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

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

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Workshop Agenda

Part IV: Communicating the strategy

Part V: The role of the board

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

Part II: Delivering the strategy

Part III: Evaluating the strategy

Part VI: Strategy away day


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.”






Vision

Purpose

Mission

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.

Strategy



What is meant by

Vision, Mission & Purpose -

what is their difference?

What is meant by

Vision, Mission & Purpose -

what is their difference?

Purpose

Vision

Mission

A purpose statement answers to the question of why something exists.

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 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.



Define purpose Decide on vision State mission Design strategy

Steps

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.”


“We aim to provide to all an excellent experience of the BSAC…” Strategy document



“Bowls England will deliver an exceptional sport and community experience that is appealing, entertaining and accessible to all.”


“…Embracing athletes of all abilities and from all communities – to grow the next generation of athletics champions.”


“We aim to provide to all an excellent experience of the BSAC…” Strategy document

Vision

Mission

Purpose



NGB purpose

Why the NGB exists

NGB’s vision

Where directors want the NGB to be in the future

NGB’s strategy

How directors are going to take the NGB from where it is now to where

they want it to be

?

How to set an NGB’s strategy?

Competitive advantage

Resources needed

Access to resources

Members

Stakeholders

Scope

? ? ??



Strategy seen… as process



Eliminating strategic uncertainties…



What should sport

organisations include in

their strategic plan?

What should sport

organisations include in

their strategic plan?

A complete strategic plan usually contains the following elements…o Vision, Mission and Purpose statements o Structure, leadership and governanceo Statement of compliance

Voluntary Code of Good Governance UK Sport and Sport England principles UK Corporate Governance Code

o Strengths & weaknesses (SWOT) analysiso Environment (PESTLE) analysiso Membershipo Key stakeholders and contributorso Risk Management plan identifying all types of risks (financial, operational,

reputational etc.)o 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

Key elements



How do you arrive at it?

How do you arrive at it?

Strategy development

Strategic plan design

Implementation and Monitoring

Definition of the overarching objectives

Business model formulation

1

2

3

4

How the organization creates, delivers and captures value: The board questions, understands and decided on general framework

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)

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



NGB budgetNGB budget The objectives of the budget are:o To commit management in achieving the goals of the organisation in a

specific annual periodo To set clear criteria for the evaluation of the above managerso 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

o 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 board receives reports at least twice a year on budget implementation

and approves eventual amendments

Principles and objectives


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



Discussion - Your experience: Elements of NGBs’ strategic plans, challenges and pitfalls



Questions?


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.)





Who is accountable?

Who is accountable?

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

The responsibility of the board



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.



Key Performance

Indicators (KPIs)

Key Performance

Indicators (KPIs)

DefinitionKey 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



Discussion - Your experience: Examples of efficient/inefficient KPIs. Their role in the successful

delivery of NGBs’ strategy



Questions?


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: 20 minutes max.)




“The board should keep member and participant focussed in order to adapt to changing society”

SRA Voluntary Code, Third Principle, practical considerations

What if there is need to change strategy?

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



Refining strategy - Typology of uncertainty



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



What if external factors

change?

What if external factors

change? 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

The role of external factors



PESTLE

Political

Economic

Sociological

Technological

Legal

Environmental



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”

The board should constantly engage with members…



Non-delivery of strategy

Non-delivery of strategy

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

What if the CEO or other executives don’t deliver?



UK Government

Sport England / UK Sport / SRA etc.

Funding & commercial partners

Employees, members, volunteers, sponsors etc.

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

BOARD

“Creating a strategic plan in consultation with staff and other stakeholders (particularly participants)…”




Questions?


Group Exercise

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




“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”


Member endorsement of strategy

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



Explaining and obtaining

buy-in

Explaining and obtaining

buy-in

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 systems and 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

How can NGBs engage with members on strategic issues?



Steps in order to effectively communicate strategy…

MotivateCreate

common vision

Develop networks within the

organisation

Approach individual members

Plan and implement

smooth transition

Keep the momentum

– build support systems

1 2 3 4 5 6



Questions?


Group Exercise

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



“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.”




Source: McKinsey, 2006, “How to Improve Strategic Planning,” McKinsey Quarterly

Role of directors in strategic planning

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%

Approve final strategy



BOARD SENIOR

MANAGEMENT

Responsible and accountable for:

Overseeing the day-to-day operation

Strategy execution

Responsible and accountable for:

Setting the overarching objectives and policies

Holding management accountable for operating the NGB in accordance with objectives and policies

Reporting to board



Ensure there are sufficient resources for strategy delivery

Ensure appropriate mechanisms for managing risk are in place

Ensure appropriate business planning tools are in place

Monitor functioning of committees

Delegate authorities within the organisation

Ensure members’ and participants’ views are being heard

Regularly conduct strategic reviews

Ensure implemented strategy is aligned with NGB’s values

What should NGBs’ boards do?



How to avoid hands-on oversight of operational delivery…

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

The board / board committees should:




When?

• Annually

Who?

• Board, CEO and support

What?

• Set / review strategy• Output: Adopt / refresh NGB’s strategy

Follow-up

• CEO finalises• Communication with membership• KPIs

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Documents

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