At nine years old, my cousin Bill and I learn to sail and eight foot sailboat that his dad made. The first thing that intrigued me was that you usually don’t sail a boat in a straight line to your destination. No, you “tack” back and forth zigzagging so the the sail is always facing the wind. Yet, you had one eye over the bow, and one eye on the distant horizon that may at 45 degrees to the boat’s bow.
The article in the McKinsey Quarterly, Building a forward-looking board by Casal and Caspar reminded me of the sailing because the article alert board members that they are spending too much time watching the direction of the boat, and the not the horizon that they should try to attain. According to them, ” Directors still spend the bulk of their time on quarterly reports, audit reviews, budgets, and compliance—70 percent is not atypical—instead of on matters crucial to the future prosperity and direction of the business.”
Now this insight is not different than what I have written about small and medium-sized businesses and their inability to strategically plan for the future. But the article did impress me with the future-minded chairman who must strategically create the board. The article states:
“Too often, vacancies on a board are filled under pressure, without an explicit review of its overall composition. An incoming chairman should try to imagine what his or her board might look like, ideally, three years from now. What kinds of skills and experience not currently in place will help fulfill the company’s long-term strategy? What, in other words, is the winning team? A willingness to look ahead expands the number of candidates with appropriate skills and heightens the likelihood that they will sign up if and when they become available.”
This concept is very similar to a Jim Collin’s mantra of “to get the right people on the bus” before you start strategizing. In other words, don’t focus on the future if you don’t have the personnel to help you envision it.
As a CPA firm, we have to look at the short term and historical aspects of a business in order to advise our clients from a managerial aspect. However, once we are satisfied with the state of the “books,” we turn our eyes to the long-term and focus on the distant horizon. Then once we assist the client in developing the long-term strategy, we run our eyes along the path from today to the horizon and establish benchmarks. As CPA’s we are in the proper position to monitor the company in light of these benchmarks to insure that the company is moving in the right strategic direction.
CPA firms usually don’t provide this service for small and medium-sized businesses because CPA firms usually only look historically at the financial statements and prospectively for only a few years. The CPA industry has to understand that they are wasting a vital role on items that will only benefit clients in the short run, if at all.
The same is true for company boards. Talent is wasted when focused on only short-term goals and endeavors. With the quick-moving world of technology, today, CPA s and board members must not focus on only their shoe laces. These types of businesses will be run over by those companies who include the horizon in their peripheral vision.