Layout Image

A conversation with David Wright about strategy and board papers

Linking to strategy in board papers

By Mary Morel | November 2016

Building on a career in IBM, David Wright has worked across an amazing breadth of industry and government in Australia and globally. He specialises in working with chief executives and leadership teams to create strategies and plans.

Mary Morel: Can you please give me a layperson’s definition of strategy.

David Wright: Strategy addresses three simple questions:

1. Why are we here? Why do we exist? This is sometimes called the purpose.
2. At a very high level, what do we want to achieve in the long term?
3. How do we want to achieve that?

Many people think the strategy is just the how, but the most challenging question is the why.

An example is the rethinking of the strategy of the Ministry of Works in New Zealand at the time of privatisation. The result was a purpose statement that said:

‘The job of the Ministry of Works is to build and fix roads, airports, harbours and dams in
New Zealand.’

The how was privatisation.

Mary: That’s a great example. Can you give me some other examples?

David: I had responsibility for global strategy in IBM for a while and it was an enterprise with half a million people in 192 countries, and the strategy was four pages.

I did some work with the Department of Human Services in Melbourne and when we started, the strategy statement was 392 pages. At the end of the work it was one A3 page which you could access on the web. It had values, purpose, achievements and how we were going to get there.

Another example is the Microsoft strategy: A computer in everybody’s home.

Mary: What’s the board’s role in relation to strategy?

David: The board’s role in relation to strategy is to first make sure it’s there. The key pieces of the board’s responsibility are appointing the chief executive, making sure the place is being run within the law, and establishing a strategy.

Some boards likes to forge the strategy with the executive team, and others commission management to do that work and then sign it off. It could be from one end of that spectrum to the other. Then the board tracks and follows it.

Mary: What is the relationship between strategy and risk?

David: Risk stands on both sides of the strategy.

Risks are one of the inputs to the strategy. If you look at what are the forces driving and restraining the business, risk is part of that conversation. What are the risks that this business is facing? Upside risk as well as downside risk.

When Telecom New Zealand was first going into the mobile market, they had no idea the business would explode as fast as it did. Within a few weeks, they were meeting annual targets. That was an upside risk they had to deal with.

Risk is not the only input – other inputs are the capabilities and aspirations of the organisation.

Risk sits on the other side as well. When you’ve formulated the strategy, you need to ask: What are the risks that could derail or enhance this strategy?

Mary: I’ve heard you say that not everyone in an organisation needs to understand the strategy. What do you mean by that?

David: I did some work with FedEx in the States when Fred Smith was the chief executive. His strategy was simple: ‘People, service and profit.’ In that order.

We were picked up at the airport at Montreal and I asked the woman who met us to tell us about FedEx. She said: ‘It’s about people, service and profit.’ The strategy was deeply ingrained across the whole place.

At the other end of the scale, doing some work for a new hospital in Wellington, we had doctors and nurses in the room and they were clearly not resonating with the strategy. We stopped and they said: ‘All we want is to be the best doctors or nurses we can be. We’re not interested in that corporate direction strategy stuff. Create an environment where we can be the best we can be.’

I had the same experience with Air New Zealand pilots: ‘I just want to fly 747s.’

So the strategy does not necessarily need to be internalised by everybody in the place.

Mary: By the same token, not all board papers will be strategic.

David: That’s true. The question always needs to be asked: Why does this need to go to the board? If the paper is within the strategy that is fine, but if it’s not, the question needs to be asked: ‘Does this mean we need to change our strategy? Or is it not material enough to do that?’

If it was a very big thing, such as the possibility of merging with another company, then that calls for a strategic rethink. Sometimes small projects change strategy. An example is Microsoft releasing x-Box.

Mary: Are people issues strategic?

David: It depends. The people are a key part of the capability and if it is essentially a people business, like a supermarket or a hospital, the people strategy has to be right.

I find it hard to imagine people not being part of a corporate strategy – whether it is creating the environment for them to work in or creating policies about how they work.

Mary: So moving on to the people who are writing the board papers, they often don’t have the ear of the CEO, so how can they understand how their paper fits within strategy? I see a lot of jargon and waffle.

David: That is a challenge. People who fall into the waffle trap have really not connected with the business. They need to find a way, such as talking to a senior person, to internalise the business direction and strategy. Then they can clearly see if their proposal does or doesn’t fit with the strategy. For example: ‘This proposal is not about building a road’, and that’s what this business is about.’

They have to put the work into finding out. If the leadership is sensible, they will make sure that happens.

I’ve been doing a lot of work with Catholic Education and the boss has the communications person sitting alongside him to hear what is going on. It’s two-way because the comms person can also make suggestions about the language.

Mary: So people writing board papers need to think about their language?

David: They have to think about directors and what their currency is. If there are advertising people on the board, the papers need to have some pizazz. If there are bean counters, there better be numbers and details.

They must think very seriously about who will be reading the paper and make sure it is compelling for them.

For more information about David Wright, visit his website.

Leave a Reply