Rethinking Strategic Planning: Rethinking the rules for more effective planning.

AuthorKavanagh, Shayne
PositionRETHINKING BUDGETING

About GFOA's Rethinking Budgeting Initiative

Local governments have long relied on incremental line-item budgeting, in which last year's budget becomes next year's with changes around the margins. In a world defined by uncertainty, this form of budgeting puts local governments at a disadvantage, hampering their ability to adapt to changing circumstances.

As we all know so well, the ability to adapt has become essential over the last two years--and will certainly remain so for some time. The premise of the Rethinking Budgeting initiative is that the public finance profession has an opportunity to update local government budgeting practices with new ways of thinking and new technologies to help communities better meet changing needs and circumstances. The Rethinking Budgeting initiative seeks out and shares unconventional but promising methods for local governments to improve how they budget, and how they embrace the defining issues of our time.

Strategic planning is a long-standing "best practice" in public finance. This is for good reason, as it is important to think strategically and long term in a volatile and resource-constrained environment. However, strategic planning, as it is commonly practiced, has limitations. This article, part of GFOA's Rethinking Budgeting initiative, calls into question fundamental underlying assumptions of traditional strategic planning and proposes a new approach that is better suited to meet the challenges governments face today.

The three unwritten rules of traditional strategic planning

Let's examine the conventional wisdom around strategic planning, which has three unwritten rules that often underpin how local governments approach it.

--Planning involves following prescribed steps, like developing a "vision statement."

--Planning and long-term thinking are done at a certain time, like once per year, as part of a planning process that precedes budgeting. It is done by certain people, like department directors, perhaps with support from budget staff.

--Long-term priorities should be stable overtime, should cover all of what the organization does, and drive department actions.

These unwritten rules have consequences. Consider the first rule: Planning involves prescribed steps at certain times, like a vision statement, long-term goals, performance measures, etc. This might be the most harmful assumption. The routine steps of planning give a false sense of certainty about an uncertain future. The steps of planning serve as a (poor) substitute for strategies that will be robust under different possible futures. Further, as steps become routine, they tend to lose the connection to what might have made them valuable. For example, many people are familiar with the eye rolls and maybe even audible groans that accompany the mention of a "vision statement." These reactions are often well deserved, as many vision statements are generic boilerplate that could belong to any local government. However, a powerful vision is transformative to a local government, as we will explore later.

Overly routine planning can cause participants to become cynical about planning and long-term thinking. Routinized planning can become oriented toward producing a planning document and not making sure the process is meaningful. This can be a case of the "tail wagging the dog," where the "need" to produce a document diminishes the value of the process.

The second unwritten rule, that planning is done at certain times by certain people, often results in the compartmentalization of planning. For example, plans may be created by elected officials and executive leadership but seem irrelevant to the working lives of frontline staff and citizens (who sometimes have a better understanding of on-the-ground realities) .The second unwritten rule positions planning as a top-down process, performed by "experts" [usually staff). Right or wrong, society has developed a distrust of experts. (1)

The COVID-19 pandemic has made obvious the limits of one part of the third unwritten rule: Long-term priorities should be stable over time. Putting aside COVID-19, local governments are in a volatile environment. For example, information technology brings rapid changes in the economy and social movements. This volatility means that governments and their plans are at added risk of failing to adapt to changing conditions. A government may feel committed to achieving the goals or tasks in a strategic plan, even as they become irrelevant due to changing conditions.

The other part of the third unwritten rule is: Strategies should cover everything the organization does and drive department actions. A strategic plan that tries to include the whole organization risks producing a bad strategy for three reasons: First, an effective strategy is focused on a limited set of the most important issues. Local governments often offer a broad set of services (and departments). Focused strategies will rarely cover everything a government does. Second, proceeding from the mindset that a plan must cover everything may cause the government to root strategies in what the government is already doing. This is because if every department is expected to have a goal or task related to the strategy, it is easier to do if the strategy is based on what they are already doing! In some cases, current capabilities might be a fine basis for a strategy; but in other cases, they may not. Third, the exercise to reach a comprehensive plan can be exhausting for all involved, stretching resources to the breaking point.

Let's look at how these rules may make strategic planning counterproductive, not just ineffective. Consider the following description of how strategic planning might work under the rules:

--The local government develops a strategic plan that has a list of tasks or goals (rule 1).

--Executive leadership then celebrates every quarter or so when they check off tasks as done--or they give a list of reasons why they were not done (rule 2).

--There is a chance that conditions changed since the plan was completed, so even if the local government finished all the tasks, it might not be any closer to achieving its goals, and it likely did not learn from those times when it failed (rule 3).

--Elected officials may put bonus programs in place for their chief appointed executive officer based on completing the strategic plan, creating an incentive to check off the boxes, even if they are no longer relevant (rules 1, 2, and 3).

Rethinking the Rules

Military theorist Carl von Clausewitz said: "No plan survives contact with the enemy." Boxer Mike Tyson had a more prosaic take: "Everybody has a plan until they get punched in the face." General Dwight D. Eisenhower's famous quote seemingly agrees with both, but adds: "Plans are nothing, planning is everything."

This means that detailed plan documents have limited value because they will become obsolete when the world changes. However, Eisenhower's point was that thinking about the future and how we might shape it is invaluable. A rethought planning process maximizes forward-thinking and continuous strategy development and minimizes detailed planning that "won't survive contact with the enemy." In that spirit, we will not offer a new set of rules. Rather, we will suggest design principles, summarized in the table below and explained after. Local governments can use the design principles to develop a planning process that fits their circumstances.

--Accept uncertainty

--Define the problem before defining the solution

--Provide focus by introducing constraints

--Develop a rolling planning process

--Make sure planning is collaborative

--Make sure planning is fair

1 Accept Uncertainty

Uncertainty is uncomfortable. Traditional strategic planning offers the comfort of a structured process, but it can't change that the future is largely unknowable...

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