Taking Command of Strategic Change: Applying The Strategic Change Portfolio Model

Meeting the Change Challenge
Your nonprofit organization, like all other organizations and institutions, has a choice in today’s changing, challenging world. You can build the capacity to lead and manage your own change – proactively and creatively – in response to the changing world around you, fashioning and executing strategies to capitalize on opportunities and to avert threats. Or you can circle the wagons in hopes of protecting your organization’s status quo from the changes swirling around you. The siren song of comfort and security will always tempt people to go on the defensive in the face of change, but you know there’s not really a choice.

Your organization’s long-term survival and growth depend on its mastering the change challenge; merely defending yourself would be a recipe for sure decline, and perhaps even extinction if the changes around you are truly strategic (for example, rapid consolidation in your industry that is taking a huge toll on your association’s membership; or a sister nonprofit with abundant resources going after a large chunk of your market).

Keep in mind that your organization can deal with the never-ending change challenge at 2 levels, concurrently traveling along 2 very different but parallel planning and management tracks. The track that we’re all most comfortable with is what I think of as “running the shop,” which involves incrementally refining and adjusting programs, services, and administrative practices through the annual operational planning and budget preparation process. In my experience the great majority of associations and other nonprofit organizations have thoroughly mastered the techniques of managing what is, and consequently lots of incremental change gets accomplished through the tried and true operational planning and budgeting process.

The other track – leading and managing strategic change – is another matter entirely. Now we’re venturing onto far less familiar and comfortable terrain, where we must deal with much more complex, higher-stakes issues (in the form of both challenges and opportunities) that demand more of a response from our organization than merely refining and updating our existing programs, services, and practices. This is far more difficult terrain, not only technically speaking, but also because larger-scale change is emotionally so challenging to human beings, which is why, in the words of Dr. Scott Peck, it tends to be the “road less traveled.” This is the territory of what has traditionally been called “strategic planning.”

A Sordid History

I tend to avoid the term “strategic planning” in my work for two reasons. First, there is no such thing as THE strategic planning process; it tends to mean a hundred different things to a hundred different people. Second, the process as traditionally applied has over the years earned a deserved reputation for ineffectiveness as a tool for leading strategic change. In a nutshell, the problem with traditional strategic planning – sometimes called comprehensive long-range planning – is that it has tended to project everything an organization is already doing into the future, often for a meaningless, totally arbitrary period such as 3 or 5 years. This approach has tended to generate bloated compilations of the conventional wisdom that eventually make their way to dusty shelves, where they reside – largely forgotten and virtually never consulted.

Strategic planning in its comprehensive long-range planning form has failed miserably as a tool for dealing with strategic change. For one thing, focusing on everything already going on in an organization inevitably buries people in detail, making it extremely difficult to focus on complex change challenges (strategic issues) that don’t fit into current programmatic and administrative compartments. For another, in a rapidly changing world, projecting the organization of today in detail into the future for 5 years (or any other meaningless period) is a monumental waste of time; we can’t possibly forecast with any precision what our world will be like 5 years hence.

Fortunately, in recent years a variation on the broad strategic planning theme that is explicitly intended to deal with strategic change has been developed and thoroughly tested: the Strategic Change Portfolio. At last we have a very powerful vehicle for involving your board creatively and proactively in leading strategic change.

The Portfolio Approach at a Glance
The Strategic Change Portfolio is essentially a “holding pen” for strategic projects – often called Strategic Change Initiatives – that have been developed to address particular strategic issues that an organization’s board and CEO have selected for attention NOW. Each of these Initiatives, or projects, consists of the goals to be achieved, implementation strategies, and the implementation revenue/expenditure budget. At any given time, the Strategic Change Initiatives in the Portfolio will involve a range of time frames. For example, Initiative A – effecting a merger with a sister association – will require 18 months for implementation; Initiative B – the image enhancement campaign – will require 9 months; Initiative C – major revamping of the annual conference – will take 12 months; and Initiative D – restructuring of the board’s standing committees – will take 6 months. As Initiatives are implemented, they move from the Portfolio to mainstream operations, and new Initiatives take their place as new strategic issues are identified and selected.

The real power of the Strategic Change Portfolio approach lies in its focus on a small number of issues that the board and CEO have decided: (1) demand attention now because of the stakes involved and the prohibitive cost of deferring action; and (2) cannot effectively and/or safely be handled through the mainstream operational planning/budget preparation process. The governing rule is that if an issue can, indeed, be effectively addressed through the annual operational planning process, then it should be. The steps involved in developing the Portfolio are:

Updating your organization’s detailed vision for the future, in terms of its intended long-term impacts on the environment generally and its members or clients more specifically and of the organization’s role and scope of activities
Identifying major issues in the form of challenges and opportunities by scanning the external environment and assessing internal strengths and weaknesses. An issue is defined as an opportunity to move closer to your organization’s vision or a challenge standing in the way of movement toward the vision.
Selecting the issues that are strategic-enough to merit attention now
Fashioning the Strategic Change Initiatives to address the selected issues

The Gold Standard
Two compelling reasons dictate that your organization’s board be involved in a creative, proactive fashion in the Strategic Change Portfolio Process, making it the gold standard for board participation in the affairs of your organization:

Your board is uniquely qualified to participate in the process of identifying and selecting strategic issues, which benefits tremendously from the diverse experience, expertise, knowledge, and perspectives that your board members bring to the table.
And, psychologically speaking, your board’s creative and proactive involvement in such a high-stakes, high-impact process is one of the surest ways to build board member satisfaction and commitment. Indeed, leaving your board on the periphery of the action in the Portfolio process is a sure-fire way to breed frustration and erode commitment among board members.

Creative and Proactive Involvement

In my experience, organizations that have realized the strongest return on their board members’ involvement in the Strategic Change Portfolio process – in terms of both leading and managing strategic change and board member satisfaction and enthusiasm – have involved their board members intensively early in the process: in updating the organization’s vision statement and identifying and selecting the strategic issues to be addressed. Once the issues have been selected, the process of developing the detailed action strategies that make up the Initiatives is essentially a staff job.

A common, highly effective approach is for the whole board to meet with its CEO and executive managers in an annual retreat (sometimes called “strategic work session”), at which a rough cut of the updated vision statement is generated, a preliminary set of strategic issues are brainstormed, and possible Strategic Change Initiatives are discussed. The board’s planning committee, working closely with the CEO and executive team, then follows up by fine-tuning the vision statement, which is subsequently adopted by the full board, and by analyzing and refining the list of strategic issues, which is eventually approved by the board. From this point on, detailed development of the Strategic Change Initiatives is handled by staff, perhaps with consulting assistance and non-board volunteer involvement in one or more task forces.