Who's accountable for the strategy?

This past weekend I attended the GO Conference in New York. Much of the discussion one day centered on the importance of CEOs being able to create a viable long-term strategy for their company. 

It is something I don't think many CEOs do that well; in fact, many have the audacity to outsource this work to consulting firms. In doing that, they don't seem realize they are abdicating one of their key accountabilities: the creation of the strategy.

Presumably their Board hired them for a fair wage (society would probably say a princely sum). The Board felt they had the capability to think through, unravel and master the complexity and competitive dangers facing their company with the required strategy... but no, some CEOS will avoid one of the more exciting and delicious pieces of work a CEO does. And I did say delicious!  If the CEO is well matched and capable of doing the role he or she should love the challenge of doing strategy work.

One of my favorite stories is how a client of mine, a CEO, went about creating a strategy for his company. He had been engaged in a turnaround situation in an industry he was reasonably familiar with. He went ahead and hired a global consulting firm to help him with his strategy development with the following proviso and instructions. 

"Look," he said, "I and my executive team are going to do the interesting (and delicious) work of creating our strategy. We want you to do some of the legwork for us and carry out the research part of things and get me the specific data I want. We will then take that data and create the strategy. To be clear: I do not want you to recommend a strategy. Got it?"

Off they went. When they returned to present the data they also presented a strategy to him. He fired them on the spot! The strategy creation was his accountability and he wanted no interference from outside. His team had to be excited and value the work of strategy creation. The people on his executive team were capable and in the right roles. By creating the plan themselves, it made it their work. Implementing the plan had a much higher chance of success than a plan devised and presented to them by strangers.

Needless to say, the strategy the team created (and lead by their CEO) was a game-changer in their industry and was implemented with huge success.

President AND Chairman? A job too far?

Recently, it was announced that Galen Weston, Executive Chairman of Loblaw Companies, has also been appointed as President and is taking over the daily operations of the business.  I cannot think of a better way to muddy the business waters and create obstacles to the smooth functioning of the company.

I firmly believe that the roles of Chairman and President should be separated. Here’s why:

1.     It concentrates too much power in a single role. How can one person be accountable for both the oversight of the company as well as its day-to-day functioning?

2.     One person as President and Chairman creates potential for conflict of interest. The chairman protects the interests of the shareholder, while the president manages the business. This often creates a healthy tension between the two roles that helps police them.  That can’t happen if one person holds both positions.

3.     There is simply not enough time in a day for one person to fulfill both roles. How will he decide which “hat” to wear? Will he end up delegating and/or abdicating the bulk of his accountabilities due to time constraints?

Now, in addition to being chairman, Galen is accountable for managing and maximizing the performance of 135,000+ employees. This in itself has got to be more than a full-time job and does not need any other distractions.  Either role in a company this size is hugely complex and time-absorbing.  The president's role itself will be busy overseeing the integration of Shoppers Drug Mart into the Loblaw business. How will he apportion his time?

As President, Galen will have a lot of strategic thinking to do.  How will he ensure it is integrated across all of his reporting functions? How many store and location visits will he have time for? How will he plan his days? And during Board week, will the business take a back seat to board meetings? It all sounds like too much of a stretch.

In the long term, it could compromise the health of his business.