Strategic Planning: Love it, hate it, or have no idea what it actually is, it’s everywhere—non-profits and for-profits, public companies and private—and in virtually every industry, from massive cultural institutions and global corporations to community arts organizations and startups.
In 2017, a Harvard Business Review study found that over 70% of organizations surveyed reported having a formal strategic planning process. In 2018, the American Management Association found that 84% of organizations surveyed practiced some form of strategic planning. In the non-profit sector specifically, a 2017 survey conducted by BoardSource found that 80% of organizations used strategic planning.
But there’s something you might not know about this cornerstone of organizational management theory. Believe it or not, there was once a time when organizations didn’t do strategic planning.
Before the second half of the 20th century, Strategic Planning was unheard of as an explicit concept and practice. It wasn’t until the mid-1960s, when Peter Drucker first described the concept in The Practice of Management, that the principles of strategic planning began to formally take hold and proliferate. Since then, the practice has become ubiquitous.
When done well, strategic planning provides a crucial opportunity to challenge institutional assumptions, engage and cultivate stakeholders, and drive innovation within organizations. And yet, lived experience teaches us that the results of any one strategic planning process are anything but guaranteed. Why is that? What does it take to ensure the success of your planning process and achieve your strategic goals?
Below, we break down three ways strategic planning can transform your non-profit and maximize your impact and three reasons why strategic planning can fall flat. Lastly, we consider five principles that can help you guide a process that advances an ambitious and actionable plan.
Three Reasons Why Strategic Plans Are Important
- Fundraising and Development
Non-profits almost always rely on contributed revenue to sustain operations, undertake important capital improvements, and achieve organizational goals. Under the right circumstances, the strategic planning process creates a vital space to make better-informed decisions about where to focus efforts, allocate resources, and give donors confidence that the organization made priorities and that their resources can help advance those priorities.
- Competitive Edge
On the earned revenue side of the puzzle, a strong strategic plan can help leaders better understand their strengths and vulnerabilities compared to their competitors. A well-devised strategic plan incorporates these learnings to understand how to leverage strengths compared to organizations with similar missions and audiences and map a path for sustainability and growth.
- Trends in Demographics and Audience Preferences
Finally, as demographics and audience preferences evolve, organizations must consider adapting and staying relevant to their audiences’ needs. A thorough planning process creates the time and space to learn about and respond to a fluctuating cultural landscape, increase impact and reach, and ensure long-term success.
Three Reasons Why Strategic Planning Fails—and How to Avoid Them.
- Lack of Resources
Strategic planning is often tied to annual budgeting processes, but this does not necessarily mean the approved plan has a firm grasp on the state of all the necessary resources. An organization may lack the personnel, technological resources, or infrastructure to implement the plan. As an early step in planning, conducting a discovery process that includes the engagement of key personnel will help you get a firm hand on internal weaknesses that might hamper an otherwise strong strategy.
- Lack of Monitoring and Evaluation
Too often, a strategy fails because the planning process does not outline how to evaluate the success or failure of a strategy. Regular monitoring and evaluation can help an organization identify if a goal is being achieved and how to take corrective action and get back on track. For performing arts organizations or museums, an evaluation needs to go beyond asking, “Did we sell tickets?” and should additionally consider, “Why or why not? What do we need to change to hit our goal?”
- Resistance to Change
The saying “culture eats strategy for breakfast” is its own cliché among strategic planners. Implementing a new plan often requires changes in processes or structures—changes that can elicit resistance from staff and stakeholders who never fully buy into the process and feel bound to certain ways of operating. Some resistance to change is normal, and it is important to identify and highlight examples of early adopters having an impact. However, if the hostility to change is persistent and widespread, that could reflect deeper cultural issues to address. Leaders need a clear picture of their teams’ and stakeholders’ experiences and motivations to shift culture. A cultural assessment that considers dimensions like employee mindsets and motivations, their relationship to power in the organization, and how they receive and share information can shed light on cultural pain points that undermine strategy. An assessment like that, which is based on Jay Galbraith’s Star Model, doesn’t need to be conducted alongside a strategy process and can yield returns in employee engagement and performance at any point in the lifecycle of a strategy.
Five Principals for Guiding Strategy Development
Strategy development sits at the heart of CFAR’s work. Our experience crafting meaningful strategic plans with leaders across various industries lends us to advocate for thoughtful, robust planning processes. And while there are dozens of methods to build a strategy, CFAR’s preferred approach is Telling the Strategy Story (learn more about that here).
There are many different approaches to and frameworks for strategy making, and we apply different ones to different organizational contexts. In A Playbook for Strategy, authors A.G. Lafley, Roger Martin, and Jennifer Riel identify five questions at the heart of an effective strategy that can help transform plans from ideas into action.
- What is your winning aspiration?
This involves defining the long-term vision and goals for your organization. Beginning at the end sets a direction for the organization and a purpose for the work. It’s the world created through the successful pursuit of your mission.
- Where are you playing?
Imagine you’re going to build a bridge from one side of a river to the other. You may be a passionate bridge builder committed to creating great and interesting bridges for everyone to enjoy—but if you don’t know how wide the river is, your bridge is almost guaranteed to miss the shoreline. Likewise, it’s critical to understand the conditions, trends, and other organizations impacting your environment.
- How will you win?
The emphasis here is on you. Answering this question means identifying the qualities and capabilities of your organization that can be leveraged to establish a unique value proposition and competitive advantage. As you create this inventory, consider the potential value of everything at your disposal to drive impact. Programming and performances are good places to start, but there may be other resources, know-how, or partners that have the potential to amplify the effect of your strategy.
- What capabilities must be in place to win?
Establishing that grasp on the “special sauce” that defines your organization’s character and competitive edge will be essential to your success. Still, your strategic planning process must also articulate the investments necessary to maximize the resources you have or secure the new ones. Not committing to these types of investments won’t just threaten the achievement of your goals but could hurt your organization. Imagine, for example, hiring a Tony-winning performer to appear in a production. That award-winning talent might be a big draw, but if the lighting system in your theater is 25 years out of date, you risk a production that falls short of audience expectations and hurts the relationship with the artist. To manage that risk, it’s critical that the organization has set the artist and the production up for success with the necessary resources.
- What management systems are required to support our choices?
This is where the rubber meets the road, and where many strategy processes come apart. Until now, you have been developing the plan: the what and the where. How you accomplish your goals when the plan moves from concept to implementation is the strategy. Here, you are establishing the structures, processes, and systems that will enable implementation. For example, a capital campaign to build a new community gallery space will need a clear leader, the support of a board committee, and metrics by which to evaluate your progress. If your plan does not include this infrastructure, your next strategic plan is bound for that bottom drawer.
At the end of the day, organizations and their leaders are measured by their impact. A robust and ambitious planning process and a vision for implementing the strategic plan are powerful tools in pursuing your mission. Though many organizations falter in planning and implementing strategy, these recommendations can keep you and your organization on the right path the next time you take up a strategic planning process.