation’s high-level, longer-term deliverables. Stated as if they’ve been achieved, these articulate the difference the organisation plans to make to its world if it’s successful. Each KRA will have one high-level outcome that frames the desired achievement of that area or organisational operation.
Key results – the organisation’s shorter-term achievements that sit under each of the KRAs. Each key result is a subset of a larger strategic outcome as stated in the KRA key statement.
Performance measures – measurements or milestones that the board must monitor to be sure about achieving key results and ensuring the organisation is on track. The chief executive should be invited to present these to the board. The onus should be on the chief executive to convince the board that key results are being achieved. In reality, many key performance indicators will be operational performance measures.
Resource allocation – resources should be allocated for each of the key results. This ensures the results are achievable and that the strategic framework is realistic (rather than simply an inventory of wishful thinking).

The strategic plan

It is useful to compress the strategic plan into one or two pages. This assists in communication with stakeholders. Most importantly, a crisp set of KRAs broken down into annual targets will significantly aid the board in understanding management’s progress against the plan.

For detailed information on strategic planning please see the Sport New Zealand resource available at www.sportnz.org.nz/governance

Good practice examples from the sector are also available in the online resources.