Strategic Planning in the Small Business

Unit 6 HO 6-5 (Continued)

competition, productivity,

and so forth. This, too, is a survival problem: "successful" should

also be interpreted to mean a reasonable probability that any unfortunate present situation is only

temporary, and that there are sound long-term prospects for survival and profitable growth.

Boards should not be created to perform crisis surgery.

There should be a reasonably stable management structure. This means defined

duties and divided responsibilities. Without such a structure,

there is really no business entity

which can experience "continuity," and a working board would be superfluous. What this kind

of company needs is management, not directors.

Another way to state this requirement would be to say that every

company reaches a

point at which it becomes important to separate owning from managing. This

separation doesn't

have to be done in fact. I'm certainly not recommending that owners avoid involvement with

the management of their own companies. However, it does mean that every successful business

owner has to be able, somehow, to separate the responsibilities, benefits and authority that

accrue to the owner(s), from the responsibilities, benefits and authority that accrue to the

manager(s).

When a company is reaching the point where the unspoken and undefined structure

everybody has taken for granted can no longer be taken for granted, it is reaching the point

where it needs a formal working board. An outside board is needed to help define the

management needs and how they differfrom the ownership needs -as

well as to establish a

priority of opinion
and action.

The managers and advisors should be as competent and well-chosen as possible.

There is a little

a board can do to help management with its planning if there is nobody capable

of having good ideas -or of making good suggestions -in the first place. Directorsare neither

replacementsfor incompetent legal or financial advisors, not substitutes for

irresponsible,

undeveloped or unqualified

managers.

A working board is the final polish O n a well-designed and functioning structure.

The

business must have the required talent and ability among its managers and advisors to be able

to provide needed information to the board in an organized and

intelligent way. These managers

and advisors must be able to explain or defend decisions and actions to the board, and then they

must also be able to translate the policy decisions made by the board into action.

Without such a management team, a working board is as ineffective .s a conductor

without an orchestra.

There must be a genuine desire on the part of the owner(s) to create a working

board and (b)

to take the steps necessary to make sure such a board can carry out its

functions.

This is the most important condition to be met. Realize that outside directors have to

have real pow-r on an owner/manager. True legal power in a corporation always rests with its

391