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Leveraging board expertise: strategy mapping as teaching tool

Leveraging board expertise: strategy mapping as teaching tool Purpose – As a result of the many governance failures in the past decade, new legislation, increased regulation, and best practices have been adopted by boards in an effort to improve corporate governance. Unfortunately, not all of the changes, such as increasing the number of external directors, have favorably impacted the quality of board governance. While having the majority of external directors on a board increases the board's independence from the CEO, these external directors lack inside directors' understanding of the firm's operations, customers and business model. The board members' lack of understanding presents a key challenge to CEOs, as their tenures depend on keeping their boards informed about the firm's business model. If CEOs are to succeed in this new governance climate, they need to find a way to effectively explain the business model to external directors in order to educate them, access their competencies, and ensure their long term support. The purpose of this paper is to examine the role of the strategy map to communicate the firm's business model to the board. Design/methodology/approach – The paper used the authors' experiences, a review of the literature, and a case study as a basis for making recommendations presented in the article. Findings – Outside directors may struggle to understand the firm's business model. While some may argue this is not the CEO's problem as it is the board's role to govern and management's job to manage, the authors argue it is an important issue for CEOs for two reasons: First, if the board does not understand the impact of changes to a firm's business model then CEOs are not fully leveraging their boards' expertise. Second, if CEOs do not keep the board adequately informed about the business model it hinders, rather than helps CEOs from building open and transparent relationships with their boards. By ensuring that directors receive the right information about the organization's business model and then have the opportunity to have a constructive dialog regarding the quality of the business model, CEOs can build trusting relationships with their boards and thus ensure they succeed over the longer term. Originality/value – Recent governance failures have demonstrated a need for better communication between boards and CEOs. This is one of the first papers to examine the role of the strategy map to communicate the firm's business model to the board. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Business Strategy Emerald Publishing

Leveraging board expertise: strategy mapping as teaching tool

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References (9)

Publisher
Emerald Publishing
Copyright
Copyright © 2013 Emerald Group Publishing Limited. All rights reserved.
ISSN
0275-6668
DOI
10.1108/JBS-11-2012-0070
Publisher site
See Article on Publisher Site

Abstract

Purpose – As a result of the many governance failures in the past decade, new legislation, increased regulation, and best practices have been adopted by boards in an effort to improve corporate governance. Unfortunately, not all of the changes, such as increasing the number of external directors, have favorably impacted the quality of board governance. While having the majority of external directors on a board increases the board's independence from the CEO, these external directors lack inside directors' understanding of the firm's operations, customers and business model. The board members' lack of understanding presents a key challenge to CEOs, as their tenures depend on keeping their boards informed about the firm's business model. If CEOs are to succeed in this new governance climate, they need to find a way to effectively explain the business model to external directors in order to educate them, access their competencies, and ensure their long term support. The purpose of this paper is to examine the role of the strategy map to communicate the firm's business model to the board. Design/methodology/approach – The paper used the authors' experiences, a review of the literature, and a case study as a basis for making recommendations presented in the article. Findings – Outside directors may struggle to understand the firm's business model. While some may argue this is not the CEO's problem as it is the board's role to govern and management's job to manage, the authors argue it is an important issue for CEOs for two reasons: First, if the board does not understand the impact of changes to a firm's business model then CEOs are not fully leveraging their boards' expertise. Second, if CEOs do not keep the board adequately informed about the business model it hinders, rather than helps CEOs from building open and transparent relationships with their boards. By ensuring that directors receive the right information about the organization's business model and then have the opportunity to have a constructive dialog regarding the quality of the business model, CEOs can build trusting relationships with their boards and thus ensure they succeed over the longer term. Originality/value – Recent governance failures have demonstrated a need for better communication between boards and CEOs. This is one of the first papers to examine the role of the strategy map to communicate the firm's business model to the board.

Journal

Journal of Business Strategy – Emerald Publishing

Published: Jul 12, 2013

Keywords: Corporate governance; Chief executive officers; Boards of directors; Communication skills; Business models; Strategy maps; Performance

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