Dr. Earl R. Smith II

Dr. Earl R. Smith II
Managing Partner, The Federal Circle
DrSmith@Dr-Smith.com
Dr-Smith.com

Visionary boards of directors create governance models that fit the organizational needs of the company they govern. These boards are an ongoing source of new ideas and fresh evaluations of old ones. One of its principal roles is monitoring the results against the strategic plan and developing alternatives when performance is less than desired. During this process, the board conducts assessments to identify strengths, weaknesses, opportunities and threats. It compares results to industry standards. When necessary, it develops resources to help in this evaluation and planning process. Committees and advisory boards develop and submit for approval plans that address the issues raised by the assessments. Directors monitor these efforts, vote on the submitted plans and charge the CEO with carrying out the operational aspects of the plan.

Visionary boards encourage high performance and match that encouragement by performing at a very high level. The board leaders determine board characteristics. The corporate culture also plays a role in how a board functions. Most visionary boards are complex, dynamic operations that require strong leadership to maintain director engagement and professional levels of attention.

Some of the characteristics visionary boards are:

◊ Future Focus: For visionary boards, results are the most important measure of success. Building on success and mitigating the impact of failure is more important than passing out accolades or finger pointing. Certainly, they reward success but they also view today’s success as a stepping-stone to future improved performance – only one-step in the journey to the ‘next level’ of operational excellence.

◊ Entrepreneurial Spirit: Board members expect the CEO and senior management team to engage employees and their teams by challenging them to exceed industry standards of operations. Visionary directors know failures are inevitable and accept that rewards need to be proportional to risk. They also know that there is a difference between those ‘risky’ initiatives and the ordinary course of business activities. A visionary board understands that the entrepreneurial spirit is important to the future of the company and cultivates it both within the board and the management team of the company.

◊ Customer Focus: Visionary board leaders are customer focused. Directors look for new and novel ways to engage customers. They understand that the customer’s assessment and perception of the company plays the most important role in determining the value of the company’s brand.

◊ Market Driven: Visionary directors support strategies that exploit proven markets and enter new ones ahead of the competition. Board members understand markets may change rapidly and failure to adjust the product/service mix to match customer needs will result in decreasing shareholder value.

◊ Open Door Policy: Visionary boards encourage new ideas. The Chairman practices the art of open-ended questions expecting other directors to contribute and fill in the blanks. Boards look to the CEO and the management team for innovative ideas to cut costs and increase productivity but board members themselves are often the best source of the truly visionary ideas that drive a company forward into new territories.

◊ Partnership Governance: Visionary boards look for partners to help them meet major challenges. Visionary boards will collaborate with suppliers and even competitors to cut costs and share in risk. Corporate ethics dictate guarding trade secrets, but strategies to address common issues among competitors that improve the industry as a whole and appeal to a common customer demand are often most effectively addressed by collaborating with competitors.

◊ De-centralized Decision-Making: The speeds at which markets react often demand prompt board actions. Demands on Directors’ time require that board meetings focus on strategy and the performance of the CEO and senior team. However, that does not relive the board of the responsibility for extended governance and effective oversight. A visionary board operates effectively between board meetings. Good governance moves decisions out of the boardroom and into the hands of committees, advisory boards, operators and corporate management – but always under the oversight of the directors. Any good board governance structure requires a network of committees and advisory boards composed of diverse talents. The board delegates responsibility and resources to carry out tasks but retains the responsibility and authority for final review and enactment of recommendations.

◊ Leadership Development: Sustainable decentralized governance requires a strong leadership development program. Governance, which delegates authority while reserving accountability, places burdens on the board, directors and CEO. They all must mentor leaders and clearly communicate strategy. Succession committees play a particularly important role in this process. They must ensure that the company has an expanding pool of diverse and engaged talent.

Visionary boards require strong, committed leadership. Visionary leaders must be prepared to abandon strategies that do not yield adequate results – that do not protect and extend shareholder value. Boards must delegate authority and duties for compliance management and be strong enough to retain the responsibility for making decisions based upon the recommendation of the boards established under the committee governance model.

© Dr. Earl R. Smith II

Other related articles:

• Leadership Development – Good Board Governance
• Lessons of Complacent Boards
• Defined Responsibility – a Key to Effective Corporate Governance
• Board of Directors: Cultural Evolution
• Board of Directors – Evolution through Devolution

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.

This entry was posted on Thursday, October 9th, 2008 at 9:43 AM and is filed under Governance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.