The Nonprofit FAQ

What is strategic planning?

Overview



Strategic planning is a management tool, period. As with any management
tool, it is used for one purpose only: to help an organization do a
better job - to focus its energy, to ensure that members of the
organization are working toward the same goals, to assess and adjust the
organization's direction in response to a changing environment. In
short, strategic planning is a disciplined effort to produce fundamental
decisions and actions that shape and guide what an organization is, what
it does, and why it does it, with a focus on the future. (Adapted from
Bryson's Strategic Planning in Public and Nonprofit Organizations)

A word by word dissection of this definition provides the key elements
that underlie the meaning and success of a strategic planning process:
The process is strategic because it involves preparing the best way to
respond to the circumstances of the organization's environment, whether
or not its circumstances are known in advance; nonprofits often must
respond to dynamic and even hostile environments. Being strategic, then,
means being clear about the organization's objectives, being aware of
the organization's resources, and incorporating both into being
consciously responsive to a dynamic environment.

The process is about planning because it involves intentionally setting
goals (i.e., choosing a desired future) and developing an approach to
achieving those goals.

The process is disciplined in that it calls for a certain order and
pattern to keep it focused and productive. The process raises a sequence
of questions that helps planners examine experience, test assumptions,
gather and incorporate information about the present, and anticipate the
environment in which the organization will be working in the future.
Finally, the process is about fundamental decisions and actions because
choices must be made in order to answer the sequence of questions
mentioned above. The plan is ultimately no more, and no less, than a set
of decisions about what to do, why to do it, and how to do it. Because
it is impossible to do everything that needs to be done in this world,
strategic planning implies that some organizational decisions and
actions are more important than others - and that much of the strategy
lies in making the tough decisions about what is most important to
achieving organizational success.

The strategic planning can be complex, challenging, and even messy, but
it is always defined by the basic ideas outlined above - and you can
always return to these basics for insight into your own strategic
planning process.

Strategic Planning and Long-Range Planning



Although many use these terms interchangeably, strategic planning and
long-range planning differ in their emphasis on the "assumed"
environment. Long-range planning is generally considered to mean the
development of a plan for accomplishing a goal or set of goals over a
period of several years, with the assumption that current knowledge
about future conditions is sufficiently reliable to ensure the plan's
reliability over the duration of its implementation. In the late fifties
and early sixties, for example, the US. economy was relatively stable
and somewhat predictable, and, therefore, long-range planning was both
fashionable and useful.

On the other hand, strategic planning assumes that an organization must
be responsive to a dynamic, changing environment (not the more stable
environment assumed for long-range planning). Certainly a common
assumption has emerged in the nonprofit sector that the environment is
indeed changeable, often in unpredictable ways. Strategic planning,
then, stresses the importance of making decisions that will ensure the
organization's ability to successfully respond to changes in the
environment.

Strategic Thinking and Strategic Management



Strategic planning is only useful if it supports strategic thinking and
leads to strategic management - the basis for an effective organization.
Strategic thinking means asking, "Are we doing the right thing?"
Perhaps, more precisely, it means making that assessment using three key
requirements about strategic thinking: a definite purpose be in mind; an
understanding of the environment, particularly of the forces that affect
or impede the fulfillment of that purpose; and creativity in developing
effective responses to those forces.

It follows, then, that strategic management is the application of
strategic thinking to the job of leading an organization. Dr. Jagdish
Sheth, a respected authority on marketing and strategic planning,
provides the following framework for understanding strategic management:
continually asking the question, "Are we doing the right thing?" It
entails attention to the "big picture" and the willingness to adapt to
changing circumstances, and consists of the following three elements:


  • formulation of the organization's future mission in light of changing
    external factors such as regulation, competition, technology, and
    customers
  • development of a competitive strategy to achieve the mission
  • creation of an organizational structure which will deploy resources to
    successfully carry out its competitive strategy.


Strategic management is adaptive and keeps an organization relevant. In
these dynamic times it is more likely to succeed than the traditional
approach of "if it ain't broke, don't fix it."

What Strategic Planning Is Not



Everything said above to describe what strategic planning is can also
provide an understanding of what it is not. For example, it is about
fundamental decisions and actions, but it does not attempt to make
future decisions (Steiner, 1979). Strategic planning involves
anticipating the future environment, but the decisions are made in the
present. This means that over time, the organization must stay abreast
of changes in order to make the best decisions it can at any given point
- it must manage, as well as plan, strategically.

Strategic planning has also been described as a tool - but it is not a
substitute for the exercise of judgment by leadership. Ultimately, the
leaders of any enterprise need to sit back and ask, and answer, "What
are the most important issues to respond to?" and "How shall we
respond?" Just as the hammer does not create the bookshelf, so the data
analysis and decision-making tools of strategic planning do not make the
organization work - they can only support the intuition, reasoning
skills, and judgment that people bring to their organization.

Finally, strategic planning, though described as disciplined, does not
typically flow smoothly from one step to the next. It is a creative
process, and the fresh insight arrived at today might very well alter
the decision made yesterday. Inevitably the process moves forward and
back several times before arriving at the final set of decisions.
Therefore, no one should be surprised if the process feels less like a
comfortable trip on a commuter train, but rather like a ride on a roller
coaster. But even roller coaster cars arrive at their destination, as
long as they stay on track!

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The Free Management Library provides additional perspectives on strategic planning processes, developing the mission and vision, environmental scanning, etc. See

http://www.mapnp.org/library/plan_dec/str_plan/str_plan.htm

Bridgespan.org also provides a guide to clarifying strategies and
determining strategic priorities here: http://www.bridgespan.org/PDF/BusinessPlanningforNonprofits.pdf


Revised 8/19/99 -- CM