Simplicity is best strategic plan to keep nonprofits on proper path

Published in the July 25, 2008 edition of Columbus Business First

I have been to many meetings over the past month in which the main topic of discussion was developing a strategic plan.  For some organizations it was their first attempt at developing one, while others were busily forming committees, interviewing consultants, and setting deadlines for final reports. 

One nonprofit head, who was wary of the entire exercise, sent me an article by school consultant Robert Evans that questioned the value of most strategic plans.

He had a point.  I often see confusion between detailed business plans, which managers prepare, and strategic plans, which boards prepare.  Don’t mistake long lists of projects, dozens of pages of analysis, or elaborate timetables for a strategy. 

My best advice:  Keep your strategy simple.  If you can’t summarize your organization’s strategy in 30 words or less, then it probably isn’t a strategy. 

Tripwires to strategy

One impediment to good strategic plans is that too often implementation takes the place of strategy, a means without a clearly stated end.  Too many strategic plans, Evans complains, heavily focus on measurable outcomes with impossibly long to-do lists involving key operational areas like facilities, technology, staff recruitment, marketing, and fundraising. 

While those might be predictable action areas, they do not describe a strategy.  They address the “how,” but a good strategy addresses the “why.”

A second impediment is unrealistic ambition.  At times, organizations initiate a strategic planning exercise to demonstrate that they are businesslike, have a vision, and are on a path to greatness (usually meaning get bigger). 

Bigger is measurable while better is often not so easily measured.  The path of least resistance is to focus on the bigger in hopes that it will lead to better: bigger facilities, bigger staff, larger service area, and a bigger planning committee to produce a bigger strategic plan document.  Unless it produces quality that the community desires, ambition may ultimately undermine the organization. 

The third impediment to effective strategic plans is the effort to try to make them also fulfill the roles of budgets and financial plans.  A budget is an action plan for the next year.  A financial plan ties anticipated resources to intended spending for the next three to five years.  The best strategic plans, in contrast, describe where you are today, where you want to be five to ten or more years from now and why you need to make the move. 

Distinguishing plans

These distinctions are best illustrated by an automobile analogy.  Strategy consists of where you are today, where you want to go, and why you want to go there.  Mission, vision, and changing community needs are inputs into that strategy.  Your strategy is informed by knowing whether you can get there with your five passenger car, or whether you will need a 12 passenger van or a semi-trailer instead.  This defines your capacity for passengers and freight, the kind of driver you will need, and the volume of gasoline your strategy may require.

The financial plan is the steering wheel that chooses the route you will follow for the next three years on the way toward that strategic destination.  It identifies the resources you will need and it sketches out what you can expect to spend for food, lodging, fuel, and other expenses.  It thinks about whether you need to replace the tires or have a tune-up before starting the trip and whether you need to take some money out of your bank account in order to follow that route. 

The budget is the accelerator pedal and brake that determine how fast you go along that route.  It takes a close look at the resources you have and the expenses you will incur to get to various points along that route and then determines how far to go in the next year.

The management plan worries about how much to pack, which suitcases to use, and where everyone will sit in the car.  Boards don’t get involved in this implementation. 

It should be obvious from this analogy that the strategic plan does not need to be elaborate and complicated.  Yet it also is obvious that, without a good case for the new destination which a strategy provides, the work of a management plan, budget, or financial plan could ultimately take you somewhere you didn’t want to go. 

If your organization is undertaking some strategic planning, keep it simple to ensure you do end up with a strategy rather than an elaborate action plan that takes you to an unknown destination.

Allen J. Proctor was formerly chief financial officer of Harvard University and is the author of Linking Mission to Money (R) Finance for Nonprofit Board Members. Subscribe to his free newsletter at www.proctorconsulting.org.

Copyright 2008. Reprinted with permission, Business First of Columbus Inc.