Strategic Fail – The Budget

Why do so many strategic planning efforts fail? Why do so many managers, boards, CEOs and other stakeholders despise the process?

I have addressed many reasons for this, but here’s one you may not have considered:

Strategic Planning fails when the organization articulates a strategy in which it is not willing to invest resources. Pretty simple huh?  Yep. It’s pretty simple, and yet it happens over, and over, and over — ESPECIALLY in the nonprofit sector.

Take a sample strategic imperative list like this one:

  • Grow resources
  • Expand the brand to reach more people
  • Use technology and data to make better decisions
  • Innovate

I could go on, but these imperatives are quite common. Do you think these would cost the organization any monetary resources to pull off?

Here is the problem — most boards who engage in strategic planning do so separate and apart from the budgeting process.  The enterprise plan is rarely a part of the strategic plan. An organization’s budget should tell a story.  THE story of how an organization invests its precious resources to achieve its mission.  But it’s rarely that.  It is usually an annual ritual of taking a baseline from the previous year, making best guesses about how much money we’ll raise next year, and tweaking the budget to “do the best we can.” And the biggest reason for that dynamic is grounded in good motive — we don’t want to cut programs at the expense of “overhead.”  I know, I know — you could have gone all day without the dreaded “O” word. But it is the key. We fail to concede that in order to grow, we must invest — just like any other business.

The result: A strategic plan that talks the talk, but has no legs to walk.

How will you ensure that this doesn’t happen to your organization the next time you engage in strategic planning?

The Jinks Perspective:

  1. For starters — let the IRS continue using the term overhead if they want to — inside your organization, use the term capacity
  2. Make the business plan a part of the conversation during the strategic planning process.
  3. Build your operating budget AROUND your strategic imperatives.
  4. Make your operating decisions based on the strategic plan (alignment).
  5. Ask yourselves “Where are we getting beaten?” Then analyze what those competitors have in the way of strategy AND capacity that gives them the edge. Yes, nonprofits have competition.

If your capacity investment strategy aligns to drive your mission, you can sell it to donors!

Try asking board members what percentage of annual revenue they spend on marketing their businesses, and compare it to what your organization spends.  Then ask this question: “Why do we keep thinking nonprofits can grow without marketing? Or talent? Or technology? Or ……..?” The faulty premise is that nonprofits’ mission or cause is the motivating marketing strategy, and people should just give because it’s the right thing to do. But with so many nonprofits struggling for resources year in and year out, and some of the larger ones losing donors fast, a case can be made that employing that strategy isn’t working.

Marketing is only one example. Technology, innovation, talent, research — they all cost money. If those things were more abundant in the social sector, could the sector have an even greater impact than it does today? Wouldn’t the overall pool of resources from which program spending occurs be bigger?

Want to know more about JPG’s approach to coaching organizations through strategic direction setting and planning?  Click HERE!

What’s your perspective?

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