The Role of Angel Investors in Strategy from the Perspective of Communication Theor

The Role of Angel Investors in Strategy from the Perspective of Communication Theory

Presented to the Faculty in Communication and Leadership Studies School of Professional Studies Gonzaga University ___________________________ Under the Mentorship of Dr. Alexander Kuskis Department of Communication and Leadership Studies ___________________________ In Partial Fulfillment Of the Requirements for the Degree Master of Arts in Communication and Leadership Studies ___________________________ By Kevin V. McConnaghy April, 2009

We the undersigned, certify that we read this thesis and approve it as adequate in scope and quality for the degree Master of Arts.

____________________ Faculty Reader

_________________________________________

______________________________ Faculty Reader

_________________________________

________________________________ Faculty Mentor

_______________________________

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 3 Abstract The degree to which corporate directors are involved in strategy is subject to a wide range of influences and therefore is best viewed in the context of a continuum that extends from minimal involvement to perhaps the formulation of strategy. While studied extensively, the role of boards in strategy suffers from definitional issues, lack of access and other control related parameters. The purpose of this thesis is to explore the role of the board in a selected population that controls for many of the major factors influencing board engagement in strategy. As an exploratory study, this research is directed toward identifying specific roles played by directors.

This study is an attempt to form a basis for answering the question, what role do corporate board members play in the formulation, implementation, monitoring, evaluation, and modification of corporate strategy?

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 4 Table of Contents Chapter I: Introduction .................................................................................................................... 6 Statement of the Problem ............................................................................................................ 6 Definition of Terms ..................................................................................................................... 7 Angel Investor ......................................................................................................................... 7 Corporate Governance ............................................................................................................. 7 Non-Executive Director ........................................................................................................... 8 Strategy .................................................................................................................................... 8 Organization of Remaining Chapters .......................................................................................... 9 Chapter II: Review of the Literature ............................................................................................ 10 Theoretical Basis ....................................................................................................................... 10 Symbolic Convergence Theory ............................................................................................. 10 Functional Perspective on Group Decision Making .............................................................. 11 Adaptive Structuration Theory .............................................................................................. 13 Critical Theory of Communication Approach to Organizations ........................................... 14 Groupthink ............................................................................................................................. 16 Figure and Ground ................................................................................................................. 16 Subject Matter Literature .......................................................................................................... 17 Research Question ..................................................................................................................... 23 Chapter III: Research Method ...................................................................................................... 24 Scope ......................................................................................................................................... 24 Disclosure and Worldview ........................................................................................................ 24 Research Method ....................................................................................................................... 25 Procedures for Conducting Case Study ..................................................................................... 25 Research Assumptions .............................................................................................................. 26 Sample ....................................................................................................................................... 27 Data Collection .......................................................................................................................... 28 Analysis ..................................................................................................................................... 29 Quality of Research Design....................................................................................................... 29 Chapter IV: The Study ................................................................................................................. 31 Introduction ............................................................................................................................... 31

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 5 Case Synthesis ........................................................................................................................... 32 Governance ............................................................................................................................ 32 Strategy .................................................................................................................................. 33 Other Major Contextual Issues .............................................................................................. 36 Analysis ..................................................................................................................................... 37 Introduction ........................................................................................................................... 37 Symbolic Convergence .......................................................................................................... 38 Functional Perspective........................................................................................................... 38 Adaptive Structuration ........................................................................................................... 39 Critical Theory of Organizations ........................................................................................... 39 Figure and Ground ................................................................................................................. 40 Discussion ................................................................................................................................. 41 Chapter V: Conclusion and Summary ......................................................................................... 42 Introduction ............................................................................................................................... 42 Conclusion ................................................................................................................................. 42 Summary ................................................................................................................................... 42 Works Cited .................................................................................................................................. 44 Appendix A: Invitation to Participate as a Research Subject ...................................................... 48 Appendix B: Agreement to Participate as a Research Subject .................................................... 49 Appendix C: Semi-structured Interview Outline and Notes ........................................................ 50

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 6 Chapter I: Introduction Statement of the Problem All over the world, people are asking, what happened? Stakeholders and more specifically stockholders around the globe are directing their inquiries to chief executive officers (CEOs) of major corporations and no clear answers are forthcoming. Naturally, people are upset and demanding to know, where was the oversight? Boards of directors, as chartered representatives of stockholders, have a lot to answer for.

Board members, according to Fiengerner (2000), have three primary overlapping roles: service, resource dependence, and control. In this construct, service includes providing advice, assistance in the formulation of strategy, and the enhancement of the firm’s reputation. The resource role relates to the acquisition of human and financial assets. And, finally, the control functions, which, in part, includes: appraisal of performance and review of strategic decisions / plans. Alternatively, Forbes (1999) defines a board’s most relevant roles in terms of service and control. In this model, he suggests that a board’s effectiveness is expressed in terms of group task and group maintenance roles. For example, board members could be expected to engage in informal and ongoing activities, such as, generating and analyzing strategic alternatives during board meetings. Similar to Fiengerner and Forbes, Madill (2005) present a construct that defines board service in two areas: decision-making and non-financial services. The decision-making role refers to all activities, including strategy, that are brought before the board for discussion and resolution. By contrast, non-financial services are actions taken by a board member in support of the enterprise. For example, a board member may provide contacts and other types of hands-on-assistance.

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 7 The brief discussion above suggests a board’s role in the hiring / compensation of executives and in the application of financial controls is well developed; however, their role in the area of strategy is not. To reinforce this point, Ingley (2006, p.178) states, “what is clearly apparent from the dialogue in the literature is that, while there is a slowly gathering convergence on the view that boards do have a definite responsibility and a key role in the corporate strategy, there is no consensus on the extent or nature of that role.”

Definition of Terms The definition of angel investor, corporate governance, non-executive director and strategy are central to understanding the scope of this study.

Angel Investor •

“An angel investor is a person that provides financial capital to start-up companies. The individual is usually affluent or has a personal stake in the success of the venture. Such investments are characterized by high levels of risk and a potentially large return on investment. An angel investor or angel (known as a business angel or informal investor in Europe) is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. A small but increasing number of angel investors organize themselves into angel groups or angel networks to share research and pool their investment capital (Angel Investor, 2009a).”

•

“Angel investors are often retired entrepreneurs or executives, who may be interested in angel investing for reasons that go beyond pure monetary return. These include wanting to keep abreast of current developments in a particular business arena, mentoring another generation of entrepreneurs, and making use of their experience and networks on a lessthan-full-time basis. Thus, in addition to funds, angel investors can often provide valuable management advice and important contacts (Angel Investor, 2009b).”

Corporate Governance

•

“Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The principal stakeholders are the shareholders, management, and the board of directors. Other stakeholders include labor (employees), customers, creditors (e.g., banks, bond holders), suppliers, regulators, and the community at large (Corporate Governance, 2009a).”

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 8

•

“Corporate governance refers to how a corporation is governed. Who has the authority to make decisions for a corporation within what guidelines? This is the corporation’s governance. In the United States, the governance of corporations is largely determined by state laws of incorporation. State laws typically say that each corporation must be "managed by or under the direction of its boards of directors." More specifically, corporate boards of directors are responsible for certain decisions on behalf of the corporation. At a minimum, as stated in most state statutes of incorporation, director approval is usually required for amending corporation bylaws, issuing shares, or declaring dividends. Also, the board alone can recommend that shareholders vote to amend articles of incorporation, dissolve the corporation, or sell the corporation. No other person or entity except the board can take these actions. That is why discussions of "corporate governance" often focus on boards (Corporate Governance, 2009b).”

Non-Executive Director

•

“A non-executive director (NED, also NXD) or outside or independent director is a member of the board of directors of a company who does not form part of the executive management team. He or she is not an employee of the company or affiliated with it in any other way. They are differentiated from inside directors, who are members of the board also serving as executive managers of the company (most often as corporate officers). Non-executive directors are the custodians of the governance process. They are not involved in the day-to-day running of business but monitor the executive activity and contribute to the development of strategy (Non-Executive Director, 2009a).”

•

“Non-executive directors have responsibilities in the following areas: 1. Strategy: Non-executive directors should constructively challenge and contribute to the development of strategy 2. Performance: Non-executive directors should scrutinize the performance of management in meeting agreed goals and objectives and monitoring, and where necessary removing, senior management and in succession planning, 3. Risk: Non-executive directors should satisfy themselves that financial information is accurate and that financial controls and systems of risk management are robust and defensible.

4. People: Non-executive directors are responsible for determining appropriate levels of remuneration of executive directors and have a prime role in appointing, and where necessary removing, senior management and in succession planning (Non-Executive Director, 2009b).”

Strategy

•

“There are at least three basic forms of strategy in the business world and it helps to keep them straight. The objectives of this brief paper are to clarify the general concept of strategy and draw attention to the importance of distinguishing among three forms of strategy: 1. Strategy or "strategy in general refers to how a given objective will be achieved.

Consequently, strategy in general is concerned with the relationships between

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 9 ends and means, that is, between the results we seek and the resources at our disposal. Strategy and tactics are both concerned with formulating and then carrying out courses of action intended to attain particular objectives. For the most part, strategy is concerned with deploying the resources at your disposal whereas tactics is concerned with employing them. Together, strategy and tactics bridge the gap between ends and means.

2. Corporate strategy defines the markets and the businesses in which a company will operate. Corporate strategy is typically decided in the context of defining the company’s mission and vision, that is, saying what the company does, why it exists, and what it is intended to become.

3. Competitive strategy or business strategy defines for a given business the basis on which it will compete. Competitive strategy hinges on a company’s capabilities, strengths, and weaknesses in relation to market characteristics and the corresponding capabilities, strengths, and weaknesses of its competitors (Strategy, 2009a).”

•

“Henry Mintzberg, in his 1994 book, The Rise and Fall of Strategic Planning [3], points out that people use "strategy" in several different ways, the most common being these four: 1. Strategy is a plan, a "how," a means of getting from here to there.

2. Strategy is a pattern in actions over time; for example, a company that regularly markets very expensive products is using a "high end" strategy.

3. Strategy is position; that is, it reflects decisions to offer particular products or services in particular markets.

4. Strategy is perspective, that is, vision and direction.

Mintzberg argues that strategy emerges over time as intentions collide with and accommodate a changing reality. Thus, one might start with a perspective and conclude that it calls for a certain position, which is to be achieved by way of a carefully crafted plan, with the eventual outcome and strategy reflected in a pattern evident in decisions and actions over time. This pattern in decisions and actions defines what Mintzberg called "realized" or emergent strategy (Strategy, 2009b).”

Organization of Remaining Chapters Chapter II provides a comprehensive review of theory that may be used to evaluate the

findings of the study and similarly comprehensive review of the literature relating to the research question. Chapter III describes the research method. This chapter considers procedures to be used, assumptions, as well as matters relating to how data was collected and analyzed. Chapter IV provides study findings and an analysis of the data. Finally, Chapter V offers a conclusion deriving from the analysis.

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 10 Chapter II: Review of the Literature Theoretical Basis Symbolic convergence, adaptive structuration and functional perspective are the three leading theories in small group communication literature (Griffin, 2006, p.259). Three other theories, critical theory of communication approach to organizations, figure / ground, and groupthink, are also considered relevant to this thesis. In addition, to one degree or another, each of the theories relies on a social constructionist viewpoint. That is, "persons-in-conversation coconstruct their own social realities and are simultaneously shaped by the worlds they create (p.69).” What differs most in these lenses is the worldview of the author – from practical to critical and reform perspectives are represented. Together, these theories provide a number of lenses through which control issues and decision-making processes can be resolved. Each of the six major theories cited form the theoretical basis of this work; each is reviewed in the sections that follow.

Symbolic Convergence Theory “Symbolic convergence creates, maintains, and allows people to achieve empathic communication as well as a meeting of the minds (Bormann, 1982, p.51).” This general theory of communication has been repeatedly attacked through the years. Periodically Bormann (1994, 2003) has been moved to defend his position. Griffin (2006) elaborates on how Bormann established a connection between dramatic imagery used by a group and its solidarity. He describes the imagery used as fantasy. In this circumstance, fantasy connotes “the creative and imaginative interpretation of events that fulfill a psychological or rhetorical need (p. 36)." A fantasy can be created by the telling a story or joke, the use of metaphor or other idiom that gives unique expression to a recognizable experience. Any talk of things outside the group, about

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 11 things in the group past or discussion of the group future fit within the limits of fantasy – not included are matters taking place in the present within the group.

Symbolic Convergence focuses on a group's response to fantasy. It considers how the response can prompt a reaction causing the energy level within the group to intensify. Similar to a train of events, spoken fantasies become carriers of shared experience that contain emotional content and in this way move a group toward cohesiveness / unity. When a collection of fantasy themes engages the imagination of a group, it can become even more closely allied -- the group takes on a unique character. By extension, when a theme is shared across groups (many groups) a social reality can be constructed -- a rhetorical vision -- that binds entire organizations / communities. Essentially, with sufficient repetition of the rhetorical vision, a master analogy can be triggered by a single code-word, slogan or non-verbal symbol (Bormann, 1982, p.53).

Functional Perspective on Group Decision Making In general terms, the functional perspective examines factors characteristic of group activities and how they relate to one another (Wittenbaum, 2004). “Three core assumptions define the functional perspective: 1) groups are goal oriented; 2) groups performance varies in quality and quantity, and can be evaluated; and 3) internal and external factors influence group performance via the interaction process (p.19).” The Functional Perspective on Group Decisionmaking, developed by Randy Hirokawa & Dennis Gouran (1985), suggests that there are four primary tasks that must be performed by a group in order to produce a satisfactory conclusion.

The four critical tasks are referenced by the terms problem analysis, goal setting, identification of alternatives, and evaluation of positive and negative characteristics. The theory assumes that communication benefits from the free flow of ideas and that talking allows people to influence, distribute and pool information while identifying / correcting errors as part of the process.

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 12 Hirokawa (1985), provides evidence that “successful decision making is the result of the satisfaction of critical task requirements (or conditions), rather than the discussion procedures that are employed in reaching a decision (p.221).�

The initial task, problem analysis, can be described in terms of stating the current situation -- nature of the problem, extent or impact, and probable cause. To prevent misunderstandings, when performing the goal setting task, the group needs to be clear. Clarity is achieved by establishing well-defined criteria by which to appraise options. The functional perspective advocates expending considerable time and effort to identification and exploration of a large number or wide range of potential and alternative solutions. The final task, evaluation of positive and negative characteristics, requires that a potential resolution be challenged on a point by point basis against agreed upon standards.

According to Griffin (2006), these four critical tasks do not happen without conscious endeavor (p.250). One or more members of the group must guard the process and keep the group mindful at all times, in order that focus is maintained on the topic under discussion.

Accordingly, it is not necessary to proceed through the tasks in a linear approach. Therefore, the effort to re-establish the process basically requires a leader to bring the conversation back to one of the four critical tasks.

This process does not insure a sensible decision. Bias, hidden agendas, inaccuracy of facts, un-grounded assumptions, and failure to seriously evaluate standards, disregard for group norms, or the presence of an overbearing person can make this process futile. Further, in practice, Griffin (2006) suggests that this approach has been found beneficial for questions of policy, but not for questions of fact, conjecture or value (p.260). As another qualification, according to Hirokawa (1985, p.205-206), “the discussion format or strategy employed by a

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 13 group is important for successful group decision-making performance only insofar as it helps a group to accomplish critical task-completion functions.”

Adaptive Structuration Theory Structuration, according to Poole (1985), holds that “groups can act, can produce and reproduce social structures in the course of acting (p.82).” Adaptive Structuration (Griffin, 2006. pp. 262-274) is based on the notion that, as active agents, groups like people can do as they wish – they can do the unexpected. For this reason, Poole suggests the phase model – originally proposed in 1965 by Tuckman (2009) -- with its linear path from group orientation (forming), conflict (storming), coalescence (norming), and development through integration (performing) is not explanatory enough -- does not account for the complexity of the group decision making process. As an alternative, Poole suggests that groups engage in a process that promotes both stability and change within a system of rules and resources (inputs). Inputs then produce decisions (outputs) that shape people’s actions, but also serve to shape the structures themselves.

In this way, rules and resources are at once changed and remain the same within the boundaries of the group's social reality.

The social reality of a group is considered by Poole to be formed from the "collective practical wisdom (p. 267)." This wisdom takes into consideration value propositions, which give definition to rules that can be identified with value judgments – what is good, what is bad.

Beyond bringing moral and ethical bias to the group decision-making process, group members also bring resources in the form of attitudes that can sway or have power over outcomes. Other resources may include: personal relationships, topic expertise, materials, possessions and those items -- both rules and resources -- borrowed from a parent organization or the wider culture.

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 14 Adaptive Structuration represents a dynamic system in which tension exists between action and structure. So, if actors are unaware of a factor or do not understand how it operates, then it is likely to have a significant effect on the decision.

Critical Theory of Communication Approach to Organizations This theory attempts to balance the needs of the corporation with human interests. In the critical tradition, Deetz (1992) questions the motives and authority vested in management.

Communication in this construct is the outcome of a political process that places a premium on the use of power to maintain and extend control. Contained in this theory is a warning that control can become the primary goal of management to the detriment of stakeholders.

Expanding on the notion of distorted communication, Deetz (1992) makes the point that: “Communication is distorted whenever genuine conversation is precluded or, more specifically, any of the conditions of the ideal speech situation are not upheld. In a general sense, all communication is distorted to some degree.

Symmetry conditions are partially violated, because at each moment there is a primary speaker, and every expression is inevitably one-sided and imaginary.

Many of these distortions are overcome in the to-and-fro character of interaction.

And following a participatory motive, structural conditions and individual ability differences could be overcome to a large extent. In many everyday settings, common distortions could give way to expanded and conflicted meanings in the pursuit of common understanding. Some distortions, however, are systematic. In these cases there is a latent strategic reproduction of meaning rather than participatory production of it. Systematically distorted communication operates like strategic manipulation, but without overt awareness (p.173).�

As part of this theory, Deetz (Griffin, 2006, p.303) provides a 2 X 2 construct / matrix to analyze the nature of two approaches to organizational communication.

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 15 Information Model

Communication Model

Managerial Control

Strategy

Consent

Co-determination

Involvement

Participation

Figure 2-1: Approaches to Organizational Communication The upper half of the matrix expresses managerial control in the context of an information model (i.e., strategy) and also in a communication model (i.e., consent). The lower half of the matrix expresses co-determination in the context of an information model (i.e., involvement) and also in a communication model (i.e., participation).

Deetz suggests that strategy and consent are controlling norms that promote worker compliance. In the case of strategy, workers are intentionally kept ill-informed, un-aware of their circumstance, and agreement (i.e., control) is achieved by a stratagem (i.e., a trick). While, in the case of consent, workers become willing participants in the stratagem. They essentially accept their fate, in exchange for some benefits, as a matter of course, even when there are good reasons to doubt management’s propositions.

In the co-determinate space, involvement and participation are differentiated by the reflective nature of the communication. In the case of involvement, management and workers exchange information. Workers are free to express their issues, but ultimately they have no voice in the decision process. By contrast, the participation space is characterized by dialogue and awareness -- engaging both parties in the creation of meaning. Extending beyond the management / employee space, the dialogue of participation may include or should include stakeholders, each with their own set of needs. Stakeholders may include: investors, consumers, suppliers, communities, and the greater global social network.

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 16 Groupthink Group decision-making can be driven by the need of members to maintain an already high-level of cohesiveness. First described by Irving Janis (1982), structurally, in the process of building a cohesive unit, members can establish norms that may not work to their benefit when making decisions -- especially when stressed by forces acting from outside the group. When member are driven to maintain cohesiveness as a primary objective they can, for example, lower their process standards, become inward-looking and rely on class-based ideology to surround decisions.

The goal of the theory is to be able to identify the symptoms of groupthink and / or the symptoms of defective or uncritical decision-making. According to the theory, there are three categories of groupthink symptoms: 1) overestimation of the group (i.e., illusion of invulnerability and belief in high quality of members' character / moral viewpoint), 2) closedmindedness (i.e., collective rationalizations and stereotypes of out-groups), and 3) pressures toward uniformity (i.e., self-censorship, direct pressure on dissenters, and self-appointed censors). In terms of symptoms of defective decision-making, the theory points to eight specific areas of concern: incomplete survey of alternatives, incomplete survey of objectives, failure to examine risks of preferred choice, failure to reappraise initially rejected alternatives, poor information search, selective bias in processing information at hand, and failure to work out contingency plans.

Figure and Ground The concept of figure / ground was used by Marshall McLuhan as the foundational argument for probing the meaning of technologies (1988). Figure / ground is a term taken from Gestalt psychology and is used to describe an area of attention or focus (figure) in contrast to a

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 17 wider field of inattention. As restated by Federman & DeKerckhove (2003), "if you notice something new or distinct, you actually observe a figure -- the new -- against its ground -- the familiar (p.17)." The implication is that the study of ground by itself is impossible, because at any moment we are unaware of the subliminal. Similarly, a figure stands or is fore-grounded standing by itself -- out of context a figure has no meaning. As a construction, ground comes first and figure emerges from ground. Ground provides context or structure that allows for the awareness of a figure. As figure rises from ground, figure also recedes back into ground; therefore, ground contains all figures at once -- with each new figure displacing the old. As figure / ground interact across a common boundary, it is the boundary area that serves to define both simultaneously.

Subject Matter Literature The many duties and obligations of boards of directors are specified by corporate charter.

One of them, the obligation to play a role in corporate strategy, is the focus of this literature review. “A study of chief financial officers (CFOs) conducted by the National Association of Corporate Directors reveals that board participation in strategic planning is ranked number two in importance to their companies, yet only number eleven in their board’s effectiveness (Nadler, 2004, p.25).” This suggests that the board’s role with respect to corporate strategy specifically is poorly defined, assuming that the board is competent and actually fulfilling their obligations of duty, care and loyalty.

In a partial manner, the continuum concept discussed by Hendry (2004) and Ingley (2001) can begin to explain why clarity of role is so difficult. They suggest that strategy can be seen in two different contexts. First, the role of the board in strategy is likely to change as the company moves through growth, maturity and decline phases. Second, the role of the board in

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 18 strategy can also be expected to reflect the capitalization of the enterprise. Gabrielsson (2000), points to the fact that in private equity situations it is most likely that strategy will be directed by the investment group. In practice, firms backed by venture capital also see a more significant participation in strategy by representative directors (Zong, 2005). Similarly, Freid’s (1998) study of venture backed firms indicates that even prior to investment a strategic direction will be set. And, according to Brauer, “despite reasonable consensus on the board’s responsibility for strategy, how the board should fulfill this responsibility has remained unclear (2008, p. 649).”

Finally, the lack of clarity is supported by studies of corporate governance conducted by Daily (2003) and Pye (2005) as reported by Brauer (2008). Brauer reiterates the call for more research in this area. He suggests that the role of the board in strategy is “the most promising theme for future research (p.649)” in the area of corporate governance.

In the process of examining the role of directors in corporate strategy, research has attempted to apply economic theories to the problem. One theory, agency, in particular has been employed repeatedly. It points to the contractual relationship between a CEO and the board of directors. According to Banning (2004), the contract includes three key terms. First, a system for monitoring management’s actions must be identified and implemented. Next, the board must create a reward system that incentivizes management and aligns the interests of the owners.

Finally, it must specify the role that the top managers are to play in strategic decision. What is implied by these terms is that the role the board will play in strategy is left to the board to decide unless otherwise specified. Hendry (2004), Eisenhardt, (1989) and Tihanyi (2003) have also examined how agency relates to a board’s role in strategy. All agree that agency has very clear implications related to monitoring. They similarly agree that agency requires a board to be involved in the articulation of mission, development of strategy and setting guidelines for

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 19 implementation. However, in practice, the role of the board in strategy can vary greatly. Tihanyi (2003) points to one issue distinctively related to agency. Specifically he points to a number of empirical studies that have explored the difference of interests by investor type.

Other authors have examined other theories in relation to a board’s role in strategy. For example, Hendry (2004), Lynall (2003), and Ravasi (2006) have examined resource dependency, social network, and strategic choice perspectives respectively. Dependency theory, for example, argues that a board’s role is to link to the external environment for the purpose of acquiring scarce resources. Four types of resources are identified by Sandvika (2004). They are: 1) advice and counsel, 2) legitimacy, 3) channels for communicating information between the firm and external organizations, and 4) assisting in obtaining resource or commitments from outside the organization. Dependency links to social network theory by considering the predictable communication paths -- based on pre-existing relationships -- that may be used to acquire commitment of resources. Both dependency and social network perspectives intersect with strategic choice theory by suggesting that directors will contribute to refining, evaluating, challenging and occasionally assisting in development of strategy alternatives (Ravasi, 2006).

While the body of empirical studies relating to the role of the board in strategy is extensive, Ravasi (2006) points out that the number of environmental variables affecting the board’s role may make it difficult to research this area. Stiles (2001) commented that no single perspective adequately explains the role of the board. However, each perspective supports the notion of a board as a control mechanism (Hendry, 2004) and the control mechanism in turn can be primarily viewed in terms of the decision-making role. He goes on to comment that studies of board involvement in strategy would benefit from a preliminary analysis of the set of interests that are represented in the board. Ingley (2003), is more emphatic. He states that, “a notable

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 20 feature of the corporate governance literature is the relative dearth of empirical analysis pertaining to the board of directors and its role or actual involvement in strategy (p.175).”

Similarly, Hendry (2004) states, “the role of the board of directors in firm strategy has long been the subject of debate. However, research efforts have suffered from several deficiencies: the lack of an overarching theoretical perspective, reliance on proxies for the strategy role rather than a direct measure of it and the lack of quantitative data linking this role to firm financial performance (p. 500).”

The most important duties of the board include three overlapping roles: service, resource dependence and control (Fiengerner, 2000). In Fiengerner’s construct, the service role includes advice, assistance in the formulation of strategy, and the enhancement of the firm’s reputation.

The resource role may include board members acting as representatives of the firm for the purpose of acquisition of external resources. In the control mode, a board retains authority to hire / fire the CEO and other executives, determine executive pay, appraise performance, review strategic decisions and plans, and insure management acts in the shareholders interests. With regard to strategy, according to Ingley (2003), there is an increasing call for directors to take responsibility beyond merely approving strategic direction set by managers and monitoring its implementation. The new call is for directors to take a leadership position in setting strategic direction and corresponding accountability.

In contrast to Fiengerner’s (2000) construct, Forbes (1999) explains the board’s most relevant roles in terms of control and service. In this construct, the control task refers to the board’s legal duty to monitor management with loyalty and care. Again, in this framework, service refers to advice and counsel and to participate actively in the formation of strategy.

Forbes’ (1999) model expands to include criteria of effectiveness as expressed in terms of group

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 21 task and group maintenance roles. Specific board activities that are critical to the fulfillment of the control task include decisions regarding the hiring, compensation, and replacement of the firm's most senior managers, as well as the approval of major initiatives proposed by management. Specific activities that correspond to the fulfillment of the service task include providing expert and detailed insight during major events, such as an acquisition or restructuring, as well as more informal and ongoing activities, such as generating and analyzing strategic alternatives during board meetings.

Again, by contrast, works by Lynall (2003), Amparo (2005) and Madill (2005) address the role of the board in strategy more broadly. According to Madill (2005), the role of the board is divided into two areas of service; decision-making and non-financial service. The decisionmaking role refers to all activities, including strategy, that are brought before the board for discussion and resolution. By contrast, the non-financial service role is defined by Madill (2005) includes six categories of angel investor behavior post-investment. They include: 1) advice, 2) contacts, 3) hands-on-assistance, 4) leadership, 5) market and business intelligence, and 6) credibility. Each of these six areas is broken down further into specific identifiable behaviors. For example, directors may demonstrate their strategic commitment to obtaining market and business intelligence by: 1) providing industry information, 2) identification of potential customers, 3) competitor information gathering, and 4) identification of potential partners.

Even more specifically, Stiles (2001) reports survey data to suggest that strategic involvement includes, in descending order of involvement: reviewing, discussing, approving, decision-taking, monitoring, defining strategic frameworks, guiding, and helping to formulate.

He also provides survey data that suggests that the role of the board can be defined in terms of

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 22 categories of activity. In descending order of frequency cited, they include: involvement in strategy, responsibility for monitoring the health of the firm, hire / evaluate / fire executives, converse with shareholders and stakeholders, ensure corporate renewal, development of corporate vision, responsibility for ethical framework, ensure corporate survival, determine risk position, lead strategic change, review social responsibly, act as ambassadors for the firm, understand current and forthcoming legislation.

From a different perspective, Ravasi (2006) categorized board members “according to their presumed strategic role as insiders (i.e. current officers of the firm), decision controllers (i.e. shareholders’ representatives, whose primary role was to ensure that decisions safeguarded the interest of the former), business experts (former executives or current officers in other firms in the same or related industries) and support specialists (lawyers, bankers, accountants or other professionals, occasionally providing specialized expertise on specific issues), or a combination of the above (p.1677).� The suggested diversity is in line with current thinking supporting the need for boards to acquire a strategic orientation is driven by the dynamics of economic, technological, political and social change which are global in magnitude (Ingley, 2003).

Framing the issue of strategy as an active dialogue between executive directors and nonexecutive directors, Nadler (2004) presents a unique perspective on corporate strategy and the role of the board. Nadler postulates that corporate strategy is developed by means of four different and identifiable types of activities: strategic thinking, strategic decision-making, strategic planning, and strategic execution. For each of these activities, he points to specific items, by director type, that conceptualize the dialogue as well as define boundaries. Although unreferenced, in this paper, Nadler also provides a correspondence between what he calls strategic choice framework (p. 29) and the strategic theories put forward by Michael Porter

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 23 (1980, 2008). The framework provided by Nadler speaks to a dialogue focused on: agreeing on the company vision; viewing the opportunity space; assessing business design, determining the firm’s future strategic intent, developing business models and prototypes; and choosing the business design alternative that is most appropriate (pp. 30-32). In another case of unreferenced correspondence, Nadler points to an issue of primary importance to Deetz’s critical theory when he speaks to the negative consequences of creating separate statements of strategic vision for internal and external stakeholders – a common practice leading to misunderstanding and poor strategic execution (p.31).

Research Question A corporate board of directors consists of a small, exclusive, carefully selected group of people with the power to decide matters of economic and social consequence. With control over rule-making and resources, board members set an agenda that impacts a large number of stakeholder groups. As the literature suggests, the role of the board in strategy is at once important and poorly understood.

This research applies communication theories to the task of resolving the question: what role do corporate board members play in the formulation, implementation, monitoring, evaluation, and modification of corporate strategy?

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 24 Chapter III: Research Method Scope This thesis focuses on the role played by boards of directors in strategy. As presented in the literature review, this is a complex issue, most often illuminated by economic and management theory, but rarely through the lenses provided by communication theory – the notable exception being Deetz’s critical theory.

Using a case study method, the scale of this work is bounded by a narrowly defined sample population, which is likely to produce findings that can be generalized to some degree. It may also help to “fill in a void in the existing literature, establish a new line of thinking, or assess an issue with an understudied group or population (Creswell, 2007, p.102).”

Disclosure and Worldview My thirty-year professional career as a scientist and business person has included a number of experiences that relate to the topic of this thesis. Entrepreneurial experiences include: serving on boards of directors, owning small companies, investing in angel funded enterprises, consulting to similar companies and their boards on matters relating to development of strategic plans.

My educational background is in the life sciences. After receiving a bachelor’s degree in Biology, SUNY at Buffalo, I worked for a number of large companies in their research and development divisions. For these companies, I conducted experiments, developed new products, and, eventually, became involved in commercializing new technologies. The advancement of my scientific career coincided with increasing responsibility for business unit performance. For me, the quantitative analytical skills developed as a scientist easily transferred into the business arena. However, over the years it became clear that quantitative analysis was insufficient to solve / reconcile complex real-world problems. My current communication and leadership

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 25 studies have contributed to a deeper exploration and appreciation of qualitative approaches to analysis.

My worldview, as expressed by this study, is both that of a social constructionist and as a pragmatist. As a social constructionist, I believe that we create our reality by interaction with our environment -- we shape and are shaped by our relationships with others. As shown in Appendix C: Semi-structured interview, my approach is to use questions that broadly address the research question from several different avenues. In the process of the interview, as information is exchanged, meaning is developed (Creswell, 2007, p.21). As a pragmatist, I have framed the research to put the point of emphasis on utility of knowing in case-specific terms -- in terms that can be applied (p.23).

Research Method To address the research question, the multiple-case study method was selected. As described by Creswell (2007), this approach “involves the study of an issue explored through one or more cases within a bounded system (p.73).” By highlighting issues in the larger context of the case (i.e., the system, bounded system), a case study can explore and provide depth of understanding, insights arising at multiple levels. More specifically, this case is bounded by multiple individuals (i.e., the sample), with each individual having specific credentials. Taken together, as a group, they from a collective / instrumental case. An instrumental approach is employed when the issue (i.e., the board’s role …) is the primary focus and the case serves as “a vehicle to better understand the issue (p.245).”

Procedures for Conducting Case Study A case study is appropriate when cases can be identified and accessed. The cases for examination should have clear boundaries that separate the data from the general population of

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 26 cases in a way that allows for in-depth understanding of the issues targeted for illumination. In this study, the boundaries selected provide a specific perspective on the topic.

Although it is generally desirable for a case study to draw on multiple sources of information (e.g., documents, archival records, etc.), in this case, due to confidentiality concerns of the participants, information and data will be collected exclusively through in-depth interviews (Creswell, 2007, p.75). For the purposes of this study, three cases were prepared in this manner. Upon completion of the case analyses, as a group, cases were reviewed to identify and sort thematic issues that exist across cases -- a “cross-case analysis (p.75)." The cross-case analysis was then used as the basis for assertions and / or interpretation -- the meaning of the case.

Research Assumptions The board's role in strategy is a complex issue not easily studied by quantitative means.

By contrast, qualitative approaches recognize and try to account for the real-world nature of a problem by accepting the fact that language, power and domination, as well as the self-reflective role of the researcher play a part in building a holistic picture of reality (Creswell, 2007, p.248249). From an epistemological perspective (i.e., the relationship between the researcher and that which is being researched), there is a closeness between my topic and the case under examination (p.247).

Ontologically (i.e., the nature of reality), my understanding of the topic is based on my sense that there is a break between the topical literature cited and my personal experience. It's this disconnect that created the need for this study. It is a value-laden issue in many ways. That is, the work that is cited in the literature section puts emphasis on organizational structures, process, and rationalizations of what should be done, and survey findings that prioritize the

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 27 rationalizations. My axiological assumption (i.e., that all research is value laden) is that both the norms of the inquirer and the respondents in this case reflect a practitioner’s view that is not easily reduced to linear processes. And finally, from a rhetorical perspective, it is my belief that the narrative style, including the use of the first- person pronoun “I,” gives greater voice / accountability to the research findings (p.249).

Sample A purposeful sample of key informants (i.e., persons with insider-knowledge) was developed using a snowball or chain procedure. The snowball approach identified “cases of interest from people who know people who know cases that are information rich (p.127).”

For the purpose of this thesis, the purposeful sample consists of three individual investors (angel investors) who have served or currently are serving as non-executive directors on the board of a small to medium size corporation. The rationale for this purposeful sample is that by using these criteria to define a system, the research would collect data from knowledgeable parties who understand the central issues of the study (p.125).

By adding the boundaries (i.e., individual investor, non-executive director, and small to medium size corporations), discussed above, the intention was to add in-depth understanding to the case and to clearly illustrate the issues. The boundaries helped to frame the collective-case (p.74), where each individual angel investor is considered a separate case.

Specific cases to be examined include: •

Key Informant “A” (KI-A): An active angel investor with experience as a nonexecutive board member, “KI-A” holds a BSBA in Finance and a Masters in Accounting. He served as CFO of an oil distributorship, president of a commercial financial services firm, and has experience in a number of industries including: retail, manufacturing, and music. He is active in East Central Europe in a variety of ventures, and serves on boards of several international concerns.

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 28 •

Key Informant “B” (KI-B): An active angel investor with experience as a nonexecutive board member, KI-B holds an undergraduate degree in analytical chemistry, a Doctorate in Law, Masters Degree in Labor Relations, and a Masters of Business Administration. Early in his career, KI-B served as Vice President Administration and / or Vice President Operations for prominent international concerns.

•

Key Informant “C” (KI-C): An active angel investor with experience as a nonexecutive board member, KI-C holds Bachelor of Science and M.B.A degrees.

He has over thirty-five years of experience as an entrepreneur and private investor with over 100 companies in more than a dozen industries. Now retired, in the past, his company provided venture resources to businesses he started, turned around or developed as an active owner, operator, investor, director or advisor and now manages his portfolio of venture investments. Early in his career, he was in product / brand management with a prominent consumer goods firm.

Data Collection

Data collection was accomplished using qualitative interviewing techniques described by H.J. Rubin & I.S. Rubin (2005).

Qualitative interviews are conversations in which a researcher gently guides a conversational partner in an extended discussion. The researcher elicits depth and detail about the research topic by following up on answers given by the interviewee during the discussion. Unlike survey research, in which exactly the same questions are asked to each individual, in qualitative interviews each conversation is unique, as researchers match their questions to what each interviewee knows and is willing to share (p.4).

The goal of this type of topic-focused semi-structured interview was to piece together a response to the research question – with the understanding that each person’s construction would be unique. Topic-focused interviews require preplanning to guide the conversation. Semistructured / focused questions that probe the issue at deeper and deeper levels are regularly employed to keep the interview on track. The interview outline used in this study is presented in Appendix C. Findings from these types of inquires are often used later, in the same session or in a future session, with the interviewee and / or with another member of the collective case, to look for correspondences.

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 29 A trial interview was conducted with a member of the target population to test questions, establish a general idea of the flow and gather impressions. Following evaluation of the trial interview, three in-depth interviews were scheduled. Two individual interviews were performed over the phone and one in person. Each interview was scheduled for sixty minutes. With the permission of the participant, an audio recording of the session was captured. Questions were arranged / presented in a conversational style to make it comfortable for the participants. This means that the interview began with general questions and become more specific as the interview developed. Follow up interviews were schedule to review project-to-date findings, probe specific areas based on preliminary individual and / or cross-case analysis, or to open new lines of inquiry identified in the course of data sorting.

Analysis Recordings, transcripts of recordings – copies of transcripts were provided to key informants for comment -- and field notes generated as part of in-depth interview sessions were reviewed for the purpose of indentifying themes. Initially, each case was developed separately.

Subsequently, as patterns or themes emerged, a matrix was developed – three cases times “x” number of themes – and populated with case specific details. In this structure, a cross-case analysis (i.e., a holistic analysis) provided the basis for an interpretation of the collective-case.

Quality of Research Design The criteria for judging research quality is based on the underlying logic of the design (Yin, 2009). In this study, four criteria are established to test quality: construct validity, internal validity, external validity and reliability. In turn, each test corresponds to a phase in the research design. For example, construct validity, a measure designed to evaluate that operational measures associated with the concept under study are applied correctly, is demonstrated during

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 30 the data collection phase and the specific tactics that support this measure included: having key informants review the case study report, maintenance of a chain-of-evidence, and use of multiple sources of evidence. The design of this study makes provision for the inclusion of each of these elements. That is, key informants were formally invited to participate, they agreed to participate under the terms of a formal agreement, interviews were recorded and transcribed, and they were given an opportunity to review and comment or make corrections on their transcripts. As a multi-case design, this study intrinsically accounted for multiple sources of evidence. Also during the data collection phase, reliability was measured / evaluated. In broad terms, reliability is concerned with demonstrating that the study can be repeated with similar results. In this case, a case study protocol and database provide proof of reliability. The database is composed of written transcripts that can be searched and the case study protocol is represented by the content of this section and the semi-structured interview protocol shown in Appendix C. The criteria for external validity are considered during the research design phase. These criteria are designed to bracket or place boundaries on the population to be studied in order that it is clear to which population the study's findings can be generalized. In this study the population was bracketed by size of firm (small to medium sized), category of director (non-executive), and investor type (angel investor). Finally, the tests for internal validity are designed to account for causal relationships and do not apply to exploratory studies of this type.

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 31 Chapter IV: The Study Introduction Four key informants were recruited. Each one agreed to participate in a semi-structured interview (see Appendix C). However, due to scheduling difficulties, one key informant was unable to provide information. Of the remaining three key informants, two were interviewed by phone and one in a face-to-face setting. The background of each of the three key informants is provided in Chapter III. Following each interview, a transcription of the interview was generated from a digital recording made during the interview with the key informants’ knowledge and consent. A copy of the relevant transcription was made available to each key informant for comment.

Once transcripts were reviewed, and topical areas of interest identified, comments relating to a specific topic / issue were placed in a database. A total of one hundred and sixty two specific passages were entered into the database. The sorted database is the basis on which the analysis and ultimately the conclusion of this case rest. The use of cross-case synthesis, the technique selected to report these findings, is applicable (Yin, 2009, p.156) when two or more cases form the basis of the study.

Findings are presented in accordance with a technique recommended by Yin (p.172) that applies to multiple-case studies. Using this approach, individual cases are not reported separately. Instead, a single descriptive narrative is developed from cross-case analysis. The narrative is developed by presenting each major cross-case issue separately. This approach is a slight change from the protocol anticipated / described in Chapter III. Changes of this type are routine in case study research (p.165).

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 32 Case Synthesis This case report represents the cross-case synthesis of three cases developed by conducting in-depth interviews with key informants. In each case, the key informant established their professional credentials during the interview. In each case it was confirmed that the key informant was actively engaged as an angel investor and has experience serving as an outside / non-executive director in support of his investment.

In accordance with the research design, the interviews were performed following a semistructured line of questions. The interviews were focused on two major issues. First, to establish context, a series of questions related to corporate governance were asked. Second, a series of questions focused on strategy were posed to the key informants. These lines of questioning were designed to place conversational focus on the research question.

Governance From the cross-case synthesis it was learned that governance is viewed as being a role executed on two levels. The first level, internal, is the level of management (i.e., employees and senior management) and the second level is a combination of internal – usually the CEO -- and external, where the external component is filled by outside (non-executive) directors. From the perspective of the key informants the parsing of the board into committees designed to address specific fiduciary tasks is a common approach to organizational role development. Committee assignments mentioned included: executive, compensation, and financial audit committees.

According to the key informants, directors are tasked to establish goals and performance standards and in turn they are tasked to provide service. The services mentioned as being performed by directors include: to provide strategic insights, to provide connections and introductions to third parties, and to offer advice.

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 33 As describe in each case, a board, as constituted in these types of small firms, is generally composed of five members -- one executive representative of the company – usually the CEO -and four non-executives (i.e., outsiders). Common to the cases was the opinion that board service is something that is a choice. Angel investors are most frequently minority shareholders and as such, by serving on a board they may have influence, but not control. They have no obligation to serve on the board of firms they invest in and, in fact, they each reported investing in many firms without personally taking a board seat.

As a matter of choice, board service is viewed by key informants as a significant commitment. A commitment that is made based on a range of motivations, but in all cases key informants mentioned that if they thought they could really bring something unique to the board, in terms of skills or resources, then they were more likely to participate. So, a driving consideration is the need of the company, the need of the board and how these needs matched up with their skills or resources or interests of any given candidate.

Strategy While there was considerable unanimity concerning governance, as the topic changed to strategy there was considerable divergence based primarily on what they viewed as their primary skills or resources or interests.

In each case the key informant was asked to provide his own definition of strategy. They were then provided a standardized definition and asked to speak to each of the elements of the definition. The definition used, expressed in three parts, was stated as follows (Strategy, 2009a): 1.

Strategy or "strategy in general refers to how a given objective will be achieved. Consequently, strategy in general is concerned with the relationships between ends and means, that is, between the results we seek and the resources at our disposal. Strategy and tactics are both concerned with formulating and then carrying out courses of action intended to attain particular objectives. For the most part, strategy is concerned with deploying the resources at your disposal whereas tactics is concerned with employing them. Together, strategy and tactics bridge the gap between ends and means.

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 34 2.

3.

Corporate strategy defines the markets and the businesses in which a company will operate.

Corporate strategy is typically decided in the context of defining the company’s mission and vision, that is, saying what the company does, why it exists, and what it is intended to become.

Competitive strategy or business strategy defines for a given business the basis on which it will compete. Competitive strategy hinges on a company’s capabilities, strengths, and weaknesses in relation to market characteristics and the corresponding capabilities, strengths, and weaknesses of its competitors.”

In two cases, key informants easily related to the definition of general strategy (i.e., strategy in general – part 1 of the definition presented above). When asked about their roles in general strategy, they provided detailed descriptions of how they participate and how they see their roles in general strategy. In summary, they viewed the application of general strategy to issues brought before the board by the executive director (i.e., the CEO). In bringing the issue or proposal forward, the CEO would generally present the means, ways (one or more options), and the desired end. According to these two key informants, their approach would be to focus on the ways – the how of the matter. With the issue of how as a focus, the task for the director would be to probe the CEOs reasoning and test any supporting proofs offered in the form of research or documentation. If necessary, they would go beyond asking questions of the CEO and solicit information from other sources outside the company. As described by these two key informants, they are testing for cause and effect relationships. In this frame, essentially the means and ends are treated as givens and the unknown to be solved for is the how.

Asked about corporate strategy, these same two key informants responded in similar ways. That is, they viewed the issue of mission and vision as being outside the scope of the board. According to these sources, mission and vision are issues for management to address. In discussing the role of the board in corporate strategy, these key informants, saw no role. In contextual terms, both these key informants related to the terms mission and vision as statements that are often developed by marketing or public relations professionals to present the best face on

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 35 things to the employees and other outside stakeholders. These statements, according to both these sources, are difficult to relate to in terms of fiduciary matters.

Again, focusing on the same two cases elaborated upon in the previous paragraphs, these key informants viewed the third element in the definition of strategy provided – competitive strategy – as being outside the role of a non-executive director. However, they both mentioned that from time to time they may be informed by the CEO of elements of the competitive strategy and that it was mostly by way of a courtesy or as part of a board member education initiative.

As opposed to the cases already discussed, the third case developed, as part of this synthesis, was more nuanced. Answers provided by the key informant were at once less precise and more grounded. Provided with the definition referenced above, the key informant responded by offering a critical assessment of the definition. In summary, he viewed all three parts of the definition as being part of the whole that is strategy. He viewed his role as a director to include bringing his skills or interests or resources to the aid of the company and to the benefit of all stakeholders – he viewed the issue of strategy as a considerable personal strength.

In the process of elaborating on strategy, this key informant described having a clear idea of the company’s mission and vision (i.e., corporate strategy) as being critical. He came back to this point several times though the course of the interview. He never expressed mission and vision in terms of statements developed by management for the benefit of employees and outside stakeholders. Rather, he spoke about mission and vision in the context of a working definition that formed a touchstone that could be used for evaluating the company’s progress in relative terms and as an essential foundation against which decision processes could be tested. From this perspective, he saw, what I called corporate strategy as being essential to evaluating issues or proposals brought forward by the CEO – essential to evaluating strategy-in-general.

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 36 Interestingly, this key informant viewed probing management proposals in totality. That is, he would question the means, ends and the how – not just the how – and then take the next step of tying the answers back to the mission and the vision.

Again, using the mission and vision as an anchor, this key informant was very comfortable engaging management, other board members and other stakeholders in dialogue concerning competitive strategy. He sees understanding competitive strategy at a very fine level of detail as being important. For example, he monitors input from customer in terms of what they say, but also he’s interested in what they actually do.

This case may be an anomaly, but it is very instructive. This key informant referred to the goal of his work, as director, several time during the interview. In each case it was a variation on the statement: the goal is to build strong, healthy, sustainable companies and if that’s’ done, the rest will take care of itself. He wants to contribute to that goal in a meaningful way.

Other Major Contextual Issues In the process of analyzing the database associated with this cross-case synthesis, a number of items of interest were recognized as being important to understanding this case from a communication theory perspective. These other major issues fall under the general headings of custom and culture, reality as the key informants understand it, specialization, and a desire for consensus among board members.

In all three cases, there are references to roles and rules that set the structure of board practices. For example, there is no strategy committee not because one isn’t needed, but because the boards of large companies aren’t engaged in strategy issues – they are simply too complex – by custom strategy is not a board issue.

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 37 All key informants mentioned that in their experience, they have served on boards with persons that were self-interested, unqualified or in some other way disruptive to board harmony.

This reality, according to the informants, takes many forms. Their point is that board practices are highly variable. Another reality issue mentioned several times relates to the pressure to act in harmony and, whenever possible, to achieve consensus in the decision making process.

As discussed earlier, board members tend to focus on issues that maximize their skills or interests or resources. This process acts to make directors experts in a narrow area. The notion of specialization is closely aligned to the notion of consensus in the sense that, according to the informants, specialists are relied on to lead the group toward a recommended solution.

Analysis Introduction In this section, the cross-case synthesis presented above is examined through the lenses offered by communication theory. But first, upon re-examining the cross-case synthesis, I feel that one of the key informants was using a different baseline definition of strategy. While clearly an afterthought, my interpretation is that his thinking is more in line with the following definition: “Henry Mintzberg, in his 1994 book, The Rise and Fall of Strategic Planning, points out that people use "strategy" in several different ways, the most common being these four: 1.

2.

3.

4.

Strategy is a plan, a "how," a means of getting from here to there.

Strategy is a pattern in actions over time; for example, a company that regularly markets very expensive products is using a "high end" strategy.

Strategy is position; that is, it reflects decisions to offer particular products or services in particular markets.

Strategy is perspective, that is, vision and direction.

Mintzberg argues that strategy emerges over time as intentions collide with and accommodate a changing reality. Thus, one might start with a perspective and conclude that it calls for a certain position, which is to be achieved by way of a carefully crafted plan, with the eventual outcome and strategy reflected in a pattern evident in decisions and actions over time. This pattern in decisions and actions defines what Mintzberg called "realized" or emergent strategy (Strategy, 2009b).�

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 38 This definition, with its inclusion of concepts related to position, time and patterns helps to illuminate a possible underlying reason why this key informant placed such emphasis on having a clear understanding of mission and vision – his touchstone from which to evaluate change.

Symbolic Convergence The cross-case synthesis, as viewed through the symbolic convergence lens suggests that the rhetorical vision introduced by the term strategy generates a strong response. According to all three key informants, a firm’s strategy – by whatever definition -- is not an issue of discussion normally of concern to non-executive directors. According to key informants, strategy is not typically a director’s job – not my job. As stated earlier, strategy is customarily not an issue addressed by the boards of large firms due to the complexity of the issues. However, it is important to remember that the key informants were selected because they were engaged with small firms in the early stage of development – complexity is present, but is not a barrier to understanding like it is in a larger organization. Even so, two of the three key informants repeatedly cited, by comparison, the relationship of their approach to a role in strategy to the practices of directors in larger firms. Of special interest, the one key informant who expressed skill and special interest in the role of non-executive directors in strategy never referenced or made comparisons to how it’s done in larger companies. He was totally focused on the topic: angel investors, non-executive directors, and their role in strategy. Through a combination of awareness and focus, this key informant was able to avoid the fantasy generated by the imagery associated with the large company comparative.

Functional Perspective A review of the data suggests that in each of the individual cases, key informants were actively making application of the four frames proposed by the functional perspective – problem

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 39 analysis, goal setting, identification of alternatives, and evaluation of positive and negative aspects – to reach decisions concerning strategy. In one case, the key informant made a point that consideration of negative aspects should be given special emphasis during deliberations.

Adaptive Structuration The cross-case synthesis confirms one of the basic tenets of this theory that holds; people can do as they wish. In each of the individual cases, key informants defined how they addressed their fiduciary responsibilities related to engagement in strategy. With regard to rules and resources – personal relationships, materials, possessions, topic expertise, and rules and resources borrowed bro the wider culture – the cross-case synthesis provides evidence that in the area of strategy involvement, directors in small firms borrow from or rely on the governance models of larger firms.

Critical Theory of Organizations A major element of all critical theory is its ability to illuminate root causes of social injustice. Class struggle is one common theme – how the working-class are exploited for the benefit of those in power. Another common theme relates to how groups in power act to maintain the existing system, avoid change, and thus continue to rule.

The evidence provided by the cross-case synthesis suggests that directors, even directors with a financial stake in an organization are the target of managerial control-- as practiced or imposed by a CEO. As an example, key informants described situations where a CEO presents strategy to the board as information – a roadmap that serves as a controlling or prescriptive device – the board may have little interest or little understanding and by default strategy proceed.

Key informants also described the situation where a CEO, and perhaps a highly engaged director or other respected person, presents strategy to the board for the purpose of seeking consent. This

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 40 approach is also problematic and an expression of control. Given, according to all key informants, the strong desire for directors to work toward consensus it is likely that some directors will agree with management’s proposal even though they may not fully understand.

The notion of consent as presented in this theory is closely related to the theory of groupthink, in that the need for harmony among group members can drive decision-making.

Unlike other stakeholders that have limited access to a firm’s management team and records, directors can, if they choose, engage in strategy at a level of co-determination; through either involvement or participation. Notably, involvement in this context is slightly different than stated in the theory. In the formal theoretical construct, stakeholder (e.g., worker) involvement is part of an information model designed to promote acceptance though codetermination, but the involvement process is not structured to allow the stakeholder to have a say in decision-making. Obviously, in the context of stakeholder as director, a say in the decision-making process would be the norm. Given this modification, co-determination options – involvement and / or participation – differ by stakeholder group rights; workers are involved by invitation, whereas, directors can initiate involvement or participation without invitation.

In the synthesis, all key informants expressed concern that group norms associated with strategy do promote managerial control. One key informant was heavily involved in strategic matters and reported that his goal was to be able to participate in meaningful dialogue with the CEO. Figure and Ground According to this theory, figure cannot be determined in isolation – a ground must exist for a figure to be noticed. Phrased differently, ground provides context from which meaning or

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 41 significance emerges. As figure rises from ground, figure also recedes back into ground; therefore, ground contains all figures at once – with each new figure displacing the old.

The cross-case synthesis suggests that ground – using conversations about mission and vision to be a surrogate for a discussion of ground -- is a matter of some contention. One key informant viewed understanding ground as a matter for management, another considered understanding ground important, but difficult for a management team to define and even more difficult to define at the board level, and the third acknowledge the difficult in developing an understanding of ground.

Discussion The cross-case synthesis, which is based on the evidence obtained from in-depth interviews of key informants as presented above, provides the foundational information from which thematic content was sorted and then analyzed using the selected theoretical lenses.

While there was unanimity of thought on the subject of governance, there is evidence that the issue of corporate strategy is an area of interest that is beyond the scope of board members for a number of communication related reasons. First, management control represents a barrier to board involvement. Co-determination of corporate strategy either through involvement or participation requires board members to be grounded in the business (i.e., markets, operations, etc.). Second, rules and resources borrowed from large company boards provide inappropriate imagery or guidance for members of small company board members.

From the data collected, it is clear that board members have wide latitude in relation to how they view the role of the board in corporate strategy; however, in each case, key informants recognized this as an issue, which upon reflection, deserves greater attention and discussion.

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 42 Chapter V: Conclusion and Summary Introduction In qualitative terms, using communication theory as a guide, the findings and analysis support a relatively clear response to the question, what role do corporate board members play in the formulation, implementation, monitoring, evaluation, and modification of corporate strategy?

In review, corporate strategy defines the markets and the businesses in which a company will operate. Corporate strategy is typically decided in the context of defining the company’s mission and vision, that is, saying what the company does, why it exists, and what it is intended to become. This is the same definition used across cases during interviews.

Conclusion Without the ground provided by corporate strategy, directors cannot understand the meaning of specific figures, where formulation, implementation, monitoring, evaluation, and modification are all separate figures. By extension, without the ground provided by an understanding of corporate strategy, a director will find it difficult to deal with strategy-ingeneral and may become increasingly susceptible to managerial control.

Summary In this time of economic upheaval, all over the world, people are asking, what happened?

Stakeholders and more specifically stockholders around the globe are directing their inquiries to chief executive officers (CEOs) of major corporations and no clear answers are forthcoming.

Naturally, people are upset and demanding to know, where is the oversight? Boards of directors, as chartered representatives of stockholders, have a lot to answer for.

In an effort to resolve the general questions posed by the public, this research focused specifically on answering the question: what role do corporate board members play in the

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 43 formulation, implementation, monitoring, evaluation, and modification of corporate strategy? In support of this effort the topical literature was reviewed, as well as the applicable communications theory, a qualitative approach to information gathering and analysis was developed and executed.

What is clear from this study, directors have the opportunity to play any role they want in corporate strategy, and by extension general or competitive strategy, but to be effective they must first take the initiative to establish a grounded view that allows for recognition of changing patterns in the environment. Based on discussions with key informants, it is difficult to imagine a director being able to fulfill fiduciary responsibilities without being in a co-determinant position with management regarding corporate strategy. And, finally, angel investors serving as board members to smaller firms may be inappropriately applying rules and resources established to benefit larger organizations.

Based on the research design and findings, this area of inquiry could benefit from more focused investigation. For example, instead of using six communication theories as the basis for analysis, it may be appropriate in the future to select one or two theories to probe the issue at greater depth.

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 44

Works Cited Amparo, S. J., Roure, J., & Aernoudt, R. (2005). Business angel academies: Unleashing the potential for business angel investment. Venture Capital, Vol. 7, No. 2, 14-165.

Angel Investor (2009a). Retrieved March 5, 2009 from: http://www.investorwords.com/212/angel_investor.html Angel Investor (2009b). Retrieved March 3, 2009 from: http://en.wikipedia.org/wiki/Angel_investor Banning, K. (2004). Corporate governance and the new chief executive: How institutional power affects the agency contract. Corporate Ownership & Control, Vol. 2, No. 1, 73-87.

Bormann, E. G. (1982). The symbolic convergence theory of communication: Applications and implications for teachers and consultants. Journal of Applied Communication Research, Vol. 10 (No. 1), 50-61.

Bormann, E.G., Cragan, J.F., & Shields, D.C. (1994). In defense of symbolic convergence theory: A look at the theory and its criticisms after two decades. Communication Theory, November, pp. 259-294.

Bormann, E.G., Cragan, J.F., & Shields, D.C. (2003). Defending symbolic convergence theory from an imaginary Gunn. Quarterly Journal of Speech, Vol. 89, No. 4, 366-372.

Bormann, E. (2006). Symbolic convergence theory. In E. Griffin, A first look at communication theory (pp. 37-49). New York, NY: McGraw-Hill.

Brauer, M., & Schmidt, S. L. (2008). Defining the strategic role of boards and measuring board's effectiveness in strategy implementation. Corporate Governance, Vol. 8 (No. 5), pp.

649- 660.

Corporate Governance (2009a). Retrieved March 3, 2009 from: http://en.wikipedia.org/wiki/Corporate_governance Corporate Governance (2009b). Retrieved March 3, 2009 from: http://corpgov.net/library/definitions.html Creswell, J. W. (2007). Qualitative inquiry & research design: Choosing among five approaches (2nd ed.). Thousand Oaks, CA: SAGE Publications.

Deetz, S. (1992). Democracy in an age of corporate colonization: Developments in communication and the politics of everyday life. Albany, NY: State University of New York @ Albany.

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 45 Deetz, S. (2005, May). Stakeholder engagement, corporate governance, and communication.

Presented at the Governance without Government: New Forms of Governance in the Knowledge Economy Conference, Cardiff, Wales.

Deetz, S. (2006). Critical theory of communication approach to organizations. In E. Griffin, A first look at communication theory (pp. 300-314). New York, NY: McGraw-Hill.

Eisenhardt, K. M. (1989). Agency theory: An assessment and review. The Academy of Management Review, Vol. 14, No. 1, 57-74.

Federman, M., DeKerckhove, D. (2003). McLuhan for managers: New tools for new thinking.

Toronto, Ont., Canada: Viking Canada.

Fiegener, M. K., & Brown, B. M. (2000). The adoption of outside boards by small private US firms. Entrepreneurship & Regional Development, Vol.12 (No. 4), 291-309.

Forbes, D. P., & Milliken, F. I. (1999). Cognition and corporate governance: Understanding boards of directors as strategic decision-making groups. Academy of Management Review, Vol. 24, No. 3, 489-505.

Fried, V. H., Bruton, G. D., & Hisrich, R. D. (1998). Strategy and the board of directors in venture capital-backed firms. Journal of Business Venturing, Vol. 13 (No. 6), 493-503.

Gabrielsson, J., & Winlund, H. (2000). Boards of directors in small and medium-sized industrial firms: Examining the effects of the board's working style on board task performance.

Entrepreneurship & Regional Development, Vol. 12, 311-330.

Griffin, E. (2006). A first look at communication theory (6th ed.). New York, NY: McGraw-Hill.

Hendry, K., & Kiel, G. C. (2004). The role of the board in firm strategy: Integrating agency and organizational control perspectives. Corporate Governance, Vol. 12, No. 4, 500-520.

Hirokawa, R. Y. (1985). Discussion procedures and decision-making performance: A test of a functional perspective. Human Communication Research, Vol. 12 (No. 2), 203-224.

Hirokawa, R., & Gouran, D. (2006). Functional perspective on group decision making. In E. Griffin, A first look at communication theory (pp. 249-261). New York, NY: McGrawHill.

Ingley, C. B., & Van der Walt, N. T. (2003). Board configuration: Building better boards.

Corporate Governance, Vol. 3, No. 4, 5-17.

Janis, I. Groupthink. In E. Griffin, A first look at communication theory. New York, NY: McGraw-Hill.

Janis, I. (1982). Groupthink (2nd ed.). Boston, MA: Houghton Mifflin.

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 46 Lynall, M. D., Golden, B. R., & Hillman, A. J. (2003). Board composition from adolescence to maturity: A multi-theoreticatic view. Academy of Management Review, Vol. 28, No. 3, 416-431.

Madill, J. J., Haines, G. H., & Riding, A. L. (2005). The role of angels in technology SMEs: A link to venture capital. Venture Capital, Vol. 7, No. 2, 107-129.

McLuhan, M. & McLuhan, E. (1988). Laws of media: The new science. Toronto, Ont., Canada: University of Toronto Press.

Nadler, D. A. (2004). What's the board's role in strategy development? Engaging the board in corporate strategy. Strategy & Leadership, Vol. 32 (No. 5), 25-33.

Non-Executive Director (2009a). Retrieved March 3, 2009 from: http://en.wikipedia.org/wiki/Non-executive_director Non-Executive Director (2009b). Retrieved March 3, 2009 from: http://en.wikipedia.org/wiki/Non-executive_director Poole, M. S. (2006). Adaptive structuration theory. In E. Griffin, A first look at communication theory (pp. 262-274). New York, NY: McGraw-Hill.

Poole, M. S., Seibold, D. R., & McPhee, R. D. (1985). Group decision-making as a structurational process. Quarterly Journal of Speech, Vol. 71, 74-102.

Ravasi, D., & Zattoni, A. (2006). Exploring the political side of board involvement in strategy: A study of mixed-ownership institutions. Journal of Management Studies, Vol. 43, No. 8, 1671-1702.

Sandvika, B. (2004). Group dynamics within the board of directors and the board's strategy involvement. Master Thesis - GRA 69955 at the Norwegian School of Management.

Stiles, P. (2001). The impact of the board on strategy: An empirical examination. Journal of Management Studies, Vol. 38, No. 5, 627-650.

Strategy (2009a). Retrieved March 3, 2009 from: http://home.att.net/~nickols/strategy_forms.htm Strategy (2009b). Retrieved March 3, 2009 from: http://home.att.net/~nickols/strategy_definition.htm Tihanyi, L., Johnson, R. A., & Hitt, M. A. (2003). Institutional ownership differences and international diversification: The effects of boards on directors and technology opportunities. Academy of Management Journal, Vol. 46, No. 2, 195-211.

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 47 Tuckman, B. W. (2009). Bruce W. Tuckman: Forming, storming, norming and performing in groups. Retrieved March 3, 2009, from: http://www.infed.org.thinkers/tuckman.htm Wittenbaum, G.M., Hollingshead, A.B., Paulus, P.B., Hirokawa, R.Y., Ancona, D.G., Peterson, R.S., et al. (2004). The functional perspective as a lens for understanding groups. Small Group Research, Vol. 35, No. 17, 17-43.

Yin, R. K. (2009). Case study research: Design and methods (4th ed., Vol. 5). Thousand Oaks, CA: SAGE Publications.

Zong, L. (2005). Governance lessons from the private equity industry. The Journal of Private Equity, Vol. 9, No. 1, 63-66.

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 48

Appendix A: Invitation to Participate as a Research Subject

Master of Arts in Communication and Leadership Studies School of Professional Studies Gonzaga University Spokane, Washington

April, 2009 Dear Mr. ________, My name is Kevin McConnaghy, and I’m working toward a Master of Arts in Communication and Leadership Studies at Gonzaga University. Now at the end of the program, I’m in the process of completing a thesis. The working title, The Role of Corporate Board Members in Strategy, will give you a sense of the scope of the research. However, I should be clear that this is a communication focused inquiry – meaning that communication theories will be used to frame the findings and conclusions.

The principle research question is: what role do corporate board members play in the formulation, implementation, monitoring, evaluation, and modification of corporate strategy?

To answer the question, I have designed a research approach based on the case study method.

The case to be developed will be based on the experience of knowledgeable individuals (i.e., key informants that poses comprehensive insider knowledge).

This is a collective case that the focus is on the issue (i.e., role in strategy). In my analysis and conclusions, I propose to acknowledge participation by name; however, there will be no direct attribution of comments without first gaining approval. Participants will have an opportunity to review transcripts and comment on them – making corrections, additions or deletions as desired.

Your participation in the case study is strongly desired. In terms of commitment, I’d ask that you agree to a semi-structured telephone interview lasting approximately one hour (the interview will be recorded), take time to review the interview transcript, and answer a few follow up questions as appropriate. I hope you will be agreeable to this arrangement – please indicate your willingness to participate by reply email.

Regards,

Kevin McConnaghy Email: mcconnaghykv@appstate.edu Phone: 919-274-2178

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 49 Appendix B: Agreement to Participate as a Research Subject

Master of Arts in Communication and Leadership Studies School of Professional Studies Gonzaga University Spokane, Washington I hereby agree to be interviewed by Kevin McConnaghy in connection with his thesis question. I understand that participants will be identified by name in the text and that my experience or qualifications will be part of the report. I also understand that there will be no direct attribution of my contribution without first gaining my approval. Further, I understand that the interview will be recorded and a transcript of the conversation will be made available to me for comment, correction, addition or deletion as I deem appropriate.

In agreement with the terms presented in the paragraph above, I have signed my name in the space provided below and faxed the completed document to Kevin McConnaghy @ 828-2622027 or I have emailed Mr. McConnaghy (mcconnaghykv@appstate.edu) to confirm my acceptance.

Name: ______________________________________ Date: _______________________________________ Mailing Address: ______________________________ ____________________________________________ ____________________________________________ Email Address: _______________________________ Telephone #: _________________________________

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 50

Appendix C: Semi-structured Interview Outline and Notes

Areas to Explore: 1. Governance (Context & Adaptive Structuration?) a. Angel Investor (Context) b. Non-Executive Director (Context) c. Decision-making (Context &Functional Perspective?)

2. Strategy a. Role in Strategy (Context &Symbolic Convergence?) i. Areas of involvement by priority ii. Views on topic 3. Corporate Strategy (Figure & Ground?) i. Mission ii. Vision 4. Vision (Critical Theory & Symbolic Convergence?) a. Information Model (Managerial Control) i. Strategy ii. Involvement b. Communication Model (Co-determination) i. Consent ii. Participation 5. Practices (Functional Perspective & Adaptive Structuration?) a. Committee Structure, resources? b. Records Semi-structured Interview Questions Governance 1.

In broad terms, can you describe to me your understanding of corporate governance? o If governance is a process, then it bounded by customs as well as policies, laws … if you will, share with me some of the customs you’ve encountered while serving on various boards?

2.

This case is being developed in a particular context. One element of the contextual definition involves the perspective of an angel investor. What is an angel investor? o Could you explain what qualifies you as an accredited investor? o Beside financial gain, what motivates an investor to take a position in an early stage firm? Is that typical? o I assume that an exit strategy plays an important role in your thinking. How would you define an exit strategy … multiple of investment, time, other?

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 51 3.

Another contextual issue relates to the role in governance of a non-executive (i.e., outside director) director. How do you understand the role? o Specifically what tasks or duties fall under the non-executive position description? o As an outsider, is there any priority to these areas of concern? o Tell me about the workload … what issues or tasks take up your time?

4.

Governance involves making decisions, explain the typical decision making process used by the boards you sit on … if there is a typical process? o To a large degree, I presume, governance relies on the collective wisdom of the assembled board to take action. At the same time, the action taken must fit into some structure that allows the board to remain cohesive. As a group, what kind of formal or informal rules or resources do fall back on when making difficult decisions?

Strategy

1.

Strategy is one of those terms that mean different things to different people. In this specific context -- angel investor, non-executive director and a seasoned business person -- how would you define / describe the role of the board of directors to a new outside board member? o o o o

2.

What are the areas of priority?

What aspects of strategy are most likely to engage non-executive directors?

Why? Please expand on this line of thought; a “good” strategy will … do what, to / for whom, for what purpose, etc.?

Before going further, I’d like to get some clarity on the issue of strategy by presenting you with my operational definition of strategy. To me, strategy falls in three categories: General (how a given objective will be achieved … relationship between means & ends), Corporate (defines markets and the business that will be operated … mission & vision), Competitive (SWOT, 5 forces – buyers, suppliers, substitutes, new entrants, and rivalry among existing firms). These frames; general, corporate, and competitive each involve you as a non-executive director in different ways. o First, is this definition, in three parts acceptable to you? How would you change it? o Second, in broad terms how are you engage in: General strategy?

Corporate strategy?

Competitive strategy?

Revised 09-0415 Kmcconnaghy Thesis -- Final Draft, Page 52 Corporate Strategy 1.

During this next part of the conversation, I’d like to focus on corporate strategy (i.e., markets addressed and the business that will be operated … mission & vision). How are these statements developed and who is involved? o From your perspective as a board member, what purpose is served by these statements? o Focusing on the vision statement, what would you expect the statement to express? o If you where to outline the elements of a vision statement what would they be?

Vision

1.

It has been suggested that a vision statement primarily represent a marketing or public relations tool, what are your thoughts on that suggestion?

2.

It has also been suggested that at the board level the vision statement should include measures of growth, relative positions in markets and industries or returns to shareholders. They provide benchmarks against which to assess strategic alternatives.

What are your thoughts on this approach? o Why would you or wouldn’t you want to have this information widely shared among the stakeholders? o Is your “exit strategy” a legitimate part of a vision statement?

3.

There is a theory that holds strategy is a tool to control workers by one of the following approaches: stratagem (i.e., force or trick), seeking their involvement (i.e., awareness, but no say), and working to gain their consent (i.e., inform and persuade, but not necessarily gain agreement), or participation (i.e., though dialogue where both parties create meaning, if not agreement) … managerial control (i.e., strategy / stratagem) vs. codetermination (i.e., involvement vs. participation).

By contrast, an old friend of mine, former COO & Vice-chair of Quintiles, once told me that matters of corporate strategy (i.e., mission and vision) are often contentious and what is need is not so much approval as acceptance. o o o o

What role does the board play in acceptance?

How does the board go about the process of coming to accept?

How do they work toward or contribute to the acceptance by stakeholders?

Why is acceptance so important?

(End)