Insights on Balanced Score-BasedStrategic Planning for Nonprofit / Nongovernmental Organizations

Arturo J. Bencosme-Dávila, PhDajbencosme@comcast.net

Affiliate Faculty, Global Nonprofit Leadership DepartmentRegis University

Introduction

Non Profit / Non Governmental Organizations :

• Typically aim at community interests, social change and the common good.

Philanthropic motivation is their prime driver: Need to emphasize the vision .

The uncertainty and complexity of the organization’s general environment require significant attention.: should utilize scenario planning,

Navigate in a complex environment beyond market forces: Should clarify the challenges involved,

• Are characterized by being mission oriented: finance and everything else should play a utilitarian role in strategy crafting.

• Demand comprehensive guidance for the entire organization: should consider multiple perspectives to attain the necessary alignment.

Visionary Balanced Scorecard: The Strategic Planning Approach of Choice:

Visionary: Underscores the organization’s governing ideas with the vision as its central focus.

Challenge Oriented: Surfaces the challenges ahead to fill the gap between current reality and the aspired future.

Strategy Focused: Clarifies strategic thrusts to go past the challenges.

Implementable: Enables strategies through action areas that address multiple perspectives of the organization.

Communicable: Deploys visually the relationships between vision and strategy.

Improvable: Sets measurements for determining progress and for improving on strategic thinking.

Introduction(Cont.)

There are two ways of being lost :

Not knowing where we are going…

And not knowing where we are…!

Where we want to go: Setting the Aspiration

through Governing Ideas

Governing Ideas are the fundamental statements of what matters to the organization specifically, the future it aspires to build.

They are summarized in a visionary narrative.

are deep-rooted ethical beliefs with which the organization identifies itself.

describes products or services offered as the specific way of manifesting the purpose.

are to be achieved in accomplishing the organization’s mission.

is the larger impact sought and why society values the organization.

PURPOSE

A shared vision of the organization’s successful future

will bring about the alignment needed to accomplish its mission.

Visions take the form of a detailed, vivid narrative

-a portrait painted with words-

of what will look like and how will feel

having attained the overarching goals of the organization.

The Visionary Narrative Weaves the Everything Together

There are two alternative routes to develop a visionary narrative:

• Start with the purpose, mission and values, establish the goals, and then write the narrative.

• Start with a narrative which incorporates the values, purpose and mission, and describes the aspired future and then, intuitively extract the goals from it.

The important result to obtain is an inspiration for achieving a set of worthwhile goals totally congruent with the underlying essence of the organization: its values, purpose and mission.

Writing Visionary Narratives

As we stand on our future, we see ourselves energized and proud as an ever growing number of graduates from our trainings surround us. They show gratitude and support having transformed themselves into the true human beings they are, and are embodying their full potential. As staff, we enjoy a profound sense of purpose and connection among ourselves and to our volunteers, sharing a worthwhile endeavor in caring, truth, endurance, effectiveness and honesty. Our funders and donors are confident on the value of the service that is provided by us to those who participate in our trainings thanks to their generosity and continued support. Our financial sustainability is partly provided by them and from the proceeds from our ever growing training participants. And we strive to remain at the cutting edge of like skill trainings, while continuing to build a community of graduates who are our best ambassadors to society in pursuing our endeavor of contributing to a better world.

Example of a Visionary Narrative in a Non Profit Organization Dedicated to Provide Life Skills for Personal Growth

Knowing Where We Are: Performing the Strategic Analysis to AssessCurrent Reality and the Challenges Ahead

The strategic analysis starts by determining the GAP

between the desired state of the organization -as specified in the vision-

and its current state relative to that vision.

VISION

REALITY CHECK

HOW FAR ARE WE?

A future centered view with the visionary goals being the focus.

And multiple organizational perspectives which allows to formulate comprehensive, organization-wide strategies. F

INA

NC

E

BENEFICIARIES

SOCIETY

PROGRAMS ORGANIZATION

PROGRAMS

The “SWOT” analysis assesses the organization’s potential for moving toward its vision: a scan for the organization’s strengths, weaknesses, opportunities and threats. Within the balanced scorecard approach, the SWOT analysis encompasses two dimensions:

The first dimension in the SWOT analysis addresses questions in relation to attaining the organization’s future vision, and with references to the complexities posed by the non profit / non governmental sector’s environment.

STRENGTHS WEAKNESSES

OPPORTUNITIES THREATS

What are the internal advantages?

What can it do better than any other organization?

What unique resources can it draw upon?

What could the organization improve on, and what should it avoid?

What internal factors hamper the organization in materializing its vision?

What external obstacles could stand in the way to success?

Are there funding /fiscal issues?

What unfavorable trends are emerging?

What are the significant opportunities within the organization’s environment for achieving success?

What favorable trends are surging?

Uncertainty needs to be included in the SWOT analysis when looking into threats and opportunities.

“In the future,

instead of striving to be right at a high cost, it will be more appropriate to be flexible

and plural at a lower cost.If you cannot accurately predict the future

then you must flexibly be prepared

to deal with various possible futures.”

~ Edward de Bono

An effective way to handle the uncertainty in threats and opportunities is via scenarios about the future:

“Should this scenario materialize, then what would be the right strategy to pursue? ”

FUTURE SCENARIO

“Z”

FUTURE SCENARIO

”X”

FUTURE SCENARIO

“W”

FUTURE SCENARIO

“Y”

CURRENTKNOWNS & UNKNOWNS ABOUT THE

FUTURE

“…Scenarios are stories about the way the world might turn out tomorrow, stories that can help us recognize and adapt to changing aspects of our present environment…”

“…To act with confidence, one must be willing to look ahead and consider uncertainties: “What challenges could the world present to me? How might others react to my actions?”

Peter Schwartz, The Art of the Long View

What are “Scenarios”?

How Strategic Scenarios are Constructed

1.Focus on the key organizational choices: the visionary goals.

3.Identify and analyze the key environment driving forces, and identify uncertainties.

4.Establish the scenario logics: the organizing paradigms or theories around which the scenarios are structured. 5.Select and elaborate the 3-4

most significant scenarios by describing their plots.

6.Interpret the scenarios for their strategic Implications in terms of threats and opportunities.

2.Specify key factors to know about the future for sound strategy crafting to achieve the visionary goals.

Organization’s Overarching

Choices

Key factors about the future needed for strategy crafting

Scenario Logics

Strategy implications

Environmental factors & trends

SCENARIOS

7.Qualify/Redefine the key factors about the future for needed for strategy crafting.

Both the organization’s working and contextual environments ought to be considered.

WORKING ENVIRONMENT DRIVING FORCES:

BeneficiariesVolunteersDonors/FundersCompetitorsPartnersRegulatorsCommunities

CONTEXTUAL ENVIRONMENT DRIVING FORCES:

EconomicPoliticalSocialCulturalGeographical

The most uncertain and therefore, the most relevant to scenario construction usually is the contextual environment.

Scenario logics is the organizing principles around which the scenarios’ plots are structured: the “theories of the way the world might work" along each of the axes of uncertainty.

1. Identify general, broad, driving forces, applicable to all scenarios i.e.., Government Orientation, Economic Strength, Immigration Reform Progress.

2. Identify trends and combine them to get a series of scenarios3. Select those which are most significant.

Social Welfare Oriented Government

Strong Economy

Weak Economy

Free Market Oriented GovernmentIm

migration

Reform Stalls

“Locomotive Style”

“Navigating in between

Waters”

“High Expectations of

the 3rd Kind”

“Mission Almost

Impossible”

Immigration

Reform AdvancesEXAMPLE

The second dimension in the SWOT analysis supports the balanced scorecard-based strategy crafting and thus will incorporate the four-fold perspective on the organization used in that methodology namely,

Organization Beneficiaries & the Community;

Donor & Financial Efficiency, Accountability & Sustainability;

Agility & Efficacy in each of the organization’s programs & processes;

and Organizational Dynamics: Learning & Growth.

The complete SWOT analysis will thus encompass all strengths, weaknesses, opportunities and threats relative to advancing toward the visionary goals, seen from the 4 balanced scorecard perspectives. It takes the form of a “bookshelf” that organizes all aspects of the analysis.

The next step in the strategic analysis Is the “So What?” stage:

what are the challenges that the organization faces?

Visionary Goals

STRENGTHS WEAKNESSES

OPPORTUNITIES THREATS

Overcoming Challenges to Materialize the Vision

The challenges are of two kinds:

1) Challenges to transform the adversities (weaknesses & threats) into possibilities.

2) Challenges to make the most of the advantages: strengths & opportunities.

Match Strengths to the Opportunities

Transform Adversities

into Possibilities

The Logic to Articulate Means to Overcome the Challenges Is at the Core of Strategic Thinking.

S T R A T E G Y

Crafting a Comprehensive Strategyfor the Organization

How to go past the challenges in order to attain the visionary objectives under a

variety of scenarios about the future?

The answer is: through implementing an effective, robust strategy.

S T R A T E G Y

VISION

YOU ARE

HERE

Within the balanced scorecard method,

STRATEGY is a set of mutually supporting themes

that will drive the organization toward its visionary goals

under the most significant scenarios about the future.

There needs to be one strategic theme for each visionary goal

expressing what the organization’s leadership believes

should do to materialize each such goal.

S t r a t e g y

STRATEGIC THEMES

Beneficiaries achieve substantial personal transformation.

Cultivate among the organization’s staff and volunteers skills to transform lives.

Financial Stability & Sustainability. Articulate process improvement

with emphasis on cost efficiency and financial accountability.

Visionary Goals

The following are examples of visionary goals and their corresponding strategic themes in a non profit organization dedicated to provide life skills for personal growth.

The next task consists of identifying the key areas of action which will operationalize the strategic themes

that is, the strategic enablers.

Organization Beneficiaries & the Society at Large; Financial Efficiency, Accountability & Transparency; Agility & Efficacy in each of the organization’s programs; and Organizational Learning & Growth.

The strategic enablers comprise the four balanced scorecard perspectives.

The strategic enablers are displayed through “strategy maps” in which the causal relationships underlying the strategic themes are apparent.

FINANCIAL

CUSTOMER

INTERNAL PROCESSES

ORGANIZATIONAL DYNAMICS

While For-Profit organizations are finance-driven,

FINANCIALBENEFICIARIES & COMMUNITY

INTERNAL PROCESSES

ORGANIZATIONAL DYNAMICS

Not-For-Profit / Non Governmental organizations are mission-driven and financially accountable

Non profit / non governmental organization strategy maps are different from those of for-profit organizations.

The causal relationships express that if those enablers are executed, they will implement the strategic theme.

Enhanced Quality of the Trainings

Offered

Volunteer, Participant & Graduate Relationship

Management

Participants Complete Trainings Successfully

Organizational Learning Focused on Adult Learning EBPs

Staff & Volunteers Align with the Values, Purpose Mission & Vision

Beneficiaries & Community

Financial (N.A.)

Internal Processes

Organizational Dynamics

Strategy Map Example 1 in an organization dedicated to provide life skills for personal growth: In order to have the beneficiaries achieve a substantial personal transformation, (Visionary goal)cultivate among the staff and volunteers skills and commitment to transform lives. (Strategic Theme). The organization needs to actuate the following enablers:

strive to build alignment with the organization’s governing ideas; collectively learn adult learning techniques & processes aimed at personal growth; Improve the trainings being offered; advance volunteer & graduate involvement processes; and support the participants in successfully completing their trainings.

Improve the Efficiency in Marketing and in Delivering Trainings

Donor & Graduate Relationship Management

Continuity in Training Offering

Staff & Volunteers Align with the Values, Purpose Mission & Vision

Beneficiaries & Community

Financial

Internal Processes

Organizational Dynamics

Donor Continuity, Financial Equilibrium,

Financial Accountability

Enhanced Cost Accounting

Strategy Map Example 2, in an organization dedicated to provide life skills for personal growth: In order to achieve financial stability & sustainability, (visionary objective)Articulate process improvement with emphasis on cost efficiency and financial accountability. (Strategic Theme). The organization will actuate the following enablers:

strive to build alignment with the organization’s governing ideas; improve the cost efficiency in the trainings being offered and in marketing efforts; advance donor & graduate involvement processes; improve cost accounting and fund allocation; strengthen relations with donors & graduates; and ensure continuity in training offering.

Applying causal schematics for each theme and superimposing them generates an overarching strategy map:

This schematic summarizes the visionary balanced scorecard approach to strategic planning.

Such a compact visual representation of the organization’s strategic thinkingcan be useful and powerful:

The organization’s leaders can make it availableto all the staff members and volunteers as a “pocket strategy guide”

to remind everyone of what the organizations aspires to beand the path that has been chosen, its strategy.

Implementing the Strategy:Making it Happen

STRATEGY IMPLEMENTATION & MEASUREMENTS

is about managing organizational change: making things happen by enrolling all organization´s individuals in a collective construction effort.

focuses on managing the initiatives that introduce the necessary changes that the strategy prescribes.

Strategy implementation:

ORGANIZATIONAL DYNAMICS PERSPECTIVEInitiatives of particular interest to enhance motivation & alignment: Governing idea collective embodiment; dialogue & systems thinking development programs.

INTERNAL PROCESS PERSPECTIVEInitiatives to improve process effectiveness, efficiency, agility and reliability: process redesign, stakeholder relationship management expansion.

FINANCIAL PERSPECTIVEInitiatives aimed at financial performance and sustainability: improving cost accounting & transparency, developing donation continuity.

BENEFICIARY AND COMMUNITY PERSPECTIVEInitiatives to enhance the organization’s mission: personal development seminar innovation & offering, advocacy & support.

Example: Translating the strategic enablers into initiativesin an organization dedicated to provide life skills for personal growth.

Measurements and targets will empower the organization to monitor its progress and to gauge feedback for improvement.

Visionary objective measurements depict how far the organization is from attaining the visionary goals.

Strategic enabler measurements depict the extent to which the strategy is being implemented.

“What is not measured is not managed”.

Where the Tread Touches the Ground

A chart can be built that displays the visionary objectives, their strategic themes, the strategic enablers for each strategic theme and the initiatives that enliven the enablers. Each of them with the corresponding measurements and targets.

Planning is a team learning effort and a continuous, never ending process.Every time, the process might cycle through all the stages.

It is at its best when it is specifically aimedat expanding the capacity for clarifying what the organization aspires to be

and the means to materialize such an aspiration.

In preparing for battle, I have always foundthat plans are uselessbut planning is indispensable.

Gral. Dwight D. Eisenhower