Good Governance – Strategic Positioning for Strategic Planning
Posted by Dr. Earl R. Smith II in Governance, tags: adviser, advisory board, angel investor, board of directors, CEO, chairman, coaching, consulting, director, earl r smith ii, earl smith, Executive Coaching, federal circle, federal contracting, funding, Governance, government contractor, investing, investment, investor, Leadership, leadership assessment, leadership coaching, leadership development, leadership styles, management assessment, managing partner, Personal Growth, the federal circle, turnaround, Turnaround Management, Venture CapitalDr. Earl R. Smith II
Managing Partner, The Federal Circle
DrSmith@Dr-Smith.com
Dr-Smith.com
Strategy is more than just setting goals and reviewing the progress in achieving those goals. Boards of Directors are responsible for enhancing shareholder value over the long-term, and strategic planning is the process of positioning a company for success over that long-term. The process of strategic planning involves a number of people and a number of committees working together on different parts of the plan.
Strategic planning should always have ‘process’ as the last word. The first word should be assessment. Before a board or committee sets off on a strategic planning process, the board should assess the current conditions of the company. Many companies go a step further and analyze the conditions of the market and the industry the company is operating in before beginning a plan for the future. Boards should review the corporate finances, the company’s level of technology, logistics, customer base, its operational ratios relative to industry standards and other issues addressed in previous strategic plans.
Corporate management should report on conditions of talent retention and recruitment. A management assessment of the corporate leadership development program is essential and senior management should review the competition’s operational advantages with the board of directors. A thorough assessment of where the company stands relative to its competition will assist the board in determining a realistic goal of where the company should be in five years.
The Finance committee should review performance measures such as cash-flow analysis, inventory turnover ratios, receivables and other activity ratios to determine future credit lines to support growth or retooling scenarios. The Finance committee should also review corporate management’s performance against previous strategies and make judgments on the ability of the same management team to execute the new strategy under anticipated future conditions.
The centerpiece of most strategic planning processes is the SWOT (Strength, Weakness, Opportunities, and Threats) analysis. By analyzing these four areas, planning committees can begin to understand the fundamental issues needing attention in the planning process. However, a list of Strengths, Weaknesses, Opportunities and Threats is not a strategic plan. The SWOT analysis is only the foundation of a detailed plan to address each issue.
Directors and CEO’s are often surprised by the results of a SWOT analysis especially when independent and third party advisers who have not been involved with previous planning efforts or the management of the organization conduct the analysis. Companies that have lost their focus and even companies having become an industry leader often find the strength the organization was built on has slipped away or become an irrelevant issue. Directors or corporate management enjoying their success must guard against stagnation, and continue the aggressive leadership style of the hungry young organization struggling for survival.
Strategic plans are usually for a five-year period with projections and goals even beyond that period. Annually, companies review progress and update plans based upon the current operational environment. Boards will often use Succession committee and Audit committee reports and other committee assessments to assist the board in updating much of the strategy. Committees will also recommend other issues for review during boards of directors meeting. Some external advisors will attend committee and board meetings to offer insight into issues the board should consider during the strategic planning process.
Strategic planning should never end. The process should be periodic, continual, with specific review periods for directors and corporate management. Professional governance must always be looking for new strategies for success. Leadership must lead and not allow the board of directors or corporate management to become stagnant or complacent.
If you want to learn more about my board management services, send me an e-mail and we will arrange a time to talk.
© Dr. Earl R. Smith II
Related Articles:
- Good Governance – Keeping Ahead of Fast Companyy
- Successful Board Assessment Models
- Governance By Visionaries
- Boards That Listen – The Art of Engagement
- Visionary Boards of Directors
- Lessons of Complacent Boards
- Board of Directors: Cultural Evolution
Dr. Smith is Managing Partner of The Federal Circle. The Federal Circle partners with teams and existing companies. We help them up their game and win big in the Federal space. We also arrange funding for acquisitions and expansion by acquisition. Our model is based on the belief that, if you select the very best and work with them in a highly professional and focused manner, the results will be truly amazing. He is the author of Amazing Pace: Turbo-charged Business Development – a book that shows how Advisory Boards can dramatically increase revenue. Dr. Smith is also the author of Dream Walk: Parables for the Living – a book of Raven Tales and exploration.
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