Tuesday, 9 November 2010

Why not just stick to the knitting?

I remember having a conversation with my boss during my time as Strategy Director at HMRC, which effectively amounted to him saying "I want to concentrate on day to day operations for now, perhaps we'll return to strategic issues around Easter" . . . in other words - let's stick to the knitting. In this case, as the conversation was in October, for at least six months, no longer term issues would be considered by the Board (the 'perhaps' and 'around Easter' gave me pause for thought too).

So - fine you might say. Sometimes you do have to concentrate on the knitting. Agreed; but if the Board aren't looking at the longer term or at the serious threats (or opportunities) that might affect the organisation - who else will? As BP discovered to it's cost over Deepwater Horizon, failing to understand the level of risk being carried could spell disaster (see some further thought on this issue here.)

As my conversation with my erstwhile boss suggests - often the problem is a lack of appetite at senior levels in organisations to think beyond day-to-day management issues. Whilst my experience was in the public sector, I have little doubt that the same is true in the private sector (and Ben Gilad's analysis in his book 'Early Warning' certainly suggests that is the case). I don't think there are any silver bullets here. I think the Board should make time for considering mission-critical potential threats and opportunities - whether from existing operations or from changes in the operational landscape. Six months is a long time to effectively ignore what might be happening outside an organisation.

I believe the answer is to have a clear separation between the Board and the day-to-day management. The former should be forward-looking, interested in the future operating environment and the higher risk aspects of operational delivery and open to robust, external challenge. The latter should be empowered to make decisions about the day-to-day operational business. That management team should provide a snapshot of delivery and - crucially but often lacking - lead indicators to the Board. The Board can then be a position to 'steer, rather than row' - helping the organisation to find it's way through the challenges, whilst exploiting the opportunities.

Lastly, to be effective, the Board must have access to analysis and evidence about the operational landscape and how it might be changing - robust, evidence based challenge. This comes in part from the strategy team or equivalent, but is also a key role for the non-Executive Directors. In mature organisations, the NEDs work closely with the strategy team, using the evidence and analysis provided to inform and support their challenge role.

Does this sound familiar?  Does your management board spend too much time focused on the present?  If you find yourself in this position and need support to deal with the issue then why not contact me at jim.scopes@ideasown.co.uk and fix the situation before it bites you.  Alternatively - stick to the knitting by all means, but don’t be surprised if your competitors use the opportunity to leapfrog you whilst you're staring at the ground.

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