Stress Test Your Nonprofit Strategic Plan With These Guidelines.

Stress Test Your Nonprofit Strategic Plan With These Guidelines.

By: Eugene Fram                 Free Digital Image

Strategic plans need to be reevaluated as they are implemented. Left routinely attended only at year’s end, a nonprofit board’s long-range plans can quickly grow old during implementation. Following are four potential changes that nonprofit boards and managers can use to consider stress testing practice changes: The changes require those responsible to move:

  1. From annual planning to strategy as a journey: * With the three-to-five year plan complete, it is no longer feasible to completely center on executing the plan year by year. Unfortunately too many nonprofits only wait till year-end to review strategic outcomes and impacts. At regular spaced meetings, during the year and following, senior managers need to discuss how the actions they have taken are supporting strategic objectives, and creating positive impacts for clients. This process enables the group to review assumptions and to quickly alert the board the need to make strategy changes.
  2. From getting to “yes” to debating real alternatives: * Robust debate at the board level is often modest because (1) board member tenures are often fixed at four to six years and (2) board members’ professional backgrounds are far afield from the nonprofit’s missions. In addition, board members often look to the executive director for direction, assuming he/s is most knowledgeable about the organization’s environment and needs. When different options are debated at the management level and them reviewed with supporting information by the board, its members are better able to understand the potential impacts on mission.
  3. From “peanut butter” to one-in-ten wins: * In many nonprofits, the idea of taking a risk is a negative. I have even seen it embedded in nonprofit bylaws so that the nonprofit kept its six-figure reserve fund in a bank savings account!   Some nonprofits are viewing risk in a more positive manner and setting small amounts of resources aside as innovation funds. ** These funds are being used to allow staffs to experiment with new programs, to help staffs upgrade their knowledge or extend the organization’s thinking beyond the traditional three to five year time frame. As with risk in the venture field, there is only one-in-ten chance a supported project will be highly successful—that is with a 10 times return on the resources invested as sought by venture firms. Therefore nonprofit boards need to be ready to accept losses from the innovation fund on occasion, as long as they are within normal business risk norms. This is the guideline used by for-profit firms.
  4. From long-range planning to force the first step: * Board members, as part-time monitors, often get quite excited about the grand visions of a long-range plan. “The problem is that there is no link to the actual big move required to achieve the vision—and, in particular, no link to the first step to get the strategy under way.” * As a result, the board and management need to be assured that the first steps are underway and that milestone reviews are established. In the fog of daily management activities and crowded board agendas, a board member, like a Lead Director ***, needs to be charged with the responsibility of monitoring the plan’s launching and maintaining its health during its implementation stage and well into its future.

As mentioned before, left routinely attended at years-end, a nonprofit board’s long-range plans can quickly grow old during implementation.   To avoid this from happening and top stress test a strategic plan, I suggest nonprofit boards and management call for:

  • frequent nonprofit board and management reviews of the “journey” being taken with the plan, possibly as often as every six months.
  • robust debate of alternatives for the plan, first at the management level and then at the nonprofit board level—including projections that go beyond the traditional five-year level.
  • establishing innovation budgets to allow nonprofit management to experiment with modest risk projects and/or to upgrade staff abilities.
  • carefully monitor the first step(s) of the plan, possibly by using a nonprofit Lead Director *** to assume responsibly for the plan’s implementation.

*   https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/eight-shifts-that-will-take-your-strategy-into-high-gear?cid=other-eml-alt-mkq-mck-oth-1804&hlkid=5206b911340242048495af12c838b48e&hctky=1801797&hdpid=4c4dc545-691c-454a-ab93-552abf4ab7b6

** https://nonprofitquarterly.org/2018/05/09/risk-leadership-necessary-embrace-nonprofit-leaders/

*** http://www.icnl.org/research/journal/vol14iss1/art_3.html

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