Listening to the audiobook of Economics in One Lesson (Henry Hazllitt, 1978), I have found (to no economist’s surprise) several interesting correlations to strategic planning for nonprofits. Yes, even the latest edition of this book is 30 years old, but it is not a bad place to start for many of us who are intrigued by economics and who don’t have the time or the will to go back to school to learn more about it.
Since economics is among the broadest of topics, there are many lessons in this book that relate to everything from the economy to governmental policies, as well as from personal and household finances to our social and cultural priorities. While there are a few points that I either disagree with or that I believe are missing, I have appreciated the lessons learned. Strategic planning can easily take critical cues, as can many disciplines, from economics. Here are just four that I consider important when it comes to developing and evaluating a strategic plan:
- Consider both the short-term and the long-term effects of your plan: Hazlitt continually points out that, too often, special interest groups argue for a piece of legislation or a policy that focuses only on short-term results at the expense of long-term trends. While we should ignore neither short- nor long-term issues, focusing on one and ignoring the other is guaranteed to backfire. When your strategic plan focuses only on one-year goals, ignoring your 5-year vision, it is like allowing a 3-year old to steer your car. The short-term goal of the 3-year old to just to move the car back and forth across the road at the expense of actually driving to a destination. Conversely, a strategic plan that only includes the long-term vision statement about where you want the organization to be in 5 years may ignore the short-term. How will you get to the destination? What paths will you take? Who will get you there? What car are you going to take? A strategic plan needs both short- and long-term components to be of value.
- Consider how your plan affects both the individuals, the larger groups and the community as a whole: Like the previous principle, this points to an inclusive approach to strategic planning. When special interest groups are allowed to sway lawmakers because of their visible and immediate need, results of subsequent policies are often detrimental to the general population in ways that are less obvious but nonetheless real. Most nonprofits serve a very specific population group, such as the homeless, the hungry, the elderly, the preschoolers. During the planning session, the question should be asked, how does our plan affect the community as a whole? Does one demographic group benefit at the expense of another? If so, discussing strategic partnerships should follow. Great plans develop win-wins for all groups.
- Consider the overall purpose projected by your plan: One of the most common oversights of organizations who hold what is termed a strategic planning meeting is to focus on programming. This is essentially the same as focusing on the short-term to the neglect of the long-term. Programs, products and services are means to the end. They are the approach to fulfilling the purpose of your agency. A discussion about programs can be part of any strategic planning session, but programs should never be the main focus. Strategy, vision, mission and values are central to the meeting and will naturally lead to programming.
- Dying programs must be allowed to die in order that programs with potential for growth be allowed to grow: I believe the actual quote from Hazlitt’s is something like, “Dying industries must be allowed to die in order that growing industries be allowed to grow.” The argument to the contrary points to the jobs potentially lost in a particular industry and argues for higher tariffs on competing imports. Ignoring points 1 to 3, such arguments may save a special interest group that is very visible, or a product that is very tangible, but it tends to stifle innovation while simultaneously raising consumer prices artificially. The strategic planning process would benefit from the use of a childhood activity you would recognize as Red Light Green Light. I call it Stop Start Continue, but regardless of the name, it forces the strategic planning group to ask the difficult questions relating to dying programs. Is your nonprofit hanging onto a legacy program for no other reason than tradition? If so, it is likely consuming resources that could benefit an entirely new, and more effective, program.
Too often, we think of the economic viability of a nonprofit organization in solely financially terms. As Economics in One Lesson and other books and articles on the subject make clear, economic viability also has much to do with the effectiveness and efficiency of today’s projects and tomorrow’s programs.
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