Thursday, September 10, 2009

New Rules New Tools

It is becoming apparent that this economic situation is here to stay for a few years - not the typical year or so. I think we are all becoming clearer that new rules are being created and those of us that figure out how to adapt and change will be those mostly likely to be standing in 2011.

Accepting this reality is tough for an organization that has a history of doing business one way, has a strong track record and has produced effective results. I find that the organizations are having a tough time accepting the concept that times have changed and as a result the organization has to figure out how to adapt and manage itself differently. We all need some new tools that will assist us as individuals and the organizations we lead to navigate through these times. I know that strategy, reflection, new alliances and managing with fewer resources are now required.

I often hear entrepreneurs say I had this vision and we were working towards it and this crisis came along. They say they do not know if they should put aside the vision , leave the organization, or try to continue on with the same vision. I see first hand entrepreneurs struggle with the loss of their "path" and the resulting confusion and angst this creates personally.

CNN Money had an interesting article about four companies and how they started planning differently - rather than report the bad news, they have begun to systematically retool their companies to respond to the new economic realities. I am sure more will follow. The nonprofit world has no such compelling stories - yet.

It seems that some redefining of the vision will be needed. In some cases it will take longer for the vision to be achieved and in other cases, new definitions for growth, performance, return on investment and achievement will be needed.

As to the new tools - scenario planning, sustainability planning, results based strategic plans and
improved business practices are being used by organizations trying to define their new realities. Even newer tools like strategic alliances and mergers are being created to extend resources and mission related activities.

Monday, August 31, 2009

Scenario Planning Process to Make Decisions

Scenario Planning is often used to help a group make decisions or at least review their options or choices. An example is a recent arts group that I assisted develop their options during a strategic planning process. The team from the board and staff developed a number of future scenarios that they might explore as part of their strategic plan. The options involved the issue of their theater space. The generated the following options:
  • leasing one space
  • buying a theater and making it their permanent space
  • forming a strategic alliance with another theater to jointly share in the space
  • leasing different venues by series package

Each scenario option had different implications for the arts group. The issues included their artistic productions, marketing pros and cons, target audiences, costs, and impact on their bottom line, sustainability in the community and funding.

In scenario planning, each option would be reviewed and defined. Financial projections were completed with budgets impacts costed out. The team reviewed the pros and cons - the impact of each scenario on a number of criteria that included:

  • funding from donations, foundations, corporate sponsorship
  • earned income revenue including ticket sales, subscriptions, concessions, etc
  • marketing challenges and opportunities
  • program - number of productions, seat capacity per show, and stage, lightening, and rehearsal space
  • expenses for each - short term and long term
  • community message, image and presence
  • long term viability
  • growth and image to audiences
  • cashflow impact

this criteria was developed by the board before the options were developed. They were developed to provide shared criteria so that all members could be on the same page when the options information was discussed.

The process of laying out the options, reviewing the impact of each options, generating the budget numbers and creating a mini action plan provided a valuable process to the board and staff. Staff would be able to review with all of the options with the board in a reasoned discussion. The information provided a more organized process for the board discussion so that ideas were classified under one of the options. It organized the information for the board so that they could ask thoughtful questions and review each option in their strategic planning process.

We all use scenario planning everyday. In these times, we are using the scenario planning tools to be more thoughtful about our organizations future.

Monday, August 24, 2009

Scenario Planning-When to Use

Scenario Planning has become a more important tool. Organizations facing change and leaders who are uncertain about how to proceed are conducting scenario planning as a method to manage the unpredictability of our times. None of us really know where this economy is going and how we will be responding a year from now.

Many organizations are facing deficits - reductions in funding and/or sales. Some organizations have lost major funding sources and have to reduce staff, eliminate programs and are having to fund raise in different ways. Other organizations are also facing increased client demand for services from families and individuals being negatively impacted by the recession. Their funding levels are not keeping pace with the demand for services.

Other organizations are concerned about future funding sources and want to stay ahead of the curve by wisely conserving resources now and ensuring their organizations are positioned to weather further changes.

Scenario planning provides a method for conducting an organizational conversation about how to manage change. It provides a set of steps for managing this conversation and provides leaders with some new tools. Organizations concerned about the future who are convinced they will need to respond to change that has yet to be defined are perfect candidates for scenario planning. As a leader, if you are certain that your organization will need to respond quickly to a set of outside forces that are not yet predictable, then scenario planning provides a method for organizing a set of options or future scenarios. It provides a process for a board and staff to dialogue about change, determine their options and formulate action plans.

Want to know more check out

Friday, August 21, 2009

Scenario Planning vs. Strategic Planning

One of the questions I often get is how is scenario planning different that strategic planning. For those new to planning it can often look similar as you begin the process. Both begin with an environmental scan and both end with an action plan but there the similarity ends.

Strategic planning is about deciding on a future with strategies on how you will achieve that future. It involves really looking at strengths, weaknesses, opportunities and threats and then deciding on some strategies for creating a desired future. It focuses on the goals and objectives for achieving those strategies. Generally, a strategic plan focuses on three to five years out and what you want to cause to happen - strategically- for the organization. It often involves some program strategies, marketing and infrastructure strategies and fundraising/funding strategy.

Scenario planning asks a different set of questions. It begins by asking what is known and unknown about the future. What can you predicate will happen and what can not predicate or be certain might happen in the future. Scenario planning then has you brainstorm a number of options or scenarios of what impact or change your organization might experience. Once you come up with scenarios, then you actually run financial projections to see the impact of those scenarios on the organization. It ends with an action plan on how you would implement the scenario should the future predictions come true or the scenarios happen.

A well prepared organization would have both - it is not an either or choice - the strategic plan is your road map for how to achieve specific strategies for your organization and the scenario planning is to prepare your organization for changing rapidly in response to external influences. Many scenario plans go in the drawer once completed and are pulled out when specific trends or changes begin happening and the organization has to respond in order to remain viable.

Most of us complete formal strategic plans and have created the scenario plans in our heads. That has all changed with this economy and scenario planning has now become a necessity and a more formal process.

So is your organization ready to change rapidly and smoothly in response to external forces?

Thursday, August 20, 2009

Managing Organizational Change

Managing Organizational Change is Tough
Managers are having to manage change throughout this economic downtown. I see it everyday in my consulting practice with the struggle, the challenges and some missed opportunities. We all seem to be in a live process of figuring out how to do things differently one day at a time as they say. We are restructuring how we deliver services, how we market and how we spend money. Everything is open for reconsideration and many changes are painfully being made as each one of us goes through both a personal and an organizational process.

I see in my own practice so many missed opportunities with conflict over somewhat silly items, miscommunication over expectations and rules, and active bartering to keep things from changing. I am witnessing several executives and their boards in conflict, leaders and their staff in conflict and staff workgroups in conflict. The are all struggling to figure out how to manage today, make decisions for the future and position their organizations for sustainability and survival. The miscommunication is often the hardest for me to watch and the most difficult to sometimes to unravel.

Here are some observations and recommendations for managing change:
  • Create some type of organizational plan - it can be a scenario plan, a strategic plan, a sustainability or results based plan. The idea is to create an organizational road map and a process for gathering input and making decisions. Without the road map, people become confused, get lost, and take some divergent paths that lead to nowhere. The road map or plan provides a process for an organizational conversation and clear focus for all members so everyone can see the future.
  • Be transparent- share information with everyone in clearly thought out ways. Share financial information, share good new and bad news, and provide information even if you can not answer all of the questions. This is not the time to hide, walk around the office with a frown on your face or make sarcastic one liners. Communicate openly, honestly and often if you want to earn respect and head off future problems.
  • Focus on the priorities - this is the time of hard choices and managers have to set and focus on priorities. Hard choices have to be made, changes are best not put off until a crisis develops and people are waiting to be lead. Complaining without action steps, blaming without problem solving and running in place are not going to work. I see too many managers become concerned and then begin complaining, blaming or going in circles. This will not work at solving the financial, social, or business related issues. Strategy and action are needed.
  • Get outside help - sometimes organizations need outside help. A outside voice that can say things you may have already said but because they have no vested interest are heard in a different way. The outsider - consultant, volunteer, or former board member - may be able to mobilize people, articulate the problems and the solutions and reformat the conversation so that people can mobilize and support the changes being proposed.

I often wish I had a magic wand to create the change and make is simple and less painful. I am often the outsider and I can see what is happening, try to intervene but if the miscommunication has gotten so deep it can become impossible to repair. Now is the time for all of us to review our leadership and think about how we manage change.

Wednesday, August 19, 2009

Scenario Planning - Preparing for An Unknown Future

Scenario planning has become an important tool for organizations and businesses. It provides a process for discussing and managing change in a organization when the future is unpredictable. It is defined as a strategic planning method that allows an organization to create several options or scenarios of what might happen in the future, how the organization might respond to that future and what financial impact the options would have on the organization. Scenario planning moves to action planning creating defined implementation steps.

The process usually has four major steps:
  • Conducting the Environmental Scan - what are the trends classified as what are the knowns and the unknowns as one looks out to the future.
  • Developing the Options - brainstorming a set of options or possible scenarios with a process to determine the two to four most likely scenarios
  • Measuring the Financial Impact - running the numbers to understand how the scenarios will financially impact the organization - both budget and cashflow are important to develop.
  • Creating an Action Plan - describing how the organization would implement the scenario if the future develops as anticipated. This last step prepares the organization to quickly and effectively respond to changes in the environment as trends unfold.

Scenario planning is an important tool for the savvy manager. Understanding how to create scenario plans, develop the financial projections and create the action plan empowers managers to be prepared and manage change in their organization. It provides a disciplined process to think out loud about the future and understand how to wisely position the organization for the future.

Want to know more check out .

Saturday, February 28, 2009

There are no rules!

After two weeks of training nonprofits on managing in critical times, I have decided that there are no rules for how to really manage through this economic situation. This crisis is more than a mere recession. We seem to be in for surprises with twists and turns every week. My interaction with so many different types of nonprofits in such a short time has given me some insights into what is happening out there. It seems many are already experiencing a cut in funding, events are not raising as much as expected, donors are donating but dollars overall are down and demand for many services in basis needs is up. Foundations are being more cautious and there is a general feeling that we have too many nonprofits and something has to give.

My no rules has to do with many of the side conversations. Directors are trying to determine if they should make more cuts and what they can use to predict what the rest of the year holds for funding. Most everyone is worried about their jobs. Most nonprofit organizations are not giving raises this year, many have eliminated retirement co-pays and increased co-pays for health insurance. Discussions indicate people are worried as to whether these cuts will be enough or if more are needed.

There are many bright spots with some events producing revenue, new donors signing on and creative social marketing techniques to link people. Some nonprofits have healthy reserves and others are carefully managing their cashflow.

There is general agreement that we are writing the rules as we go. This will mean more meanings, careful planning and much more communication to share what we know and are learning.

Wednesday, February 18, 2009

Critical Times

Nonprofits face critical times is a topic throughout this sector. Want to know more here is a link to a workshop and several tools for managing financial information, scenario planning and developing critical skills for this uncertain times.

The Northland Foundation in Duluth Mn hosted a workshop for over 150 people to learn about Charting your Course during these times. Speakers included an economist, a nonprofit sector expert and myself with the Management Tips. The Foundation graciously offered to post some of the more important tools for managing in these times.

Check it out!