nonprofit strategic thinking and planning

Nonprofit Strategic Thinking & Strategic Planning

In our rapidly changing environment, nonprofit need to engage in strategic thinking and strategic planning. In fact, the single most important question that nonprofit leaders must be asking today is how well are we at thinking strategically and are we supporting strategic thinking with strategic planning.  This is not a mere nuance but it means abandoning cookie-cutter approaches to strategic planning steps and embrace, focused planning based on strategic thinking.

Note:  This blog post was written a number of years ago but it is still timely and relevant.  I have done some minor editing recently to reflect refinements in my thinking as I am five years deeper into working with clients.

Here is an interesting exercise to try.  Go to the Google Image Search tool and type in the words “strategic planning model.”  In .33 seconds one will have over four million images that depict the process of strategic planning in a wide variety of geometric shapes such as flow diagram, pyramid, circles, stairs, clusters, road maps, and a combination of all of the above.  — Okay, you might not see the last diagram but you get the point of the exercise when you begin looking at the content of the varied diagrams.   Strategic planning is a concept that came of age in the mid-1960s and has been the largely implemented as a linear process that includes some variation of the sequence:

1. Articulate a vision, 2. write or rewrite a mission, 3. conduct an environmental scan using unscientific tools (must use the jargon SWOT to describe the analysis), 4.  choose priorities & set goals, 5.  develop action steps, timelines, roles and responsibilities, 6. draft a formal plan, 7.  pronounce it very good and 8. repeat the process every 3-5 years.

As strategic planning models became routine and accepted as a standard of practice, those who excelled in project management (and repositioning content) developed a consultant industry of strategic planners who emerged to bring “expertise” to help organizations create high-impact plans.  The secret that few consultants want to admit is that strategic planning is often reduced to a cookbook that illustrated with overused “fill-in-the-blank” prescriptions that result in unimaginative plans.  Quite often, strategic planning is a simplistic reordering and renaming of existing strategy and approaches. Such a focus diminishes the value of strategic planning. This premise of the declining value of traditional strategic planning was identified over a decade ago in the seminal Harvard Business Review article titled, “The Fall and Rise of Strategic Planning” by Henry Mintzberg.  Mintzberg’s main criticism is that strategic planning often stymies strategy. He argues that “sometimes strategies must be left as broad visions, not precisely articulated, to adapt to a changing environment” (p. 112).

Since the appearance of Mintzberg’s article (and subsequent text that reverses the title), strategic planning has been broadened somewhat to include the concepts loosely termed adaptive planning, opportunity management, or “real-time” strategic planning.  In essence, the “innovation” of the adaptive strategic planning models is to build into the process strategies that allow organizations to be responsive to sudden shifts in the operating environment.  Yet the methods employed to get to this more “flexible strategic plan” still reflects the pedestrian process described above. In other words, the revamped strategic planning model looks more like this:

1. Articulate a vision, 2. write, rewrite a mission, 3. conduct an environmental scan using unscientific tools, 4.  choose priorities & set goals, 5). develop action steps, timelines, roles and responsibilities, 6.  insert opportunity matrix 7. draft a formal plan, 8.  pronounce it very good and 9. repeat the process every 3-5 years.

The 2008 economic meltdown still haunts many nonprofit organizations. It was a wake-up call is that business is no longer “as usual.” Now, in 2017, we find ourselves, again, and an unstable environment. Namely, an untenable period of economic expansion coupled with a dramatically shifting public policy environment.  The rapidly changing environment require more than a strategic planning process focused on rearranging the deck chairs and adding one more lifeboat christened “opportunity management.”  As Mintzberg suggested over a decade ago, we must liberate strategy from the confines of a constrained and defined planning process and foster a culture that encourages strategic thinking at every level of an organization.  Strategy needs to be unbound from pedestrian and conventional thinking. This point is lost on many strategic planning consultants.

Let me illustrate.  I was recently reading the retreat notes from what was billed as an “adaptive planning process” that written by a consulting group that an unnamed nonprofit agency had contracted with.  It is stunning how pedestrian the results were.  Day opens with the typical icebreaker, pages of brainstorm lists are then sequenced and the conclusions are listed as key….yawn…. findings.  these included …yawn… diversify your funding, increase your communications, and invest more in …yawn…(excuse me)…  capacity…  No wonder strategy and strategic planning are undervalued, if not ridiculed by so many nonprofit leaders.

Force marching an organization through a strategic planning process is not the same thing as stepping back and asking the hard questions related to how nonprofit operations are organized around solid business thinking that is resilient and tenable over the long term.  For example, going back to the …yawn… adaptive strategy notes review, one of the most non-strategic statements of the document was this:

“Key Finding #2 – Financial stability/funding is the greatest challenge facing XYZ agency as it plans for its future.” Open-ended answers provided by staff and board focused on identifying XYZ’s greatest challenge included, long-term sustainable funding, limited funding resources, identifying alternative funding sources, lack of diversity in funding.”

This statement is non-strategic on two levels.  At face value, this key finding lacks any basis for action. Every nonprofit’s greatest challenge is to develop long-term sustainable revenues.  So what.  Where is the strategy?  Second, pulling up the agencies, IRS Form 990’s for recent years, shows a revenue pattern that is represented in this graph. This agency not only weathered the 2008 economic downturn but for a decade demonstrated revenues above 1 million dollars annually. Indeed, portraying revenue as the greatest challenge for an organization with this revenue profile borders on malpractice.

To me, strategy would be to ignore the economic angst of the board and staff and build on the organizational strength of the funding model.  Indeed, during a period whererevenue2 many nonprofit agencies were hammered by steep revenue declines, this nonprofit held its own. As a facilitator of such a process, I would be asking the questions, how do we replicate, or at least maintain, the stable revenues patterns that we held through the economic crisis.  How do we build upon the revenue spike of 2009 and 2011?  What drove the break-out revenues for those years?  What lessons can we learn from how we brought in the additional revenues?

I almost titled this post, “What is Needed Now?” because I am convinced that this is the single most important question that nonprofit leaders must be asking today. For me, the answer to the question, “what is needed now” is not strategic planning but strategic thinking that is supported by clear and strategic program plans. The fact that strategy needs to be a cultural value does not negate the need for strategic planning and the development of clear strategic written program plans. The shift that is needed is to think strategically and support strategy with programmatic planning.  This is not a mere nuance but it means abandoning the two million images of a senseless strategic planning model and embrace, focused planning based on strategic thinking.

Elsewhere I have written about the anchors of a strategic plan and, more broadly planning approaches to strategic planning and will not belabor the point here. Rather I want to point to three areas where focused planning needs to occur.

1.  Core Social Impact Strategies: A clear and focused organizational model and theory of change, leverage, and scale is the core strategy for an agency.  Without a shared conceptual approach to how an organization fulfills its mission nothing else matters.  Previously, I have explored social impact (here) and social innovation (here) in more detail.

2.  Revenue Strategies: There has been a tremendous amount of recent research that goes beyond the irrelevant and oversimplified model that all agencies need diversified revenue streams and that the board of directors should play a major role in revenue development.  Revenues  strategy should include a customized strategy carved from the careful study of autonomy, reliability and the opportunity costs of diversification. Such strategy planning also includes thinking about investment capital, earned income, and policy approaches to revenue development. Having a clear revenue plan is a second core document (more here).

3.  Operational & Capacity Strategies: Often undervalued in strategy is a clear articulation of the operational capacity that is really required for successfully creating significant social impact. Such strategy requires the consideration of capital investment, breaking the tyranny of starving overhead costs, investing in technology, staff development, building outcome measurement systems, and expanding key staff and external partnerships (more here).

Other common areas that require strategic thinking and planning  include communications and marketing, program evaluation, and board development, to name a few.  The point of this post is not to list every possible strategic planning focus but to point out the fallacy of trusting the arcane strategic planning process while missing the opportunities for strategic thinking and focused programmatic planning.  As the current year ends, and a New Year opens with equal uncertainty, the role of strategy becomes more important than ever.

As Mintzberg, concluded, “Three decades of experience has taught us about the need to loosen up the process of strategy making rather than trying to seal it off by arbitrary formalization (p. 114).”  We are yet a decade and a half beyond Mintzberg’s words and yet many nonprofits continue waste time and resources executing ill-conceived strategic planning sold to us by some book or consultant group. As we reflect on the year past and look forward to the year future, let us commit to thinking strategically first and allow formality to unfold driven by need.

~Mark

 

Photo Credit: Michal Jarmoluk

 

Mark Fulop
Mark founded Facilitation & Process in 2009 to help organizations and communities bridge the gap between where they are today and where they want to be tomorrow. He’s led dozens of Portland nonprofits, government agencies and philanthropic organizations through complex change initiatives including strategic planning, revenue planning, board development, collaboration, and facilitation.

4 Comments

  1. Great piece. Amen.
    I’d up the ante even more. The result we are looking for is strategic action driven by strategic thinking supported by strategic plans.

    But the lack of strategic thinking, and even more, being able to do that in the moment while you are executing, is a much,much bigger challenge than just the nature of the content of strategic planning processes. It takes a lot of work for many boards and staff to first understand the promise it holds, then to figure out what true strategy would be, and then, to practice it. For many, the specifics of old fashioned plans and approaches are like comfort food, reinforcing the status quo in a place where they are very happy to stay.

    1. Gayle, Agree with your upped ante. Where we might quibble (tho I doubt we are far off from each other) is that it is more often than not it is lame consultants and not lame nonprofits that cook up the “comfort food recipe.” Nonprofit leaders, in this economy, have to be smarter, more focused and strategic than ever. Many nonprofit leaders see the need and are looking for partners in strategic improvement, efficiency and innovation. Unfortunately, I think that there is a large section in field of nonprofit consultants who aren’t skilled enough to provide nonprofits the answers to “what is needed now.” Thanx for your comments!

  2. Loved this. Can’t but help feel I need a day with colleagues where we sit down together and dissect it then think about what it means for us and how we plan.

Comments are closed.