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Third Principle: Strategy - Delivery of Vision, Mission and Purpose

Third Principle: Strategy - Delivery of Vision, Mission and Purpose. Workshop Agenda. Part I: Understanding the Third Principle - What is strategy?. Part II: Delivering the strategy. Part III: Evaluating the strategy. Part IV: Communicating the strategy. Part V: The role of the board.

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Third Principle: Strategy - Delivery of Vision, Mission and Purpose

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  1. Third Principle: Strategy - Delivery of Vision, Mission and Purpose

  2. Workshop Agenda Part I: Understanding the Third Principle - What is strategy? Part II: Delivering the strategy Part III: Evaluating the strategy Part IV: Communicating the strategy Part V: The role of the board Part VI: Strategy away day

  3. Voluntary Code of Good Governance for the Sport & Recreation Sector -Third Principle: Delivery of Vision, Mission and Purpose “The Board should set the high level strategy and vision of the organization and ensure that it is followed without becoming involved in the operational delivery.”

  4. Part I: Understanding the Third Principle - What is strategy?

  5. Part I: Understanding the Third Principle - What is strategy?

  6. Part I: Understanding the Third Principle - What is strategy? There is a clear difference between the vision, mission and purpose of an organisation but all three concepts play a vital role in keeping management focused on delivering the right strategy. Purpose Vision Strategy Mission

  7. Part I: Understanding the Third Principle - What is strategy? What is meant by Vision, Mission & Purpose - what is their difference? Purpose A purpose statement answers to the question of why something exists. Vision Vision is where you want to be in the long run. A view of a desired future state for the company. A vision is the ideal picture in your mind, and in the minds of your people, about what your NGB should look like. A vision is the ideal. It’s the dream. Mission Mission is a statement of what needs to be done in order to achieve the envisioned state, preferably quantified. It answers to the question of how. It tells you what steps you need to take in order to fulfil your vision.

  8. Part I: Understanding the Third Principle - What is strategy? Steps Define purpose Decide on vision State mission Design strategy Implement strategy “Bowls England will deliver an exceptional sport and community experience that is appealing, entertaining and accessible to all.” Strategic plan 2009-2013 “…Embracing athletes of all abilities and from all communities – to grow the next generation of athletics champions.” Strategic plan 2009-2013 ? “We aim to provide to all an excellent experience of the BSAC…” Strategy document

  9. Part I: Understanding the Third Principle - What is strategy? Vision “…Embracing athletes of all abilities and from all communities – to grow the next generation of athletics champions.” Strategic plan 2009-2013 “Bowls England will deliver an exceptional sport and community experience that is appealing, entertaining and accessible to all.” Strategic plan 2009-2013 Mission Purpose “We aim to provide to all an excellent experience of the BSAC…” Strategy document

  10. Part I: Understanding the Third Principle - What is strategy? How to set an NGB’s strategy? How directors are going to take the NGB from where it is now to where they want it to be Where directors want the NGB to be in the future Why the NGB exists NGB purpose NGB’s vision NGB’s strategy ? ? ? ? ? Members Competitive advantage Resources needed Stakeholders Access to resources Scope

  11. Part I: Understanding the Third Principle - What is strategy? Strategy seen… as process

  12. Part I: Understanding the Third Principle - What is strategy? Eliminating strategic uncertainties…

  13. Part I: Understanding the Third Principle - What is strategy? What should sport organisations include in their strategic plan? Key elements • A complete strategic plan usually contains the following elements… • Vision, Mission and Purpose statements • Structure, leadership and governance • Statement of compliance • Voluntary Code of Good Governance • UK Sport and Sport England principles • UK Corporate Governance Code • Strengths & weaknesses (SWOT) analysis • Environment (PESTLE) analysis • Membership • Key stakeholders and contributors • Risk Management plan identifying all types of risks (financial, operational, reputational etc.) • KPIs • The above list is non exhaustive. NGBs might choose to include any information they deem appropriate in order to deliver a complete strategic plan

  14. Part I: Understanding the Third Principle - What is strategy? How do you arrive at it? Strategy development • Definition of the overarching objectives 1 Business model formulation • How the organization creates, delivers and captures value: The board questions, understands and decided on general framework 2 Strategic plan design • Strategic plan • Based on priorities, activities and resources • Multiyear plan (3 to 5 years) in order to coincide with 4-year funding cycles • Reviewed annually • Budget (reviewed at least annually) 3 • Delivering the expected results, measuring them to ensure consistency and timeliness with what was planned, within the approved resources. Deliverables: • Annual business plan (reviewed at least annually) • Multi-year business plan (reviewed annually) • Timelines / road maps • Map of reporting lines Implementation and Monitoring 4

  15. Part I: Understanding the Third Principle - What is strategy? NGB budget Principles and objectives • The objectives of the budget are: • To commit management in achieving the goals of the organisation in a specific annual period • To set clear criteria for the evaluation of the above managers • To describe in detail the way through which available resources (human resources, technical infrastructure, capital) will be distributed in order to achieve the goals above • To facilitate the delegation of authority within the NGB • The budget should support the long term strategic targets of management as described in the business plan • The budget should reflect developments in the sports industry • The budget is developed by management and approved by the board • The boardreceives reports at least twice a year on budget implementation and approves eventual amendments

  16. Case study: Liverpool F.C. • Autumn 2010: The board of Liverpool F.C. sold the company to a group of investors, against the wishes of the Club owners. By doing that, the board disregarded one of the bedrocks of modern corporate governance: the idea of shareholder value • Issues for discussion: • Why did the board do that? Arguments for and against • How does a board decide what is right? • Debate between shareholder value and stakeholder rights • Ethics of corporate governance • Alignment of strategic objectives between the board and shareholders. Is it a prerequisite? Source: “The ethics of shareholder value: Duty, rights and football”, Donald Nordberg, Westminster Business School, June 2011

  17. Part I: Understanding the Third Principle - What is strategy? Discussion - Your experience: Elements of NGBs’ strategic plans, challenges and pitfalls

  18. Part I: Understanding the Third Principle - What is strategy? Questions?

  19. Group Exercise Prepare a skeleton of an NGB’s strategic plan. Make sure to include vision, mission and purpose statements. Two groups should work on a new sport and two groups on an established sport.(Duration: 15 minutes max.)

  20. Part II: Delivering the strategy

  21. Part II: Delivering the strategy Who is accountable? The responsibility of the board • The board is accountable for developing the strategy. In particular, according to the Third Principle, the board is responsible for: • Setting the high level strategy and vision of the organisation • Ensuring there are sufficient resources available to deliver the strategic plan • Ensuring appropriate business planning tools are in place • Conducting a strategic review • Creating appropriate committees • Delegating authorities to the committees created (e.g. reviewing budgets and operational plans etc.) • Conclusion: even though the board shouldn’t be the one delivering/implementing the strategy, it will be nevertheless held accountable if strategy is not delivered by the NGBs’ management bodies

  22. Part II: Delivering the strategy To whom is the board accountable? Stakeholders! “the board needs to be open and accountable to its membership and to its participants and its actions should stand up to scrutiny when reasonably questioned”(Voluntary Code, Sixth Principle) • The various stakeholders of the NGBs and above all the members can therefore question the board’s actions and omissions when strategy is not delivered appropriately. The board is responsible for ensuring that appropriate whistleblowing mechanisms are in place.

  23. Part II: Delivering the strategy Key Performance Indicators (KPIs) Definition Key performance indicators (KPIs) are a set of metrics that are being used in organizations across all sectors to measure individual or organizational performance in one or more areas Why KPIs? • In the context of the Third Principle, setting KPIs is the best way to make sure that strategy is being implemented • KPIs will allow the NGB to keep the right track and help its board to monitor the performance of officers or managerial bodies that are responsible for implementing the organization’s strategy Examples of KPIs • KPIs are individual to each organisation. They must reflect the organisation’s unique priorities and objectives. Some examples of KPIs (source: Bowls England Strategic Plan 2009-2013): • Review Committee structure • Appoint key staff and ensure they are sufficiently supported in their role • Prepare strategic plan 2013-2017 • Recruitment strategy • The KPIs list is usually accompanied by statement of who is responsible for their delivery as well as a timeframe

  24. Part II: Delivering the strategy Discussion - Your experience: Examples of efficient/inefficient KPIs. Their role in the successful delivery of NGBs’ strategy

  25. Part II: Delivering the strategy Questions?

  26. Group Exercise – Case study You ‘ve been appointed to the board of “XYZ” NGB as their first independent director because of concerns about their funding continuity. The CEO provides you with an induction which includes a 3-page strategy paper for XYZ. The strategy focuses on developing the sport for people who have recently retired, developing international relationships, hiring a deputy CEO and COO and obtaining increased media coverage. The CEO was authorised to apply the budget to deliver the plan. He explained that he had been personally committed to developing XYZ in schools although this is not in the strategic plan. As CEO, he has ensured that 40% of the budget has been allocated to this and so far was very pleased with the progress albeit that there was now insufficient funds in the budget to hire the approved new staff. His daughter had been made school and county captain of XYZ and his wife’s physiotherapy business now specialized in treating injuries for players in XYZ youth squad. You also learned that he disagreed with the target group, was sceptical of international alliances and had paid a fee to a sports magazine to run an article on his family’s commitment to the sport. The CEO considered himself to be a visionary and is confident that he could deliver far broader participation without oversight of the board or obtaining input from the XYZ affiliates and senior players. It emerged that XYZ had set no objectives for the CEO and no KPIs for delivery of the strategy. Please set appropriate KPIs for XYZ’s strategy. Are there any other issues that concern you?(Duration: 20minutes max.)

  27. Part III: Evaluating the strategy

  28. Part III: Evaluating the strategy What if there is need to change strategy? “The board should keep member and participant focussed in order to adapt to changing society” SRA Voluntary Code, Third Principle, practical considerations • In a rapid changing sporting environment, NGBs’ strategy should be easy to refine and adapt to changing circumstances in the sports sector • Since the board is responsible for setting the high level strategy and vision and creating a strategic plan for the organization, it is also responsible for ensuring that this strategic plan reflects current needs and external circumstances • The need to change strategy will be identified through the strategic review that the board is responsible to conduct according to the Third Principle • This review should be periodical. International experience and best practice indicate that most boards conduct strategic reviews at least on an annual basis

  29. Part III: Evaluating the strategy Refining strategy - Typology of uncertainty

  30. Part III: Evaluating the strategy Scenario analysis as a useful tool • Definition • “A scenario is a narrative description of a consistent set of factors which define in a probabilistic sense alternative sets of future business conditions” (Huss, 1988) • Scenarios help where: • Discontinuous change is important • Quantitative factors are important • You need a long-term perspective • There is high uncertainty • There are significant data gaps

  31. Part III: Evaluating the strategy What if external factors change? The role of external factors • External factors in sport change very often, often unexpectedly… • Change in government strategy & funding • Change in regulations & best practices • Unexpected events that tarnish the brand name of the sport organisation etc. • Change can be either positive or negative • Even though most people think that strategy should only be refined when things go wrong, this is just half of the story. Successful NGBs should also try to constantly improve their strategic plans in order to take advantage of new opportunities as soon as they arise • The board should be flexible enough to respond quickly and efficiently to every change affecting the NGB • Change in external factors can be assessed through a PESTLE analysis

  32. Part III: Evaluating the strategy

  33. Part III: Evaluating the strategy The board should constantly engage with members… The change of the membership structure of the NGB shouldn’t affect the delivery of the strategy The Code clearly states that the board “creates a strategic plan in consultation with staff and other stakeholders” the Third Principle is complemented by the Sixth Principle which states that “the board needs to be open and accountable to its membership and to its participants and its actions should stand up to scrutiny…” In the practical considerations (Sixth Principle), it is also stated that the board should “make use of structures and meetings to fully engage with members and participants”

  34. Part III: Evaluating the strategy Non-delivery of strategy What if the CEO or other executives don’t deliver? • According to the Code (Second Principle), it is for the board to determine whether the CEO delivers the NGB’s strategy: “the board is responsible for recruiting, appointing, monitoring and supporting the CEO” • Further, the board is responsible for “ensuring each member of the board carries out a self-assessment and has an informal annual one-to-one meeting with the Chair”. This self-assessment relates to both executive and non-executive members of the board • The board is responsible for delegating the appropriate authorities to executives • According to the Third Principle, the board is responsible for “delegating operational issues outside the board room to individuals with a remit to deliver the operational function” • Those individuals are accountable to the board and can be removed by the board in case of non-delivery

  35. Part III: Evaluating the strategy UK Government Sport England / UK Sport / SRA etc. BOARD Stakeholders • More rigorous focus on: • Creating strong links between NGB and its stakeholders • Consulting with all appropriate stakeholders when setting or amending the strategic plan Funding & commercial partners Employees, members, volunteers, sponsors etc. “Creating a strategic plan in consultation with staff and other stakeholders (particularly participants)…” SRA Voluntary Code, Third Principle, practical considerations

  36. Part III: Evaluating the strategy Questions?

  37. Group Exercise Please identify what may trigger the need to revise the adopted strategy. How would you revise it?(Duration: 15 minutes max.)

  38. Part IV: Communicating the strategy

  39. Part IV: Communicating the strategy Member endorsement of strategy “The board should put the participant at the core of the mission of the organisation” and should “keep member and participant focussed in order to adapt to changing society” SRA Voluntary Code, Third Principle, practical considerations • Apart from the Third Principle, the Sixth and Seventh Principles include many provisions regarding member, participant and stakeholder inclusion • In order for members to endorse the organisation’s strategy and accept potential changes, they must feel part of the decision making process • They must feel that they contribute to the success of the organisation and that the board values their inputs and takes into account their recommendations

  40. Part IV: Communicating the strategy Explaining and obtaining buy-in How can NGBs engage with members on strategic issues? • Obtaining buy-in depends on the extent of members’ inclusion in the decision making process and the quality of information flows within the organisation • It is up to each organisation to develop the systemsand processes that best fit its culture and resources • NGBs should aim at establishing a good and efficient communication channel between the board and the various stakeholders • Some relevant questions that boards should ask: • Do we recognise the importance of engagement with members? • Is there an annual plan? • In what occasions is more engagement required and how is it best achieved? • When is formal approval required? • Answers should be specified by the organisation’s constitutional documents

  41. Part IV: Communicating the strategy Steps in order to effectively communicate strategy… 1 2 3 4 5 6

  42. Part IV: Communicating the strategy Questions?

  43. Group Exercise Please identify best practices in developing an effective communication strategy. What can go wrong?(Duration: 15 minutes max.)

  44. Part V: The role of the board

  45. Part V: The role of the board “The Board should set the high level strategy and vision of the organization and ensure that it is followed without becoming involved in the operational delivery.”

  46. Part V: The role of the board Role of directors in strategic planning Approve final strategy 64% Challenge emerging strategy 52% Monitor performance against strategy 48% Identify key strategic issues 37% Help develop strategy’s content 25% Parties involved in strategic decisions Small group including the CEO 52% Within a formal strategic planning process 23% By business unit leaders 11% By the CEO 10% Source: McKinsey, 2006, “How to Improve Strategic Planning,” McKinsey Quarterly

  47. Part V: The role of the board SENIOR MANAGEMENT BOARD Responsible and accountable for: Responsible and accountable for: Overseeing the day-to-day operation Setting the overarching objectives and policies Strategy execution Holding management accountable for operating the NGB in accordance with objectives and policies Reporting to board

  48. Part V: The role of the board What should NGBs’ boards do?

  49. Part V: The role of the board How to avoid hands-on oversight of operational delivery… The board / board committees should: • Regularly solicit reports from the individuals responsible for implementing the strategy • Regularly monitor the progress of on-going projects • Regularly evaluate the performance of senior management • Send appropriate memos to individuals with detailed description of the steps to be taken, timeframes and KPIs

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