Strategy, When It Isn't

Nonprofit organizations are a lot more like businesses than one might think. There really is a bottom line, for example. It is achieving the results the organization is funded for and achieving the financial results -- income within expenses -- that are set by the board annually. There are a number of other differences (and similarities) but the big difference is the source of money. In business, it is owners and customers. In a nonprofit, it is often third parties --insurance companies, government agencies, foundations, donors, etc. as well as clients (customers).

We have our share of business transplants in the nonprofit sector with that, "Here I come to save the day!" (with apologies to Mighty Mouse) attitude, when actually, many nonprofits are pretty sophisticated these days. The larger nonprofits are often led by individuals with masters' degrees in business, nonprofit management, social work, public affairs and similar pursuits. Again, most nonprofits of any size have a CFO or other financial and operations leader who knows the biz, the regulations (e.g., Financial Accounting Standards Board) and rules (General Accounting Procedures for Nonprofit Organizations) of the sector.

And, so, that many nonprofit organizations engage in strategy and strategic planning ought not to be a surprise. But what we are not able to keep track of, because it is not our main business and most of us do not have the resources to stay on top of business planning trends, is the impact of the ever-changing environment on strategy development and implementation. In fact, I doubt that most businesses are able to keep up either. Like many business practices, strategic planning -- or other forms of strategy development -- become formulaic. As a long time practitioner of strategic planning, I have learned that some elements of the old formulas still work and others do not.

The entities that evaluate nonprofits, such as the BBB Wise Giving Alliance, expect to see a nonprofit worth its salt engage in strategic planning. It is a practice endorsed and encouraged by our membership organizations, such as Independent Sector and the National Human Services Assembly, and by our major foundation partners. That an organization has a plan earns it points or a check on list, but there is little attention to the rigor and quality of the planning.

The pattern is this. A nonprofit (led by its CEO and board) decides to conduct a strategic planning process. It engages a consultant or consulting firm to gather information, facilitate a process and produce a plan, usually over the course of six months, minimum, but often a year or longer. So what could be wrong with that? Well, many things, but the main one is a failure to closely examine the purpose for strategy development. It is not to decide what we want to do but to determine what we need to do to achieve our mission, in light of current and emerging environmental trends, to maximize our distinctiveness as an organization and to survive or thrive.

Organizations which, however rigorous a process, pursue what current stakeholders perceive as strategy may well, whether they recognize it or not, are stuck in a rut. A common scenario: The board and staff assess what they perceive as the organization's strengths and assets, review the data assembled by the staff and consultants, including cursory information on the organization's operating environment and project new goals for variations on what the organization did at the onset of the planning process. This often takes place in steps over a period of months and culminates in a real feel-good board-staff retreat.

Think of a newspaper, broadcast network, magazine or other prominent media going about strategy this way -- with little regard for the dramatic changes in the media marketplace, technology and the competition. Well, maybe they did. Maybe that's why there are few daily papers remaining, decades-old magazines have disappeared and online communications and streaming media are eating the lunch of print and broadcast media.

It is not that nonprofits and others engaged in strategic planning completely fail to consider external factors in their marketplaces but maybe that we examine the big issues (e.g., technology, community becoming virtual as well as literal) at a distance instead of close-up and as they relate to our very survival and ability to deliver on mission. As David LaPiana, a well-known consultant, suggests, we ignore competition at our peril as organizations. LaPiana notes that knowing the competition and distinguishing oneself from it are fundamental and I agree. We can be a bit squeamish about the notion of competition in the nonprofit sector because, as community resources, we often cooperate across organizational boundaries. That's great but there is nothing wrong -- and everything right -- about knowing what unique value an organization provides that makes it distinct from others in its space.

There are many processes for strategy development. I am agnostic as to models. However, if we as stakeholders in this nation's diverse array of nonprofit organizations want to ensure that the organizations we support are on-mission and meaningful into the future, we will ask how to get the opinions of people beyond our current stakeholder groups (including critics, competitors and people who should know about us but don't); we will look in a very disciplined way at how major environmental trends and trends in our specific marketplaces could affect our business (perhaps even changing how people may get what we provide differently in the future); and we will examine the other organizations in the space we occupy both as competitors and potential collaborators, considering if what we provide is distinctive enough to attract customers and resources or if there are ways to fulfill our missions better in partnership with other entities.

Ken Favaro writes in strategy+business magazine that "Business strategy... is the result of choices made to maximize long-term value." It's our job as staff, volunteers, donors, board members and consumers to see that the nonprofit organizations we value and that are a part of our lives think beyond what it takes to keep the organization afloat to what will allow it to maximize value -- to fulfill its mission in spades -- over the long-term.