David Spear FAICD, VUCA Director is one of Australia’s leading Strategic Planning facilitators. He has been conducting these sessions now for many years and his reputation continues to grow. He brings extensive value to Strategic Planning because he sees both sides of the Board and Management. David is Chairman of two companies and a Non-Executive Director of two other companies. He has seen the good, bad and ugly of Boards and organisations in getting this right, as well as wrong. David sat down with Marlene Elliott GAICD to discuss the important elements of Strategic Planning.

How do you determine your role as the Facilitator?
It is Important for the Board and Management to understand the role of the facilitator. It is my job to get both Board and Management on the same page. When you talk about strategic planning it’s not about Management coming to the Board to present a predetermined strategy, and it’s not about the Board presenting to Management and saying here is the strategy. There has to be a commonality to both the Board and Management. It has to be a collaboration of minds and agreement of this approach, because without that agreement on the strategy, why would management implement a strategy that they believe is not in the best interest of the business?

It’s also about consensus, collaboration, prioritisation and understanding direction between Board and Management. Management can implement actions of the strategy and then the Board can move to oversight and review of the strategy. The strategic planning day must be as one, united, transparent and on the same page at the end of the day.

Is it about Vision, Mission, Values?
Vision and Values are often in place before strategic planning starts but they need to be reviewed. There is more of a trend nowadays to at Vision and Purpose more so than Mission. Which is why the key focus for strategy is now about understanding the core purpose of the organisation. It is critical that there is agreement between Board and Management on what is the core purpose of the organisation is.

In such a session you need to identify what you are good at because you don’t want to lose what you are good at. Identify what are the issues the business is facing and build some consensus and priorities on what is holding the business back.

Who should be involved in the strategic planning day?
The Board, CEO and the Management Team. Everyone needs to be an equal on that day, there should not be anyone more important than someone else in the room. Sometimes its hard for both parties to understand this but it makes the session so much better if they do. During the strategic planning session there are breakout groups to work through issues and those groups would be a mix of Board and Management. You don’t want Board in one group and the Management in another group.

Groups must be talking and debating what are the issues, what are we good at.  It’s extremely important that everyone is open and honest with their input and discussions. Some Executives may find it confronting being with the CEO or Board or peers, however this is the best way to get the best results because all the issues are fleshed out along with all the positives as well.  Then it’s about prioritising the issues and setting the goals and milestones.

Is prep work required to enable an effective strategic planning session?
Some organisations allow time and space prior to the session for preparation. Quite often Management will present a 5-10 min overview of their area and how their part of the business is performing. Some Boards will bring in industry experts from outside the organisation to give an update on the industry and sector which is also helpful in setting the scene.  

The danger is if you do too much pre-work or the CEO’s presents their thoughts or issues prior to the day this can influence others, create bias and can be disruptive and restrictive to the process as opposed to all participants attending the strategy day with an open mind.  Outside industry expert can desensitise the session and provide an independent outside-in perspective compared to a CEO saying this is what is happening in the sector and this is where we need to head.

Some organisations will do a SWAT analysis before the day, or perhaps even share some articles or papers on certain subjects, it really depends on the organisation and their stage in the life-cycle of the organisation.

How long should the strategic plan be?
It does depend on the industry and sector and also the maturity of the business. A long-term strategic plan is usually 5- 10 years but the most common tends to be around 3 year plans. But times are challenging right now. Locking in a 3-5 year plan is putting the organisation on railroad tracks and that’s dangerous at the moment. We are in a four-wheel drive environment and must have the flexibility to move off the tracks and change direction as the environment around us changes.

Regardless of time period 1, 2, 3, 5, or 10 years, it is mandatory for the Board to review the strategic plan every 12 months. You must determine if you are achieving the goals, meeting targets and time frames. Also, what are the external factors that have impacted the business? A great tool to use is called a PESTLE. Political – Economic – Social – Technological – Legal – Environmental. These are the external factors that the Board has no control over. For example, change of Govt, change of Legislation, right now it’s COVID-19 that is impacting organisations. Understanding the external factors that impacts a strategic plan is critical. I mean who would have thought a global pandemic would have this much impact on the world, business, people and financials. On reflection, consider how many strategic plans have included a global pandemic – not many!  

How often should you review the strategic plan?
Targets and goals must be realistic, measurable and accountable. The Board must monitor the oversight of the strategic plan on a regular basis. Generally, the strategic plan comes back to the Board quarterly or six- monthly for review against targets. However, it is often in every Board pack, as an appendix at the back to give clear oversight to the Board. Most Boards use a dashboard or traffic light system to monitor how the strategic plan is tracking.

When the CEO or Management presents a paper to the Board it must be aligned to the strategic plan noting the key area for decision and reflective of the goal and target of the strategic plan. When the CEO or an Executive is writing a Board paper – ask the question where is the reflection from this paper to our strategy? 

What are some key questions Board’s should consider going forward?
I think there are some simple questions that the Board should be asking themselves first.

  • Where do you want to be in the next three years?
  • What market trends or client demands support our vision?
  • What strategic goals do we have for the coming year?
  • What is the tactical plan for delivering on these goals?
  • What are the known Risks?
  • What time frame should our strategic plan cover?
  • How often should we review progress on our strategic plan?
  • When should we change or update our strategic plan?
  • Do we need to use a Dashboard or Scorecard?
  • How do we make our strategic plan flexible to allow for change?

Your final thoughts?
Keep it simple. Focus on Vision and Purpose first and get alignment between Board and Management. Understand that this process will take time if done right. The back and forth between Management and the Board before settling on a final document is normal. Once the framework is set at the strategic planning day, it is up to Management to come back with the first draft for Board review and ultimately approval. Boards must remember that Management is running the business and they need to ensure they understand the boundaries and difference between governing and managing.

For more information please contact David Spear on 0408 404 910 or email david.spear@vuca.com.au

David Spear FAICD
VUCA Director