The Strategic Premortem

Board members collaborating with the senior leadership of a credit union can benefit from a strategic premortem. By analyzing the strategic goals under the assumptions that they have failed or “died” leaders can generate risks to be aware of. This approach requires a unique critical lens and set of skills that directors should flex and develop.

By Kevin Smith          

Here we go again with the Latin phrases. Kevin is at it again as if he’s back at his Jesuit high school. The postmortem is a common enough phrase: the after-death analysis of what went wrong. Beyond the realm of autopsies, the postmortem is a familiar approach to finding out what went wrong with projects that failed to reach their objectives. But where does the premortem fit in?

As you may have intuited, the premortem comes at the beginning of a project or strategic planning cycle. Those involved review the plan with an eye to the future where the plan has failed to reach its goals. This is an opportunity to consider what might go wrong and plausible reasons for failure.

The Value

This is a valuable exercise for board members who should always be looking for ways to improve their strategy muscles. Harvard Business Review cites research that “found that prospective hindsight—imagining that an event has already occurred—increases the ability to correctly identify reasons for future outcomes by 30%.” The approach requires a different kind of focus than the board typically engages in. It goes beyond a standard risk analysis.

Don’t Go It Alone

We recommend that the board engage in the premortem analysis along with the senior leadership of the credit union rather than on its own. This may require a level of operational insight that the board may not have (and a level that we don’t necessarily encourage). But it is helpful for the board to participate in this kind of analysis.

One Approach

One approach to the strategic postmortem is to review the plan, inform the group that the plan has failed, then ask all of the participants to independently write down as many reasons as they can think of for the project’s demise. Group members share their responses and look for themes, outliers, and probabilities. Anonymity can be a value in the process depending on how much psychological safety there is in the room. This may allow not only for candor, but also for unique insights that aren’t part of a risk profile.

Resources

There are a number of ways to perform the strategic premortem. A Google search will yield plenty. A template such as this one from Creately may help you organize the process and not recreate the wheel.

Be Careful But Flex

When taking on this exercise, it is important for directors to be careful in their analysis and not “punt” with oversimplifications like “the regulators put us out of business” or “we were forced to merge.” It’s critical for credit union directors to ramp up their capabilities regarding strategy to address the complexity of our industry and rapid evolution. The strategic premortem is but one of many lenses that help improve understanding and ability. Try as many as possible.  

“Kill the Company”

Another similar option is Lisa Bodell’s Kill the Company. In her book, Bodell outlines approaches for analyzing your organization from the point of view of an outsider in the same industry with the intent of putting you out of business. This requires participants to not only understand the strategy of the organization, but also to be frank and open about what weaknesses are open to exploitation. It can be difficult to think this way, but tremendously valuable. Be aware of egos in the room that would balk at this kind of candor. Reinforce that this is for the good of the organization.

Sometimes we need to mix it up, make sure we’re not stuck in a rut with our strategic thinking. This is part of the job of the board. Give it a shot!

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