LGT's Profit Sense

“Life moves pretty fast.” So observed Ferris Bueller back in the summer of 1986 — and that pace has only accelerated in the 30+ years since. Yet many not-for-profits continue to take an old-school approach to strategic planning, spending months or even years to develop formal written plans that lay out specific goals for set periods of time.

And those plans can have a downside. As a Harvard Business Review article notes, traditional strategic planning requires leaders to confront a future they can only guess at. Moreover, choosing a strategy under this approach requires an organization to explicitly shut down other options and possibilities.

That’s why some not-for-profits have adopted a more fluid and ongoing approach known as Real-Time Strategic Planning (RTSP). Its proponents say the process helps not-for-profits quickly and efficiently identify, understand, and act on challenges and opportunities to advance their missions.

What is it, exactly?

RTSP was first introduced in not-for-profit consultant David La Piana’s book The Nonprofit Strategy Revolution: Real-Time Strategic Planning in a Rapid-Response World. According to La Piana, strategy is “a coordinated set of actions designed to create and sustain a competitive advantage in achieving a nonprofit’s mission.” A successful not-for-profit plan requires three levels of strategy: organizational, programmatic, and operational, using the following building blocks of strategy formation through RTSP:

Understanding your identity. RTSP is rooted in a firm and honest understanding of the organization’s identity. What is your organization’s mission and impact? What do you do (programs and services), where (geographic scope), and for whom (constituent, client, or customer)? And how do you pay for it?

Identifying your competitive advantage. What strengths do you leverage to differentiate your organization from others and compete effectively for resources and clients? This step requires analyzing other organizations in the same geographic area that offer the same or similar programs, to the same or similar constituents, with similar funding sources.

Knowing how you will make decisions. Develop a “strategy screen” composed of the criteria you will use to choose strategies or courses of actions. A strategy screen might consider, for example, if an option advances your organization’s mission and enhances its competitive advantage. It also considers if you have the capacity to carry the option out and if you can pay for it.

Defining the right strategic questions. Many questions naturally arise when presented with an opportunity, but they aren’t all strategic. You need to identify the strategic questions that must be answered now and sort operational questions like “Will we be able to hire more employees to do this?” from strategic questions like “What are the implications for our mission?”.

What about “competitive advantage”?

La Piana pegs an organization’s competitive advantage as one of the most important components of its strategy — perhaps the most important. For purposes of RTSP, competitive advantage is the ability to advance your mission by 1) using a unique asset — or strength — no competitor in your area possesses, or 2) having outstanding execution of programs or services. Your competitive advantage must be something clients and funders value.

Asset advantages include:

• Better program design leading to better outcomes, including unique attributes of programs or services,
• Accessible locations or specialized property that enhances program delivery,
• A robust, diversified funding base that provides flexibility and stability,
• Great name recognition and reputation among funders and constituents,
• Powerful partnerships and a well-connected board of directors.

Examples of execution advantages include lower costs to funders or customers, greater efficiency per dollar spent, faster delivery of programs or services, sound marketing and communications, or better accountability and public reporting.

To make comparative judgments, of course, you also need to identify and understand your competitors and their strengths. As La Piana notes, though, competitor in this context isn’t a negative term. In the not-for-profit arena, competitors often are organizations with whom you collaborate. Nonetheless, you’re likely competing for donors, media coverage, board members, employees, volunteers, or clients.

A continuing process

Effective strategic planning for today’s fast-moving world requires more than a weekend meeting every three years. Organizations that implement RTSP have the tools to align their daily actions with the organization’s overall strategy and can work toward having a clear vision of their long-term direction.