How Adaptive Strategy Is Adapting

When our article, “The Strategic Plan Is Dead; Long Live Strategy,” came out in 2014, the main takeaway seemed straightforward but generated a surprising amount of discussion: When it comes to developing strategy in a rapidly changing world, it’s no longer enough to just make a plan and stick to it; organizations instead need to learn to set a direction and make adaptations to it.

This concept of “adaptive strategy” has been core to Monitor Institute by Deloitte’s work with nonprofits and foundations for nearly two decades now. We still spend many of our days helping organizational leaders drive through the set of integrated choices about what vision they want to pursue, how they will make a difference, how they will succeed, and what capabilities it will take to get there.

But as we’ve worked with clients in the days since we wrote that earlier piece, we’ve also been adapting our approach to adaptive strategy itself. Advances from several other parallel disciplines—namely, innovation, measurement and data science, and execution management—are creating new opportunities for increasing impact and profoundly influencing how we approach strategy work with nonprofit and foundation leaders.

Ideas from innovation theory and practice

Over the last decade, interest in the theory and practice of innovation has moved from the fringes to the mainstream in both the private and social sectors. Our research into how to apply innovation concepts to philanthropy has taught us several practical lessons that have had important implications for strategy work.

First, we’ve learned that “widening your aperture” is critical to effective strategy. If you go into a strategy process with all the same inputs you always have, you’ll almost certainly get the same outcomes you always have. So it’s important to intentionally start the strategy process by exploring and opening yourself up to the full range of possibilities for your organization—taking inspiration from bright spots emerging in the field around you, learning from adjacent spaces and industries, challenging your long-standing orthodoxies, and exploring what’s newly possible given changes in the world around you—before then narrowing down and honing in on the strategies that are right for you.

Too often, an organization’s vision is limited by the automatic assumption that what has made it successful in the past is the same thing that will make it successful in the future. (This may be true in some cases, but it’s important to go through the process of checking the assumptions to make sure they still hold.) Branching out could mean building activities into a strategy process such as an in-depth scan of trends in an organization’s area of focus, a review of how new concepts from related fields like behavioral economics or crowdsourced data analysis might influence your operating model, or a landscaping effort to anticipate changes in your target beneficiary population.

The second lesson we’ve learned from the innovation space is about the importance of designing and managing experiments—explicitly testing strategic elements in the field and adjusting them as necessary. Even as the body of literature on lean startups and agile leadership grows, we’ve seen few mainstream organizations integrate adaptive feedback loops into their ongoing operational management and strategy development processes in a robust way. To do this effectively, an organization must be able run a controlled test against clear learning and impact measures, capture the data necessary to evaluate how the experiment performed, and have a fast feedback loop back to the organization to decide whether and how to adjust the approach in the future.

Learnings from measurement and data science

Recent work on data-driven decision-making has made it clear that data really only matters to the degree that people use it. But as we found in our recent study on measurement, the information social sector organizations collect for learning and evaluation is all too often gathered for others. It’s common for nonprofit organizations to simply pass data about their performance straight from evaluator to funder.

They’re missing an important opportunity. Successful nonprofits are increasingly making sure their data collection efforts not only gather the (often-lagging) information required for evaluation purposes, but also the real-time management information they need for effective day-to-day decision-making.

Some are even taking their efforts to make data collection more useful a step further, negotiating with funders to develop metrics and reporting that are explicitly designed to be useful to the grantee, not just to the funder. An organization might propose that funders accept data that the organization already uses to track its own performance—such as 90-day retention rates for a job-placement program or changes in teacher performance between observations for a teacher training program—that can both help the program improve and satisfy monitoring requirements.

Lessons from execution management

In working with our clients in recent years, we’ve seen time and again that it’s one thing to develop an adaptive strategy, and quite another to successfully execute it.

In part, this is because many organizations create strategic plans without a firm grounding in their current operational reality. The plans can result in a set of high-level strategic goals—oftentimes quite powerful ones—that are nevertheless extremely difficult for the organizations to implement as they presently stand. A compelling data-analytics strategy designed to understand geographic patterns of disease outbreak or forecast neighborhood water demand, for example, will fall flat unless there is a clear path for collecting and cleaning the necessary data, putting the underlying technology infrastructure and expertise in place, and developing processes for integrating findings into future planning. Infusing rigorous, strategic choice-making with a deep understanding of existing organizational systems and capabilities can result in a more execution-ready strategy, with clearer roles and responsibilities for leadership, board, and staff. In many ways, it no longer makes sense to claim that a good strategy failed due to bad execution. Good adaptive strategies should, at their core, be highly executable.

Another important execution-related lesson we’ve learned is that while most strategy processes still happen primarily at the leadership level of the organization, the majority of the execution does not. When people across all levels drive the process, it is more likely that changes will be implemented well and sustained over time. And we often watch leaders in organizations, fatigued by a months-long strategy process, miss valuable opportunities to drive execution by making sure every team member deeply understands not only the strategy itself, but more importantly, the implications of the strategy for that individual’s role in the organization. Effective execution is about building your team’s capacity to understand, react, and adjust, not just implementing a static plan imposed from above.

Bridging this gap involves consistent, ongoing communication about strategy rather than a single grand reveal, and a commitment from the leaders of the organization to work with their staff to ground the strategy in changes to their team’s existing roles and responsibilities. This enables staff to use their judgment—for example, a program director can choose to focus on improving existing activities versus pursuing a new expansion opportunity, or a development associate can prioritize research on new high-net-worth donors over researching grant opportunities. Strategy should guide choices across the organization and help make day-to-day choices for all team members easier.

Turning strategy into a verb

To some, building the capacity and systems for this type of strategy recalibration is nothing new and will simply feel like common sense. But for far too many others, the familiar, time-delimited planning processes remain the norm, even as the demands of business as usual routinely overtake such static efforts.

The good news is that that by integrating insights from innovation, measurement, and execution into the strategy process, organizations can begin to continuously adapt in a way that begins to, as we like to explain it, turn strategy into a verb: It’s just as much about how you implement and adjust your direction in an ongoing way as it is about setting your vision and initial plan.

Read more stories by Dana O’Donovan, Gabriel Kasper & Nicole L. Dubbs.