Strategy Execution: It Starts with Good Plumbing

Imagine yourself walking into the kitchen of a new home and turning on the faucet, and nothing happens. You then go to the bathroom and it’s the same. Beautiful fixtures but no water. When you ask about the problem, you are told that to cut costs, the homebuilder did not include the plumbing. Consequently, you have a house in which all the right parts are in place but there is no system to ensure that water actually flows throughout the house.

I use this absurd example to illustrate an important point about strategy execution. To be effective, strategic thinking must flow throughout the organization. And for this to occur, organizations must have the structures and processes in place. Said another way, effective strategy execution requires good organizational plumbing.

The Strategy Plumbing

By default, most nonprofits will have the right strategy parts in place. The fixtures of strategy include a CEO, a board of directors, maybe a strategic planning committee, and some form of a strategic document. Yet, the strategic thinking does not always lead to the alignment of efforts among the individual parts. Why is this? What is required to have good strategy plumbing throughout the organization?

To move towards an answer to this vexing question, I conducted focus groups with about twenty nonprofit CEOs and board members. The focus group participants identified a number of conditions that facilitated the steady movement of strategic thinking throughout the organization.

Clarify the board’s role in strategy. Board members from different organizations engage in the continuum of strategy development, implementation, and evaluation at different levels. In some cases, members of the same board engage in strategy at different levels. The following steps are recommended for clarifying the board’s role in overseeing strategy.

• Identify the appropriate level for the board to engage in strategic discussions. Boards should operate somewhere between the broad vision and the implementation details. The best place for boards to focus is on broad organizational priorities, which are areas of emphasis that cut across the organization. Examples include major shifts in resource allocation, or expansion into new markets. From this perspective, progress is defined as organizational movement on these priorities, not on the completion of individual tasks or the eventual attainment of an abstract vision.
  
  
• Make time for strategic discussions. It still amazes me to hear from boards that they never seem to have time to talk about strategy. The simple truth is this: strategy is not an agenda item; it is the agenda driver. However, because strategic progress occurs gradually, it is easy to get lost in the minutiae of daily organizational life. To keep the focus where it belongs, I recommend that board meeting agendas be divided into three sections: routine issues, emerging issues, and strategic issues. The goal is to get through the first two so that the board time can spend significant time on the third one.
  

Create the tools and processes that foster strategic discussions. Strategy does not conform to the rhythm of board and committee meeting schedules. Like water through the pipes, strategic considerations should seep into all aspects of the organization and be accessible upon demand. The following suggestions are offered.

• Organize the contents of CEO reports/updates in a strategic context. CEO reports to the Board should not be viewed as regular performance reviews. Similarly, they are not intended to be a show and tell for the CEO. The context for CEO activity is movement toward the strategic priorities. What does it matter if a CEO meets with ten new donors (as mandated by the Board) if no progress was made on growing the annual giving program, which is the strategic priority?
  
  

• Integrate strategic priorities into financial discussions at every level. Strategy execution is rooted in tradeoffs. Money spent here means less money spent there. Money should follow the priorities. Enough said.
  
  

• Align CEO performance reviews with organizational metrics. Ultimately, the CEO is responsible for the performance of the organization. You cannot say that you have a good CEO if the organization is floundering. Regardless of how smart, nice, professional, etc. he or she may be, the bottom line is that the main job of a CEO is to move the organization where it has decided it needs to go.

Conclusion

We take for granted that water will pour from our faucets at home when we turn the handle. Likewise, nonprofits should expect that the difficult work that goes into developing a sound strategy will shape thought and behavior throughout the organization. The only way to ensure this is to connect the various components into a system of positions and processes.