1. Strategic Nonprofit Management
Nonprofit Learning Point
June 10 & 17, 2015
Presented by: Sam Davis III
Principal, The Davis Group

2. Day Two Objectives
Review the Strategic Management process, including how Strategic Thinking, Business Models, and Nonprofit Lifecycles contribute to effective Strategic Planning.
Undertake a “deep dive” into the Strategic Planning process to permit participants to be able to design and pursue planning for their organizations.
Emphasize the importance of being able to implement the Strategic Plan, track performance, and make changes as needed.
What additional objectives do you want to pursue on the second day of this two-day class?
Sam Davis III, The Davis Group for NPLP June 10&

3. PROPOSED SCHEDULE
9:00–9:30 Review of Homework; Questions; Observations. 9:30–10:00 Review of Day One – Strategic Management, Strategic Thinking, Business Models, etc. 10:00–10:30 Strategic Planning Overview w/Exercise 10:30–10:45 Break 10:45–Noon Strategic Planning, Phase One, w/Exercises Noon–1:00 Lunch on your own 1:00–2:00 Strategic Planning, Phase Two, w/Exercise 2:00–2:30 Strategic Planning, Phase Three, w/Exercise 2:30–2:45 Break 2:45–4:00 Strategic Planning, Phase Four, w/Exercises 4:00 – 4:30 Review; Questions; Taking it Home
Sam Davis III, The Davis Group for NPLP June 10&

4. Strategic Management as Process: Some Important Principles
1. Strategic Management should be an ongoing process,
not an event.
2. The strategic management process logic is generic, but
its application is very situational.
3. Strategic Management is necessarily messy and iterative.
“Keep it simple, but no simpler than it is.”
-Albert Einstein
There must be a system to balance the tensions
between strategy and operational tactics.
Discussion: For each principle, why is this important?
Sam Davis III, The Davis Group for NPLP June 10&

5. STRATEGIC MANAGEMENT SYSTEM
Strategy
Formulation
Translate the Strategy
Plan Operations
Execute Processes and Initiatives
Monitor and Learn
Revise / Adapt the Strategy
Ready – What to Do
Decision
Action
Aim – How to Do It
Steer – Do It
Sam Davis III, The Davis Group for NPLP June 10&

6. STRATGIC THINKING DEFINED
Strategic thinking is about clarity and simplicity, meaning and purpose, focus and direction, relationships and feedback and desired outcomes.
- Haynes Center for Strategic Management
Anticipation
Critical thinking
Interpretation
Decision-making
Aligning
Learning
Sam Davis III, The Davis Group for NPLP June 10&

7. Dr. Jeffrey A. Krug
Sam Davis III, The Davis Group for NPLP June 10&

8. ORGANIZATIONAL LIFECYCLES Source: Nonprofit Lifecycles by Susan Kenny Stevens
Renew
Turnaround
Sam Davis III, The Davis Group for NPLP June 10&

9. 7 STAGES OF NONPROFIT CAPACITY Source: Susan Kenny Stevens
1. Idea Stage – Magnificent Obsession
2. Start-Up Stage – The Labor of Love
3. Growth Stage – Becoming Who You Are
4. Maturity Stage – Maintaining Your Edge
5. Decline Stage – Someone You Used to Be
6. Turnaround Stage – The Rubber Meets the Road
7. Terminal Stage – Alive in Name Only
Sam Davis III, The Davis Group for NPLP June 10&

10. How do you know when you are approaching
Nonprofit Lifecycle by Susan Kenney Stevens As amended by Charles Hardy in The Age of Reason
Regeneration
Maturity
Vitality
Turn
around
Decline
A sound
Business concept
Growth
In the
box
Startup
Inflection
Points
The Idea
How do you know when you are approaching
maturity?
Decline?
Terminal
Fail
Sam Davis III, The Davis Group for NPLP June 10&

11. BUSINESS THINKING
A business model describes the rationale of how organizations create, deliver and capture economic, social, cultural and other forms of value for stakeholders.
- the logic by which an organization earns its lively- hood and sustains itself financially.
If business is part mystery and part art, a big part is also basic science and math. Some fairly ordinary rules predict financial results.
- Clara Miller, “The Looking Glass World of Nonprofit Money”,
The Nonprofit Quarterly, Spring 2005.
Sam Davis III, The Davis Group for NPLP June 10&

12. CLOSELY-HELD BUSINESSES & NONPROFITS: SIMILARITIES & DIFFERENCES
Both typically have values-driven missions.
Leadership succession can be a challenge for both.
Industry and competitive environments are fragmented.
Attracting and retaining talent can be a challenge.
Neither closely-held businesses nor nonprofits tend to offer equity to executives.
Access to capital can be a challenge for both.
Profitability can be a clear “bottom line” for businesses, but success measures for nonprofits are often unclear.
Sam Davis III, The Davis Group for NPLP June 10&

13. THEORY OF CHANGE or LOGIC MODEL for NONPROFITS
How will we create the desired impact?
What are our key inputs to induce change?
What strategies will we make as priorities?
What outcomes will we measure?
a. Immediate
b. Intermediate
c. Long-term
What is the ultimate impact we are trying to have?
Sam Davis III, The Davis Group for NPLP June 10&

14. THE STRATEGIC MANAGEMENT PROCESS
Strategic Plan
(Road Map)
Level 1
3-Year Business Plan
& Resource
Plans
Quarterly
Line of Sight Plan
Level 2
1-Year Strategic Framework
Level 3
Level 4
Daily Execution
Level 5
Sam Davis III, The Davis Group for NPLP June 10&

15. STRATEGIC PLANNING: A ROADMAP FOR MANAGING CHANGE
Sam Davis III, The Davis Group for NPLP June 10&

16. STRATEGIC PLANNING PROCESS: FIVE TASKS
Assess Current
Situation;
Develop Vision,
Mission, and
Values
Establish
Goals/
Objectives
Formulate
Strategies
to Achieve
Objectives
Implement
Strategies
Monitor
and Evaluate Performance
Revise as needed in light of actual performance, changing
conditions, emergent strategies, and new ideas
Sam Davis III, The Davis Group for NPLP June 10&

17. THE STRATEGIC PLANNING PROCESS
PLEASE SEE HAND-OUT FOR FLOW DIAGRAM OF THE PROCESS
Sam Davis III, The Davis Group for NPLP June 10&

18. Phase 1: Preparation STRATEGIC PLANNING KEY QUESTIONS
What are realistic goals for the process?
What is the appropriate level of effort given the type, scale and timing of the required change?
What is the logical starting point?
What are the appropriate planning horizons/timeframes?
What will be the Planning Calendar?
How will the work be organized?
Who will be the Champion?
Who will be on the Strategic Planning Task Force?
What information will be required?
How will the Board and Senior Staff interact in planning?
Identify the task forces, their work plans and responsibilities
Sam Davis III, The Davis Group for NPLP June 10&

19. STRATEGIC PLANNING PROCESS AND KEY RESPONSIBILITIES
Board – Ordains the planning process and approves the Plan; tracks implementation performance
CEO/Executive Director – Staffs the process; shapes the Vision; and directs implementation of the Plan
CFO – Identities business model; projects revenues & expenses; tracks performance metrics
Strategic Planning Task Force – Oversees the process and ensures coordination
Planning Professional – Facilitates the design and conduct of the process; serves as objective advisor
Sam Davis III, The Davis Group for NPLP June 10&

20. STRATEGIC PLANNING PROCESS Four Phases
1. Pre-Planning – Gaining commitment; gathering data
a. Review Mission and Values
b. Define Business Model and Theory of Change
b. Assess Internal and External Environment
2. Planning Retreat – Visioning; brainstorming; team building
3. Plan Development – The essence of the process
a. Goals, Strategies & Implementation Details
b. Strategic Business Plans (financial projections)
4. Implementation and Tracking – Strategic Management; getting it done; making changes as necessary
Sam Davis III, The Davis Group for NPLP June 10&

21. AN EXERCISE TO PREPARE FOR THE STRATEGIC PLANNING PROCESS
Consider that you will engage with your organization in a Strategic Planning process, write answers to the following: 1. What are your primary objectives in undertaking a strategic planning process? 2. Who will “champion” your process? Who needs to be involved? What will be your role in the process? 3.How will you assess the current status of your organization? 4. What can you do before you begin to ensure that the Plan will be implemented, performance tracked and changes made as necessary?
Sam Davis III, The Davis Group for NPLP June 10&

22. LET’S TAKE A 15 MINUTE BREAK.
Sam Davis III, The Davis Group for NPLP June 10&

23. PHASE ONE: WHAT IS YOUR ENDURING PURPOSE? WHAT IS YOUR CURRENT STATUS?
MISSION & VALUES
BUSINESS MODEL; THEORY OF CHANGE
ENVIRONMENTAL SCAN
Internal Assessment; External Analysis
S.W.O.T. ANALYSIS
Sam Davis III, The Davis Group for NPLP June 10&

24. MISSION
Mission Statement: An organization’s statement of its enduring purpose; the fundamental reason for an organization’s existence
Some Examples:
Enriching lives by fostering environmental awareness through education and connecting communities with nature.
To increase access to dental care for all Virginians.
To provide safe, affordable housing for elderly persons lacking adequate resources.
To increase market access for local and regional food producers.
Page 11 in manual
Refer to other examples in book.
Don’t ask participants to share mission statements yet.
Sam Davis III, The Davis Group for NPLP June 10&

25. CORE VALUES Some Examples:
Principles that govern behavior in your organization and the way you pursue your Mission
Some Examples:
Client focused – Committed to understanding the needs of our clients and meeting them in a timely manner by providing high quality services and programs.
Respect
Accountability
Teamwork
Innovation
Citywide values for all OR department specific or hybrid
Sam Davis III, The Davis Group for NPLP June 10&

26. ENVIRONMENTAL SCAN S.W.O.T. ANALYSIS
Internal Analysis
What is our Current Situation?
Strengths and Weaknesses
External Analysis
What are the “forces for change” that may affect us?
See hand-out of sample External Analysis
Opportunities and Threats
Sam Davis III, The Davis Group for NPLP June 10&

27. THE CURRENT SITUATION INTERNAL ASSESSMENT
Products / Services / Programs
Financial Management
Access to Capital / Fundraising
Marketing / Strategic Communications
Talent Management
Infrastructure and Systems
Governance
Sam Davis III, The Davis Group for NPLP June 10&

28. INTERNAL ASSESSMENT: Triage -Quickly Assessing Current Situation
What is the General Condition and
Momentum of the Organization?
Momentum
Positive
Stable
Negative
Strong
Many options
For how long?
Have time to fix it
Average
Plans are working
Little margin of error
Need corrective action
Weak
Should strengthen over time
Hanging on
How much time do you have?
Condition
Applies to Organization as a whole and to each Component of the Business
Sam Davis III, The Davis Group for NPLP June 10&

29. INTERNAL ASSESSMENT: STRENGTHS AND WEAKNESSES
Have we objectively assessed our capabilities and performance to identify key strengths?
What are our core competences, those capabilities that allow us to differentiate ourselves from others?
What critical weaknesses have we identified that must be addressed before we can position ourselves for future success?
Have we prioritized these weaknesses?
Are we prepared to act to overcome these weaknesses?
Sam Davis III, The Davis Group for NPLP June 10&

30. STRENGTHS: CRITICAL SUCCESS FACTORS
Critical Success Factors (CSFs) are those strengths of an organization that are so profound they can leverage future success.
CSFs are distinctive competences the organization has built that can provide for long-term sustainability.
CSFs are capabilities that differentiate an organization from its competitors.
Identify your CSFs (one, nor more than three), and pursue strategies that will leverage the capabilities to ensure future success.
Sam Davis III, The Davis Group for NPLP June 10&

31. INTERNAL ASSESSMENT: AN EXERCISE IN PAIRS
A. Considering your own organization, answer the following:
Is there clarity about your Mission? Your Guiding Principles?
Do leaders of your organization agree on where you stand on the Lifecycle curve, and do they understand what this means for strategies you might pursue in the future?
What are your organization’s Critical Success Factors?
What critical weaknesses do you need to overcome?
B. Share your responses with the person next to you.
C. Prepare to share key findings with the large group.
Sam Davis III, The Davis Group for NPLP June 10&

32. EXTERNAL ANALYSIS: ASSESSING EXTERNAL FORCES FOR CHANGE
See hand-out for example of External Analysis
What trends in nonprofit management and philanthropy may offer opportunities to pursue?
What nonprofit sector, social, demographic, technology, or market trends may affect us in the near future?
Who are our competitors? What are they doing? What is our niche?
How are we working with other nonprofits, community leaders, “centers of influence”, funders, businesses and individuals to form strategic alliances?
Sam Davis III, The Davis Group for NPLP June 10&

33. 5 FORCES MODEL UPDATED Substitute Products Rivalry Suppliers Among of
(of firms in
other industries)
Rivalry
Among
Competing
Sellers
Potential
New
Entrants
Suppliers of
Key Inputs
Buyers
Macroeconomics
Technology
Customer
Preferences
Regulatory
Sam Davis III, The Davis Group for NPLP June 10&

34. EXTERNAL ANALYSIS: OPPORTUNITIES & THREATS
Remember: This is not about predicting the future but identifying factors and trends that may affects, either positively or negatively.
From our analysis of external “forces for change” have we identified numerous potential opportunities we might pursue?
Have we identified potential threats to our future operations or challenges for which we need to prepare?
Have we prioritized these Opportunities & Threats?
Sam Davis III, The Davis Group for NPLP June 10&

35. S.W.O.T. ANALYSIS PROVIDING A CLEAR SENSE OF REALITY
Internal Strengths: Resources or capabilities that can be leveraged for future success
Internal Weaknesses: Deficiencies in resources or capabilities that are critical to overcome to ensure future success
External Opportunities: Factors or situations that exist beyond your organization that may be pursued in the future
External Threats: Factors or situations that exist beyond your organization that may block current or future initiatives
Sam Davis III, The Davis Group for NPLP June 10&

36. S.W.O.T. ANALYSIS: OPPORTUNITY TO CHART YOUR ORG.
1. On a sheet of paper, list the sources you might use to gather data to help identify externally driven Opportunities that your organization might pursue over the next 3 to 5 years and external Threats against which you will need to defend? 2. List 3 – 5 Opportunities your organization might pursue. 3. List 3 – 5 Threats that have the potential to disrupt your organization or to force you to change strategies. 4. You have previously identified your Core Strengths and Critical Weaknesses. Now, plot your S.W.O.T. analysis on a grid like those shown on the slide.
Sam Davis III, The Davis Group for NPLP June 10&

37. LUNCH ON YOUR OWN.
Sam Davis III, The Davis Group for NPLP June 10&

38. PHASE TWO: PLANNING RETREAT, VISION OF FUTURE
For a Strategic Plan to be based in reality and gain the commitment of both those responsible for the future direction of the organization and those responsible for its implementation, some form of planning retreat can serve as a means for sharing information, gaining consensus on the strategic direction and priorities of the organization, and build a culture of teamwork.
Remember that the planning retreat is not for final decision-making but for brainstorming and team building.
Sam Davis III, The Davis Group for NPLP June 10&

39. STRATEGIC PLANNING PROCESS A VISION OF THE FUTURE
Sam Davis III, The Davis Group for NPLP June 10&

40. STRATEGIC VISION Where we are going?
Using data from the Internal Assessment and the External Analysis will provide leaders with the basis for forming a creative yet realistic Vision.
This is not about writing a Vision Statement. It is about envisioning the future state of the organization:
Where we are going?
What is our shared image of what future success will look like?
What are the critical paths to be pursued to ensure the future success of our organization.
What is our BHAG? (Big, Hairy, Audacious Goal)
Clear and compelling and serve as unifying focal point of effort
Stimulating and promote forward movement and progress
Tangible, energizing, people get it right away, takes little or no explanation
Have clear finish line so can know when achieved – be measureable
Sam Davis III, The Davis Group for NPLP June 10&

41. QUESTIONS TO ASK ABOUT YOUR VISION
Is it consistent with your Mission?
Is it future focused or bound by your current situation?
Does it represent a “stretch” but not a fantasy?
Does everyone in the organization understand where you intend to be in 20 years?
Does this Vision inspire your leadership, employees, donors and strategic partners?
Will pursuit of this Vision differentiate you from others?
Sam Davis III, The Davis Group for NPLP June 10&

42. BIG HAIRY AUDACIOUS GOAL
WHAT IS A BHAG?
BIG HAIRY AUDACIOUS GOAL
Jim Collins, Good to Great
Can you conceive of a major initiative, consistent with your Mission, that will speed the organization in the pursuit of its Vision, generate financial and public support, set your organization apart from its competitors, and serve as the basis for future success?
Be bold! Be innovative! Be inspired!
Sam Davis III, The Davis Group for NPLP June 10&

43. VISION OF THE FUTURE & BHAG - WHAT ARE YOURS?
Pair – Brainstorm – Inform 1. Find a partner, preferably one with whom you have not worked previously. 2. At the Instructor’s direction you and your partner will be given 2 minutes to brainstorm key elements of the Vision of both your organizations. Prizes will be given for the most ideas listed. 3. Now, at the Instructor’s direction, you will be given 3 minutes to brainstorm BHAG’s that might be pursued. 4. Prizes will be awarded for the best BHAG in class.
Sam Davis III, The Davis Group for NPLP June 10&

44. PHASE THREE: DEVELOPMENT OF THE STRATEGIC PLAN
How do we organize our work to pursue our Vision?
Where are the gaps between our current capabilities and what we need to be successful in pursuing our Vision?
How can our governance and management structures be enhanced to serve our strategic planning efforts?
How does our Nonprofit Lifecycle status suggest how we might organize our work? Governance? Programs? Financial Resources? Strategic Communications? Infrastructure? Management
What did our Internal and External Assessments reveal about our organization?
Sam Davis III, The Davis Group for NPLP June 10&

45. THE STRATEGIC PLAN GOALS, STRATEGIES & TACTICS
STRATEGIC PLANNING TERMS DEFINED GOAL: aka Objective; The desired outcome from strategic management efforts taken over the 3-5 yr. planning period. STRATEGY: One of a select number of means for achieving a Goal over a period of time (usually 1 or more years) to produce measurable change. TACTICS: aka Initiatives; steps to be undertaken in a finite period of time (usually less than 1 year) to carry-out a designated Strategy.
Sam Davis III, The Davis Group for NPLP June 10&

46. GOALS: SOME PRINCIPLES
State only one Goal for each Strategic Path issue.
Virtually all nonprofits will need to have in their Strategic Plans include, among others, Goals for:
Governance or Leadership
Fund Development
Programs
Goals should require 3 or more years to achieve.
Goals must be measurable in quantitative or qualitative terms.
Ask yourself: How do I know how the organization is doing in pursuing this Goal?
Sam Davis III, The Davis Group for NPLP June 10&

47. STRATEGIES: SOME PRINCIPLES
For every Goal there are likely to be 4 to 6 Strategies.
Use action verbs.
What is it we intend to do to pursue the stated Goal?
Are there better ways of pursuing the Goal?
What changes are we making? Are these realistic?
Is the Strategy consistent with our Mission and Values?
Do we have the resources necessary to pursue this Strategy?
How will we measure success in pursuing the Strategy?
Quantitative or qualitative data is needed; no pass/fail
Sam Davis III, The Davis Group for NPLP June 10&

48. STRATEGIES: DISTINGUISHED FROM TACTICS/INITIATIVES
1. Strategies generally cannot be accomplished in less than a year; most take several years.
2. Strategies are not a check list; no pass/fail.
3. Strategies require multiple steps to complete.
4. Tactic/Initiatives – Think of these as being steps to be taken to pursue an given Strategy
5. Tactics/Initiatives may be accomplished in very short periods of time.
6. Tactics/Initiatives should be prioritized according to completion timeframes.
Sam Davis III, The Davis Group for NPLP June 10&

49. ASSESSMENT OF POTENTIAL STRATEGIES
KEEP OPERATING
CONTAIN COSTS
INVEST RESOURCES
AND GROW
Mission Impact 
High Mission Impact
Low Revenue Potential
High Mission Impact
High Revenue Potential
Revenue Sustainability 
PURSUE IF IMPACT
CAN BE INCREASED
CLOSE, TRANSFER
TO PARTNERS/OTHERS
Low Mission Impact
Low Revenue Potential
Low Mission Impact
High Revenue Potential
Sam Davis III, The Davis Group for NPLP June 10&

50. PHASE FOUR: IMPLEMENTATION
Without details of how to implement each Strategy you will have only a Strategic Vision with no action plans. For every Strategy, Strategic Plans need to include: A. Tactics/Initiatives – Multiple steps to be taken B. Timetable - For initiating and completing the Strategy C. Resources Required - The human, financial, and other resources required to execute the Strategy D. Accountability Measures - Specific measures for assessing progress in completing the Strategy E. Responsibility – The position (nor person) with lead responsibility for successfully implementing the Strategy
Sam Davis III, The Davis Group for NPLP June 10&

51. A NONPROFIT EXAMPLE Goal: Leadership Development:
Provide visionary board and man- agement leader-ship to shape the future of the organization and ensure its financial stability.
Strategies:
1.1 Develop a governing board of diverse leaders w/expertise
1.2 Recruit and train a dynamic and highly capable senior management team
1.3 Use annual performance plans to develop and assess leaders
1.4 Provide governance training for board members and professional development opportunities for staff.
1.1 Tactics / Initiatives:
Use criteria to identify and recruit visionary leaders committed to our Mission
Implement a leadership succession program for officers and board members
Review the implementation of the Strategic Plan through board committees
Increase board financial contributions and participation in fundraising.
Sam Davis III, The Davis Group for NPLP June 10& 51

52. RESOURCE PLANS (ESPECIALLY H.R. AND INFRASTRUCTURE)
All too often Strategic Plans fail to anticipate the human resources, technology and other resources needed to implement key Strategies. Such plans assume that staff and volunteers can simply do more without the organization incurring any additional expenses.
Investments in the future should include provisions for attracting, training, compensating and retaining the most qualified staff possible. There is a cost for doing so.
Similarly, IT upgrades and other systems improvements can be costly and need to be included in financial projections. Strategic plans cannot be implemented without adequate resources, and these need to be identified in every Plan.
Sam Davis III, The Davis Group for NPLP June 10&

53. 3-YEAR BUSINESS PLANS
Just as every organization needs to have an annual budget, so too every organization should operate using a rolling 3-Year Business Plan (current budget year, plus two year’s of financial projections based on the Strategic Plan.
3-Year Business Plans do not require the same line item detail included in Annual Budgets. However, projections should realistically project revenues (based on the Development Plan) and expenses.
Business Plans will be covered in more detail in the 5th and final course in the Strategic Management series: “Strategy Implementation.”
Sam Davis III, The Davis Group for NPLP June 10&

54. A WORD ABOUT ACCOUNTABILITY MEASURES
Two types of Accountability Measures:
Leading Indicators – measures of short-term performance that will lead to long-term outcomes
Lagging Indicators – measures of final outcomes; may not be determined in the short-term
Example: Increase Annual Fund to sustain
program growth
Leading - # of new donors generated per year
Lagging - % increase in Annual Fund > than budget growth
Can we gather and analyze the necessary data?
Sam Davis III, The Davis Group for NPLP June 10&

55. See hand-out for example of Dashboard Report.
The most important part of the Strategic Planning process is implementation of the Plan; after all, the ultimate objective is not to plan but to take action to manage change.
Dashboard Reports provide a handy, effective means for the ED and Board to track implementation on a monthly basis.
Dashboard Reports track priorities to be implemented in the current year.
Top 10 Strategies and/or Initiatives are identified, and progress in meeting the Outcome Measures for each is reported. (Color codes may be used to indicate process.)
See hand-out for example of Dashboard Report.
Sam Davis III, The Davis Group for NPLP June 10&

56. RESOURCES TO CONSULT BIBLIOGRAPHY
SEE HAND-OUT
Sam Davis III, The Davis Group for NPLP June 10&

57. QUESTIONS & COMMENTS As a final action to ensure that you will put what you have learned into practice, please list at least 3 action steps you will take to apply Strategic Management principles to benefit your organization. Let’s share these with the class.
Sam Davis III, The Davis Group for NPLP June 10&

58. STRATEGIC NONPROFIT MANAGEMENT THANK YOU!
Sam Davis III, Principal, The Davis Group
(804)
Sam Davis III, The Davis Group for NPLP June 10&