Organizational Development

Strategy Needs a Plan

The strategic plan is far from dead—it’s alive and adapting.

Upon learning that his possible death had been incorrectly reported, Mark Twain famously responded, “The report of my death was an exaggeration.”

It is popular now to say that strategic planning is dead—that the world is changing so fast, even a three-year plan is unrealistic. In 1994, Professor Henry Mintzberg published The Rise and Fall of Strategic Planning, and ushered in a steady stream of books and articles on the topic, including SSIR’s 2013 article “The Strategic Plan Is Dead. Long Live Strategy.”

These claims are an exaggeration.

It is true that times have changed and tools must change to match the times. But the contention that change renders strategic planning dead is based on three faulty assumptions.

Faulty assumption #1: Strategic plans are static and preclude adaptive leadership.

I have never met a nonprofit leader who, having developed a strategic plan, felt hampered in their ability to make needed changes. Nonprofit leaders are typically visionaries and entrepreneurial—they have to be, because they are literally working to change the world. Just as organizations draft annual or bi-annual budgets and absolutely expect that they will not be perfect predictions of the future, these leaders expect that future events will confound some of the assumptions in their completed strategic plans. The strategic plan is alive—and it is a living document when used.

Part of the challenge of formulating a plan is that some problems don’t yet have solutions. In research published in 2002, Ronald Heifetz called these “adaptive problems,” as distinguished from technical problems. Adaptive problems have no known solutions, and we need creative and collaborative actions to solve them. But many problems nonprofits face have at least some known solutions that they can plan for and manage, and strategic plans often include a commitment to ongoing exploration of adaptive problems.

Rather than abandon strategic planning to deal with adaptive problems, leadership expert John Kotter argues for a “dual operating system.” In his 2012 Harvard Business Review article “Accelerate!”, Kotter describes working to help businesses address emergent challenges and opportunities, with a dedicated, internally run system of invention to complement ongoing planning and management practices. Many nonprofits use variations on this idea as a way to handle these types of issues to complement strategic planning.

Faulty assumption #2: Strategic plans are futile because the future is impossible to predict.

The work of nonprofits is to create change, not simply respond to it. Those who argue that strategic plans are futile assert that organizations should do “continuous” strategy assessment. In the recent Wall Street Journal and Washington Post bestseller Playing to Win: How Strategy Really Works, authors A.G. Lafley and Roger Martin respond to proponents of this argument, who “deny that long-term (or even medium-term) strategy is possible. ... Emergent strategy has become the battle cry of many technology firms and startups, which do indeed face a rapidly changing marketplace. Unfortunately, such an approach places a company in a reactive mode, making it easy prey for more-strategic rivals.”

Execution requires plans, but what if the environment in which people work changes dramatically over a short period of time?

The San Diego Museum of Art completed a five-year strategic plan in June 2008, with a bold vision and strategy for becoming a truly international museum. The plan addressed slower-moving external changes in the demographics of visitors, art viewing preferences, and sources of competition; it also called for major capital investments. Three months later, Lehman Brothers collapsed and the Great Recession began. The museum’s endowment shrank rapidly, and the prospect of attracting significant new gifts disappeared. Rather than abandon its strategic plan as useless, the museum used the plan to help navigate its way through one of the most challenging financial periods of the last several decades. The timing of different initiatives changed, but because it had already made difficult choices about how to pursue its goals, the strategic plan continued to inform its operational decision-making and management. Eight years later, the museum has fully implemented its plan and is thriving as never before.

Contracts with foundations, governments, and businesses are based on multi-year plans with deliverables—not just strategy, and 30-year mortgages remain the norm in residential real estate. While the world changes, people continue to make long-term plans. Why should nonprofit management be exempt from long-term commitments?

Faulty assumption #3: Strategic plans are irrelevant because some strategic plans have been seen to sit on shelves “gathering dust.”

Strategic planning is difficult and sometimes not done well. The process requires an investment of time and money, skilled and meaningful leadership, a willingness to make difficult decisions, and the stamina to articulate the operational implications of an inspiring vision. A bad plan, or a badly executed one, is not valuable—no argument—but the same could be said of the ineffective use of any management tool.

Strategic planning is alive and well. The 2014 Bridgespan Group Nonprofit Management and Trends Report showed that 89 percent of nearly 500 nonprofit leader survey respondents used strategic planning. Strategic planning also received the second-highest level of satisfaction (80 percent) of the 25 management tools evaluated. And a recent national study by the Association of Strategic Planning of more than 1,000 US nonprofits found that the more effective an organization considered itself, the more value it reported getting from strategic planning.

It is also worth noting that the art of strategic planning in the nonprofit sector has not stood still. Without a doubt, the practice has become more sophisticated and nuanced over the past few decades, as the demand for improved organizational performance and the quality of available tools has increased, and it will continue to evolve.

Moving from doing good work to doing great work demands both strategy and plans to guide execution. While nonprofits need to adapt their specific path (the plan) as they go, a clear vision supported by a strategic plan will endure and help organizations successfully navigate changing conditions.

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COMMENTS

  • BY Alison Brewin

    ON May 7, 2015 11:45 AM

    Excellent article! Great defense of the strategic plan. Strategy alone isn’t transparent and doesn’t capture commitments. Made this video to argue the point: http://youtu.be/ccJMqFXJTmk

  • BY Mike Allison

    ON May 7, 2015 12:16 PM

    Thanks Alison.  Love the short video with ways to use a strategic plan!

  • BY Gayle L. Gifford

    ON May 7, 2015 12:46 PM

    I agree 100%.
    While every organization has to be adaptive in the short term, if you don’t know the size of the community change you are trying to catalyze, how can you possibly be strategic about getting there? For some organizations, those outcomes take 10, even 20 years to realize, as you pointed out in your example. I worked with an arts organization that is still holding steady to the core elements of strategic plan it committed to in 2006, virtually all of which remains relevant today.
    To me, the identification of the organization’s logic model, especially the results it is trying to achieve for the community(near and far), its core strategies (related to its theory of change) and the capacity investments it needs to make to achieve those objectives are critical to the ability to be adaptive and think strategically in the moment.
    Unfortunately, most NPOs (and their boards) are comforted with a plan that has the detailed operational plans included, even if those are the ones around which they need to be most flexible. Yet those types of plans are the ones without a heart and tend to sit on the shelf as they can’t react quickly enough to community change or opportunity.

  • Marieka Easterley's avatar

    BY Marieka Easterley

    ON May 7, 2015 04:27 PM

    Agree with the thrust of the article and Gayle’s further comments re strategic plans that become a little too straight-jacketed with operational details - especially those that do not include any strategies re being adaptive in scanning and responding to emergent challenges and opportunities as well as response change management design thinking and planning.
    Suggest those arguing that strategic plans are useless and that ‘continuous strategy assessment’ is far better in today’s fast moving environment, seem to be missing the point - that is a strategy, there is no avoiding the term.

  • BY Paul Brown

    ON May 8, 2015 06:47 AM

    I’m battling against a bias as I write my response to your position on strategic plans. That bias is an alignment with A.G. Lafley and Roger L. Martin’s thoughts on strategy and a belief that for strategy to be useful, it has to be adaptive.

    Now that my bias is out in the open, I want to take your idea a bit further, if you don’t mind.

    It seems that the wisdom of leadership is an undercurrent in addressing each of the assumptions you mention. Pulling from another Harvard Business Review article—this one from May 2011 by Ikujiro Nonaka and Hirotaka Takeuchi—the authors explore Aristotle’s discovery of episteme and techne and complement them with a different form of knowledge:

    “Aristotle also identified *episteme*, or universally valid scientific knowledge, and *techne*, or skill-based technical know-how. If episteme is know-why and techne is know-how, phronesis is know-what-should-be-done. For instance, because no univeral notion of a good car exists, episteme cannot answer the question ‘What is a good car?’ That will depend on who is using the car and why, and it will change over time. Techne is knowing how to make a car well; phronesis is knowing both what a good car is and how to build it. Thus phronesis enables managers to determine what is good in specific times and situations and to undertake the best actions at those times to serve the common good.”

    This lesson in Greek philosophy, while meritorious on its own, is particularly helpful in the context of the strategy vs. strategic planning debate. Whether considering strategy, strategic planning or any other choices that have broad implications, leaders are laden with taking on a high level of responsibility. It is their job to “know-what-should-be-done.”

    Thus, wise leaders must put strategy into context. For some leaders and their organizations, adaptive strategy will work best. For others, the more traditional strategic planning process will yield the biggest benefit. Regardless, as participants in this ongoing debate, we must help leaders put strategy in context. To do that, we must broaden the discourse to include a both-and paradigm that allows leaders to use their own wisdom to make the best choice for their organization at any given time.

  • BY Michael Donahue

    ON May 8, 2015 12:23 PM

    Strategic thinking, planning and action has been around since the cave man sought a better way to hunt. It will be around until the last day the world exists as some of us try to find a way to get around the inevitable. Great article. Thanks.

  • BY Mike Allison

    ON May 8, 2015 04:22 PM

    I totally agree with the both-and paradigm that Paul spoke to.  My point was that to dismiss strategic planning as no longer relevant is incorrect, or at least incomplete, not to suggest that strategic planning per se is the only way for organizations to set direction and succeed.  Thanks for the thoughtful comment.

  • BY Selma Moya

    ON May 12, 2015 06:15 AM

    with the emergence of big data planning has greatly changed. the principles of strategic planning remain the same what has changed is how monitoring and evaluation is done, its now a more proactive process with real-time data on both sides (input & output) for M&E which is a critical change management tool for strategic management

  • Tekle Bushen's avatar

    BY Tekle Bushen

    ON May 14, 2015 11:23 AM

    The implementation phase of the strategic management is very critical. That’s where the continuous review, updating, and maintaining the relevance to the changing time(adaptive problem) comes in. A good strategic planning is not a guarantee for success.Balanced Scorecard combines the both sides. Norton and Kaplan have done good job on providing the tools.

  • BY Jane Garthson

    ON May 14, 2015 02:39 PM

    Excellent article. I am tired of people saying strategic plans are useless because they’ve only been involved with bad planning and poor planning facilitators.

  • BY Sean Kline

    ON May 20, 2015 04:22 PM

    Not only does emergent strategy place ‘a company in a reactive mode, making it easy prey for more-strategic rivals,’ but it can also turn a nonprofit into an ever-opportunistic chameleon, undermining its strategic position and differentiation.

    The ‘both-and’ paradigm is a compelling notion, but a strategic plan implies a time-specific period of action in which an organization will make certain proactive decisions, as opposed to simply reacting, however strategically, to new circumstances and opportunities. A good strategy guides a board and staff to place prudent bets and navigate change.

    Strategy to me has always been about a planning process that forces an organization to make important choices about how it is going to make a positive dent in the world and—implicitly or explicitly—what it will not do, such that it has the focus and resources to succeed.

  • BY Mike Allison

    ON May 21, 2015 10:31 AM

    Agreed about the risk of being an ever-opportunistic chameleon.  And, the balancing act for each organization will be settled uniquely and vary over time.  I agree that for the most part a 3 - 5 year plan in the nonprofit world will serve most organizations extremely well, and remain relevant if it has been thought through well and achieved meaningful buy-in.  I’m not prepared to say categorically that this is always the case, for all organizations, hence the nod to the “both-and” idea.  However I agree with your description of strategy and a strategic plan and consistently find this approach to be very helpful to board, staff and stakeholders!

  • BY Leonard Satali

    ON October 16, 2015 12:18 AM

    Great reflection there! I love the arguments around the faulty assumptions that have mislead or sent us into a mix. This increases my confidence as I facilitate Strategic Planning Processes for Non Profits.

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