Strategic Planning 3

Strategic Planning (cont'd)

What's in a vision statement?
Martin Luther King, Jr. said, "I have a dream," and what followed was a vision that changed a nation. That famous speech is a dramatic example of the power that can be generated by a person who communicates a compelling vision of the future.

Management author Tom Peters identified a clear vision of the desired future state of the organization as an essential component of high performance.

Widely-read organizational development author Warren Bennis identified a handful of traits that made great leaders great. Among them is the ability to create a vision.

So, What Is a Vision and How Do I Get One?
A vision is a guiding image of success formed in terms of a contribution to society. If a strategic plan is the "blueprint" for an organization's work, then the vision is the "artist's rendering" of the achievement of that plan. It is a description in words that conjures up a similar picture for each member of the group of the destination of the group's work together.

There is one universal rule of planning: You will never be greater than the vision that guides you. No Olympic athlete ever got to the Olympics by mistake; a compelling vision of his or her stellar performance inevitably guides all the sweat and tears for many years. The vision statement should require the organization's members to stretch their expectations, aspirations, and performance. Without that powerful, attractive, valuable vision, why bother?

How a Vision is Used
John Bryson, the author of Strategic Planning for Public and Nonprofit Organizations, states that typically, a vision is "more important as a guide to implementing strategy than it is to formulating it." This is because the development of strategy is driven by what you are trying to accomplish, your organization's purposes. A mission statement answers the questions: Why does our organization exist? What business are we in? What values will guide us? A vision, however, is more encompassing. It answers the question, "What will success look like?" It is the pursuit of this image of success that really motivates people to work together.

A vision statement should be realistic and credible, well articulated and easily understood, appropriate, ambitious, and responsive to change. It should orient the group's energies and serve as a guide to action. It should be consistent with the organization's values. In short, a vision should challenge and inspire the group to achieve its mission.

The Impact of Vision
John F. Kennedy did not live to see the achievement of his vision for NASA, but he set it in motion when he said, "By the end of the decade, we will put a man on the moon." That night, when the moon came out, we could all look out the window and imagine... And when it came time to appropriate the enormous funds necessary to accomplish this vision, Congress did not hesitate. Why? Because this vision spoke powerfully to values Americans held dear: America as a pioneer and America as world leader.

In an amazing longitudinal study on goal setting, Yale University surveyed the graduating class of 1953 on commencement day, to determine if they had written goals for what they wanted their lives to become. Only three percent had such a vision. In 1973, the surviving members of the class of 1953 were surveyed again. The three percent who had a vision for what they wished their lives would become had accumulated greater wealth than the other 97 percent combined.

Great wealth, a man on the moon, brother and sisterhood among the races of the globe... what is your organization's vision?

Shared Vision
To a leader, the genesis of the dream is unimportant. The great leader is the servant of the dream, the bearer of the myth, the story teller. "It is the idea (vision) that unites people in the common effort, not the charisma of the leader," writes Robert Greenleaf in Leadership Crisis. He goes on to write:
Optimal performance rests on the existence of a powerful shared vision that evolves through wide participation to which the key leader contributes, but which the use of authority cannot shape.... The test of greatness of a dream is that it has the energy to lift people out of their moribund ways to a level of being and relating from which the future can be faced with more hope than most of us can summon today.

The Process for Creating a Vision
Like much of strategic planning, creating a vision begins with and relies heavily on intuition and dreaming.

As part of the process, you may brainstorm with your staff or your board what you would like to accomplish in the future. Talk about and write down the values that you share in pursuing that vision. Different ideas do not have to be a problem. People can spur each other on to more daring and valuable dreams and visions -- dreams of changing the world that they are willing to work hard for.

The vision may evolve throughout a strategic planning process. Or, it may form in one person's head in the shower one morning! The important point is that members of an organization without a vision may toil, but they cannot possibly be creative in finding new and better ways to get closer to a vision without that vision formally in place. Nonprofit organizations, with many of their staff and board members actively looking for ways to achieve a vision, have a powerful competitive and strategic advantage over organizations that operate without a vision.

Perceptions of Ideal Futures: An Exercise in Forming Vision
This section outlines an exercise you may employ to assist your organization in defining its own vision. By using this exercise to develop your organizational vision, you may be better assured that the vision statement that is developed is a shared vision.

At a retreat, or even at a board meeting or staff meeting, take an hour to explore your vision. Breaking into small groups helps increase participation and generate creativity. Agree on a rough time frame, say five to ten years. Ask people to think about the following questions: How do you want your community to be different? What role do you want your organization to play in your community? What will success look like?

Then ask each group to come up with a metaphor for your organization, and to draw a picture of success: "Our organization is like ... a mariachi band - all playing the same music together, or like a train - pulling important cargo and laying the track as we go, or ...." The value of metaphors is that people get to stretch their minds and experiment with different ways of thinking about what success means to them.

Finally, have all the groups share their pictures of success with each other. One person should facilitate the discussion and help the group discuss what they mean and what they hope for. Look for areas of agreement, as well as different ideas that emerge. The goal is to find language and imagery that your organization's members can relate to as their vision for success.

Caution: Do not try to write a vision statement with a group. (Groups are great for many things, but writing is not one of them!). Ask one or two people to try drafting a vision statement based on the group's discussion, bring it back to the group, and revise it until you have something that your members can agree on and that your leaders share with enthusiasm.

What is a situation assessment?
Strategic planning must include an assessment of the organization's environment because no organization operates in a vacuum. The very definition of strategic planning stresses the importance of focusing on the future within the context of an ever-changing environment - the myriad of political, economic, social, technological, demographic, and legal forces that change our world daily. Skill at assessing the environment and then being proactive in responding to that environment (i.e., strategic planning, thinking, and management) determines who is effective in using their resources and, ultimately, who survives.

The situation assessment outlines the process of gathering and analyzing the information needed to make an explicit evaluation of an organization in its environment. The situation assessment includes the following activities:
collecting internal and external stakeholders' perceptions about the organization
evaluating programs' impact on clients
evaluating programs through cost/benefit analysis
analyzing programs through competitive analysis
defining previous implied strategies

At the conclusion of a situation analysis, a strategic planner will have a database 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 in the strategic planning process.

Gathering Perceptions about the Organization
Part of getting a clear view of the environment and dynamics of an organization is to look at it through others' eyes; both internal and external stakeholders' perceptions of the organization will add valuable information to the situation assessment. The SWOT technique, a simple and effective vehicle for collecting this information, helps focus the process by breaking it down into four broad categories:
S - What are the organization's internal Strengths?

W - What are the organization's internal Weaknesses?

O - What external Opportunities might move the organization forward?

T - What external Threats might hold the organization back?

Evaluating an organization's general strengths and weaknesses, as well as the strengths and weaknesses specific to each of its programs, typically includes assessments of:
staff and board capabilities
quality of programs
reputation of both the organization and individual programs
management information and financial systems
office facilities and equipment, etc.
Successful organizations exploit strengths rather than just focus on weaknesses. In other words, this process isn't just about fixing the things that are wrong, but also nurturing what is right.

The same kind of thinking should apply to how an organization approaches its opportunities and threats -- the external trends that influence the organization. These are usually categorized into political, economic, social, technological, demographic and legal (PESTDL) forces. These external forces include such circumstances as changing client needs, increased competition, changing regulations, and so on. They can either help an organization move forward (opportunities) or hold an organization back (threats) -- but opportunities that are ignored can become threats, and threats that are dealt with appropriately can be turned into opportunities.

Gathering Board and Staff Perceptions of the Organization
Since SWOT analysis is a primary means of receiving input from a broad and representative constituency, it is important to include as many staff and board (your internal stakeholders) as possible in this process. Their ideas and opinions might be collected through questionnaires, telephone or in-person interviews, facilitated organization-wide or small-group meetings, or a combination of these methods. Some organizations have board and staff meet together to discuss their ideas and opinions, while others have them meet separately. A common and useful approach used during meetings is to brainstorm ideas onto flipcharts.

After the lists of strengths, weaknesses, opportunities, and threats have been recorded, the listed ideas can be grouped into logical topic or issue groups (e.g., all the ideas related to staffing or program development should be grouped together) to make the data easier to present and analyze.

Gathering External Stakeholders' Perceptions
Just as the above SWOT assessment allows an organization to collect a wide variety of perceptions from internal stakeholders, a SWOT assessment of those outside the organization can also add a great deal to the situation analysis. External stakeholders (such as clients, funders, community leaders, and potential collaborators) can give the planning committee insight into community opinions of what the organization does well, where it can improve, unmet community needs it might address, and other potential opportunities or threats. Again, this information might be gathered through telephone or in-person interviews (preferably), questionnaires, or focus groups. In addition to their general perceptions of the organization's strengths, weaknesses, opportunities, and threats, external stakeholders might also be asked some questions specific to their outsider perspective. For example:
What are the organization's strengths and weaknesses? What opportunities and threats does the organization face?
What does the stakeholder need or expect (criteria for performance) from the organization?
How well does the organization perform against those criteria (excellent, good, fair, or poor) and why?
How well does the organization perform relative to its competitors?

Evaluation of Programs
A key component of an organization's situation assessment is the evaluation of its programs' effectiveness and efficiency. This evaluation will provide data about whether to continue or discontinue each program, maintain it at its existing level, expand or change its direction, market it aggressively, and so on. Most program evaluations focus on both outcome, or results, and process, or methods. Outcome evaluation looks at whether a project achieved its planned results. Process evaluation looks at internal project management, both staff performance and the extent to which the project is successfully implemented.

The program evaluations can be based on quantitative and/or qualitative data. Quantitative data consists of fact-based information such as records review, descriptive statistics, inferential statistics, examinations results, and the like. It is more easily collected and less easily disputed because it translates experience into quantifiable data that can be counted, compared, measured, and manipulated statistically. Qualitative data consists of what people "say" about the programs, based on interviews, focus groups or other meetings, direct or field observation, reviews of written materials, informal feedback, satisfaction surveys, and questionnaires.

Program Outcome Studies
In addition to examining the resources required to operate a program, an organization can also more generally assess the program's impact on clients, using the following considerations:
inputs - the resources that are required to operate the program;
throughputs - how the program is operated
outputs - the immediate, observable results of the program
outcomes - how the program affects the client's life or society
impact - the program's benefit to the client or society

The key measures of effectiveness, outcomes, and impact are the most difficult to measure but are important to keep in mind.

Cost/Benefit Analysis of Program Services
One approach to evaluating organization programs is a cost/benefit analysis. As the name indicates, this entails comparing the costs of providing a service or product with the benefit to be gained. The analysis begins by answering a series of important questions:
What are the projected costs (direct and indirect) of the program?
What are the revenue benefits to be gained?
What are the direct service benefits?
What would it cost to purchase the benefits on the open market?
What intangible benefits are gained by either the organization or the client?
What assumptions, risks, organizational capabilities, alternative methods, foreseeable changes, and other considerations need to be taken into account?

Unfortunately, doing a cost/benefit analysis on a particular service often proves difficult for nonprofits. Unlike the for-profit sector which uses the measurement of profit gained for owners and stakeholders as its primary benchmarks for benefits, nonprofits do not usually have an explicit indicator of benefits. Moreover, there may not be comparable services or products with clearly defined prices available on the open market. Finally, some benefits may be difficult to quantify because they are intangible, or literally unmeasurable. How, for example, could an organization measure the benefit gained by providing one woman and her child shelter and support for two weeks? Yes, the cost of comparable services or products could be calculated, if they were available, but that would not begin to measure the intangible value.

If an organization offers a service for which no comparable alternative exists, or if the organization cannot define what the cost would be to society if the service were not provided, a cost/benefit analysis will be difficult to do. If, however, competing products exist whose benefits can be readily measured, then an organization should be able to calculate and compare its costs and benefits to those of the competing product. In any case, cost/benefit analysis should not be used as the sole criteria for accepting or rejecting a project or even measuring success, but it can prove a helpful tool when it comes time to make difficult choices about how to use scarce resources.

How can we do a competitive analysis?
Nonprofits have not traditionally been thought of as organizations that need to be competitively oriented. Unlike for-profit businesses, which compete for customers and whose very survival depends on providing services or products to satisfied, paying "clients," many nonprofit organizations operate in a non-market, or grants, economy - one in which services may not be commercially viable. In other words, the marketplace may not supply sufficient resources to support an adequate, ongoing provider base. Moreover, the customer (client) does not decide which provider gets adequate, ongoing funding. (In fact, many nonprofits are considered "sole-source," the only place to get the service, so there is not necessarily any choice in which provider receives funding even if the client does have some say). Consequently, nonprofit organizations have not necessarily had an incentive to question the status quo, to assess whether client needs were being met, or to examine the cost-effectiveness or quality of available services.

The competitive environment has changed, however: funders and clients, alike, are beginning to demand more accountability; sole-sourced nonprofits are finding that their very success is encouraging others to enter the field and compete for grants; and grant money and contributions are getting harder to come by, even as need and demand increase. This last trend - increasing demand for a smaller pool of resources, requires today's nonprofits to rethink how they do business, to compete where appropriate, to avoid duplicating existing comparable services, and to increase collaboration, when possible.

The MacMillan Matrix for Competitive Analysis of Programs
The MacMillan Matrix is an extraordinarily valuable tool that was specifically designed to help nonprofits assess their programs in that light. The matrix is based on the assumption that duplication of existing comparable services (unnecessary competition) among nonprofit organizations can fragment the limited resources available, leaving all providers too weak to increase the quality and cost-effectiveness of client services. The matrix also assumes that trying to be all things to all people can result in mediocre or low-quality service; instead, nonprofits should focus on delivering higher-quality service in a more focused (and perhaps limited) way. The matrix therefore helps organizations think about some very pragmatic questions:
Are we the best organization to provide this service?
Is competition good for our clients?
Are we spreading ourselves too thin, without the capacity to sustain ourselves?
Should we work cooperatively with another organization to provide services?

Using the MacMillan Matrix is a fairly straightforward process of assessing each current (or prospective) program according to four criteria, described below.
1. Fit
Fit is the degree to which a program "belongs" or fits within an organization. Criteria for "good fit" include:
congruence with the purpose and mission of the organization;
ability to draw on existing skills in the organization; and
ability to share resources and coordinate activities with programs.

2. Program Attractiveness
Program attractiveness is the degree to which a program is attractive to the organization from an economic perspective, as an investment of current and future resources (i.e., whether the program easily attracts resources). Any program that does not have high congruence with the organization's purpose should be classified as unattractive. No program should be classified as highly attractive unless it is ranked as attractive on a substantial majority of the criteria below:
high appeal to groups capable of providing current and future support
stable funding
market demand from a large client base
appeal to volunteers
measurable, reportable program results
focus on prevention, rather than cure
able to discontinue with relative ease, if necessary (i.e., low exit barriers)
low client resistance to program services
intended to promote the self-sufficiency or self-rehabilitation of client base

3. Alternative Coverage
Alternative coverage is the extent to which similar services are provided. If there are no other large, or very few small, comparable programs being provided in the same region, the program is classified as "low coverage." Otherwise, the coverage is "high."

4. Competitive Position
Competitive position is the degree to which the organization has a stronger capability and potential to deliver the program than other agencies - a combination of the organization's effectiveness, quality, credibility, and market share or dominance. Probably no program can be classified as being in a strong competitive position unless it has some clear basis for declaring superiority over all competitors in that program category. Criteria for a strong competitive position include:

good location and logistical delivery system;
large reservoir of client, community, or support group loyalty;
past success securing funding;
superior track record (or image) of service delivery;
large market share of the target clientele currently served;
gaining momentum or growing in relation to competitors;
better quality service and/or service delivery than competitors;
ability to raise funds, particularly for this type of program;
superior skill at advocacy;
superiority of technical skills needed for the program;
superior organizational skills;
superior local contacts;
ability to conduct needed research into the program and/or properly monitor program performance;
superior ability to communicate to stakeholders; and
most cost effective delivery of service.

An organization can review its mix of programs, sometimes called a "program portfolio," and decide if any adjustments need to be made. Ideally, an organization would have only two types of programs. The first would be attractive programs (programs that attract resources easily), in areas that the organization performs well and can compete aggressively for a dominant position.

These attractive programs can be used to support the second program type: the unattractive program with low coverage. The unattractive program is considered unattractive by funders, with low alternative coverage, but makes a special, unique contribution and in which the organization is particularly well-qualified.  These programs are known as the "soul of the agency" because the organization is committed to delivering the program even at the cost of subsidizing it from other programs. An organization cannot afford to fund unlimited "souls," and it might have to face some difficult decisions about how to develop a mix of programs that ensure organizational viability as well as high-quality service to clients.

For example, five years ago there was little funding for case management by AIDS Service Organizations. Unwilling to let clients fend for themselves in getting the help they needed, many organizations devoted staff time to this service. At the time this was a "soul of the agency" program. These days, this program is more attractive (i.e., fundable) though there is also growing alternative coverage. Therefore, organizations in a strong position to serve the clients well, with cultural competence and program expertise, should aggressively compete: those in a weak competitive position should get out of the business.

Articulating Previous Strategies
Most organizations operate within the guidelines of certain program and organizational strategies, although often these have neither been recognized or articulated as actual strategies. Once an organization is in the process of strategic planning, however, it is time to make explicit these unspoken strategies and incorporate them into this deliberate consideration of the organization's future directions. This should happen as part of the situation assessment: look for past patterns of operation or allocation of resources -- these are your previous strategies; analyze whether those strategies were effective, and why; and consider whether or not they should be held as strategies for the future.

Identification of Critical Issues
Upon completion of the situation assessment, a planning committee should be in a position to identify all of the critical issues, or fundamental problems or choices, facing the organization, and then begin to address those issues and identify priorities. A first attempt will probably result in a very long list of "critical" issues. Some might indeed be critical, but require no action at present and should, therefore, be monitored; some will require immediate attention, and as such should be dealt with accordingly; and some will be of critical importance to the long-term viability and success of the organization. Those are the issues (usually no more than six to eight issues qualify) that become the framework for the decisions that must be made next: decisions regarding strategies, long-range goals and objectives, and financial requirements.

To arrive at this final list of true critical issues, the planning committee should brainstorm a list of issues that might qualify and then assess each issue by asking: Why is it an issue? What are the consequences of not responding to this issue in the near future ? Why does the issue need immediate attention? Why is it a critical issue? Again, the final list should include no more than six to eight items; beyond that, the organization is in danger of losing focus and sabotaging its own best intentions.

Finally, additional research may be needed, in order to gather specific information about new opportunities which can be pursued. This might include: description of new target markets and their needs; description of new products and/or services with descriptions of start-up costs, competitor analysis, long-term financial projections, and break-even analysis.

Tell-A-Friend Printer Friendly