Most executive management teams have clear areas of authority with board approval spelled out in areas of key executive hiring, substantial business direction change or capital allocation. If you are working with a board and want your initiatives in these areas approved, then be prepared for discussions in these five areas.
- Managing the Downside. In your initiative proposal for board review, describe in clarity what your plan is, particularly if the initiative does not show early performance. Do you have an alternative plan if things do not work? Is there a way to diminish the spending? Boards want to understand the contingency plan as well as if not better than the success plan. All-or-nothing initiatives are delayed for further review and relegated to incremental roll out if these details are not presented.
- Initiative Trade-Off. The key decisions that require board approval or at the very least need board review will come with trade-offs. There is not an infinite amount of capital, executive team leadership time or other resources to be spent. Past approvals of initiatives have taken the full available measure. Your plan must articulate the impact of new initiatives on the progress and resource requirement of previous and ongoing initiatives.
- Impact to the Current Business Performance. Boards are wary of trading current and understandable business performance for future and less certain performance. You may not be able to avoid a short-term dip in business performance, but you should take it into account, and credibly estimate the impact and duration to business performance.
- What if the Initiative Works? Showing how your organization is prepared for excess success on a new initiative is a valued component of a good plan, and something boards will want to know. There is a story of the success of the Swiffer™ product launch. The demand for the product was so high that additional product had to be brought in by plane from plants in China to keep up. Imagine, wet towels in plastic boxes receiving that cost of first class shipping.
- Leverage Shared Success. Boards need to believe they are involved in the success of the business, as well. This is not a manipulated perception. Their involvement in the key areas of large decisions is part of what has made the business grow. If you want to be successful in the approval of a proposed initiative, link it to past approved initiatives so that your proposal does not stand alone. Connecting the dots for the board of a series of successfully implemented and board-approved initiatives that are congruent with the longer-range strategy gives you leverage in the discussion.
Board members who are reading this article have the responsibility of requiring that initiatives submitted by management for board approval meet these standards, as well. Management and board interaction that works through these topics as a part of the discussion will have fewer surprises during the execution of the approved initiatives.