Leadership is the capacity to translate vision into reality.
He may not have known it at the time, but when Warren Bennis (American scholar and pioneer of Leadership Studies) penned those words, he was aptly explaining what strategic guidance means for the boardroom today.
Directors must be prepared not only to envision the future of the company, but also to find the best way to guide it into the fulfillment of that vision.
To understand what strategic guidance means exactly, we must take a look at the two words individually.
Crafting company strategy is an essential function of a board of directors. Simply stated, board members must bring their assortment of individual knowledge and experience to the table in order to seek out the best path forward for the business.
Strategic thinking takes many elements into consideration: goal setting, prioritization, realistic financial planning, and more. The expectation is that board members should be looking at the horizon rather than at the ground beneath their feet.
Guidance carries a different sort of significance. Boards must find the unique balance between being overly distant or too domineering. It’s important that the company is allowed to operate with the C-suite at the helm but also with the board providing clear and impactful oversight.
Some might view this as a Catch-22 of sorts, but the two halves must work in harmony in order to see positive growth. And strategy, however brilliant it might be, will mean very little if it’s not delivered through the most effective form of guidance.
These two simple words lie at the heart of all of the other functions of a board of directors. Whether it’s hiring a CEO, engaging with new technology, or weighing financial risks, board members must review their strategic values and guide the company smoothly through the inevitable decision-making and implementation processes.
These days, the emphasis on strategic guidance is apparent in every major business news outlet. The general consensus is that boards have been too under-involved in years past. Some writers have pinned the decline of power players like Blockbuster, Radio Shack, and Sears on the aloofness of their boards.
According to Dr. Reatha King, Chair of the National Association of Corporate Directors, “It is time for Boards to change their approach regarding strategy formulation toward ‘shape and monitor.’ Boards must move from a passive role to a more active role. The Board must be fully engaged, at all times, with strategy.” In other words, the expectations for board member involvement are continuing to rise.