By: Steve Zimmerman as part of the Blog Series, “Rethinking Strategy”
If the road to success could be paved with a plan, nonprofit organizations would have it made. But it can’t. We live in a dynamic world where constituent needs, competitive and collaborative pressures, political forces and funding streams change quickly. Adding to this difficulty, many of the challenges that nonprofits are seeking to address are the result of multi-generational neglect while short-term thinking demands results today to keep donor interest.
While many organizations today struggle to adapt to this dynamic environment the primary management tool they use, strategic planning, provides a fixed three to five year roadmap based on set assumptions. It doesn’t work.
There is nothing new in this statement. It has been said by many in the last several years.
Dana O’Donovan and Noah Flower wrote in Stanford Social Innovation Review in 2013 that, “The world has become a more turbulent place, … [and] the traditional approach to strategic planning is based on assumptions that no longer hold. The static strategic plan is dead.” They’ve been joined in this chorus from many others in both the nonprofit and for-profit sectors.
Now the bigger questions: Why? And how can we make it better?
A study in Harvard Business Review revealed that only 11% of for-profit executives found that strategic planning was worth the resources. Even worse, the same study found that most strategic decisions are made “in spite of the strategic planning process, not because of it.” The same is true in the nonprofit sector.
Organizations often look for a strategic plan “because the last one ran out” or because they “need a roadmap” to the future. More likely, they’re looking for a way to put off making the hard decisions or to delay taking up the hard work of maximizing their impact and remaining financially viable.
To be fair, many nonprofit executives and staff dread strategic planning. It is done not with excitement, but rather with the fear that it will lead to a laundry list of things to do without ever taking anything off their plate. Overworked staff will get more work, the board will feel they’ve “done their job,” and the organization will continue to operate as it has for years.
What is it about strategic planning that makes it ineffective?
We see four characteristics that stand in the way of effective, ongoing strategic decision-making:
1. Episodic Planning Intervals
One of the primary challenges with strategic planning is that it is viewed as a periodic event, conducted at an arbitrary time of every three to five years. David LaPiana captured this extremely well in his book Nonprofit Strategy Revolution. He visually demonstrated the “Planning-Doing Cycle” which depicts planning for three to five years and then implementation followed by planning again. “The reality [is] nonprofit life requires a faster, continuous cycle of strategic thinking and action … not a separation of organizational life into reflective and active periods.”
The idea that implementation is the end of strategic thinking is ridiculous. Envisioning the future can be pretty hard, if not impossible – especially with limited resources. Organizations need to be clear about the impact they want to have, but creating a roadmap to achieving that goal isn’t a good use of resources. Rather, nonprofit leaders need to establish an organizational mindset that includes a shared understanding of where the organization wants to go, the key ingredients necessary and the assumptions held about how it will get there. This isn’t a time restricted plan, but an overarching operating ethos that can hold for significant periods of time. With the bones in place to guide, the organization can then learn from implementation and adapt to changing environments. This big picture framework allows for strategic thinking to permeate through all involved with the organization as opposed to being kept in the written document.
2. Goal Setting
The advent of the “Big Hairy Audacious Goal” (or “BHAG,” as true believers call it) has also wreaked havoc on strategic planning. Too many strategic plans have become lists of goals for the organization without the strategies to back them up.
While being able to show progress toward a goal is important, nonprofit leaders need to think carefully about the metrics they choose and the goals set. We need to ask ourselves, “Do we have a proper baseline for understanding where we are today?” A “BHAG” may be fun to contemplate – but is it really achievable? Our cities are littered with broken promises aimed at creating better communities. We need to acknowledge that change is slow and setting a fixed goal at the beginning is arbitrary. Let’s spend our time understanding and evaluating potential strategies that could lead toward greater impact. Let’s spend our time exploring the implications of these strategies and making sure that we minimize unintended consequences.
3. Separating Mission and Money
You’re at the end of your planning time. The board has had some great discussion about strategies to employ to achieve greater impact and you’ve even prioritized which ones you’ll pursue. Now is the moment of truth – how will you pay for it? Too often this comes up at the end of the meeting and is dismissed with a simple phrase, “We just have to raise the money to pay for it.”
Raising money isn’t easy. We all know this, yet we fool ourselves into believing that if we have a compelling idea and communicate it more clearly to more people that money will come flowing in. Fundraising, marketing and communication all require the same strategic thinking – and investment – as programmatic ideas. Yet, we tend to segregate discussions about revenue sources from impact discussions.
Nonprofits can’t afford the money or time to have a separate strategic plan and business plan. We need integrated plans that take both into account. A strategic plan that does not address financial resources is not a plan – it is a dream. Our communities need us to stop dreaming and start acting.
4. Positive Bias
The opposite of separating mission and money is believing that there is a new strategy – usually a revenue strategy – that the organization just hasn’t found yet. Boards often think that by implementing a new strategy, the organization have better results than if they fully invested in their current strategies. How do we have a truly candid conversation about our organization’s strengths and shortcomings? How can we discuss whether a particular strategy has run its course or deserves more time? Rather than focusing on new, more exciting activities, organizations need to also analyze what they’re currently doing and decide what to continue and what to stop.
Where do we go from here?
These are just some of the challenges with strategic planning. Nonprofit staff and board members can probably easily add to the list – and I encourage you to do so. Some nonprofit consultants will argue that if executed correctly, traditional strategic planning would address these challenges. They may be right, but unfortunately it isn’t usually executed correctly.
So how do we fix it? It is easier to see the drawbacks in the current strategic planning process than it is to build a new one. In this blog, under the name “Rethinking Strategy,” we’ll begin to articulate our thoughts on how we here at Spectrum think it can be implemented. We’ll offer a new strategic model which moves from “strategic planning” to “strategic doing.” A model that is designed to support the strengths of board and staff and allow for a collective leadership which can guide organizations toward exceptional impact in a financially viable manner.
We invite you to join the conversation. Our communities’ challenges are big and funding is getting harder. Now is the time to think strategically about how we work to create a better future.