Strategic Planning: Failures and Alternatives

Here is Part 1 of a two-article series on strategic planning and alternatives to strategic planning.

Strategic planning swept into the nonprofit sector in the mid 1980s. Nonprofits were becoming seriously interested in management techniques, and strategic planning -- along with meeting facilitation and fundraising training -- was a focal point for that interest. Twenty years later, today no organization would dare say it doesn't have a strategic plan.

As the recession deepens, many nonprofits now have strategic plans that they can't move forward on. Those plans aren't helping them figure out what to do instead.

And even before the economic crisis, there has been widespread grumbling about strategic planning. Too often dozens of meetings fail to produce new insights. Nonprofit staff are often frustrated that "the strategic plan is never used," while many board members feel the strategic plan is simply a validation of what the staff is already doing or has decided. Executive directors often get going on new ideas long before the strategic plan is adopted, and by the time the document is finished, it can feel like old news.

Organizations often undertake strategic planning "to get board members engaged" or "to get everyone on the same page," objectives which could be reached in much more efficient, productive ways. Meanwhile, consultants make money (one nonprofit consulting firm charges $200,000 for a strategic plan), and foundations -- for whom the plans are mostly written -- read the plans with eyes glazing over.

This is not to say that strategic planning hasn't been a useful and effective tool for many organizations. Staff and boards are often enthusiastic about strategic planning discussions, and celebrate what they see as clearer goals, a document to give funders, and a sense of good work having been done. Good things that often come out of strategic planning include:

  • In the process of establishing goals, issues around values and priorities -- which don't seem to come up in regular board or staff meetings -- are often raised and discussed.
  • A long process gives the executive director and the management team the time to think things out as they listen to evolving conversations.
  • Although it's often the wrong tool, the strategic planning process is usually flexible enough that the real problems emerge, whether a problem executive director, financial

    mismanagement, conflicts between the board and the executive, racial tension, etc. Unfortunately, addressing the issue through the strategic planning framework often confuses the issue and makes it more difficult to resolve.

  • Board members like planning: it's creative, allows them to come up with new ideas (seldom encouraged at a regular board meeting), discusses the environment (again, seldom discussed at a regular board meeting), and gives them a sense that the board has a real function.
  • Strategic planning can be a vehicle for leadership to raise new ideas and ambitions. Too often executives can't figure out how to initiate change within their own organizations in any way other than the one they know, which is strategic planning.

This is to say that different approaches are needed and are often better choices than traditional strategic planning.

Problems with strategic planning

Aside from bad practices in strategic planning, there are two levels of problems with strategic planning. Let's look at some of the unsaid realities about nonprofit strategic planning as it actually takes place:

  • Strategic planning is often driven by funders, which means that from the nonprofit's point of view, a key goal of the strategic plan is to produce a document that will result in continued funding from that institution. (We know one funder that found that 80% of its capacity-building grants were for strategic planning consultants.)
  • Strategic planning is frequently used to deflect criticism or unrest, or used to delay decisions. Strategic planning is also used to justify putting decisions on hold, or to avoid taking a stand or making a decision. "We can't get into staffing issues/go into merger talks, etc., until we're finished with strategic planning." And sometimes the delay itself results in problems deepening, and options narrowing.
  • In many cases strategic planning has become a ritualized process with elements of an improvisational play starring a high-paid consultant. Funders assign (or signal) their favorite consultants to grantees, resulting in consultants who must be praised to the funders and plans that the funders will like. Discussions are held in thoughtful tones while most participants secretly suspect that nothing will really be decided or changed. But like people at a restaurant with dreadful food, no one wants to say anything in case everyone else is happy.

But even when these issues aren't at play, there are some deeper problems with strategic planning as it's practiced in the nonprofit sector.

First and perhaps most importantly, most strategic plans do not take financial sustainability seriously. As recent evidence, a 2009 book on strategic planning from a well-known nonprofit publisher not once mentioned money, sources of income, revenue strategies, or financial viability. And many of us are all too familiar with the plaintive comment, "We've finished our strategic plan, but now how do we get the money to carry it out?"

In fact, financial sustainability needs to be at the core of planning and the establishment of goals. But neither should a strategic plan simply be about following the money. Strong executives steer planning discussions along the lines of financial viability, but discussing revenue strategies and opportunities should be an essential, explicit part of strategy.

This shocking neglect of financial viability is part of a second, larger problem with strategic planning these days: it focuses on goals, but seldom touches on HOW to achieve those goals. For instance, a plan might be to restore 800 acres of wetlands, but fail to identify the strategy to achieve that restoration (volunteer efforts? corporate funding? legislation?). The goal might be to increase individual donations by 300%, but how will we do that (through individual donations, direct mail, special events?)? It's easy to say, "That will be worked out in the operational plan," sidestepping the real strategic issues of choosing among those vehicles.

Third, strategic planning often fails to build analytic capacity or relationships for the organization; instead, these are often benefits to sole-practice consultants or other for-profit firms. There is obviously a value in having an outsider interview some key community players, but is it better than the relationships and nuanced content that would result from having the organization's leaders -- staff and board -- hold those discussions?

A fourth, common, large flaw in strategic planning is that the big questions can still be unanswered and vague at the end of the process. For instance, after a long process and a 20-page document, board members are still wondering to themselves, "So are we going to close our branch office in Springfield or not?"

Finally, too often confusion, disagreement and financial problems are mistakenly attributed to the lack of a strategic plan. If we know more about alternative frameworks and processes, it's possible for us to identify issues more sharply, and to make the continuous strategic decisions that must be made.

Next issue: Alternatives to Strategic Planning

Jan Masaoka is editor of Blue Avocado and co-author of Nonprofit Sustainability: Making Strategic Decisions for Financial Viability (Jossey-Bass, 2010). Thanks to Mike Allison and Steve Zimmerman for assistance with this article.

See also in Blue Avocado:

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Comments

This article is spot on! Many thanks for raising these issues. As consultants we frequently feel pressure to conduct 'Strategic Planning' and have to work hard to help non-profits realize that a lot of time can be saved focusing on the critical issues without going through the whole horse and pony show. We constantly promote the concept of financial sustainability and how important it is to balance to the Mission bottom line as well as the Financial bottom line.

We offer Capacity Building and Sustainability as alternatives to SP - neither term is completely accurate however we also have to use a term that funders will 'endorse'. If the SP mantra will not go away, we use Strategic Direction which equals some targeted components of traditional SP + robust implementation (which does include the resource impact analysis - both financial and human resources).

In another article would you please also tackle the pros and cons of 'needs assessment / environmental scan'? This is another area where vast amounts of time and monies are expended with frequently zero net gain.

Thank you, Anonymous, for your comments, and for the idea of tackling the "needs assessment/environmental scan" sacred cow! Jan

Jan, I am sick of the term "strategic planning". It is tiresome. Are there any other terms to describe the process of planning?

Me, too. And actually, most "strategic plans" are actually "long-term plans," rather than outlining a strategy. I suggest "strategy document" instead of "strategic plan" and, dependin on what questions you're addressing in the planning process, perhaps "business strategy re-vision," "strategic learning agenda," or "strategy development" instead of "strategic planning."

Good luck! Jan

 

"There is obviously a value in having an outsider interview some key community players, but is it better than the relationships and nuanced content that would result from having the organization's leaders -- staff and board -- hold those discussions?"

In my experience, consultants from outside the organization are able to cut through the "happy talk," of staff and board members and get to the core issues in a way that spares relationships. Too much insularity is a recipe for delay and a lack of engagement with the external environment. Organizations need challenge in the form of the external community, be it consultants or external stakeholders. Without that, old patterns of acting, vested interests and founders symptoms take hold. The idea that the organization's operations are too precious to examine is allowed to flourish and no strategic plan created internally can overcome this pattern strongly enough to revitalize the organization's capacity.

Wonderful points! Glad you are openly discussing these issues. I've seen where strategic plans work...and where they have not. The problems were when agency leadership (board and executive director) didn't understand importance of process and cut corners due to fiscal/time constraints, muddling through piecemeal. And/or where the executive director had an endpoint already in mind and controlled process details.

I love Blue Avocado! Thank you Jan for another great article! We just went through a strategic planning process, which hit all the positive aspects you mention, but which also left me wondering as the ED, what is our organizational vision for the next five years? Do we foresee an office in X town, increasing office hours or staff at our Y office?

Unfortunately, we are still operating in survival mode, as we have been for the past two years, and my time and attention as ED, board members' time, etc. is stressed and we still lack the ability to stand back and see the big picture together. For me it comes and goes as I switch hats and regret not being more on top of one thing or another.

As a small (3 staff) non-profit service organization, I cannot seem to get back out in front of the grant cycles before all of a sudden we need to throw our energy into local fundraising just to get through the next couple months before another grant comes in.

As you stated so clearly, we left the details of our plan to me, or a committee led by me, to flesh out in an annual work plan, which I can't seem to find the time to focus on. We also left the financial planning piece out entirely. There's a budget in the plan, but just number targets with little strategic thinking, per se, behind them.

Anyhow, thanks for nailing this one! Any chance you can address the idea of ED support groups?

Thank you for this article. I agree with the author that strategic planning is all too often hugely expensive and time consuming, and results in an unused, even unusable, product. I use a strategic planning process based on the ICA technology of participation method. It takes two days of meeting time and produces a shared vision, strategic directions for the next 3-5 years, a timeline for specific accomplishments to move the organization toward the strategic directions, and concrete, detailed implementation plans for accomplishments for the next 90 - 180 days-all keyed to the organization's mission. This process begins with some form(s) of organizational reflection-historical scan, SWOT analysis, overview of available resources, etc. - and assumes that knowledge is in the room. I do not conduct interviews with key stakeholders except for process design purposes, as I find this less than valuable, but the strategic plan process includes safe group work on underlying contradictions, which is much more useful and leads the group to identify and discuss organizational issues together, rather than behind each other's backs. The process identifies funding needs for implementation and can include fundraising accomplishments, however, I believe a separate fundraising/marketing plan that works from the Strategic Plan is a good way to go. The whole thing,including planning, set-up, materials, facilitation time, and follow-through, is highly affordable. Roxane George roxanegeorge at earthlink.net

I also use a two-day intensive process with the board, key staff, and sometimes key stakeholders with the goal of gaining consensus around Vision, Values, Mission, and three-to-five consensus objectives/strategies. I call that the strategic agenda as opposed to a strategic plan. To my way of thinking, the board sets the agenda (shades of Carver) and it is the responsibility of staff (employee and/or volunteer) to develop the plan. A plan is not a plan until there are expense and income numbers attached to it. The board should then evaluate the annual budget, which is the expression of the objectives/stategies/actions, as to how that budget and work plan relate to the strategic agenda. Every year at one board meeting, the focus should be on scanning the environment to see how its changes have affected the strategic agenda. This should be done before the staff begins to prepare the next annual budget. How the annual budget and work plan relates to the strategic agenda is also a good way for the board to evaluate the executive director. JDK

Jan, you couldn't be more right on with this article. I once worked with an organization where, after the strategic plan was drafted, the "powers that be" sent it back and insisted that we remove all reference to "the how." There was to be no mention of financial sustainability in the plan! Thanks for starting this important discussion.

Thanks for the straight talk on planning! My small organization did an abreviated planning process that was very helpful to us internally. The problem - some of our funders didn't understand this shortened process or our reasons for it. They wanted the long, involved process and expensive consultants with which they were familiar, regardless of the fact that we didn't have the time or money for it.

Please hurry with the second part of this article. We need it NOW!!

Anonymous speaks for me!! I am eager to see the rest of this series.

Ditto, I'm waiting for part two! We're getting ready to tackle a three year operations and business plan, and want to see your advice before we jump!

Friends: Part 2 was published on March 15, 2011, and can be found at www.blueavocado.org/content/alternatives-strategic-planning. In that same issue you can also find a rebuttal to this article, written by Mike Allison. Thank you all for writing! Jan

Great article, Jan. I look forward to reading Part 2. The strategic planning process has become the universally accepted cure for a wide range of organizational ailments. It's like treating a broken leg and diabetes with the same therapy.

As planning (hopefully) evolves to include more focus on how to sustainably support the work, I hope we see an increased emphasis on assessing the competitive landscape. Who else is doing this work? I'm working with an organization, that, as a result of strategic planning, decided to close one of their programs. I wish we saw more of this deciding "not to do" as outcomes of planning.

Jan has raised some concerns with strategic planning that all of us who have been a part of the process have experienced. I have participated as an executive director, a board member and as a consultant. As the latter, I have actually tried to suggest different means to accomplish the process of visioning and laying out a plan to direct an organization toward outcomes. What I have found is that all of the organizations that I have helped look at the process like it is a root canal and to Jan's point only go through it to please funders. On the other side, the grants officers from funders that I have worked with are not skilled at assessing the complexity of an organization's plan. So, a vicious cycle continues. The plans that work tend to be simple and above all are integrated into the very fabric of the work of the organization from staff meetings to board meetings. I often stress also that the process of planning is often more important than the actual plan itself as long as the board and staff identify this and realize that no matter what type of document is produced it is to be an organic document that is able to live and breath within the dynamics of the organization's culture. Thanks for bringing this topic into the light Jan. Jim

Thanks for another thought-provoking article. My experience is that strategic planning processes and outcomes are influenced to a great degree by the size and governance arrangements of the organization. Most organizations, especially small non-profits, are not designed as learning institutions, and as such, the strategic planning exercise is the only opportunity to undertake any serious evaluation of programs. Linking program or institutional outcomes to a long-term goal (determined by the objects and purposes for which the organization was established) requires that the organization maintains an institutional development program. This requires dedicated professional staff, management support, and board engagement. Most small non-profits simply do not have the necessary resources to design and implement such a program. Maybe one of your future articles could address the issue of the impact of institutional design on sustainability. Lloyd Gardner Foundation for Development Planning, Inc.

WIlliam H. Starbuck, a scientist who studies organizational behaviors, has repeatedly stated that strategic planning (in a corporate setting) is a waste of time and resources. Eric Abrahamson and David Freeman, in their book "A Perfect Mess: The Hidden Benefits of Disorder" discuss Starbuck's take on strategic planning: "It's not as if no one had ever examined the value of formal planning. Numerous studies have demonstrated that strategic planning works. Except that when Starbuck reviewed them, he found the studies typically involved interviewing senior managers to ascertain how useful they thought their strategic planning was. And what do you know? Strategic planners tended to find their strategic planning very useful. For a more objective assessment, Starbuck reviewed data on how a corporation's profits fared as compared to the amount of strategic planning the company had engaged in. The results: companies that did a lot of strategic planning performed, on average, no better than companies that did less strategic planning."

Jan's article is a good summation of the value--and pitfalls--of strategic planning. Instead of embracing it mindlessly because it's what this or that funder wants to see, organizations would do well to consider other means of achieving the positive results which can come from the process, and avoiding the costs and detours inherent in it.

I use the Technology of Participation (ToP) Participatory Strategic Planning method. It addresses many of the common problems in Strategic Planning and still requires time from staff and stakeholders and a continual reflection and revision strategy on the part of the organization to ensure movement. I also recommend using an outside facilitator so all staff/Board, etc. can fully participate. I also encourage the prep work like environmental scans or trends analysis - many of these can be done by volunteers or by the group as a whole. The more diversity the better the resultant plan. It starts with Preparation and Design, then moves to create a Practical Vision (3-5 years). The group then addresses the Underlying Contradictions - what is blocking them from achieving their vision. This part is often overlooked as well since you have to consider reality. It also doesn't let folks use "lack of" as a block - they have to look deeper and say why XXX is a block or contradiction. Then the group is ready to look at Strategic Directions - broad stokes that indicate direction and action. The last phase is the Focused Implementation where an actual action plan for the first year and the first 90 days is created. The best part of this is that everyone participates to create the plan, the facilitator does only that - facilitate. She does not impose specific ideas or actions but provides tools the group can use to create their own. Anyway, I think they work well and really energize the group and get buy in for the plan. It is still the responsibility of the group to carry the plan forward and do what they say. That can certainly be "the rub". I have done this with large groups and small groups. It needs to be a dedication of time - maximum 2 days, minimum 1 day with a half-day follow up. Of course the facilitator charges, but it certainly doesn't have to be expensive. I applaud organizations that take the time to figure out where they are going and how they plan to get there. Nancy Fastenau

Jan, thanks for this thought provoking article. I hope it generates a healthy dialogue around strategic planning, and I can't wait to read your next article on Alternatives! I am surprised by the statement that "...most strategic plans do not take financial sustainability seriously." In my own practice I've noticed that in the last year especially, financial sustainability is often the only thing a group wants to talk about! The Recession has had a deep and profound effect on the sector and on the nature of planning. My groups have become more pragmatic and practical than ever. I'd be interested in hearing the experiences of others around this as well. Morrie Warshawski

Oh no! Do we really have to wait until the next issue to get some ideas on alternatives to strategic planning? I'm in the midst of pulling together a strategic planning session for our board right now. I couldn't agree more with the issues raised in this article, but really want some ideas for practical alternatives. If anybody has ideas that have worked for them, I'd be grateful if you'd share them! - Sarah Milligan-Toffler

Thank you readers, for these thoughtful comments. Of course, strategic planning works for some organizations and for these: don't fix it if it isn't broken. And like any process, strategic planning can be done badly or well; I'm trying to address the concepts behind strategic planning, not just how it is practiced at its most medioxre. One of my observations is that a great executive director and a great board chair can make ANY process serve the organization well.

Next issue (March 15) I'll write about some atlernatives to strategic planning, and some of you have already touched on some alternatives. And -- if everything goes as planned -- we'll also be including a rebuttal to this article. Jan

Dear Jan, You rock! Very, very thoughtful article -- and comments. SP's are based on predictability. And, we all know what a myth that is. Thank you. Don

Thanks Jan, as a consultant, I've been doing strategic planning with an emphasis on income solutions for several years with great success.... but to get beyond "what do we want to be next" to "how we will do it" requires more commitment and investment than a done-on-Saturday deal.

Many leaders don't expect much out of sp (for good reason) and therefore don't invest much and .... get what they expect. Good sp takes people out of their comfort zone and asks them to think deep and hard about their future.

Perhaps you will cover this in part 2, but there is great potential in changing sp from a-time per-year event to something more frequent. On my website there is a 12 month board plan to help a group do some strategic planning each month which may be of interest.

To my way of thinking, strategic planning is what you make it. It can be a convoluted process that results in nothing that is different or used, or it can ensure the organization take time to look at the trends, decide on what is critical, and ensure it is focused on those items. A key issue for non-profits today is funding, given the decrease in government funding. That is part of the strategy - funding is the lifeblood of an organization, a critical item, and something that needs a solid, realistic and attainable strategy and action plan. The key is to have a practical process that will yield an actionable plan. The basis of strategic planning is: where are you now? Where do you want to be? How do you get there? That is the core of it. I am impressed with the discussion here, dealing with the realities of strategic planning. Best, Tove Rasmussen http://www.thrivebusinesscoachingandconsulting.com/about-thrive-business...

Thank you for this article! I frequently ask "how" during planning. "How will you sustain the plans you are making?" "How will you accomplish your objectives?" "How will you recognize success?" I also believe any planning process needs to address human adaptive capacity needed for success.

I'm looking forward to your March 15th article!

Thank you Jan for a great article. You, and many of the people posting comments have hit the nail on the head with the challenges around setting strategic direction. I have been lucky enough to work with both large and small nonprofits in strategic planning, and have found that size does not matter--strategic planning can be a boon or a bust for all sizes of nonprofits. I find myself going back to many of my clients (I can't help it!) to find out if the "final plan" has been put on a shelf, or whether it has made any difference to the impact or sustainability of the nonprofit. To me, success, (beyond the actual process of the plan,that I find extremely helpful as long as there is active participation by both staff and board members) comes with the follow-up by ED's, Boards and staff. As Jan mentions, a great ED and Board Chair can keep a plan alive--used for both evaluation of the staff as well as an assessment of the board's engagement and oversight. And, lastly, all plans should be flexible, with necessary changes thoughtfully made as the environment--both internal and external--throws it's bric-a-bats our way. Anne Green, Griffin Green Consulting, NYC and beyond.

This article is excellent and echos my experience. The successful strategic planning processes I've been a participant in are not only well facilitated, but thought through all the way from pre-planning to what the output will be....thanks for the excellent insights.

All too often what passes for strategic planning is a funder driven requirement that the organization tolerates which produces a consultant driven plan that works really well as a door stop but not as a guide to the work of the organization.

On the other hand, I think that sustainability and strategic planning are crucial to the long term success of any organization - non-profit or not. However it only works if it is driven by the organization, clearly strategic, tied to targeted results which are measured and revised, and considers not just financial resources but also human resources (to which most financial resources go) and community resources (where in the non-profit sector, is usually where the efforts are targeted). A good planning process provides ongoing measurement of progress and support to the planners in making the progress they determined they wanted.

Thank you so much for this article! At One Street, many of the organization emergencies we respond to are tainted by a demand for strategic planning. Sometimes this demand comes from an abusive funder trying to gain control over the organization. Other times it comes from an individual within the leadership team with big plans for upheaval and personal gain. You touched on such abuses wonderfully. It's too bad that your article is so unusual still, but I can sense from all the great and supportive comments that you are helping to turn the tide. I just hope some representatives of major funding organizations read this as well. Sue Knaup, Executive Director One Street http://www.onestreet.org

I can't wait to hear your suggestions for alternatives to the traditional strategic planning process. As a non-profit executive, I've seen sp result in the alienation of both board members and staff, and have never witnessed it have a positive outcome. I've also noticed that most those who are proponents of strategic planning are facilitators themselves rather than non-profit executives. If our organization's funders aren't requiring it, and our board members are highly engaged already, is it still necessary? In this case I tend to follow the "if it ain't broke, don't fix it" school of thought. For several years I've regarded traditional strategic planning an outdated, old-school stand-by that inhibits innovation and growth rather than encourages it. I think there must be much less disruptive ways to ensure organizational success and evaluate an executive's performance than strategic planning.

Jan, Great article, thanks. In terms of the comments about financial viability sometimes being ignored by strategic planners, as well as the importance of community feedback, both are areas where workplace giving's benefits can be of value to a non-profit. Workplace giving, such as the Combined Federal Campaign (CFC) remains the only type of non-profit fundraising that is subsidized, low-risk and high leverage. Once a revenue stream is developed, the monies that come in are unrestricted, reliable and predictable, assuming the non-profit takes some basic steps to ensure this (like saying thank you to the all 3 types of supporters - most non-profits only thank one type). Secondly, if a non-profit chooses to particpate in charity fairs, they have an excellent opportunity to build community feedback/awareness questions into their workplace giving campaign. Whether it is paid staff or volunteer staff that participates in the charity fairs, they are all equipped with the same tools - two ears and one mouth. This ratio is important, implying how much listening one should do, versus how much talking. Since you're sending staff out into the field anyway, ask them what the potential workplace giving donors, who are active members of your community, know about your issue and your non-profit's role in it. It's less expensive than a consulant and it gives your staff practical, hands-on experience in listening and speaking to members of your community. Regards, Bill Bill Huddleston The CFC Coach www.cfcfundraising.com billhuddleston1@gmail.com P.S. In terms of actual giving, if the CFC were a foundation, it would be the 10th largest foundation in the US. Isn't actual giving a better measure than asset size?

Jan: You've described POOR PLANNING to a T. I view your use of a broad brush like that for ALL strategic planning to be a) beneath you, and b) very detrimental to the 51% of nonprofits who have NO plan for the future.

GOOD PLANNING is the antithesis of what you describe here. It does take into consideration financial sustainability as one of its key components. It IS used by Board and Staff. It DOESN'T cost $200,000. It is NOT vague, leaving questions unanswered. It DOES have a series of measurable action steps and an accountability system.

From what I read from other posters here, most of you have experienced BAD PLANNING, and don't understand the power of a compelling vision coupled with strategic directions and specific action steps.

(Finally getting around to reading this. )

Spot On.

Years ago I got frustrated with a strategic planning process for an organization providing Internet services to the community. The problem was that in the 1990s, the Internet was changing every year (every month??). We decided to do a much shorter "Strategic Direction" process--generally, what is our mission and vision, what are our values, and what what we wanted to accomplish in the next 18 months.

A few years after than, I organized a session at the Nonprofit Tech Conference on "The Top Ten Reasons to Not Do a Technology Plan."

Wanted to let you know that I've also put a link to it on my LinkedIn Group STRATEGIC PLANNING FOR NONPROFITS. If you are a member of LinkedIn you might want to join the group and see a number of the Discussion threads we've had on planning the past year. Best, Morrie Warshawski www.warshawski.com

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