Strategic Thinking: In 1964 Peter Drucker rejected the word 'strategy' for the title of his seminal book because market research showed that the word 'strategy' was generally accepted as a military concept.[1] Historically, the foundation of a successful business was a sound business plan. The world has changed. Alternatives emerged; competition became commonplace. Every person now has many, many choices on what to buy, where to contribute money, and where to spend discretionary time. Your nonprofit can only do better by being different. Being good is not enough. Strategy is key to organizational success. Ignore strategy at your institution's peril. In good times(strong economy and little competition) the environment will support your organization whether it is well managed or not; whether you have a consciously designed and implemented strategy or not. Even poor farmers make money in good years.

In the last 30 years, in the hands of the consultants and bureaucrats, strategy formulation became strategic planning, SWOT analysis, strategic retreats and three ring binders. Like many good things, planning has been driven off track by the experts. In the 1970's, major corporations eliminated their planning departments because they were disconnected from the doing departments. Many of these ex-planners took to writing books and manuals on planning or became planning facilitators. In the 90's several well researched books appeared explaining the death of strategic planning.[2] This is why Qm² focuses on helping clients think strategically. The results of this thinking can usually be captured on one sheet of paper.

Thinking of visitors, clients, and donor tradeoffs is also a useful way to think about competition. What will people not do that they are now doing if they decide to use your service or attend your program? What will donors take money away from when they decide to give more to your program? Answering these questions is likely to lead you in the direction of strategic thinking.

Strategy is one or more decisions impacting your whole organization, considing the critical external factors (primarily economy, markets and competition) in shaping how you will focus your resources (primarily knowledge, financial, and facilities) so that the organization delivers competitively distinct value in the public's eyes

Strategic alignment is implementation of strategy by aligning the organization's auto pilots to the strategy. This means designing the auto pilots to directly support the strategy. First, remove barriers that may auger against alignment. Second, design to support the strategy.

Auto Pilots

• Culture: the key collective attitudes which shape our decisions and behavior.

• Structure: how work is divided up among the workers-positions, duties, reporting relationships.

• Staffing: how well individuals are matched to the needed positions.

• Systems for communication, coordination and control of the strategy.

• Resource allocation i.e. budgeting of all resources to support the strategy

• Rewards and recognition

Strategic fit is implementation of strategy by fitting all operational areas to the strategy. This includes marketing, sales, R&D, products, programs and services, human resource development, personnel, fund raising, finance, and accounting. Aggressively examine all activities in each area to identify what poses a barrier to the strategy or is not directly supportive. Activities which form a barrier should be modified, reduced or eliminated. Basic skill in process improvement (Total Quality Management and process reengineering) can have a big payoff.

Few nonprofits have a strategy. They do have strategic plans, but these do not articulate a strategy. Michael Porter one of the world's foremost thinkers on strategy[3] claims that most corporations do not have strategies, either. What does he mean?

• Most strategic plans (This includes visions, values, missions, goals, strategies and action plans) are simply "to do"lists lacking adequate focus. Every planning cycle adds new items. This is unfortunate in nonprofits since most staff carry a very full work load. When a planning retreat generates a whole new set of things to do, who will do it?

• Having strategy means having focus. The Strong Museum in Rochester N.Y. choose to focus on one and only one market segment-the family market. That means all development, marketing, programming, exhibits focused on this one market. This resulted in one hundred eighty percent growth in visitors in two years, eighty percent growth in membership, and a twenty-five percent increase in staff.

• Real strategy rarely occurs, because leaders are unwilling to make tough decisions and tradeoffs. Constituents are appeased by inclusion of their favorite idea in the strategic plan. This builds agreement from all participants. It often fails to inspire with passion and commitment. It is so unfocused that the organization must dilute its resources by spreading them across too broad a front. No single area receives enough to truly flourish. Your organization must make the tough decisions to give it focus. Thus no plan can be called 'strategic' unless it articulates the tough decisions on what will not be done.

What is a Strategy?

Good strategy describes how you create unique value in your client's, member's, visitors' and donor's minds.

• It distinguishes you from competitors
• It distinguishes you from substitutes
• It distinguishes you and delivers value in the public's mind.
• It distinguishes you and delivers value in the minds of donors and funders.
• It guides the organization on how to create distinctive value for visitors and donors.

Find your niche. Focus your energies.

Guidelines for Strategies

They are more effective when:

• They are a sustained focus over time, three to five years, which help achieve Vision, Mission and Goals.

• They are focused on things that really make a difference.

• They are specific and clearly understandable.

• They are few. No more than four or five. Three is better.

• They are brief, simple stated, and begin with action verbs.

• Each strategy has an organizational champion or an owner.

To Implement Strategic Plans

1. Convert your vision, mission, and strategies into goals and action plans. Beware too much detail. Such plans are overly academic and imply a unrealistic certainty and control. Derive the key three to five organization -wide, strategic thrusts needed to achieve the mission and vision. Each department can then derive its three to five departmental, strategic thrusts which support the organizational ones. This is often adequate detail.

2. Make the tough decisions; do not minimize the tradeoffs.

3. Use the Management Cycle described on the next page to build in a disciplined

4. follow up process. Most nonprofits neglect to measure the results, which means they can't manage the gap. This breaks the cycle and insures the strategic plan will not be implemented well. This cycle recognizes a basic principle of leading and managing. No one devises a perfect plan, a plan that accounts for all the unknowns in the future. Your current strategic plan is your best plan. But as soon as it is written, it's dated. As Dwight Eisenhower said 'Plans are useless; planning is priceless.'

The real leadership occurs in measuring and managing the gap, where your plan is tested against reality. Invariably, testing reveals gaps or shortfalls. The activities may not be just the right ones to implement the plan, so adjust or rethink the activities. The activities may be right, but not implemented with the integrity required to produce the desired results. You may have the right activities, done the right way and still not get the desired results. The strategies may be inadequately formulated. Maybe the all the whole plan is well designed, but the auto pilots are not aligned with the plan. The auto pilots may be aligned and the strategic fit is poor. In other words the strategic plan and the organization's design are solid, but the museum is doing too many things justifiable under the plan but not critical and central to it. The focus is too wide.

The process of reality testing always further improves and refines the plan and strengthens it if you measure the actual results, manage the gap, and have an overriding commitment to finding the truth.

This process is illustrated in the Strategic Thinking Graphic below.

Strategic Thinking Graphic

There are five elements that must all be a part of the strategic thinking process. All five require exploration and understanding of their characteristics and how they might creatively interact with the other elements. Failure to include one or failure to deeply understand an element leads to a flawed strategy.

The crucible is the container that holds the people together in relative safety as the fire is applied. The strength of the crucible is proportional to the degree of mutual respect and the commitment to finding the truth vs. being right or being in control.

The refiner's fire is heat generated from fully honest and truthful conversations. It is hottest when assumptions and old ways are challenged. The fire refines and alloys the five elements into strategic insights which were not as clear before and that have a high degree of acceptance and commitment by the participants.

The process also surfaces the assumptions that your museum and the museum industry use as the foundation for their thoughts and behavior. These assumptions are suspended while the refining process continues. As new insights and understandings emerge you can evaluate the validity of the assumptions.

1 Peter Drucker, Effective Business, 1964.
2 Henry Mintzberg, Rise and Fall of Strategic Planning, Free Press, 1994.
3 Michael Porter, What Is Strategy? Harvard Business Review, Nov. Dec. 1996.
4 What Makes Great Boards Great by Jeffery Sonnenfeld. Harvard Business Review, Sept. 2,002