The Risky Business of the Strategic Planning Process
More than a year ago, following a public meeting to describe the process and methodology we would use to refresh Augustana College's (Ill.) strategic plan, I was confronted by a respected colleague. He warned me that all my "talk about and emphasis on risk was going to scare people about the process and disenfranchise them." For the moment, I was at a loss.
I had been asked by the president to center our institutional planning efforts on enterprise risk management—and I could not figure out a way to do that without talking about risk. I also knew it was critically important to have participation and buy-in from faculty and other stakeholders who were now at risk of being disenfranchised.
Deep down, I knew my colleague was right. After nearly three years of bad economic news, budget cuts and austerity measures—including no pay increases—the last thing people wanted to hear about was more risk, assessing risk, and dealing with the challenges created by risk. At the same time, I recognized that many strategic planning processes, particularly in higher education, spent an insufficient amount of time thinking about threats and weaknesses. Too frequently, organizations focus only on strengths and opportunities as they search for a niche or discover a distinction to harvest and promote.
The plan transforms our most significant risks into areas of emphasis for our strategic direction.
Although my colleague's warning gave me pause, I genuinely believed an honest and thoughtful assessment of the college's risks would, in the end, lead us in a positive, engaged, and proactive direction—which is exactly what any planning process really needs.
So, over the last year, I accepted the challenge of asking our stakeholders to face our risks without falling into a paralysis of fright and hopelessness. Through risk assessment, we developed an innovative plan—to affirm our mission, assure our future, and assess our results—that focuses on the most critical areas for the college at this time. The plan transforms our most significant risks into areas of emphasis for our strategic direction.
Creating the list to face
It is important to note that risk management is nothing new to Augustana. The president and the Board of Trustees increasingly focused on enterprise risk management as the recession of 2008 impacted the college's endowment and budget, as well as the financial state of our students' families. At the annual board retreat in January 2009, the president and senior leadership team presented a summary of the 10 most important issues facing the college, as well as steps being taken to address those issues:
- Inability to maintain enrollment
- Inability to adjust to the stock market and high levels of debt
- Breakdown of "high-cost/high-discount" business model
- Loss of reputation
- Breakdown of trust between board, administration, faculty, and staff
- Neighborhood concerns
- Change in federal or state financial aid policies
- Failure to address deferred maintenance
- Natural or manmade disasters
- Inept management or complacency of the board, administration, or faculty
As part of the presentation, we asked the board, as well as the president's cabinet and several faculty members who were present, to embark on several risk-mapping exercises. For each of the 10 risks, each person was asked to assess the likelihood of the threat (remote, possible, likely) and the impact on the college (manageable, major, critical). Responses were color-coded so that the views of the board, the cabinet, and the faculty members could be tracked separately. However, what was most interesting was that the responses of all three constituencies were consistent.
The board was now fully engaged in risk management. Since then, the president has provided regular updates to the board on the 10 most important issues.
Risk management meets strategic planning
At its 2010 retreat, the board received a progress report on Authentically Augustana, the college's strategic plan adopted by the board in January 2005. Although the implementation of the strategic plan was at least 80% and, in some cases, complete, it was most obvious to everyone that the environment had changed dramatically over the five-year period. While the board concluded that a new comprehensive strategic plan was not yet needed, there was a need for an addendum to Authentically Augustana that would address changes in the demographics, the economy, and financial issues, and the changing climate for liberal arts higher education. Further, the addendum was to incorporate the work that had been done on enterprise risk management.
Soon, I realized that, if we were to involve the campus community in strategic planning and our process was to acknowledge and minimize our risks, we needed to ensure the community comprehended those risks. While the work on enterprise risk management was not a secret, it also was not communicated widely to faculty and staff. They could no longer be shielded.
And so the campus community was invited to do the risk-mapping exercises used with the Board of Trustees in 2009. Using the same 10 most important risks, the new audiences learned how board members and senior leaders rated the likelihood and severity of each. By introducing each risk in this way, each was made relevant and accessible to all. This process generated a dialog about risk management that formed the backbone of our strategic plan addendum.
Members of the administration, faculty, and a trustee comprised a strategic plan task force that formed in June 2010. One of the task force's first challenges was to translate the risks included in the enterprise risk management work into strategic issues, while recognizing that some of the risks presented in January 2009 were already not the same risks we now faced. While the stock market and the value of our endowment had begun to rebound, we had some new questions: Should we have a strategy to address the possibility of a double-dip recession? Or how should we address a possible change in the perceived value of a four-year liberal arts college degree, regardless of where the degree is earned? And last but not least, will anyone be inspired by a strategic plan that ensures we have adequate responses and contingencies in place in case of a natural disaster?
The planning committee quickly saw the need to define the relevant risks to address as those so significant that if we did not take proactive steps, genuine harm would result. We also acknowledged the interrelatedness of several of those risks. Our risks needed to focus on areas we could and should address, rather than a litany of nebulous threats. At some level, we abandoned risks that were uncontrollable and focused on areas we could leverage to advance and strengthen Augustana College.
Finding the silver lining of a risk profile
Although our list of 10 quickly grew to 15, we were able to ultimately settle on eight contemporary risks, with the understanding that: 1) each area is something over which we have control, and 2) the inability to address each could have a significant impact on the college.
- Inability to maintain full-time, on-campus enrollment of 2,500 students from diverse backgrounds without significantly increasing the tuition discount rate
- Inability to maintain and develop the necessary financial resources to deliver our mission/program
- Inability to prepare our graduates to stand out to employers and graduate schools
- Inability to demonstrate the college's value, advance our reputation, and earn positive recognition
- Inability to successfully recruit, motivate, diversify, and develop our human resource base
- Inability to address issues related to our physical plant, including technology infrastructure and deferred maintenance, in a timely manner
- Inability to respond to adverse changes to our neighborhood and/or broader community
- Inability to respond quickly and proactively to external conditions
In agreeing on these risks, we clearly delineated the boundaries of our risk profile—those things that uniquely or independently impact our college and those things that others also may face, but to which we are committed to being better at than anyone else. We had a strategic direction that mattered.
Although the planning committee was beginning to feel good about our agreement on the risks facing the college, the negative connotations remained. Although "risk" was now called "inability," so far, we had not motivated people to think positively about the future.
Clarity came via a fairly innocent statement by a member of the planning task force as we were discussing the risk associated with loss of reputation. This faculty member said, "Our risk to reputation is not losing it, it's failing to advance it." This declaration was an instant catalyst for turning our risk assessment toward a promising new horizon. We needed to think differently by creating a positive objective to respond to each risk.
We had a strategic direction that mattered.
Addressing risk through positive objectives
Working with eight "design teams" formed of people from all areas of the campus community—including faculty, staff, administrators, board members and students—the planning committee developed the following objectives to respond to each risk identified:
Objective 1: Augustana will develop a recruitment and retention plan for an enrollment of 2,500 that responds to shifting demographics and a changed economy.
Objective 2: Augustana will develop an operating plan that ensures our ability to deliver our mission, measures returns on new investments, explores methods of increasing revenue through traditional and non-traditional means, manages costs and ensures strong financial health.
Objective 3: Augustana will prepare students to stand out to employers and graduate schools by centering learning—inside and outside the classroom—on high-impact and hands-on learning experiences.
Objective 4: We will refine Augustana's value proposition and advance the college's reputation by emphasizing outcomes and ensuring all members of our community can articulate and promote our successes and distinctions.
Objective 5: Augustana will foster a work environment that values community, diversity, collaboration, and innovation, while shaping the workforce to optimize productivity and accountability.
Objective 6: Augustana will operate and maintain facilities in a manner consistent with a high-quality learning and living environment, and will improve facilities when deemed strategically important to provide the best learning experiences for our current students and to attract prospective students in an increasingly competitive market.
Objective 7: Augustana will extend its reach within the neighborhood and broader community.
Objective 8: Augustana will strengthen its shared governance and open communication practices to ensure shared and timely decision-making in response to changes in external conditions impacting Augustana and higher education in general.
These eight objectives are the framework for the addendum to the Authentically Augustana strategic plan: Affirm, Assure, and Assess. Our plan will provide strategic direction over the next three to five years, and will shape the college's future through momentum gained with sure footing founded in reality. As we pursue these objectives, we will assess and measure our progress along the way—therefore minimizing our risks as we strengthen the college as a whole.
I often think back to the warning my colleague provided, and I am thankful he said what he did. His message provided the gravitas our strategic planning process needed to gain ground with goals relevant to the times. There is no question that risk assessment can depress and even paralyze an organization, but to ignore risk or gloss over it during strategic planning is just as dangerous. Institutions of higher education should not shy away from risk assessment in the fear that too much focus on risk prevents seizing or even seeing opportunities.
Some key takeaways from our planning process include:
- Knowing what risk you face is critical to effective strategic planning
- Understanding which risks you can and cannot influence is necessary to avoid risk paralysis
- Risk alone cannot guide proactive strategic planning
- Risks must be paired with positive, realistic objectives
- Risks need to be periodically reviewed and contemporized based on changes in the organization's risk profile
- Risk-driven strategic planning is possible in higher education
- Focusing on risk does not neglect "upside potential" if paired properly with positive, realistic objectives
Understanding your college's specific risks, and pursuing the opportunities that directly respond to your risks, are too uncommon in an environment that tends to focus on making comparisons and dwelling on the strengths of "the competition." If more colleges focused on the type of self-reflection and understanding needed to do a genuine risk assessment, and then centered their strategic planning on responding to the contemporary risks they face, our colleges and universities would be stronger, more realistic, and more authentic.
W. Kent Barnds is Vice President at Augustana College (Ill.).