The power of strategy in navigating successFor a nonprofit chief executive, strategic leadership is based on a unique two-fold accountability: leadership occupancy and leadership legacy.
As the organization's leader, the chief executive is accountable to the board for the organization's operations and the dedicated pursuit of enterprise success. This is leadership occupancy. Meanwhile, the board provides oversight of the organization's fiduciary, legal and community impact. At the same time, the chief executive must consider his or her leadership legacy. As we enter an era in which many enterprises extend well beyond a single generation of leaders, the chief executive has an obligation to position enterprise success not only during his or or her tenure but in perpetuity.
Enterprises that have mutual clarity about the operational accountability of the chief executive and the oversight role of the board — as well as the profound nature of the role of the chief executive in owning strategy — are poised to achieve long-term success.
When it comes to strategic planning, however, there's often significant variation on who owns the planning, the plan itself, achievement against the plan and lessons learned. When boards leave strategic planning to the chief executive, there's an inherent imbalance. In contrast, an accord on these issues is an indicator of working trust between a board and the chief executive.
Separating strategy from goals
Strategy is an essential means by which an enterprise articulates organizational direction and mobilizes resources and distinctive capabilities over time. Strategy can be used to answer critical questions, address operational issues or gaps, and advance competitive or market positioning. In contrast, goals are most often associated with results reached within a shorter period of time (say, one year). Goals are vitally important in planning and can be identified contextually within a strategy attributed to a system or service.
So why do we focus on strategy in strategic leadership rather than goals?
Consider system theory, which recognizes the 85/15 rule presented by famed management consultant W. Edwards Deming. This rule suggests that up to 85 percent of variation in a system is due to the system itself and the remaining 15 percent of variation is due to randomness or people. A lack of attention to system dynamics and the 85/15 rule may lead to the development of enterprise-level strategic goals that are really operational system indicators (or indicators of what the system produces). This creates the potential for unintentional system chaos rather than an operational system in a state of equilibrium.
Guiding principles for effective strategy formation
With greater awareness of the differences between strategy and goals, we can pivot to focus on guiding principles for strategy formation.
Strategy provides context for stakeholder engagement
Strategy is often used to address a gap with the people or communities served by a given organization. You might ask:
- How will we advance the quality of life of the people, community or society we serve over time?
- In three years, where do we see our position in addressing the needs of our key stakeholders?
Strategy takes service enhancements to a new level over time
Strategy can guide an organization to an improved future state of quantity, quality, productivity and performance. You might ask:
- Do we seek to expand our service delivery or outcomes?
- Do we need new skills to meet the changing needs of the people or community we serve?
Strategy identifies clear action plans
Strategy provides a means of creating change in an incremental way. Strategy can involve multiple people from various departments across all levels of an organization. Of course, this requires continuous communication about who does what and by when. You might ask:
- How will we advance specific attributes of our services, knowledge, skills and delivery in an organized manner that doesn't deflect, injure or diminish our current level of performance or service?
- How can we ensure that all key contacts — both internal and external — are aware of the intended changes and implementation plans?
- How will we address the intended and unintended consequences of change?
- How can we invite feedback as change takes place?
Strategy creates distinction and addresses barriers to market
Strategy advances an organization's unique characteristics, differentiators and distinctive capabilities in support of market positioning. You might ask:
- As we change, how will we manage our brand, equity, community trust and relationships with stakeholders?
- What attributes, characteristics and results are we seeking to achieve?
- How do we determine where the "there" is, and how will we know when we arrive?
Using the power of strategic leadership
Strategic planning and leadership can lead to profound and dynamic contributions to an organization over time. With the chief executive and board in balance and accord — agreeing on who owns the plan, achievement against the plan and lessons learned — strategy can be a powerful way to harness energy, goodwill and momentum. Imagine the nonprofit chief executive as a captain navigating open waters and effective strategy as wind in the ship's sails. It takes both to navigate nonprofit success.