Hearing from Puuinfo’s business members and partners, an article series

Jarmo Pekkarinen, CEO of LapWall Oyj: How important are management and strategy to the success of a company or organisation?

Read the article in Finnish here.

Good management creates the preconditions for a company or organisation to flourish. This potential often goes unrealised – in small and medium-sized enterprises in particular – when the board and management team do not function properly or do not exist at all. When a CEO only focuses on running company operations, a company may run into surprising challenges. A capable board can significantly contribute to a company’s success, so this is an opportunity that should not be missed.

The annual general meeting elects the board of directors, who then select the CEO to manage operations. A board’s most important task is to help the CEO help the company. A new CEO needs to understand what the owners are trying to achieve (their strategy) and build an organisation with a business strategy that can reach those goals. Typically, the CEO works with a leadership team to draw up the business strategy, which is then approved by the board. The roll-out of this strategy sets the company up to prosper and ensures it steers the course set by its owners.

The leadership team serves as an “enabler” for the CEO and handles practical tasks while keeping an eye on the entire company’s business operations from three perspectives: current operations, future prospects, and good governance. Board meetings review these issues at a predetermined cadence.

Risks are an inherent part of business, and management plays a key role in identifying and preparing for them. Surprises are usually the result of poor preparation.

For companies operating a project business, there are four key risk areas: production, cybersecurity, receivables, and business opportunities. The risks concealed within opportunities are often overlooked, which can be perilous to a business. We need to recognise market opportunities when they present themselves, and consider how our own companies can benefit from them.