Board Meetings that are more than just Governance. How to Incorporate Commercial Excellence Ideas into the Board Room.

The Board “Watch” System for Board Meetings

Firstly i know what your thinking... Have you lost your mind? What the hell is a “Watch” system. Well let me explain… if we look at Trickers model for corporate governance the Central theme is to the board to “Act through the CEO”.  I also often use the term “Noses in, Fingers Out” to my board meaning I want their understanding of what is happening within the business. (lower left quadrant) but I don't what them acting in the business. I also want the board to be active on the External and Future sides of the equation and “Watch” the market place, and Stakeholders as they will have more resources to connect with whilst less burdened with running day to day and executive. 

A well-structured board meeting agenda is crucial for effective governance and strategic decision-making. However i believe the board should be more than just Finance, Legal and governance. Most of the directors i know had a commercial background at some point in time. Is it therefore inferred that they will bring this to the table? And in my experience so far the board’s i’ve been on are very much commercially focused first Governance focused second. What we learn and are educated on and the reality are sometimes worlds apart. 

So with this concept in mind i’ve put to gether my Ideal flow for a board meeting. This represents my thoughts and opinions take what you will from this and use what helps in your circumstances. 

The good news is that this article is likely to cover all topics that you may come across. The flip side to that coins is, to cover everything you’re looking at at least 3&½ hour meeting. 

In my experience 3 hours is about the limit for most so pick and choose the items and frequency to get to your sweet spot. 

Hence you may not cover every topic and every meeting that’s also why I call them Watch’s. The Board is “Watching” For what’s changed since the last meeting. See what i did there another link to Watching.. 

Remembering earlier i mentioned “Noses in, Fingers Out” they can watch what is going on but the actions need to be done by the CEO.  Hence working using trickers model through the Chair to the CEO. I’ve categorised the meeting agenda into a number of “Watch’s” being

1. GOVERNANCE WATCH

2. BOARD CALENDAR WATCH

3. FINANCE WATCH

4. CEO WATCH

5. EXECUTIVE GUEST 

6. MARKET WATCH 

7. TALENT WATCH

8. STRATEGY & RISK WATCH

9. EXIT WATCH

10. ACTIONS AND EVALUATIONS

Governance Watch

ORGANISATIONAL HYGINE

Watching out for our organisational hygiene and governance topics. 

This section should be first, and contain all the governance issues that need to be covered at every meeting. 

• In-Camera Sessions,

• Apologies,

• Conflicts of interest,

• Previous Min and Action list review,

• Committee Minutes,

• Major Correspondence,

• Common Seal, etc.. 

This section is to basically cover any Hygiene factors that you need to do to ensure the organisations is clean. 

Committees: 

This should be a simple check of the meeting min of the committee and a small space to ask any question that may arise from those minutes. 

This assumes that you have a committees on your board. Many do not. If you don’t you can easily add the topic either to the board calendar to rotate through them or add them to the appropriate watch in this agenda.  

Board Calendar Watch

NOTHING LEFT BEHIND

In this section the parts of the rotating board calendar agenda items can be added. As an idea here are some of those items that may only been needed annually, biannually. 

Having this at the start of the meeting ensures they are covered. I’ve been in many a meeting where we run out of time to cover the board Calendar items and there is always a new one next month that needs attention. 

Things like:

• CEO Remuneration,

• Board Skills Matrix,

• Board Policy reviews,

• Risk Appetite statements etc

  
  

  Those items that don't need to be visited every month but we do need to review them periodically. A board Calendar ensures your cover everything and this section helps dedicate the time to it.  

Finance Watch

REVIEW THE PHOTO THEN THE FILM

Photo → Film → Photo

The Ballance sheet and Cash flow statements are statements at a point in time. They are a snapshot at that point in time. I.e. they are the Photo’s not dynamic. Usually they will have an opening and closing Snapshots. So to review we should start with the photo’s which gives us the movement or changes and those changes tell us where to look in the Film, in this case it’s the income statement or Statement of Profit and Loss. 

Balance Sheet & Statement of Cash Flow (Review the Photos) 

Do this first you need to understand the Photo snapshot of where you are today and where you were last board meeting first. Too often we look at this last and follow the Film first. As the old saying goes “Cash is King” so Start with the Cash where did it go how much came in. This will guide you where to look in the Film (P&L / Income Statement) 

Evaluate Cash Position and Access to Liquidity: Determine if the organization has enough cash reserves or credit facilities to support rapid growth or withstand downturns. Consider scenarios where the business might double or halve in size overnight.

Assess Leverage Levels: Analyze the company’s debt-to-equity ratio to ensure it aligns with strategic goals and risk tolerance. High leverage can amplify risks during economic downturns. 

Understand Causes of Balance Sheet Changes: Review significant changes in assets, liabilities, or equity. This may involve understanding shifts in inventory levels, receivables, or capital investments.

Profit & Loss Statement (Review the Film)

Analyze Profit Adequacy: Assess whether the current profit levels are sufficient to meet both short-term and long-term financial goals. Consider industry benchmarks to evaluate performance.

Assess Growth Against Expectations: Compare actual growth rates with projected targets. Identify any discrepancies and understand their implications for the business.

Identify Causes of Financial Changes: Investigate the reasons behind fluctuations in revenue, expenses, and profit margins. This could include market conditions, operational efficiencies, or changes in customer behavior.

CEO Watch

What Keeps the CEO up at night. 

In this section it’s more than just the business presentations and the updates on how the execution is going against the statement of strategic intent. 

The CEO should be brining the important topics and updates to the board so we don't need to cover that in this section. It is assumed it will be completed.  

For the board it would be interesting to understand what the CEO thinks about, What is the CEO spending their time on, and what are the worries and what keeps them up at night. Understanding these topics will help the board know where and how to work through the CEO. what resources is needed and what re-alignments could be a benefit.

CEO’s Execution: Assess the effectiveness of the CEO’s leadership in executing the company’s strategy. Look for evidence of progress towards strategic goals. What areas can the board Coach the CEO. Where is the CEO’s head too deep in the day to day? Where could bringing them the helicopter view be helpful. Have they progressed with developing their team. Do they have the balance right? Internal Vs External for example

CEO Presentations: Analyze presentations made by the CEO during board meetings. Consider the clarity, depth of information provided, and responsiveness to board inquiries. 

CEO's Strategic Thinking: Engage in discussions about the CEO's vision for the future of the company. Understand their priorities and concerns regarding market dynamics and organizational capabilities. 

Executive Guest Watch

(Key Executive Presentations)

Noses in. Fingers out. 

Review Presentations from Department Heads: I include a section to ensure that the board meets or hears from 1 executive a meeting. To do this i schedule presentations from key executives across departments such as Sales, Marketing, R&D, IT, HR, Operations, Finance, and Legal. This ensures a holistic view of organizational performance. Rotating 1 per quarter or 1 per meeting is a great way for the board to get to know the Executive and understand their personalities strengths and areas for improvement. Have them come to dinner with the board the night before the meeting it’s a great way to understand what’s going on in the business. Always being mindful that it’s the CEO’s place to tell them what to do.. Did i mention “Noses in Fingers Out”… 

I usually have them stay for the next section on the Market Watch as a learning and to have their input into this space. 

This will also allow the board to see how the CEO is developing his/her people. 

Market Watch

What’s happening in the world. 

Analyze Market Trends and Future Directions: Stay informed about industry trends, emerging technologies, and consumer preferences. Understanding where the market is headed is crucial for strategic planning.

Align Organizational Strategy with Market Projections: Ensure that the company’s strategic initiatives are aligned with anticipated market developments. This may involve adjusting product offerings or exploring new markets.

Competition Watch

What can we learn from our Top 3-4 Competitors

I like to look at what the competition are doing well at. Can we do the same, Is it a point that we need to differentiate ourselves against or is it something that will become a norm. How could we improve our organisation if we were to emulate. 

Benchmark Performance: Compare your organization’s performance metrics against those of competitors to gauge relative success and identify areas for improvement.

Explore Potential Adaptations of Successful Strategies: Investigate what competitors are doing well that your organization could emulate. Consider how these strategies could be tailored to fit your unique context.

2-3 Respected Companies

I add this in because we don't have to only look at our direct competitors. Is there a company that the board respects and wants to or is inspired to be like. 

Analyze Best Practices: Look at companies outside your direct competition that are known for excellence in their field. Identify practices that could be beneficial if adapted for your organization.

Identify Transferable Strategies: Discuss how successful strategies from these respected companies could be implemented within your own operations to enhance performance.

Customer Watch

Review Top 5 Customers' Activities

Analyze Customer Engagement Strategies: Understand what your top customers are doing in their businesses that may impact your relationship with them. What worries do they have? What’s their thinking on those topics, and what do we think of those topics. 

Identify Strategies for New/Expanded Business Opportunities: Discuss ways to deepen relationships with existing customers or attract new ones through tailored offerings or enhanced service delivery. Remembering “Noses In Fingers Out” here, the job is to 

a) understand what is driving the business and 

b) give the CEO ideas to think about and a different perspective, harnessing the boards wealth of experience. (not to tell the CEO what to or how to do their job). 

Explore Potential Top 10 Customers

Who could be a largest customer today and / or in 5-10 years time. Why arn’t they buying from us. What does the future ones want now.  

Analyze Potential Top Customers for Growth Opportunities: Identify businesses that could become significant customers based on market trends and organizational capabilities.

Discuss Changes Since Last Review: Regularly revisit customer status updates to ensure you are aware of any shifts in their financial health or business strategies that could affect your partnership.

Talent Watch 

Develop The Future

Thank the Executive Guest for their time and hard work on preparing the presentations and input. Then they should leave.

Assess High-Potential Employees: Identify individuals within the organization who show exceptional promise for future leadership roles. Discuss development plans for these employees.

Identify Underperformers: Address any performance issues among team members and consider strategies for improvement or reassignment as necessary.

Evaluate New Hires and Their Progress: Review the integration of new employees into the organization. Discuss their contributions thus far and any support they may need to succeed.

Evaluate The Executive Guest’s Performance Today: Review how the executive guest went at todays board meeting. Discuss their development Plans. Are they progressing? 

For the Executive Guest to be invited they should be considered part of the organisational talent. In my experience this section is more about keeping their development on the boards radar. 

Strategy and Risk Watch

Where’s the puck going 

I always like to cover Risks before delving into strategy. Both Strategy and Risk are completely intertwined. Selecting strategy is always a trade off vs the Reward. It’s also about the companies appetite to incur risks. Therefore you cant  discuss strategy until you know the risks and the companies Appetite for taking them. 

Strong Committees in both these areas will make this a very short section however i like to keep it in even if it’s a 30sec discussion as a matter of good thinking practice. 

Risk Watch

Items that are not covered in the Risk Committee’s scope: should have a section. This is usually quite short as the committee should have it covered. The context here is opening up to the input of the other Directors / NED’s and there is always something new tabled or discussed during the meeting. (A players like to build upon the work of others). 

Identify Potential Threats and Mitigation Strategies:  Of the external factors discussed what could pose risks to the organization. Do we have contingency plans already? Is it worth consideration by the Committee? 

Review the Risk Documents: What’s moved in the Risk register, Does anything we have discussed so far change our appetite for risk as a company. (eg: Finances, Market Movements etc)

Strategy Watch

Items that are not covered in the Strategy Committee’s scope: should have a section. This is usually quite short as the committee should have it covered. The context here is opening up to the input of the other Directors / NED’s and there is always something new tabled or discussed during the meeting. (A players like to build upon the work of others). 

Evaluate Potential Strategy Changes: Discuss any proposed changes to the company’s strategic direction. Consider how these changes will impact operations, culture, and stakeholder perceptions.

Assess Impact on Customers/Consumers: Analyze how potential strategy shifts will affect customer satisfaction and loyalty. Engage in discussions about customer feedback and market research.

Anticipate Competitor Reactions: Consider how competitors might respond to strategic changes. This can help in formulating counter-strategies to maintain competitive advantage.

Product Development

Discuss New Products/Services in the Pipeline: Engage in discussions about innovation initiatives within the organization. Evaluate how new products or services align with market needs and strategic objectives.

Exit Watch

Chance favors the prepared: The Forgotten Child that’s never discussed. 

Like all sections in this article one the initial work has been done it should not take too much time to update on the changes, either in the market or changes, improvements in your thinking that may have occurred. 

Most of the time this will be minimal from 1 month to another. 

The initial work to bring this concept in may need dedicate and facilitated sessions.. 

Even if your a Government or Public controlled entity please read on, an exit is not only about a sale. 

Discuss Exit Plans for Directors: Ensure there is a clear understanding of succession planning for directors. Discuss potential retirement timelines and transition strategies. Even if you have perpetual directors understanding their personal situation early is easier than after something unexpected has happened. 

Consider Various Exit Strategies:  Explore options such as Initial Public Offerings (IPOs), private equity investments, leveraged buyouts, or simply continuing operations without significant changes.

If your a public owned or controlled entity what would happen if there was a change in government, or leadership? Would the board remain the same? 

Plan for Potential Retirements or Unexpected Departures: Prepare contingency plans for sudden departures due to retirement, health issues, or other unforeseen circumstances.

Merger & Acquisition Watch

Identify Gaps in Product and Service Lines: Evaluate current offerings against market needs to identify potential gaps that could be filled through acquisitions or partnerships. If a product line suffered from a new disruptor, could you Exit from that line or service. 

Review Potential Acquisition Targets: Discuss companies that may be suitable acquisition targets based on strategic fit, financial health, and cultural alignment. In the Medical Device and Diagnostic industry over ⅓ of all growth comes from Mergers and Acquisitions.  So the board should be thinking on this always. How would you fund it? 

Shareholder & Stakeholder Watch

Evaluate Stock Pricing:  Regularly assess stock performance relative to industry standards. Ensure that shareholder value is being maximized through effective governance practices and strategic decision-making. 

For those who are not Listed or traded what system do you have to value the shares. How often is it updated? See below?

Assess Overall Company Valuation:  Assuming that your not doing this in the financial section. Discuss strategies for enhancing shareholder value moving forward. This is also important in the event of a director or major shareholder departing suddenly how to value their stock and account for it needs to be a regular and agreed process. 

Stakeholders:

Review of who else has a stake in the company and what value are we brining them? What’s changing in their world? How could that effect us? Does the statement of Stakeholders and Materiality need reviewing? (Deloitte has a good graphic on this LINK ) or maybe it’s already covered in the board calendar. 

Conclusion: 

By incorporating parts or all of these aspects into your board meeting agenda, CEOs, Officers and Directors and have a comprehensive view of the organisation. The Watch system offers a different perspective to a standard Governance or Finance driven board agenda. Remembering Directors need to be Fiduciaries and Stewards of the organisation may (i implicitly include NED’s here) don't have a way or idea of what actually happens inside the organisation. This structured approach promotes informed decision-making and hopefully poses thoughts that ultimately improves the effective governance, ultimately driving long-term success and shareholder value.

The accompaning standard board agenda document can be dowloaded below.