By Les Wallace, PhD
“A strategic plan should energize the organization around its possible future.”
It wasn’t too many years ago that one could still find organizations without a strategic plan. I ran into one just the other day. However, in today’s business environment it’s a rare organization of any type, for-profit or nonprofit, without a strategic plan.
The importance of an organizational strategic plan has drawn consulting enterprise into the planning marketplace with enough options, approaches and models to make your head swim. You can still “SWOT,” or even “SOAR,” “Scenario,” and certainly “Aspire,” your way to a plan for alternative futures.1 According to Wikipedia, a determined organization can also “PEST,” “STEER,” “ATM,” and “EPISTEL” its way to the future.2
Strategy is an integrated set of actions designed to create a sustainable vibrancy to your mission or an advantage over your competitors. For many organizations, strategy is opportunistic and reactive when the business environment pressures the enterprise. For successful organizations, strategy is about constantly migrating to a new position in the business environment. For high performance organizations, strategy is about using strategic thinking to create new entrepreneurial and innovative approaches to stay ahead of a rapidly changing business environment.
Whatever your approach, the board and executive team need to understand exactly why they need a strategic plan and agree upon a methodology to jointly develop and maintain a strategic focus. The “why” is easy: a rapidly changing business environment threatens a complacent organization yet provides success opportunities for the alert organization.
Developing a plan typically means the executive team leads the board in a scan of the business environment, an honest assessment of the organization and its talents and competencies; digests customer / member / constituent / competitor data and jointly sets goals for assuring future success. A strategic plan should give confidence that the organization can be viable (alive), valuable (relevant to a constituency) and vibrant (dynamic). A strategic plan should energize the organization around its possible future.
Despite the abundance of planning approaches the most common question I get is “what are the typical domains covered by a strategic plan?” Drawing upon 30 years’ work helping organizations think in the future tense, I’ll be bold enough to summarize these typical domains below. This doesn’t mean your plan needs to look like this—it’s only an anthropological summary based upon my experience.
It’s not uncommon to find the following areas where organizations have live strategic objectives:
- Operational Excellence
- Sound Financial Management
- Technology Solutions and Accelerators
- Customer / Member Engagement
- Advocacy / Regulatory
- Governance Leadership
Let’s take each domain and outline what I frequently find organizations attending to as strategy.
While operations is an infrequent domain of strategy in a successful organization, it’s not unusual for a Board to demand strategic attention to bolstering operational excellence as a reaction to failure or performance demise. Certainly as technology, competitors and customer demands shift, it’s necessary for operations to also adapt. Common areas for attention are leadership / management excellence, organizational structure, organizational culture, automation, innovation, workforce development, lean manufacturing / quality improvement, and customer focus. In many smaller associations it may be enhancing the service from the contract management company.
Most organizations that put “operational” goals in a strategic plan do so because they have fallen behind and need to elevate the importance of improvement. Typically, when operational matters are in sync and performing well, they drop off a “strategy” dashboard and onto the management team’s “operational” dashboard.
Sound Financial Management
OK, so 2008 was a wake up call for every organization on the planet. Boards and management teams have been forced to take a fresh look at economic downturn, customer demand, and financial strength to sustain the organization. Cutbacks, layoffs, and delayed purchases were all executed to skinny down expense, protect capital needs, and live for recovery. In a strong economy it’s unusual to see financial management goals in a strategic plan.
In recent years it’s common to find a board weighing in on the strategies to keep the organization well capitalized, hording reserves for a rainier day, and closely examining margins and products to assure focus. 2008 changed the conversation in every boardroom I know and has been cause for financial management issues showing up more frequently in strategic plans.
Many boards are also including improvement goals for their finance and audit committees. As financial oversight grows more complicated, selecting and developing committee and board members around fiscal literacy is crucial. In corporate America, 47% of finance committees are chaired by a board member who is or has been Chief Financial Officer somewhere. Audit committees are increasingly taking on broader Enterprise Risk Management (ERM) and it’s not unusual for focused development in the ERM area to make it onto the strategic plan.
Technology Solutions and Accelerators
Technology in general and social technology more recently has always been cause for strategic planning focus. IT hardware and software capability have typically shifted so quickly (quarterly most experts say) one must stay strategic to keep up. How recently has your organization undergone a “core conversion”? How recently have you “shock tested” your IT security?
The more recent growth of a networked globe has changed how organizations engage their employees, customers, vendors, contractors, funders, regulatory officials, competitors, and the media.3 This is the new networked social technology future and it is no longer peripheral to any organization. It is core to the future.
IT capacity and social technology strategy are here to stay in our strategic plans. Many experts believe they should be separate “domains” of a strategy, each with its own challenges, philosophies and goals. I happen to agree. In the 21st Century I would urge every organization to have both domains separate and accounted for in their strategic plan.
Customer / Member Engagement
As the 21st Century dawned, customer pressure and selectivity increased and choice exploded. These forces forever changed the old 1990s conversations about “service.” Service is now too abstract a concept for strategy. Instead, the new “customer experience” approach encompasses customized products and channels, customer input into design and pricing, web based showrooms, virtual intelligence, communities of users / purchasers, speed, organizational accountability, and full transparency. “Big Data” now dominates how organizations must sort through customer / member expectations and satisfaction is now paired with “value” as common research interests.4 Customer / member data must now be crunched with geometrically more combinations that ten years ago. Woe to the organization that can’t articulate the customer / member value proposition and how it’s changing. Many boards are expecting to see data in this strategic arena at least quarterly.
Satisfaction is now a complex set of questions about the “customer experience” and value is now prone to mass customization. Boards must set rising expectations for organizational performance and continuously refresh strategy. A strategic plan without goals and expectations for adding great customer / member value is inadequate.
For the Association strategic plan, member choice has grown in importance. A one-size membership category no longer fits everybody and members are now expecting to choose between whether they wish to receive the newsletter / journal, even whether they wish hardcopy or e-versions. They also expect to pay differently for their choices. The most recently published works on associations indicates major member engagement change is in play—your association should have something in its strategic objectives about how you plan to adapt to the generation of new expectations.5
Brand and brand management is showing up more commonly in organizational strategic planning.6 Brand goals are frequently a subset of the customer / member focus goals. However, the rapidly shifting customer and competitor landscapes elevates this to its own strategic domain for many organizations. If your organization confuses its branding with its marketing campaign then maybe a tutorial at your next board meeting would be useful.
Branding strategy makes sense if your organization finds its customer / member base shifting, competitors taking away market share, or customers questioning your value or credibility in a new economy. Re-branding is a frequent strategy in today’s global economy. Branding refresh—using different or newer mechanisms to define who you are—is now common and most likely necessary every few years.
Advocacy / Regulatory
Associations are typically involved in advocacy for their profession or business domain. Everyone is involved in adapting to shifts in regulatory oversight. For associations, advocacy goals are consistently represented in strategic plans, most commonly because the economy, government oversight, credentialing, hiring practices and overall professional or business value is always being challenged.
For groups in healthcare and financial services, regulatory chaos has been in play for several years and is not likely to settle down in the next few years. Therefore, refreshing your strategic goals for influencing external oversight as well as new adaptive strategies to shifting regulations is crucial. While many larger organizations have seasoned government relations staff, it is still critical for the board to recognize and focus strategy in its strategic plan. For smaller organizations, it’s even more crucial, because the executive team and board are playing the major influence and education roles as part of the advocacy agenda.
Since the Sarbanes-Oxley act (2002) in response to corporate accounting scandals of Enron, Tyco and others, the conversation has changed in every boardroom about accountability, fiduciary oversight, and the required talent for a competent board of directors. A 2012 BoardSource survey reveals at least 40% of Board members admitted they didn’t fully understand what they are supposed to do.8
In the last 10 years about 75% of the boards I’ve worked with have used some element of strategy dedicated to governance leadership. At the basic levels, developing greater board governance literacy is a common strategic objective. More complex strategic goals frequently surface around board leadership succession and board ERM responsibilities. Boards that conduct regular self-assessments will always find some element of governance needing attention—frequently it’s significant enough to surface as a strategic goal. Another reason for elevating governance leadership goals to the strategic plan is to make them visible to regulators and outside constituents who appreciate seeing how the organization recognizes governance’s significant role in business success.
Non-profit boards in general, and particularly those in the domain of cause-related fundraising, will have goals around philanthropy. As the landscape of causes and organizations seeking funds has exploded in the last decade, more and more boards invest substantial strategic dialogue in developing goals that keep up with competition and giving behaviors. As traditional means of fundraising, such as galas and walks come under greater stress, more and more boards are moving to social networks, on-line campaigns and targeted spokespersons to maintain their philanthropic funding pipeline. For example, two of the most recognized and respected cause fundraisers, the American Heart Association and the American Cancer Association, have recently gone through major upgrades in their on-the-ground approaches to local governance and engagement. When the big girls and boys recognize a changing and more challenging philanthropic marketplace, it’s time us smaller players also wake up.
Because boards are so crucial to philanthropic fundraising success it doesn’t matter if you have high powered experts on staff or not—the board must get in this game and articulating strategic goals is a means of doing so.
What About Your Strategic Plan?
If strategic goals aren’t stretching your organization to change, you don’t have a strategy. Instead, you have a reactionary plan to stay afloat and are most likely only reacting as changing conditions hammer you.
As explained above, not every organization will have all of the strategic domains covered here in their plans. However, it would be challenging to find any strategic plan that couldn’t be easily nestled within these domains.
Finally, I’ve seen many a great “paper strategic plan” of numerous goals and tactics and pages of accountability. Most of these are too complicated for the average organization to manage. The challenge is to decipher the changing landscape and focus on the vital few strategic priorities that will transport you to your desired new future. These are usually three-to-five, or at most, five-to-seven strategic goals. More goals than that and Boards and management teams tend to get distracted, and something falls off the plate. What are your vital few? Take a few moments at the next board meeting and scan your plan to identify the top three strategic goals where success is most crucial to your future. Then, discuss and check in on those goals at every meeting!
- “The Think Book of SOAR: Building Strengths-Based Strategy,” Jacqueline Stavros and Gina Hinrichs (2009); “SWOT Analylsis—An easy to understand guide,” Charlie Ioannou (2012); “Scenario Planning: A Field Guide to the Future,” Woody Wade (2012).
- “Strategic Planning: Tools and Approaches,” http://en.wikipedia.org/wiki/Strategic_planning (2012)
- “Social Technology,” Marti Hearst (http://www.slideshare.net/marti_hearst/social-technology) 2009.
- “Big Data: The Management Revolution,” Andrew McAfee and Erik Brynjolfsson, Harvard Business Review (October, 2012)
- “Race for Relevance: 5 Radical Changes for Associations,” Harrison Coerver and Mary Byers (2011); “The End of Membership as we Know It,” Sarah Sladek (2011); “Managing Engagement,” C. David Gammel (2011)
- “The 22 Immutable Laws of Branding,” Al Ries & Laura Ries (2002);”Selling the Invisible,” Harry Beckwith (2012); “Building Strong Brands,” David Aaker (2011).
- “The Sarbanes-Oxley Act and Implications for Nonprofit Organizations,” BoardSource (2006)
- “BoardSource Nonprofit Governance Index, 2012,” BoardSource, 2012.