Boards can’t predict the future, but they can make sure their institution is ready for it

There are few things governing bodies in higher education are asked to do more often right now than to be “more strategic.” Government, regulators, and board members themselves all want boards that look up from the committee papers and engage with the big picture.

The financial pressure the sector is facing gives the context for the demand, but it is also why it’s hard to deliver. Strategy right now demands planning for an uncertain future in which the arrival of external shocks is assumed, but the nature and impact of those shocks is unknown or can only be glimpsed at.

The sector knows, for example, that demographic change will likely affect the medium-term baseline demand for HE. But reduction in the overall numbers of school and college-leavers tells us nothing about how that shift will manifest for any given institution, or how it will be affected by institutional behaviour in the short term. AI, similarly, is obviously driving significant change in industry, education, business operations and our political culture, but given our collective well-rehearsed tendency to overestimate short term impacts and underestimate long terms ones of new technology, it’s probably wise not to put too much stock in speculation about what an AI-enabled world is likely to look like.

The conventional model of institutional strategy is a five-year plan that sets out the institution’s plans around research and teaching, touches on regional/civic and international aspirations, and hat tips the operational pillars making those aspirations possible. Sometimes the strategy captures a new or evolved mission for the institution, and sometimes it foregrounds an area that was controversially neglected in previous iterations. Often it points to new marginal activity, a strategic theme that needs a bit of additional focus and resource – digital transformation, say, or student success – or sets out an aspiration to grow in a particular direction, like more TNE.

It’s conventional to be a bit disparaging about these kind of strategies but those who say that conventional university strategies aren’t very strategic I think are downplaying something important. Strategy has traditionally served the very meaningful purpose of bringing disparate groups of people together under the auspices of strategic planning to explore critical questions of the future, the mission, and the delivery opportunities and challenges. The document with all the pretty pictures that gets launched at the end of the process serves the critical function of giving as many people as possible – the full range of diverse internal and external stakeholders – a line of sight to “their” institution. In other words, strategic planning serves a community building function as much as it serves a strategic one.

However, in times of serious financial pressure, strategy that is truly strategic requires a credible plan for long-term sustainability that can hold up against really quite powerful headwinds. Ask a board to be more strategic in those conditions and there are two likely outcomes. Either it retreats into scrutinising the operational detail it can see, or it signs off a plan everyone in the room suspects will be overtaken by events. Neither is what anyone means by strategic governance.

What is needed is a way of thinking about strategy at board level that makes the most of the values and skills represented on the board. Predicting the future is unlikely to be within the gift of even the most experienced board member. But everyone in that room is likely to hold critical information about two things: whose needs their institution serves; and what sort of strategic capability organisations in general need to be able to adapt when the world around them changes. Putting the two elements together gives boards a powerful starting point to guide the exec in building a concrete business strategy.

With mission on one hand and strategic capability on the other, a board can set the compass points and be assured that the organisation can make progress towards them. The test of its success is whether it can do both without getting drawn into the daily detail of operational decision-making.

A conceptual shift

This dual focus on mission and capability necessitates some practical shifts in strategic planning processes.

The process itself moves from consultative to deliberative. The traditional strategy consultation gathers views widely and tends to produce a long list of aspirations that no one feels able to say no to. In a constrained environment, the question is not “what should we do?” but “what must we prioritise?” That doesn’t mean abandoning consultation but it could mean doing more to set out and engage stakeholders on the range of priorities and how they manifest in reality, the potential synergies and trade offs between possible courses of action, and the mission and operational considerations involved in weighing them up.

The horizon of the strategy may also be more flexible – instead of a fixed five-year cycle, it may make sense to work through scenarios of short, medium and long-term sustainability. Those horizons can be anchored by values and mission-based compass points that offer a sense of direction of travel, while leaving room for organisational agility when new information, new opportunities or external shifts change the picture.

Big ticket questions like international footprint, significant strategic partnerships, or possible structural change to the institution should certainly be on the table, but considered as a range of possibilities and options as part of a tiered horizon rather than a “right now, yes or no” question or, indeed, a “possibly someday but not today” avoidance of the question.

The idea of institutional performance may need to be more closely calibrated to mission. Performance metrics derived from public data returns have a purpose, including managing the risks of regulatory intervention but, being laggy, they aren’t very useful in answering broader questions about impact, or informing progress towards achieving the desired impact.

In the best of all worlds, all institutions would be able to articulate their mission as a statement about who or what they aim to impact, underpinned by a theory of impact, and a basket of evidence that indicates whether the impact is actually happening. This is a very dry way of explaining something quite important, so instead I’ll paraphrase a recent vice chancellor who explained it as “knowing the story of your institution and how it makes a difference” which is frankly a better way of putting it.

And on the governance side, the shift is from a focus on strategy content to strategic context and strategic capacity. Boards need – and can bring their own experience of – the external environment and political landscape in which HE institutions are operating. And they need to be assured that the institution has the organisational capacity and capability to understand its environment, adapt, and execute change.

What boards can bring at the development stage

None of this substitutes for the routine business of financial governance, audit and risk management, and legal and regulatory compliance. But it can build a firmer shared understanding of the strategic context in which that activity takes place. And it gives board members a meaningful role when strategy is being developed.

The first contribution is clarifying and refining the institution’s distinctive mission and purpose. That includes the specific places and contexts in which that mission is realised. A university’s mission is not an abstraction; it is lived out in particular communities, regions, partnerships and disciplines, and boards are well placed to hold the institution to that specificity.

Second, boards can stress-test the theory of impact that guides strategic decision-making and leadership activity across the institution. If we do these things, why do we believe these outcomes will follow? Asking that question well is one of the most useful things a critical friend can do.

Third, boards can validate the proposed basket of performance metrics. That means investing time in building a shared sense of what each metric means in practice and what underpins it, so that when the numbers move, everyone understands why that matters.

Fourth, boards can help identify and agree red lines around core function stability and operational risk in areas such as finance, technology, student service delivery, education and research infrastructure, and compliance. A red line marks the point beyond which the institution would no longer be able to deliver its mission. Agreeing those limits in advance provides a foundation for potentially difficult choices further down the line.

Finally, boards can explore how the institution understands and assesses its own capacity in the areas that determine whether it can adapt, such as leadership development and strategic “bandwidth,” capacity to build and sustain partnerships and strategic collaborations, reputation and relationships with key stakeholders, or systems for innovation, continuous improvement and change management. Not to oversee or direct how these should be approached, but to be assured that the organisation as a whole has a sense of how it goes about those things, is resourcing it adequately, and knows what it’s trying to achieve by doing so.

All this necessitates looking again at the data and evidence that comes to boards. The oldest problem in governance is information asymmetry, and lay governors meeting a handful of times a year have their impressions filtered through what the executive chooses to show them. The CUC code of governance is clear that boards cannot be assured of capability on the strength of the executive’s self-assessment alone.

An evidence base for capability assurance could include:

• Internal audit commissioned to examine capability, as well as controls
• External board effectiveness reviews that look at how effectively board and leadership work together on strategic capability and how coherent the approach is
• Staff and student voice offering a view of whether the systems in place materialise as capacity on the ground

The obvious objection is that this is a model for institutions with headroom. When finances are under pressure, boards are sometimes necessarily pulled into operational detail, because the day to day decision-making becomes the strategic context. This is where red lines come into play. Agreeing in advance where the limits lie means that when one comes into view, the board knows it has moved from strategic oversight to active intervention. It also knows why, rather than drifting into the weeds by default. In that sense capability assurance is not a lighter-touch form of scrutiny – if anything it is more demanding.

Realising that value through the strategic cycle

A strategic capability approach also sets up boards well to stay engaged throughout the lifetime of a strategy. That role starts with overseeing how performance is tracked and reported, in a way that prompts meaningful reflection and action rather than simply noting a dashboard. It means testing the business assumptions, values framework and evidence behind major strategic choices as they arise, against the mission the board helped to define.

The assumption of change and the adoption of horizon tiers will also mean that there will need to be periodic review and adjustment of the strategy, identifying where gaps in strategic capacity have opened up, and testing plans to close them. And the board will need to work through how its processes around audit, risk, and resourcing facilitate attention to mission and strategic capacity, so that audit processes are realising value for the institution rather than running in parallel with its strategy.

Being “more strategic” does not require boards to know more about the future, or more about operations. It requires them to be clear about purpose and rigorous about capability. In a period when few can say with confidence what the next five years will bring, the most useful reassurance a board can offer is not a plan. It is confidence that the institution knows what it is for, and that it can rise to whatever comes next.

If you’re planning a strategic away day for your team or board, Policy.Partners may be able to help you tackle the big questions. Find out more at Policy.Partners/away-days or get in touch.