Five Strategies for Planning during Change

We are surrounded by uncertainty and change. Technology is obsolete almost as soon as it is implemented, making expensive investments even more worrisome. The continuing debate over the Affordable Care Act has made healthcare costs volatile, and budgeting for them challenging. Concerns about the economy, or even the management decisions of a single key donor, customer or client, can make planning seem pointless. In fact, when I talk to clients about business planning, budgeting and strategic planning, I often hear that those practices are obsolete. The pace of change is just too rapid.

I disagree.

I disagree because I’ve seen the fallout from poor planning. Yes, things change. Life, including your organization’s life, rarely turns out the way you anticipate. But that doesn’t mean that planning isn’t important.

Planning, done well, provides a framework for evaluating opportunities. It also allows you to address risks proactively and understand both the implications and how to deal with unexpected setbacks. It also provides the organization with a north star: a vision and direction that will help prevent organizational drift. In short, it helps an organization operate effectively and efficiency.

However, planning in the face of change and uncertainty does require a slightly different approach. I advise clients to use the five strategies outlined below to plan effectively during times of change.

Planning during Change Strategy #1: Clearly Articulate Your Vision

During the past six months, I’ve worked with two clients who have lost their way because they lost sight of their vision. In both cases, the result were the same. Their organizations were unfocused and stretched thin. When presented with opportunities to take on new programs, they jumped in without careful consideration of impact. Other times, they wavered and lost out on opportunity.

Their lack of a clearly articulated vision meant they had no framework for evaluating programs and opportunities. It also meant that their donor base had become confused about why they existed. This hindered their development efforts, putting their financial stability at risk.

In response to criticism, both had developed mission statements that were broad enough to cover all of their existing activities. Unfortunately, because their mission statements reinforced no ultimate vision of the impact they could have, their mission statements were equally ineffective as an evaluation tool.

Most nonprofit organizations aren’t big enough to do everything. Your vision should articulate what one thing you plan to do.

That one thing can be big. You can aim to end homelessness, cancer or illiteracy. But you must have a single vision. You must be able to drive that down to who you are currently serving, how you are serving them, and how what you are doing serves that final vision. Without a vision, your north star, you risk drifting in response to change, not proactively addressing it.

If you need help crafting a solid vision statement, check out this blog post: Why Vision Statements Are Hard to Write (and How to Make it Easier).

Planning during Change Strategy #2: Identify & Address Risks

Every organization faces risks. Some are large and some are small. Both business planning and strategic planning processes must include an assessment of the major risks the organization is likely to face during the planning period. These risks could be internal weaknesses, like technology infrastructure, or external factors, like an economic downturn or a regulatory change.

One of my clients has a social enterprise unit that is very heavily dependent on a large contract with a single client. They are very aware of the dependence, and have been working diligently to address it. Still, if the organization changed its mind about using the nonprofit as a service provider, the impact would be devastating to that important source of revenue.

As an outsider, it’s easy to identify that risk and say that the organization should have two plans in place: a plan to solidify the client-provider relationship, and a plan outlining how the organization would cope with its loss if that were to happen. While the organization has been actively working to prevent the loss, it had not addressed how it would cope in a worst-case scenario.

This is not an uncommon approach. It’s easier to talk about how to prevent a problem than to talk about what would happen if the preventative tactics failed. As you are working through the planning process and identifying the most significant risks, address both how to prevent them and what you will do to cope if you must.

Of course, you don’t need to address every possible risk. There are generally a handful that are most significant. If the risk you’ve identified threatens the stability of your organization, you must have a plan to address it.

Planning during Change Strategy #3: Develop Exit Plans

It is exciting to launch a new program, initiative or campaign. Everyone is enthusiastic and the upsides are obvious. New programs, initiatives and campaigns do take time to get rolling. However, sometimes organizations hold onto poorly performing activities long past the time they should have been delivering results.

Sometimes programs, initiatives and campaigns fail because they weren’t well developed. Other times, they fail because the environment changed, donor interested shifted, or another external factor impacted their success. Regardless of the reason, when an organization fails to exit activities that are unsuccessful, particularly those requiring financial underwriting, the impact on the organization’s health can be devastating.

To prevent this from happening to your nonprofit, develop your exit plans alongside your launch plans. Map out the performance expectations in advance. Identify the critical milestones, how they will be measured, and what should happen if they are missed. Understand when you will decide to exit before you have launched. This helps to keep emotion out of the decision, and can make problematic performance apparent before it has the opportunity to destabilize the organization.

Planning during Change Strategy #4: Develop an “Every Next Dollar” Assessment Tool

Sometimes change is good! Your planning processes should include your approach to dealing with unexpected windfalls as well as risks and associated potential outcomes. You should know how, when and under what circumstances you would spend reserves, unexpected surpluses, or a bequest or other significant gift. I call this the “every next dollar” approach.

The “Every Next Dollar” Assessment Tool outlines the types of opportunities you would consider exploring, and under what conditions. It describes how to assess the strategic alignment of potential opportunities. It also articulates when you would use an unexpected surplus to fund them.

For example, let’s say you want to make a contribution to the organization’s retirement plan. Your business plan identifies employee retention as a key success factor, and you know that the retirement plan impacts retention. However, your current budget doesn’t have sufficient funding to make the contribution. The “Every Next Dollar” Assessment Tool outlines how much surplus you would need to have in order to make that match, and what types of other investments might take priority above it. In other words, it tells you how and when your organization spends (or saves) every next dollar you bring in beyond what has been budgeted.

Planning during Change Strategy #5: Understand and Communicate the Role of Planning

One of the reasons that people argue planning is obsolete in the face of our rapidly changing environment is that they assume everything needs to be accurate. As a result, they continually change their plans (and budgets, and strategies), and the result is either a constant state of “planning” or frustrated drift.

Budgets, business plans and strategic plans were never meant to be written in stone. They are plans, not historical reflections of reality. They present the approach the organization will take in the optimal situation. And, if they are done thoughtfully, they will also identify the risks, the organization’s opportunity assessment approach, the expected outcomes, and the ultimate objectives of the organization.

The end of the planning period is the time for reflection and learning. If you completely missed the plan, how did that happen? Did you fail to identify an important risk? Did an opportunity arise? If so, was it consistent with your ultimate vision? Did you hang on to a failing initiative longer than you should have?

Your executive team and your board should understand that the role of planning is to anticipate and reduce risk, and to maximize opportunities and impact. Don’t give up on planning because it wasn’t accurate. And don’t redo your plans mid-stream because they don’t match reality. Instead, develop a plan, assess how well your plan worked, and then improve the process.

About the Author

Heather Fitzpatrick is a management consultant who works with nonprofits to help them maximize the progress toward their vision. She is a CPA, a Chartered Global Management Accountant (CGMA), and the author of a book on marketing management. Heather has also served on the boards of ten nonprofit organizations, and on innumerable committees and task forces. She is the author of Upturn Strategies, and would love to have you as a subscriber! She is also available via email for questions, suggestions and requests for assistance.