A few innovative ways to make the most of the limited time that top management spends working together as a team
Although time is the scarcest resource in any company - after all, no amount of money can buy a 25-hour day - the sad reality is that few top executive teams manage their time well. The typical company's senior executives spend less than three days each month working together as a team - and in that time they devote less than three hours to strategic issues. Moreover, those three hours are seldom well spent: strategy discussions tend to be diffuse and unstructured, only rarely designed to reach good decisions quickly.
The price of misused executive time is high. Apart from the frustrations that individual managers suffer, delayed or distorted strategic decisions lead to overlooked waste and high costs, hastily conceived and harmful cost reductions, missed new business development opportunities, and poor long-term investments.
However, a few deceptively simple changes in the way top management teams set agendas and structure meetings can make an enormous difference in their efficiency and effectiveness. Strategy making can be transformed from a series of fragmented and unproductive events into a streamlined, effective and ongoing management dialogue.
How not to waste time
A real constraint on the financial performance of most companies is top management's capacity to reach good decisions quickly. Both quality and pace are important. Obviously, poor decisions made too quickly will lead to actions that destroy shareholder value. But good - even great - decisions made too slowly can depress company performance as well. Unfortunately, few companies manage executive time in a disciplined or systematic way. Executives spend too much time discussing issues that have little or no direct impact on company value. Even worse, their meetings often fail to produce both the quality and quantity of decisions required to drive superior performance.
Serious as they are, the problems can be fixed. At a number of companies, executives have found ways to improve teamwork at the top. Leaders spend their time together addressing the issues that have the greatest impact on the company's long-term value. The top management team employs rigorous processes to produce high quality decisions at pace. As a result, these firms have generated better financial performance and higher rates of value growth than their competitors.
While every executive team is different and faces different challenges, there are a few common techniques they all use to manage their agendas and achieve superior value growth.
Delink operations from strategy
Reviewing operating performance and making strategy decisions are distinct activities, requiring different modes of discussion and different mindsets. Most successful companies hold separate meetings for each purpose. This prevents day-to-day operations from dominating the leadership team's agenda.
The key is to transform the managing board into a decision-making body that truly had clear authority and could be fairly held accountable for the company's performance. This transformation requires fundamental changes in both the timing and the structure of board meetings. A clear delineation between operations time and strategy time allows the board to perform both roles better.
Decisions vs discussions
The changes needed to focus a leadership team's meetings more intensely on decision making can seem almost surprisingly innocuous. At Cadbury Schweppes, for example, the chief executive committee (CEC) approves the company's strategy and investments. The CEC meets for two full days six times a year to debate important strategic and organisational issues. Two small changes have had a big impact on the quality and pace of the group's decision-making capabilities.
First, since 1997, all reading materials have been distributed to participants at least five days before each CEC session. Whenever possible, standard templates are used to display important financial, market, and competitor information. This gives each CEC member time to carefully review materials before the meeting and quickly get up to speed on important issues. Second, a standard cover sheet is included with all material specifying precisely why people are being asked to read them - for information purposes only, for discussion and debate or for making a decision and deciding a course of action.
Since the purpose of each agenda item is clearly indicated and all materials are reviewed in advance, CEC members can devote meeting time to making decisions on important issues rather than to having those issues explained in lengthy PowerPoint presentations.
Measure the real value
If top managers were presented with five issues and they knew that resolving one would create 20 times more value than dealing with the other four combined, they would naturally spend their time addressing the issue of highest value. Of course, the importance of agenda items is rarely labelled so explicitly. As a result, top executives risk wasting valuable time on trivial issues and postponing important decisions, sometimes indefinitely.
Successful firms prioritise the problems and opportunities on top management's agenda according to the 'value at stake' - that is, according to the impact that resolving each issue will have on the company's intrinsic value.
Get issues off the agenda quickly
Companies that focus top management on growing long-term value have just as rigorous a process for getting issues off the agenda as they do for getting the right issues on it in the first place. In other words, once the right issues are on management's agenda, it's imperative that the teams have a clear way to resolve them. Such a process must include an unambiguous timetable, detailing when and how team members will reach a decision on each issue and who must be involved in approving the final strategy.
Put real choices on the table
Once the right issues are on the table and the clock is running, the key requirement for effective strategic decision-making is to present viable options. After all, management can't make choices if it doesn't have real alternatives. Management needs to have at least three alternatives before any strategy is discussed or approved. These must be real alternatives - not just minor variations on a single theme.
Separating the generation of alternatives from their evaluation and approval improves the ultimate selection process. When top managers are confident that all alternatives have been thoroughly evaluated, they are much more willing to choose a course of action and allocate the necessary resources - in effect, to make a final decision.
Adopt a set standard
Some top management teams find it difficult to accelerate the pace of decision making without sacrificing quality, but there are ways to avoid that trade-off. Even if they can't make each decision any faster, they can reach more decisions in the same amount of time by considering more issues in tandem. To do so, companies with superior decision-making capabilities use a common language, methodology and set of standards for making decisions. This lets them address many issues at once often outside the team meetings. Individual decisions may not be made any faster in this way, but the team will be able to reach many more decisions each year.
Making the right moves
If more firms recognised that top management's time was their most precious resource, more of them will start adopting these common practices. Strategic planning would become a matter of ensuring that the top management team focuses on the most important issues, considers all viable alternatives and makes the best possible choice in the shortest period of time.
HOW TO GET THE TIME BACK
Seven techniques to make sure meeting time is spent building value
- Deal with operations separately from strategy
- Focus on decisions, not on discussions
- Measure the real value of every item on the agenda
- Get issues off the agenda as quickly as possible
- Put real choices on the table
- Adopt common decision-making processes and standards
- Make decisions stick. Translate them into something tangible
MAKE DECISIONS STICK
The biggest challenge a top management team faces is agreeing on what it agreed to in the meeting. Here's how to make decisions stick
Make it tangible. Unless strategic decisions are translated into something tangible, they can become subject to reinterpretation or fall victim to the silent veto
Tie in resource allocation. Make the strategic decision-making process consequential by tying resource allocation to strategy approval. Specify the resources required to execute the strategy, as well as the financial results that management pledges to deliver
Be clear about the final decision. If there is ambiguity about the resources required to execute the strategy or about what results should be expected over time, the leadership team can withhold its approval until those things are nailed down
© businesstoday 2004
