In a murder trial, to prove that a defendant was guilty the prosecution must establish that:
- The victim was killed;
- The defendant unlawfully caused the death of the victim; and
- The defendant did so with “malice aforethought.”
These are known as the elements of the crime. Elements have been defined for many legal actions. They are the major things which all must be proved in order to establish the prosecution’s (or plaintiff’s) case.
We can by analogy think of the elements of a major business decision. In a board context, where typically management will recommend an option for the board to approve or reject, these are the major things that management must establish to the board’s satisfaction. The recommended option must be:
- Strategically sound;
- Financially sound;
- Operationally sound;
- Prudentially sound (i.e., acceptable from a risk perspective)
- Ethically sound; and
- Legally sound.
These are the minimal conditions; a decision satisfying these conditions would be reasonable or defensible. It may not be the best decision. For that, an additional element point must be established:
- The option is on balance better than any other relevant option across elements 1-6.
These elements are often not independent matters. For example, what counts as financially sound will depend on the organisation’s strategy (and ultimately of course on its purpose).
Each element must in turn be established by argumentation, governed by standard principles of clarity and rigor.
Associated with each element are a series of critical questions. Addressing the critical questions generates supporting arguments or objections. For example, critical questions for strategic soundness might include:
- Is there a wider corporate strategy pertaining to this type of decision?
- If so does the proposed option align with that strategy?
- If there is no wider strategy, or no alignment, is this option nevertheless strategically defensible?
The elements listed above are generic, suiting a typical major business decision. However, just as different crimes have their distinctive sets of elements, so particular categories of business decision would have tailored sets of elements.
The “elements of the case” approach can be used in a variety of ways. It can for example guide the development and structure of the board paper and presentation in which the recommendation is advanced. Or, it might be used within the board meeting to structure attention and discussion.