The big decisions a board and its CEO make determine the future performance of the company and, in the end, the return to shareholders. Intel's $15.3 billion purchase of Mobileye, announced the week this was first written, will shape both the company and the transportation industry for a decade. In your business, whether the decision is worth thousands or billions, can the outcome be made more predictable? Yes. Four practical steps do most of the work.
Lay out the assumptions
Have your key people write the assumptions about the future and their impact on the company, tied to real data. If the data does not exist, build it, assemble it or buy it. One organisation I worked with spent three months stratifying demand data for China before the board approved an investment. The assumptions were what the board approved; the investment followed.
State the objectives
Say concisely what the decision has to achieve and how alternatives will be measured. A common boardroom error is the chair or CEO assuming everyone agrees on both. A quick poll usually finds wide variance, which produces skewed decisions or none.
Consider every alternative
"We must do this because…" usually hides several options. One CEO, told by the board that the home market was the only path, built an outstanding result by entering Indonesia and Singapore instead, while the home market plateaued.
Name the risks before the vote
For the leading alternative, ask what could go wrong, how likely it is, how serious it would be, and what you would do about it. Decisions fail most often because risks were considered after the money was spent.
Where it lives
These four steps are the spine of a MOVE® decision. The assumptions are tool one; the objectives and alternatives are the product-market matrix and the market reality check; the risks are the triggers on the page. The board does not receive a recommendation. It receives a decision it can test.
Monday
Take the biggest decision on your board agenda this quarter and write the objectives in five lines. Send them to each director separately. If the replies differ, the decision is not ready.
