New Thoughts on an Old Nonprofit Topic: Strategic Planning

Planning Signposts

On a panel of accomplished arts executives where I recently appeared, we discussed the relationship between the board and the leadership of performing arts nonprofits. At one point, someone asked about the importance of strategic planning and succession. Being opinionated on this topic (and having taught it to artists), it was easy to weigh in.

Perhaps the single most difficult thing a nonprofit leader has to do, and which I have commented on before, is to balance giving attention to the long-term with addressing the daily needs and “crises” of running an organization. I believe that the persistent undercapitalization of nonprofits leaves their leaders lacking the capacity to focus on the future; to take the natural, considered risks they would want to undertake; and to appropriately plan for business and leadership succession and longevity.

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When properly and adequately done, strategic planning — or business planning, which is just another aspect of strategic planning — can provide a framework for daily operations and a vehicle for maintaining direction and focus over the long-term. While important in and of itself, it can also help nonprofit leaders structure their focus in order to shift their gaze from the near-term to the future. In this regard, strategic planning is one of the most important things an organization can invest in, though there is no doubt that it is hard to find the capacity to take on a planning process at many small organizations.

Probably the question or comment I encounter most often on this topic is how to prevent the plan from ending up on a shelf. There is no answer other than it takes a commitment of the organization — of all parts of the organization — and a constant connection to and review of the plan, if it is going to remain a living and operative guide. Keeping a plan alive, realizing the value of a plan as a useful tool, requires constant attention, self-introspection, and, most of all, an analytical understanding and consideration of the essence of the plan and how it is relevant to the organization. Many plans founder because they lack an organizational commitment, and fail to use the plan as a tool, not as a rigid blueprint.

Talk to any successful business person and they will tell you that (i) despite all their planning, their path turned out to be different than what they thought it would be, and (ii) if they knew then what they know now, they probably would not have started building their business. Neither of these, however, can in any way be taken as arguments for not doing appropriate planning. Rather, these comments should be seen as acknowledging the reality that any plan is only that — a plan — and that reality often looks far different than the plan. But without a plan that provides context for decision-making and adjustment when necessary, the odds against success increase and the likelihood of chaos grows.

The Value of a Strategic Plan
When properly conceived and executed, a strategic plan gives an organization several values. At its core, it provides a link between the organization’s mission (it’s “Why”) — or, for a commercial business, its core competency and primary market — and the operational decisions the organization makes in such a way that there is a clear framework for decision-making. If this link is coupled with a logic model, there is a very clear matrix for making decisions. It provides leadership with a framework to evaluate expected outcomes and the success of the operations that flow from their choices:

Kellogg Logic Model

Planned work … intended results.

A successful plan may lay out the needs and proposed set of steps to arrive where the organization wants to go, but it need not lay out a detailed matrix of actions, responsibilities and priorities. While such a detailed roadmap may be helpful in certain cases, it can also lead to a shift in how the plan is used, turning it into a checklist for success, rather than a lens through which to approach decision-making.

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The very process of building a successful plan has its own value as well. Along the way, the successful planning organization will build consensus, which also builds investment and commitment; will focus clearly on the relationship between mission and activities; will understand aspirations; and will propose a realistic path to achieve those aspirations.

So What Is “Strategy”?
First and foremost, strategy answers a question. Without a question, there is only an idea or a stance. It is strategy to propose a path from point A to point B in solving a problem; it is not strategy to say “We will be the greatest.” For most organizations, strategy answers the question of how to achieve a goal (for a nonprofit, often the mission) with the givens at hand (resources and situation). While the details in which a strategy operates may change, the strategy remains, or can be altered, based on changed givens. Or it can be rejected because the strategy is no longer viable or because the question has lost its importance to the organization.

Different people describe strategy in different ways. Richard P. Rumelt of the UCLA Anderson School of Management, for example, describes it as the “craft of figuring out which purposes are both worth pursuing and capable of being accomplished” — focusing on the connection to mission (what is worth pursuing) and realistic resources (what is capable of being accomplished).

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Taking a focused approach on addressing a question, Rumelt, writing for business leaders, proposes that a strategy is “a cohesive response to an important challenge.” And it has three components:

  1. A diagnosis — what is the challenge to be solved?;
  2. A guiding policy — the approach to dealing with the challenges of the diagnosis;
  3. Coherent action — feasible coordinated policies, resource commitments, and actions designed to carry out the guiding policy.

Rumelt notes that good strategy is rooted in decision-making — it does not avoid it. Bad strategy skips over pesky details, dedicating resources to “unconnected targets,” and failing to face relevant challenges.

Good strategic planning is invaluable for a nonprofit organization — or even for artists looking to build a career. If the process is effective and productive, one is forced to consider mission, to ask why one would invest resources in an effort, to examine the paths to fulfill the mission with available resources, to imagine what success would look like. When done properly, the result is a guide to decision-making that can be turned to time and time again. On a practical level, planning answers the critical questions every business must constantly ask itself and answer in order to run its business: What do I want to accomplish? How much (or what resources) do I need? When do I need them? How will I get them? If one can keep these questions in view, if one can measure the relevance of the answers, the responses needed to address short-term issues become much easier to handle.

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