Strategic Management Articles

Avoiding The Strategic Implementation Trap


Many associations understand the principles of strategic management. Elected leaders and staff, often with the assistance of professional strategic facilitators, successfully develop vision and mission statements, from which they establish objectives, strategies and policies.

Having done this, however, they often founder in the attempt to use the new strategic plan as the driver of the association's work plan and the budget. The result is that the strategic plan, no matter how well done, is relegated to the shelf and the association proceeds with business as usual. Strategic planning often fails in associations because it is not tied to a formal strategic implementation plan. Here is how to avoid falling into that trap.

The Strategic Prism

The first step in translating a strategic plan to a workplan and budget is to focus each of the association's programs and services through a strategic prism. This strategic prism is a succinct summary of the association's business strategy. During a time of cutbacks and scarce resources, the prism will screen out programs and services that are not essential to most of its members. The prism should help assure that the association will be sharply focused on core issues that are vital to the broad base of its membership.

Association Products and Services

There are two types of products and services that are offered by an association. The first are those that are directly positioned to achieve the ends set out in the strategic plan. An example of such a service is government relations, which is charged with representing members' political views to government policymakers.

The second kind of product or service offered by an association is money-makers designed to supplement dues and programs that conform to the strategic prism. Two examples would be educational programs and trade shows. Other money-making activities have a less direct link to the association's strategies. These include affinity cards, car rental programs, insurance programs, etc.

All the association's programs should be separated into these two categories: those directly supporting its mission and those that are primarily sources of revenue. Those that support the mission should be slotted under the appropriate objective in the strategic plan and then prioritized according to how directly each helps to achieve that objective.

Portfolio Analysis

Those programs whose primary purpose is to provide financial support for the activities of the association should be subjected to the same kind of rigorous market analysis to which any private sector business venture might endure. This process is called Portfolio Analysis. It is also advisable to apply portfolio analysis to mission-driven activities to ensure that they are self-supporting, where possible, and operated cost-effectively, if not.

Wharton School Professor Ian C. MacMillan has correctly observed that since the need for resources is competitive, the association must view the problem of securing resources in a competitive context. It is preferable to provide good service to a focused market, he maintains, than to provide mediocre or poor service to too large a market. In other words, it is desirable to concede mediocre programs to better competitors and wrest away promising programs from weaker competitors.

The business portfolio is a convenient methodology for determining asset allocation by associations. Portfolio analysis considers each product, strategic business unit (SBU) or division of the association separately for purposes of strategy formulation. (An SBU is a discrete, independent product market segment that has been given primary responsibility and authority for management of its functional areas.)

Most associations are involved in more than one business. Even if an association markets only one product or service (such as professional development programs, for example), it might benefit from separately handling several business segments. For example, it might manage national conferences, self-instructional programs and regional meetings as separate and distinct market segments.

Advantages of Portfolio Analysis

Portfolio analysis offers several advantages to the association executive. It encourages top management to evaluate each of the association's businesses individually and to set objectives and allocate resources for each. It stimulates the use of externally-oriented data to supplement management's judgment. And finally, it raises the issue of cash flow availability for use in expansion and growth.

Evaluating Program Characteristics

When undertaking portfolio analysis, MacMillan urges that the association's programs should be evaluated to determine the following program characteristics:

  • Is it a good fit with our other programs?
  • Is it easy or difficult to implement?
  • Is there high or low alternative coverage?
  • Is our competitive position strong or weak?

Criteria for a good fit include congruence with the mission and purpose of the association, the ability to draw on existing skills of the association, and the ability to share resources and coordinate activities with other association programs. Ideally, an association will have two types of programs: well-fitting, easy programs where the association has a strong position and competes aggressively for a dominant position; and well-fitting, difficult programs with low coverage that the association has the unique, strong capability to provide to important stakeholders. Low coverage can be deemed to exist if there are few comparable programs offered elsewhere. High coverage exists if many similar programs are offered elsewhere.

Criteria for an easy business include appeal to groups capable of providing current and future support; a stable source of funding; market demand from a large concentrated, growing client base; appeal to the volunteer leadership; and measurable, reportable program results.

The association should be considered to be in a strong competitive position for a program or service if it has such attributes as a successful funding track record, a superior reputation for service delivery, a large market share of target groups, strong growth in relation to competitors, better quality/value/service delivery than competitors, superior technical skills needed for such a program, etc.

Conclusion

Portfolio analysis should be regarded as a disciplined and organized way of thinking about asset allocation. It is only a subjective tool, however, it is not a substitute for the ultimate professional judgment of the responsible decision-makers.

The effect of portfolio analysis is to serve the association's membership base with a small number of strong, excellent providers rather than with a larger number of fragmented providers competing for limited dollars in circumstances. This will permit you to apply scarce resources to the programs that are of greatest importance to your members.



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