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What
is strategic planning?
Key
concepts and definitions in strategic planning?
What
are the basic steps in a strategic planning process?
What
do I need to know before I start the planning process?
What is strategic
planning?
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Overview
Strategic planning is a management tool, period. As with any
management tool, it is used for one purpose only: to help an
organization do a better job - to focus its energy, to ensure that
members of the organization are working toward the same goals, to
assess and adjust the organization's direction in response to a
changing environment. In short, strategic planning is a
disciplined effort to produce fundamental decisions and actions
that shape and guide what an organization is, what it does, and
why it does it, with a focus on the future. (Adapted from
Bryson's Strategic Planning in Public and Nonprofit Organizations)
A word by word dissection of this definition provides the key
elements that underlie the meaning and success of a strategic
planning process:
The process is strategic because it involves preparing the best
way to respond to the circumstances of the organization's
environment, whether or not its circumstances are known in
advance; nonprofits often must respond to dynamic and even hostile
environments. Being strategic, then, means being clear about the
organization's objectives, being aware of the organization's
resources, and incorporating both into being consciously
responsive to a dynamic environment.
The process is about planning because it involves intentionally
setting goals (i.e., choosing a desired future) and developing an
approach to achieving those goals.
The process is disciplined in that it calls for a certain order
and pattern to keep it focused and productive. The process raises
a sequence of questions that helps planners examine experience,
test assumptions, gather and incorporate information about the
present, and anticipate the environment in which the organization
will be working in the future.
Finally, the process is about fundamental decisions and actions
because choices must be made in order to answer the sequence of
questions mentioned above. The plan is ultimately no more, and no
less, than a set of decisions about what to do, why to do it, and
how to do it. Because it is impossible to do everything that needs
to be done in this world, strategic planning implies that some
organizational decisions and actions are more important than
others - and that much of the strategy lies in making the tough
decisions about what is most important to achieving organizational
success.
The strategic planning can be complex, challenging, and even
messy, but it is always defined by the basic ideas outlined above
- and you can always return to these basics for insight into your
own strategic planning process.
Strategic Planning and Long-Range
Planning
Although many use these terms interchangeably, strategic planning
and long-range planning differ in their emphasis on the
"assumed" environment. Long-range planning is generally
considered to mean the development of a plan for accomplishing a
goal or set of goals over a period of several years, with the
assumption that current knowledge about future conditions is
sufficiently reliable to ensure the plan's reliability over the
duration of its implementation. In the late fifties and early
sixties, for example, the US. economy was relatively stable and
somewhat predictable, and, therefore, long-range planning was both
fashionable and useful.
On the other hand, strategic planning assumes that an organization
must be responsive to a dynamic, changing environment (not the
more stable environment assumed for long-range planning).
Certainly a common assumption has emerged in the nonprofit sector
that the environment is indeed changeable, often in unpredictable
ways. Strategic planning, then, stresses the importance of making
decisions that will ensure the organization's ability to
successfully respond to changes in the environment.
Strategic Thinking and Strategic
Management
Strategic planning is only useful if it supports strategic
thinking and leads to strategic management - the basis for an
effective organization. Strategic thinking means asking, "Are
we doing the right thing?" Perhaps, more precisely, it means
making that assessment using three key requirements about
strategic thinking: a definite purpose be in mind; an
understanding of the environment, particularly of the forces that
affect or impede the fulfillment of that purpose; and creativity
in developing effective responses to those forces.
It follows, then, that strategic management is the application of
strategic thinking to the job of leading an organization. Dr.
Jagdish Sheth, a respected authority on marketing and strategic
planning, provides the following framework for understanding
strategic management: continually asking the question, "Are
we doing the right thing?" It entails attention to the
"big picture" and the willingness to adapt to changing
circumstances, and consists of the following three elements:
-
formulation of
the organization's future mission in light of changing
external factors such as regulation, competition, technology,
and customers
-
development of a
competitive strategy to achieve the mission
-
creation of an
organizational structure which will deploy resources to
successfully carry out its competitive strategy.
Strategic management
is adaptive and keeps an organization relevant. In these dynamic
times it is more likely to succeed than the traditional approach
of "if it ain't broke, don't fix it."
What Strategic Planning Is Not
Everything said above to describe what strategic planning is can
also provide an understanding of what it is not. For example, it
is about fundamental decisions and actions, but it does not
attempt to make future decisions (Steiner, 1979). Strategic
planning involves anticipating the future environment, but the
decisions are made in the present. This means that over time, the
organization must stay abreast of changes in order to make the
best decisions it can at any given point - it must manage, as well
as plan, strategically.
Strategic planning has also been described as a tool - but it is
not a substitute for the exercise of judgment by leadership.
Ultimately, the leaders of any enterprise need to sit back and
ask, and answer, "What are the most important issues to
respond to?" and "How shall we respond?" Just as
the hammer does not create the bookshelf, so the data analysis and
decision-making tools of strategic planning do not make the
organization work - they can only support the intuition, reasoning
skills, and judgment that people bring to their organization.
Finally, strategic planning, though described as disciplined, does
not typically flow smoothly from one step to the next. It is a
creative process, and the fresh insight arrived at today might
very well alter the decision made yesterday. Inevitably the
process moves forward and back several times before arriving at
the final set of decisions. Therefore, no one should be surprised
if the process feels less like a comfortable trip on a commuter
train, but rather like a ride on a roller coaster. But even roller
coaster cars arrive at their destination, as long as they stay on
track!
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What are the key
concepts and definitions in strategic planning?
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Values
That Support Successful Strategic Planning
The Support Centers of America has adopted the following guiding
principles to support its consulting practice in strategic
planning. These are self-explanatory and are offered as one way to
approach this work.
Successful strategic planning:
-
leads to action
-
builds a shared
vision that is values-based
-
is an inclusive,
participatory process in which board and staff take on a
shared ownership
-
accepts
accountability to the community
-
is externally
focused and sensitive to the organization's environment
-
is based on
quality data
-
requires an
openness to questioning the status quo
-
is a key part of
effective management.
Key Concepts
What is the difference between
strategic planning and long range planning?
The major difference between strategic planning and long range
planning is in emphasis. Long range planning is generally
considered to mean the development of a plan of action to
accomplish a goal or set of goals over a period of several years.
The major assumption in long range planning is that current
knowledge about future conditions is sufficiently reliable to
enable the development of these plans. For example, in the late
fifties and early sixties, the American economy was relatively
stable and therefore predictable. Long range planning was very
much in fashion, and it was a useful exercise. Because the
environment is assumed to be predictable, the emphasis is on the
articulation of internally focused plans to accomplish agreed upon
goals.
The major assumption in strategic planning, however, is that an
organization must be responsive to a dynamic, changing
environment. Some would argue that this was always the case.
Nonetheless, in the nonprofit sector a wide agreement has emerged
that the environment is indeed changing in dynamic, and often
unpredictable ways. Thus, the emphasis in strategic planning is on
understanding how the environment is changing and will change, and
in developing organizational decisions which are responsive to
these changes.
In planning lingo, what is the difference
between purpose, mission, and vision?
There is a lot of confusion about these three words in the
nonprofit planning literature. For the sake of clarity, the
following definitions are used consistently throughout this series
of response sheets.
A purpose is an end result, a goal which an organization is
seeking to accomplish. Purpose is the answer to the question,
"Why does this organization exist?" The answer is to
achieve the purpose.
Mission is typically understood as a broader concept. Mission is
synonymous with mission statement and includes three major
concepts: the purpose (as above), the "business" an
organization engages in to achieve this purpose, and a statement
of values guiding the accomplishment of the mission.
Finally, vision is the most global concept. A vision is quite
literally a mental image of the successful accomplishment of the
mission, and thus the purpose of the organization.
What is strategic thinking?
Strategic thinking means asking, "Are we doing the right
thing?" It requires three things:
-
purpose or end--a
strategic thinker is trying to do something
-
understanding the
environment, particularly of the opponent, or opposing forces,
affecting and/or blocking achievement of these ends
-
creativity in
developing effective responses to the opponent or opposing
forces.
What is strategic management?
As you might guess, strategic management is the application of
strategic thinking to the job of leading an organization.
Dr. Jagdish Sheth, an expert on marketing and strategic planning
suggests that strategic management means continually asking the
question, "Are we doing the right thing?" Strategic
management is focused on the future within a context of a
changing, but relatively predictable environment. Strategic
management consists of the following three activities and
decisions:
-
formulation of
the future mission of the organization in light of changing
external factors such as regulation, competition, technology
and customers;
-
development of a
competitive strategy to achieve the mission; and
-
creation of an
organization structure which will deploy resources to
successfully carry out its competitive strategy.
It
requires attention to the "big picture" and a
willingness to adapt to changing circumstances.
Dr. Sheth distinguishes strategic management from two other
approaches to management, a tradition-driven approach and an
operations-driven approach. A tradition-driven approach is
characterized by the saying "if it ain't broke, don't fix
it," and is focused on past practices. The tradition-driven
approach works best in a non-changing environment. An
operations-driven approach asks, "Did we do things
right?" It is focused on current practices and works best in
a highly volatile environment.
Key Definitions
Strategic
In the dictionary, the word strategy has to do with war and
deception of an enemy. In nonprofit management, strategy has to
do with responding to a dynamic and often hostile environment in
pursuit of a public service mission. Thinking strategically thus
means being informed and consciously responsive to this dynamic
environment.
Planning
Strategic planning is planning because it involves intentionally
setting goals (choosing a desired future) and developing an
approach to achieving those goals.
Fundamental
Because it is impossible to do everything, strategic planning
implies that some decisions and actions are more important than
others. The most important decisions have to do with what an
organization is and why it exists; the most important actions
have to do with what it does. On the other hand, strategic
thinking is deciding on and carrying out the fundamental, or
most important actions.
Disciplined
Discipline highlights the relationship between the different
steps in strategic planning. Mission depends on environment;
which actions are most important are determined by assessing
strengths and weaknesses, opportunities and threats. Strategic
planning is also disciplined in that there is a sequence of
questions typically raised to examine experience and test
assumptions, gather and make use of information about the
present, and try to anticipate the future environment the
organization will be working in.
Decision Making
Strategic planning is based on decision making because in order
to answer the questions raised in the structured planning
process, choices must be made. The plan ultimately is no more,
and no less, than a set of decisions about what to do, how to do
it and why to do it.
Long Range Plan
Long range is the longest time period for which it makes sense
to make plans. The time period varies from organization to
organization: the Social Security Administration must plan for
the retirement of today's babies sixty five years from now; high
tech computer companies are putting out new products every six
months. For most nonprofit organizations, a 3-5 year timeframe
is appropriate for meaningful long range planning. Three year
plans work well for most nonprofits, taking into consideration
the fast pace of change (technology, political and economic
environment, internal realities, and community conditions). Five
year plans may be more appropriate for those organizations with
extensive physical plant or very large service constituencies,
such as schools, colleges, universities and hospitals.
Operating Plan
Operating plans are the detailed action plans to accomplish the
strategic goals laid out in the strategic plan. An organization
should have operating plans for each major organizational unit
and correspond to its fiscal year. In addition, an organization
may need operating plans which correspond to grant cycles or
longer, or cycles that differ from the fiscal year. Each is
important.
Strategic Management
The concept of strategic planning implies managing, day to day
and month to month, in a way that focuses on the most important
decisions and actions. This requires the kind of longer term
perspective and priorities which result from a strategic plan.
This concept also incorporates the assumption that the
environment is always changing: thus, strategic management
requires ongoing reassessment of current plans in light of long
term priorities.
Inclusive Process
An inclusive process means that people who have a stake in the
work of your organization participate in the planning process in
an appropriate way. This does not mean that every client, funder,
volunteer and staff member must come to a joint consensus about
what to do. It does mean that these interested individuals have
a chance to be heard by the decision makers.
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What are the basic
steps in a strategic planning process?
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Strategic
Planning Model
Many books and articles describe how best to do strategic
planning, and many go to much greater lengths than this planning
response sheet, but our purpose here is to present the fundamental
steps that must be taken in the strategic planning process. Below
is a brief description of the five steps in the process. These
steps are a recommendation, but not the only recipe for creating a
strategic plan; other sources may recommend entirely different
steps or variations of these steps. However, the steps outlined
below describe the basic work that needs to be done and the
typical products of the process. Thoughtful and creative planners
will add spice to the mix or elegance to the presentation in order
to develop a strategic plan that best suits their organization!
Step One - Getting Ready
To get ready for strategic planning, an organization must first
assess if it is ready. While a number of issues must be addressed
in assessing readiness, the determination essentially comes down
to whether an organization's leaders are truly committed to the
effort, and whether they are able to devote the necessary
attention to the "big picture". For example, if a
funding crisis looms, the founder is about to depart, or the
environment is turbulent, then it does not make sense to take time
out for strategic planning effort at that time.
An organization that determines it is indeed ready to begin
strategic planning must perform five tasks to pave the way for an
organized process:
-
identify specific
issues or choices that the planning process should address
-
clarify roles
(who does what in the process)
-
create a Planning
Committee
-
develop an
organizational profile
-
identify the
information that must be collected to help make sound
decisions.
The product developed
at the end of the Step One is a Workplan.
Step Two - Articulating Mission and
Vision
A mission statement is like an introductory paragraph: it lets the
reader know where the writer is going, and it also shows that the
writer knows where he or she is going. Likewise, a mission
statement must communicates the essence of an organization to the
reader. An organization's ability to articulate its mission
indicates its focus and purposefulness. A mission statement
typically describes an organization in terms of its:
-
Purpose - why the
organization exists, and what it seeks to accomplish.
-
Business - the
main method or activity through which the organization tries
it fulfill this purpose.
-
Values - the
principles or beliefs that guide an organization's members as
they pursue the organization's purpose.
Whereas the mission
statement summarizes the what, how, and why of an organization's
work, a vision statement presents an image of what success will
look like. For example, the mission statement of the Support
Centers of America is as follows:
The mission of
the Support Centers of America is to increase the effectiveness
of the nonprofit sector by providing management consulting,
training and research. Our guiding principles are: promote
client independence, expand cultural proficiency, collaborate
with others, ensure our own competence, act as one organization.
We envision an ever increasing global movement to restore and
revitalize the quality of life in local communities. The Support
Centers of America will be a recognized contributor and leader
in that movement.
With mission and
vision statements in hand, an organization has taken an important
step towards creating a shared, coherent idea of what it is
strategically planning for.
At the end of Step Two, a draft mission statement and a draft
vision statement is developed.
Step Three - Assessing the Situation
Once an organization has committed to why it exists and what it
does, it must take a clear-eyed look at its current situation.
Remember, that part of strategic planning, thinking, and
management is an awareness of resources and an eye to the future
environment, so that an organization can successfully respond to
changes in the environment. Situation assessment, therefore, means
obtaining current information about the organization's strengths,
weaknesses, and performance - information that will highlight the
critical issues that the organization faces and that its strategic
plan must address. These could include a variety of primary
concerns, such as funding issues, new program opportunities,
changing regulations or changing needs in the client population,
and so on. The point is to choose the most important issues to
address. The Planning Committee should agree on no more than five
to ten critical issues around which to organize the strategic
plan.
The products of Step Three include: a data base of quality
information that can be used to make decisions; and a list of
critical issues which demand a response from the organization -
the most important issues the organization needs to deal with.
Step Four - Developing Strategies, Goals,
and Objectives
Once an organization's mission has been affirmed and its critical
issues identified, it is time to figure out what to do about them:
the broad approaches to be taken (strategies), and the general and
specific results to be sought (the goals and objectives).
Strategies, goals, and objectives may come from individual
inspiration, group discussion, formal decision-making techniques,
and so on - but the bottom line is that, in the end, the
leadership agrees on how to address the critical issues.
This can take considerable time and flexibility: discussions at
this stage frequently will require additional information or a
reevaluation of conclusions reached during the situation
assessment. It is even possible that new insights will emerge
which change the thrust of the mission statement. It is important
that planners are not afraid to go back to an earlier step in the
process and take advantage of available information to create the
best possible plan.
The product of Step Four is an outline of the organization's
strategic directions - the general strategies, long-range goals,
and specific objectives of its response to critical issues.
Step Five - Completing the Written Plan
The mission has been articulated, the critical issues identified,
and the goals and strategies agreed upon. This step essentially
involves putting all that down on paper. Usually one member of the
Planning Committee, the executive director, or even a planning
consultant will draft a final planning document and submit it for
review to all key decision makers (usually the board and senior
staff). This is also the time to consult with senior staff to
determine whether the document can be translated into operating
plans (the subsequent detailed action plans for accomplishing the
goals proposed by the strategic plan) and to ensure that the plan
answers key questions about priorities and directions in
sufficient detail to serve as a guide. Revisions should not be
dragged out for months, but action should be taken to answer any
important questions that are raised at this step. It would
certainly be a mistake to bury conflict at this step just to wrap
up the process more quickly, because the conflict, if serious,
will inevitably undermine the potency of the strategic directions
chosen by the planning committee.
The product of Step Five is a strategic plan!
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What do I need to
know before I start the planning process?
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The following
addresses the concerns of the pre-planning stage. This stage is
divided into three phases, each addressing different issues and
questions. They are:
To
Plan or Not to Plan
The Benefits of Planning
Planning consumes resources, a precious commodity for all
nonprofits. As a process that eventually defines the direction and
activities of the organization, it can be an overwhelming and
daunting task. Despite the overwhelming nature of the process, the
benefits of planning can far outweigh the hardships.
There are benefits to be gained from the actual planning process,
as well as from the final planning document. The very activities
that nonprofit staff and boards conduct as part of the planning
process empower them to be more effective in their roles-more
informed leaders, managers, and decision makers. In addition, the
final planning document becomes a tool that can be used to
effectively and efficiently manage the organization.
The time devoted to the planning process varies from organization
to organization and depends on the resources available to devote
to the process. Whether you decide to devote only a two day
retreat to the process or engage in a twelve month process, your
organization will begin to realize the benefits from the start.
Some of the fundamental benefits to the planning process and the
development of the final plan include:
-
a framework and a
clearly defined direction that guides and supports the
governance and management of the organization
-
a uniform vision
and purpose that is shared among all constituencies
-
an increased
level of commitment to the organization and its goals
-
improved quality
of services for clients and a means of measuring the service
-
a foundation for
fund raising and board development
-
the ability to
set priorities and to match resources to opportunities
-
the ability to
deal with risks from the external environment and
-
a process to help
with crisis management
Prerequisites for Planning: Key Factors that Must be in Place
Before Beginning the Planning Process
As with any major effort, a planning process has its proper time
and place in the organization. There are certain organizational
elements that must be in place in order to ensure that the
planning process will provide the maximum benefit to the
organization. It is important to be candid when assessing the
organization's readiness to engage in the planning process. Even
if you get half way through the planning process before you
realize that the organization is not ready, stop and remedy the
situation before continuing with the process. Unfortunately, many
organizations plan when the organization is not ready. They always
have an unsatisfactory planning process and subsequent results.
Make sure the following elements are addressed before making the
commitment to plan:
-
a commitment of
active and involved leadership, with continuous leadership
engaged throughout the planning process
-
a resolution of
major crises that may interfere with the long range thinking
during, commitment to, and participation in the planning
process (e.g., insufficient funds for the next payroll, the
organization is not operating legally, etc.)
-
a board and staff
that are not embroiled in extreme, destructive conflict
-
a board and staff
who understand the purpose of planning and what it can and
cannot accomplish, as well as consensus about expectations
-
a commitment of
resources to adequately assess current programs and the
ability to meet current and future client needs and
-
a willingness to
question the status quo and to look at new approaches to
performing and evaluating the "business" of the
organization
Level
of Planning
As with any other organizational effort, you can do a little
planning or a lot of planning. "Enough planning" is when
your organization's leadership understands and has consensus about
a clear organizational direction.
Planning Resource Requirements
As a nonprofit organization, it is critical to examine what needs
you are attempting to address from the planning process and the
resources available to engage in the process. It is safe to assume
that an organization can expect more benefits from a more
informed, more resource intensive process.
The key resources required for planning are staff time, board
time, and dollars (e.g., market research, consultants, etc.).
Specific examples of time resources consumed by the planning
process might include time spent:
-
collecting and
analyzing environmental information
-
engaging key
stakeholders
-
gathering
historical financial information, projecting future budgets,
and cash flow projections and
-
analyzing options
and consequences for potential organizational and program
strategies.
The amount of
resources, time, and money spent on planning should reflect the
complexity of the issues you are addressing and the availability
of information and resources. Resource requirements will vary for
every organization.
The Role of an External Consultant
For an organization with little or no experience in planning, an
external consultant can enhance the planning process by providing
the following services:
-
Facilitating of
retreats, meetings and the planning process as a whole: The
use of a consultant to serve as the "conversation traffic
cop" is one method of ensuring that good ideas do not get
lost in the emotion of the process or personality of the
participants. A consultant can work with an organization to
minimize planning barriers that impact effectiveness, using
his or her experience as a source of tried and true processes.
-
Training in
planning information and processes: It is critical for
everyone involved in the planning process to be speaking the
same language and using the same planning tools. External
consultants can provide that conduit of information flow and
education.
-
Providing an
objective and different perspective in the process: As an
outsider to the organization, the consultant can ask questions
and challenge existing traditions, assumptions, and routines
more objectively than staff and board members. Often planners
do not realize that they are using jargon or have made certain
assumptions about their constituency. Having an outside
consultant participate in the planning process helps ensure
that organizations stay true to one of the prerequisites of
engaging in the planning process, the willingness to question
the status quo.
-
The process
expert role: The consultant who has facilitated and conducted
many strategic planning processes can provide significant
information and advice on tools and processes that can best
accomplish your process and content goals.
Once
the Decision to Plan Has Been Made
The planning process is like any other process, it needs to be
managed. People have many expectations when they hear the word
planning. It is important to make sure that everyone is operating
from the same set of expectations and knowledge base.
Organizations often train key board and staff members in process
and planning language before embarking on the planning process.
Large groups of individuals are not conducive to the creation of
documents and quick decision making. They are more suited to
producing feedback, ideas, and suggestions about existing
documents or modifying draft decisions after the initial analysis
has been completed. A strategic planning committee is one tool
that is used to focus the energies and responsibilities of the
process. The planning committee spearheads the process, serving as
the quarterback of the team, but it does not take sole
responsibility for all decision making and all the nuts and bolts
work.
It is also important to identify the potential information needs
of the process. Key decisions will be made during planning. In
order for these decisions to be high quality, decision analysts
and decision makers need to have appropriate financial, program,
and client information.
Another tool used in the management of the planning process is a
work plan, or a plan to plan. It is an outline of the steps and
activities that will take place during the planning process. The
plan specifies the tasks, outcomes, resources to be expended (time
and financial), and the person(s) responsible in each of the
phases in the process.
Steps to Prepare for Planning
The following items summarize the steps necessary to prepare for
the planning process:
-
Obtain a formal
commitment to conduct planning, including education of board
and staff, if necessary.
-
Select a
strategic planning committee of no more than five to seven
people, a combination of visionaries and "actionaries,"
or a planning liaison to spearhead the process.
-
Develop a work
plan or a plan to plan that outlines who is responsible for
each outcome and time frames.
-
Consider the
adequate level of resources (dollars and time) required to
conduct an appropriate planning process.
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