Gone are the days when directors gathered at an off-site location for a leisurely discussion of their organisation’s next three-year strategic plan. Or, they should be.
The business of not-for-profit management is too serious not to feed the strategy mill with serious information and analysis. Blue sky thinking just won’t cut it any longer. The pressures of revenue raising, service delivery, and competition for government and donor dollars are all too great to make light of what should be your board’s most important role – that of strategic planning.
There are three problems with the ways many NFPs approach strategic planning which stack the odds against good strategic deliberation. First, the board is given an impossibly short time to fulfil this critical responsibility. Most organisations relegate strategic planning to one day every three years, with possibly an afternoon set aside each year for an annual review. Second, the board is saddled with an external facilitator who, while expert in theory, has only limited knowledge of the organisation itself. Consultants are hired for a day when what they really need is longer engagement to learn about the organisation and the strategic challenges it faces, possibly by assisting management in preparing the evidence base for use in the session. Third and most importantly (and the issue that this article mainly addresses), boards are not given the data necessary to craft a good strategy. In the end, a blue sky session is likely to produce just that – a lot of air but not a lot of concrete action.
The big picture is painted with little strokes.”
— Henry Mintzberg, Harvard Business Review
Many years ago, I held a senior management position at the Canadian Institute of Chartered Accountants. Although I am not an accountant myself, I quickly learned how accountants approach the task of strategic analysis (and believe me, chartered accountants are very strategic thinkers). Before tackling any major strategic question, my management committee colleagues would methodically review the information at hand and ask if we had all the data we required to make an informed decision. If something was missing, we stopped until the information was produced. This is a critical step because incomplete information can lead to incomplete or incoherent strategies. More NFP boards would be well-advised to adopt a similar checklist approach before convening their strategic planning retreats. Even better, board chairs working with their CEOs, could help ensure that meeting time is well-spent by ensuring that the advance preparatory work is done.
Volunteer board members do require high-quality ‘grist’ because they don’t have the daily exposure to the operations of the organisation or the all-important ‘feel for the numbers’. I am not advocating that directors interfere with operations. I am simply arguing that they need to have a good grip of past trends to effectively plan for the future. Henry Mintzberg, a global dean of strategic planning, wrote in the Harvard Business Review that ‘Real strategists… are not people who abstract themselves from the daily details; they are the ones who immerse themselves in them while being able to abstract the strategic messages from them. The big picture is painted with little strokes’ (Mintzberg, 1994).
What information is needed?
So, what sort of grist is needed for the not-for-profit strategy mill? The textbooks might say that what is first needed is an environmental scan – a picture of the political, economic, social and technological factors likely to impact the organisation. However, given that not-for-profits typically operate in a prescribed area of operations, information about our world can be more useful than information about the world. So, historical financial information, programme data, and research with internal and external stakeholders is likely to provide the most strategy-rich material.
Historical financial data
An analysis of historical financial information is a good place to start because financial data is generally available and easy to compare year-over-year. Where the organisation has professional management in place, managers conduct a first-pass analysis of the data. They challenge one another to explain variances and to relate them to changes in the programmes of the organisation. This analysis leads to insights which can be packaged up for use by the board when it sits down to craft strategy. Where professional managers are not in place, this preliminary financial analysis could be conducted by the treasurer or finance committee.
The next level of preparatory process is to analyse the programme data. If yours is a membership-based organisation, you might analyse the retention rate or changes in the demographics of your members. If yours is a services organisation, you might analyse changes in your client base or in the mix of services desired. If yours is an advocacy organisation, you can analyse which campaigns moved the policy debate forward. At first, it might not be clear what sort of analysis will yield the best insights. However, just by working with the data, different ways of looking at the information will lead to learning.
“Research data, both qualitative and quantitative, can produce invaluable grist for the strategic mill”
Research data can also produce invaluable grist for the strategic mill. Just don’t satisfy yourself with the hard numbers produced through quantitative surveys. Consider qualitative research (focus groups, interviews) with your members, donors or stakeholders to deepen your understanding of the survey findings and to expand your thinking. As Mintzberg says, ‘While hard data may inform the intellect, it is largely soft data that builds wisdom’ (Mintzberg, 1998).
What is important is to make a start. It is only through working with the data that you will find the gaps in your data collection. Even when hard data is not readily available, you needn’t stop. Proxy data can be generated and local knowledge fed into the analysis when hard numbers are hard to come by. ‘Quick and dirty’ analysis is better than no analysis at all.
You don’t have to have all of these three levels of data either. It could be that in your first attempt, you simply work with the historical financial information. However, beginning there will help to break the mould and kick-start a new approach to strategic planning. The other information can later be layered in. And, new areas of enquiry and analysis can and will also present themselves.
There is a time for blue sky thinking – but strategy making should never be limited to the strategic planning day. Strategic thinking, including open enquiry and curiosity, should be part of the daily practice of managers and directors alike.
Mintzberg, H., 1994. The Fall and Rise of Strategic Planning. Harvard Business Review, Issue January-February, pp. 107-114.
Mintzberg, H. A. B. a. L. J., 1998. Stratey Safari: A guided tour through the wilds of strategic management. New York: The Free Press.
Randall Pearce will be speaking at the 2014 Better Boards Conference. Register here.