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The Board’s Role in Strategy

Who sets company strategy, the Board or the CEO? Roger L Martin, in this HBR article, provides clear and succinct answers to this question. In the most effective companies, the Board and CEO work hand-in-hand to formulate, approve, and implement strategy.

Summary:

What is the proper role of a board with respect to company strategy? On some boards, the prevailing view is that strategy is their job. On others, the prevailing view is the extreme opposite: their job is to wait for management to come forward with its strategy and to either approve it or not. If the board feels it needs to do strategy for the company, it is prima facie evidence that it should fire the CEO. If a board that meets just a few days a year can do a better job of setting strategy than the CEO who is in the business 24/7, then the board has the wrong CEO. The right approach is an iterative process in which the CEO is in charge, because it is the CEO’s job to formulate strategy, but the CEO wisely gets the maximum amount of advice from the board – assuming that the board has useful insights.  

Full Article: Harvard Business Review

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