Monday, July 15, 2013

Linking Operations to Your Strategy

By Virgil R. Carter

Many non-profit organizations have a strategic plan.  Virtually all of these organizations also have an annual operating budget.  Some organizations also develop and use an annual business or operational plan.  But what’s the connection among these?  How can you, your staff and volunteer leaders plan and manage the connection between your strategy and annual operations?

The business press frequently hosts readable articles on the important connection between strategy and operations.  Although written for business, many topics are equally useful for non-profit organizations.  Colorful titles suggest the importance of the issue, including “Putting Leadership Back Into Strategy”, “Mastering the Management System”,  “Five Competitive Forces That Shape Strategy” and the compelling “Innovation Killers:  How Financial Tools Destroy Your Capacity to Do New Things”.  These topics often are as common to the non-profit world as the for-profit world.

One of the most effective ways to link strategy and operations is also the simplest--through the annual budget process.  An organization’s annual budget really is a plan for what the organization will do during the fiscal year, isn’t it?  Thus, budgeting and strategy should be connected—operations and expenditures for the coming year should be based on the organization’s strategic plan and priorities.  Conversely, a budget developed in isolation from the organization’s strategy is simply a spending plan!

There are some challenges, however, in linking budgeting to strategy:
  • Use the strategic plan to identify what’s important:  Identify the priority strategic objectives, how they will be implemented and how progress will be measured;
  • Don’t work backwards:  Avoid simply assigning all existing goods and services to some aspect of the strategic plan as a means of justifying and continuing everything that the organization currently does;
  • Encourage new, targeted programming:  Strategic priorities and market opportunities change over time, so encourage and reward new programming proposals that support new, emerging needs.
Want to improve the connections between your strategy and operations?  Here’s a final thought:  think about your annual operational cycle and how the various elements of your annual cycle can be best organized in support of your overall strategy.  How can your annual budgeting cycle be linked to your strategy?  How can your business planning cycle be linked to your strategy?  How can you develop usable metrics and evaluations to assess your operations and the extent to which they support your organization’s strategy? 
Successful organizations are those that have found ways to link strategy and operations!

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