QUESTION 5: Does Our Board Really Own the Strategy?

“Don’t Come With a Buttoned-Down Strategy Document”

Here’s one of my Top-10 favorite governance quotes:

“There is nothing more important for a CEO
than having the right strategy and right choice of goals,
and for the board,
the right strategy is second only to having the right CEO.”

That wisdom is from Ram Charan and it’s very timely during the COVID-19 marathon. Ironically, Charan references another crisis in this chapter. “The financial crisis of 2008 laid bare a long buried truth: that many boards do not really own the strategy of their company.”

QUESTION 5 of 14: Does Our Board Really Own the [Ministry’s] Strategy?
Owning Up: The 14 Questions Every Board Member Needs to Ask, by Ram Charan (Order from Amazon)

Why is strategy so important—and why should your board own the strategy?

Good News. The CEO of ABC Ministry urges the board to expand into three more countries. This new initiative aligns with the organization’s written strategy and three-year rolling strategic plan. The board’s due diligence process considers this bold move during two consecutive board meetings (with focused time for prayer and discernment)—and approves.

Bad News. The CEO of XYZ Ministry brags that “ideation” (a good thing) is her top strength from the Gallup StrengthsFinder assessment. But with no prioritization filter, the latest idea-of-the-week lands on the board agenda—with no vetting. In the absence of a written strategy or strategic plan, the board authorizes a considerable chunk of future donations and this non-budgeted brainstorm becomes a boondoggle. Yikes.

The best boards, writes Ram Charan, orchestrate comprehensive strategy discussions at board meetings—with ample time for Q&A. “Don’t come with a buttoned-down strategy document,” board members are requesting, “talk to us about the knotty issues you’re grappling with; tell us what’s on your mind.”

Rather than a 200-slide PowerPoint (snoozer!), Charan recommends a staff/board process that culminates in a five- to seven-page strategy document (about 2,000 words). Read the four-step process in this chapter and learn how to use a two-day board retreat for the fourth step: “Conduct a Strategy Immersion Session.” After one-on-one discussions on earlier drafts (CEO with individual board members), then meet in groups of four at the retreat, and ask:
   • “What three things do you like about this strategy?
   • What three things do you not like about this strategy?
   • What three ideas do you propose that the strategy should seriously consider?”

Read the entire chapter to leverage Charan’s very, very practical—but thorough—approach to engaging the board in strategy.

Example: Noting that strategy should always be in the back of board members’ minds, he writes, “It helps to have the strategy brief or a two-page sheet of bullet points in the binder for every meeting.” 

That two-page strategy brief would have helped XYZ Ministry. Board members—steeped in the importance of strategy—would have asked their CEO, “How does this new idea align with our written strategy?” (Short answer: It doesn’t—so please go back to the drawing board and our strategy documents.)

If you only read one chapter in Owning Up, read Chapter 5. And beware! “The shelf-life of a strategy is shortening,” says Charan. “The board’s objectivity and diverse viewpoints can help management detect a bend in the road” and other opportunities to grow or pull back—based on risk assessments.

As you prayerfully discern God’s voice for your ministry’s strategy, couple Ram Charan’s practical insights with Randy Samelson’s six-step plan from 1 Chronicles 28-29, in his helpful book, Breakthrough: Unleashing the Power of a Proven Plan (read my review). He urges board members and ministry leaders to ask the Key Log Question: “Other than money, what one opportunity (or obstacle) if captured (or removed) would most advance your mission/vision?”

BOARDROOM DISCUSSION: Randy Samelson says a credible plan has three elements: 1) It is written. 2) It is measurable. 3) It is responsive to the unexpected. (Oops! How responsive is our current strategic plan to the COVID-19 marathon?)

MORE RESOURCES: Check out these helpful ECFA resources:

• BLOG: Click here to read the guest blog by Bruce Johnson from Lesson 2 in More Lessons From the Nonprofit Boardroom, “Engage Board Members in Generative Thinking. They rely on generative thinking in their day jobs but are rarely asked to think collaboratively in the boardroom.” (Click here to read the chapter online.) Johnson reminds us, “No one joins a board because they love hearing reports. People join a board because they want to make a difference, they want to contribute to an organization or church they love.”

• TOOL: Consider summarizing your strategy and strategic plan with a one-page 11” x 17” template, “The Rolling 3-Year Strategic Plan Placemat,” Tool #14 from the book, ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board. Click here to read the color commentary on Tool #14.

QUESTION 4: Are We Well Prepared to Name Our Next CEO?

Emergency Succession: The Elephant in the Room?

Yikes! “Three quarters of board members aren’t prepared for CEO succession, and fewer than 1 in 4 have a written succession plan.”

That discomforting news is one of 12 highlights (including low lights) from ECFA’s Nonprofit Governance Survey Comprehensive Report: Unleashing Your Board’s Potential, by Warren Bird, Ph.D. (Check out the library of free ECFA research findings and download this 60-page report by clicking here.)

Even during this COVID-19 marathon—is it possible that your board might be looking for its next CEO? It’s certainly possible. Read on!

QUESTION 4 of 14: Are We Well Prepared to Name Our Next CEO?
Owning Up: The 14 Questions Every Board Member Needs to Ask, by Ram Charan (Order from Amazon)

Ram Charan reminds us that every board member “knows deep down that nothing is more important than having the right CEO at all times.” This fourth chapter in Owning Up is bursting with must-read sections. Here’s a taste:

• Succession planning is a long-term, on-going process, for healthy organizations. But it may take two to three years of diligent work and preparation when replacing the CEO.

• Start with strategy—not people. “When the succession decision is about a year away, the board should take another hard look at the external environment and the business challenges and translate them into specific criteria for the CEO job.”

• “Generalities such as ‘intelligent,’ ‘visionary,’ ‘strategic thinker,’ or ‘great with people’ will not be very helpful.” Instead, says Charan, the board must identify three to five “non-negotiable” characteristics. “Without them, a candidate cannot even be considered.”

• The perfect search is rare. “The test is not only whether the board can make the right decision, but also how quickly it can admit that it did not.” Yikes.

• The elephant in the room? “Too often, boards are reticent to address the elephant in the room: emergency succession.”

While Owning Up’s 14 questions address life (and elephants) in the corporate boardroom, Christ-centered boards will appreciate these bare knuckle reality checks. I’m encouraging every board chair to make Chapter 4 required reading for every board member.

Plus, enrich this critical competency with the four short videos and viewing guide in the ECFA Governance Toolbox Series No. 4: Succession Planning—Eleven Principles for Successful Successions (“Every CEO is an Interim CEO”). Note, especially, these principles:
   • Principle 1: Avoid Buses and Boredom! (Emergency Succession)
   • Principle 2: Discern Your Board’s Succession Values and Beliefs
   • Principle 7: Trust God and Discern Direction! Wisdom on Ending Well

In the ECFAPress book, Stewards of a Sacred Trust: CEO Selection, Transition and Development for Boards of Christ-centered Organizations, David McKenna raises the stakes on CEO succession with this:

“Like the ripple effect of a stone tossed into a pond,
the CEO’s influence will move in waves through generations.
No decision of the board,
absolutely no decision, is more profound.”

BOARDROOM DISCUSSION: Do we have prayerful, discerning, competent, and succession-savvy board members in place—so we’re prepared for our next CEO succession, whenever that might come?

MORE RESOURCES: Check out these helpful ECFA resources:

• BLOG: Click here to read the guest blog by Reid Lehman from Lesson 9 in Lessons From the Nonprofit Boardroom, “Serve with Humility and Experience God’s Presence. One board chair creates a holy moment for his CEO Search Committee.” (Click here to read the chapter online.) Lehman notes that “board leadership is a ‘group sport.’” Read Reid's reason.

• TOOL: Download the ECFA Governance Toolbox Series No. 4: Succession Planning—Eleven Principles for Successful Successions and view one or more of the short videos at your next board meeting or board retreat. For the color commentary on each of the 11 principles, click here for the index to the 11-part blog series.

QUESTION 3: Are We Prepared to Do Our Job Well When a Crisis Erupts?

The Board’s Role With Unknowable Unknowns

Wow! Question 3 is way too timely! In this 14-part series from the must-read governance book, Owning Up (read my review), Ram Charan says there are two kinds of crises:
   • Crisis #1: The Knowable Unknowns
   • Crisis #2: The Unknowable Unknowns

He elaborates on the these two types: “…those that are knowable, meaning they happen from time to time but at unpredictable intervals and with varying ferocity, and those that are unknowable, meaning no one has even imagined such an event.” 

QUESTION 3 of 14: Are We Prepared to Do Our Job Well When a Crisis Erupts?
Owning Up: The 14 Questions Every Board Member Needs to Ask (Order from Amazon)

Whether COVID-19 was predictable or not, Ram Charan says “Boards have to prepare for both the knowable unknowns and the unknowable ones in order to minimize disruption to the [organization], damage to the brand and [organization] reputation, and loss of hard cash.”

A plethora of experts and not-so-expert prognosticators are weighing in on Zoom webinars, white papers, and memes—and often (my opinion) giving inappropriate directions for the foggy journey ahead. The good news: CEOs and board members can pick their flavor-of-the-week expert and find agreement for their own opinions. The bad news: CEOs and board members can pick their flavor-of-the-week expert and find agreement for their own opinions.

Reminder: “In their hearts humans plan their course,
but the Lord establishes their steps.” (Proverbs 16:9, NIV)

Charan’s crisis wisdom is worth reading:

#1. Benchmark Crisis Practices. It’s never too late to get ready for the next crisis. For the knowable unknowns: “They should not be a complete surprise, and some expertise will exist somewhere to deal with them. Boards need to benchmark these practices as a preparedness measure.”

#2. Address Internally Inflicted Situations. Some crisis situations are, sadly, created by management (hasty hires, overly optimistic cash flow forecasts, revenue bucket imbalances, inadequate or no customer research, etc.). Boards can also stumble and create or exacerbate problems. “Every board needs to decide which categories are important enough to prepare for ahead of time.” How? See the next point.

#3. Establish a Crisis Committee. Charan writes that boards must ensure that management has “a core group that forms a crisis committee comprising the CEO, general counsel, CFO, and a public relations and communications officer.” He adds, “In each case, there must be a point person in charge and a game plan that can be deployed instantly.”

#4. Rehearse! Rehearse! Rehearse! It’s too late to “rehearse” for the front end of COVID-19. But it’s not too late to be prepared for the next knowable unknown crisis. Charan recommends that boards prepare “a list of advisors or experts available to the board 24/7 and keeping contact information current can save valuable time in the heat of the moment. Rehearsing a crisis can test how well the mechanisms and processes are working.”

The Board’s Role With Unknowable Unknowns

I urge your CEO and board chair to read chapter 3—even in the midst of the current unknowable unknown crisis. Charan advises, “Here the board can be an important check on management’s interpretation of events, because even the best CEOs can sometimes be too optimistic or have blind spots.”

As your board members pray daily (we hope) about Plan B or Plan C, heed these insights from the author:
• “The board should also help management imagine what the domino effect might be, projecting what other problems might arise as the one thing triggers something else.”
• “Waiting for management to make a move is a mistake. Management, after all, has never been tested under the conditions of an unknowable unknown, and the board cannot assume they know how to respond.” 

BOARD DISCUSSION: In chapter 3, Ram Charan cites a board that met six times in two months during a crisis. Is your board meeting at appropriate intervals during this COVID-19 unknowable unknown?

MORE RESOURCES: Check out these helpful ECFA resources:

• BLOG: Click here to read the guest blog by David Wills from Lesson 19 in Lessons From the Nonprofit Boardroom, “Never Throw Red Meat on the Board Table. Boards need advance preparation to fully address complex issues.” (Click here to read the chapter online.) Wills notes, “The currency of great boards is great discernment.”

• TOOL: The book, Owning Up, is featured in Tool #13, “Board Retreat Read-and-Reflect Worksheets,” from the book, ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board. Click here for the color commentary on Tool #13.

QUESTION 2: Are We Addressing the Risks That Could Send Our Organization Over the Cliff?

The Seemingly Improbable 100-Year Flood!

During this COVID-19 marathon, I’m encouraging board members to address 14 critical boardroom questions from the savvy wisdom of Ram Charan’s must-read governance book, Owning Up. (Click here to read my review.) The second chapter (just 13 pages) is so, so timely. Wow. 

Ram Charan urges boards to look at risk through five different lenses. He notes, “…keeping in mind that the seemingly improbable hundred-year flood might well occur during your board’s tenure.”

QUESTION 2 of 14: Are We Addressing the Risks That Could Send Our [Organization] Over the Cliff?
Owning Up: The 14 Questions Every Board Member Needs to Ask (Order from Amazon)

Examine risk through five lenses:

#1. The Financial Vulnerability Lens. “The board should watch cash flows—everybody knows cash is king—as an early warning signal of distress.” (Raise your hand if you agree that having more cash on hand would have better prepared you for this COVID-19 marathon.)

#2. The Strategy and Operations Lens. “Monitoring is not just about making the numbers, but also about talking through the risks.” The author adds, “If you have no appetite for risk, you shouldn’t be on a board; it will inhibit the CEO from making bold and necessary moves and potentially company-saving bets.” Yet he also warns that boards must watch both ends of this continuum: CEOs who tilt toward greater risk and CEOs who are risk-averse.

#3. The Political and Geopolitical Risk. Here, Charan recommends assembling advisory boards to ensure there is expertise where needed. If your ministry operates internationally—or depends on people or resources from another country—are you prepared for the what-ifs?

Do local, state, and national politicians understand the important work you do? Does someone on your team have relationships with these decision-makers? As Dan Heath writes in Upstream, “You don’t want to be exchanging business cards in the middle of an emergency.”

#4. The Reputation Lens. Ram Charan is prophetic! “In this age of transparency, an idea or rumor can spread instantly across the Internet like a virus.” He adds that some boards and organizations “have been blind to the factors that caused their reputations to fade, even though they had plenty of time to do something about it.” Do you have an action plan for addressing Internet rumors?

#5. The People and Culture Lens. The author warns, “Boards must also watch for a toxic culture that enables ethical lapses throughout the organization.” To check the temperature of your culture, Charan suggests boards follow the lead of General Electric and conduct periodic “pulse surveys.” ECFA, for example, participates in the “Certified Best Christian Workplace” process—and is one of many ministries that have earned that certification.

So how is your board assessing risk? Charan suggests you establish a “stand-alone risk committee, which would work with the audit committee.” And consider this: if you’re “climbing out of hot water, the board might even suggest that the CEO hire a chief risk officer.”

I urge your board to delegate their reading so at least one board member and one senior team member dives deep into this important book—and, especially, this important chapter. Then, set aside time at your next board meeting—or even between board meetings with a Zoom call—for special prayer and discernment, as you trust God on how best to prepare for the next crisis. It will come. 

BOARD DISCUSSION: Is “risk assessment” on your board’s agenda—at least once a year?

MORE RESOURCES: Check out these helpful ECFA resources:

• BLOG: Click here to read the guest blog by Danny de Armas from Lesson 35, “Is Your Board Color-Blind to Hazardous Conditions? What color is your boardroom flag?” in Lessons From the Nonprofit Boardroom. (Click here to read the chapter online.)
• TOOL: “The Board’s Annual Financial Management Audit: 20 True/False Statements the Board Must Address Annually (Tool #6),” from the book, ECFA Tools and Templates for Effective Board Governance: Time-Saving Solutions for Your Board.