Thank you for emailing me the first draft of what you envisage will form the key strategic initiatives for ABC over the coming year, following on from the discussions that have comprised our initial sessions together.
Before I provide you with feedback on your document itself, there are several core concepts that I wanted to take the opportunity to outline that I think will help provide additional context to the work that we have commenced:
- The Fours Hats – distinguishing four different roles people play in organisations
- The Strategic Plan vs. The Business Plan
- The CEO Mandate
- The Work of the Worker
The Four Hats
Part of the complexity you face in establishing what is expected of you in your new role is separating out these expectations based on which hat you and others are wearing. Defining appropriate boundaries between these hats is a logical place to start.
|Hat||Role & Responsibility|
|1. Shareholder||Purchases shares in an enterprise with the expectation of achieving a positive return on investment, in the form of dividends and capital gains (appreciation in the value of those shares over time).|
|2. Director||Understanding the charter of the enterprise, directs management where to prudently invest capital to achieve optimal returns whilst managing risks.|
|3. Manager||Understanding the direction of the board, plans projects and programs designed to control and develop the enterprise.|
|4. Worker||Understanding the plans and programs management has developed, undertakes the work required to achieve their fulfilment.|
One of the greatest challenges for small business owners is the need to operate at all four levels. Having defined these four hats, let’s turn our attention to establishing some useful boundaries between them.
Whether consciously or unconsciously, your board of directors (which includes you) has chosen to employ you as their CEO, since you recently succeeded the founder of the business. I prefer to use the word CEO to describe your role of managing the business rather than Managing Director as I think the latter is a misnomer: it collapses the responsibilities of hats 3 and 4, as I have outlined them above. Even though many standard company constitutions refer to the term Managing Director, colleagues of mine from the Australian Institute of Company Directors share my perspective on this topic. From a practical point of view, I would also go as far as to recommend you consider using the title CEO on business cards and websites in preference to Managing Director.
The Strategic Plan
A strategic plan is a document that defines and aligns what is important across three time horizons:
- Vision: long-term (5 years)
- Goals: medium-term (3 years)
- Objectives: short-term (1 year)
A strategic plan also explains why those things are important and, at a high level, how the enterprise will go about achieving them. Taken together, the what, why and how articulate the current strategy of the enterprise.
The board is the author and owner of the strategic plan and should not delegate this work to management.
Learn more about this framework here: https://nliven.com.au/product/guaranteed-success/
The Business Plan
A business plan takes the architecture of a strategic plan and engineers in more detail how management will achieve the one-year objectives, by breaking them up into smaller periods, like weeks, months or quarters.
The CEO is the author and owner of the business plan and should not delegate this work to middle management.
The CEO Mandate
When you come into the position of CEO, it is common to have a long list of things that you would like to achieve. Likewise, different members of your board may have additional items they would like to champion and see brought to fruition.
However, you and your board need to be mindful that managing the business will take up eighty percent of the CEO’s attention. In that respect, the CEO has limited resources (of time, energy and money) available to improve the enterprise through driving innovation intended to augment the competitive position of the enterprise. In my experience, a CEO can be expected to drive 2-4 primary projects per annum, depending on their size, scale and complexity. Collectively, these signature projects create an agenda that I call The CEO Mandate.
The benefit of a CEO clearly defining his or her high-level agenda is that it helps other people filter the information and ideas they bring to the CEO. If they know a certain initiative has been deferred until the following year for example, they can accumulate ideas and resources relevant to that initiative but hold off sharing that information with the CEO until it becomes relevant, i.e. when that project does make it onto The CEO Mandate the following year.
Given that the creative process is firstly divergent and then secondly convergent, I suggest that you begin with some individual and team (board level) brainstorming to create a wish list of items that could comprise your first CEO Mandate, before selecting which projects to prioritise for year one.
The CEO Mandate is a separate document from the strategic plan and business plan. However, you might like to include it as an Appendix to one or both of those plans for convenience when communicating your plans to others or, conversely, include one of those plans as an appendix to your CEO Mandate.
The CEO Mandate is intended to be a short document of 1-6 pages that provides a brief overview of each of the signature projects that you will be leading over the coming year. Writing succinct overviews of projects like these is something that we are going to be practicing together over the coming twelve months. Each of those initiatives may well require their own individual project plans in due course. You can learn more about The Art of The Brief in another article I previously wrote.
There is an important opportunity to brand each of the signature projects that comprise the CEO Mandate. It is helpful when it eventually comes to communicating, and engendering support for these projects, that you have been incubating ideas about them. This begins with naming each of the projects in a way that makes their core idea sticky. See http://heathbrothers.com/download/mts-made-to-stick-model.pdf for further explanation on ways to achieve this in your writing.
Ultimately, whether the board provides the CEO with their formal mandate, or a CEO proposes their mandate to their board for ratification via an internal memo, the intended outcome is the same – a clear, written agreement between a board and its CEO as to how the current strategy of the enterprise will be translated into a shortlist of initiatives to be achieved over the year ahead. The absence of such a documented agreement makes appraising the performance of the CEO unnecessarily difficult later in the year when both parties turn their attention to mutually assessing progress.
In situations when someone finds themselves playing the roles of both CEO and Chairman, the exercise of preparing an internal memo from oneself (as CEO) to oneself (as Chairman) plus the other executive and / or non-executive directors, or vice versa, may feel a little artificial, but can help a person change hats more seamlessly.
The Work of the Worker
In professional service firm environments, it is not uncommon to find that the executive directors are also the senior, client-facing practitioners. In this respect, they have marketing, sales and operational tasks that also need to be undertaken on a daily, weekly and monthly basis.
In larger organisations, the people serving as managers (including the CEO) also have worker responsibilities to perform. Whether that is presenting to the media, leading meetings or drafting memos, managers have a lot of work to do as well.
John, I hope this letter is helpful in clarifying and refining your understanding of some of the technical terms that have emerged in our discussions and correspondence over recent weeks.
In a previous article entitled “Strategic Plan, Business Plan, Strategic Business Plan: Is There A Difference?”, I further expand on the difference between some of these commonly used but less frequently understood terms that comprise the executive vernacular.
I’ll send you my feedback separately on the first draft of The CEO Mandate document you shared with me via email earlier today.
Glenn A. Williams
Organisational Development Solutions: Need help developing your strategic plan?
Article: Strategic Plan, Business Plan, Strategic Business Plan: is there a difference? By Glenn A. Williams
Article: The Art of The Brief by Glenn A. Williams
Infographic: Made to Stick
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