Using strategic and risk planning to chart your course in turbulent times for higher education institutions needs to be approached differently than just using the traditional tools. As you read in last month’s blog and newsletter, higher ed is in a maturing and/or declining market; the indicators include enrollment is down across nearly all segments, driven by a strong business environment and declining birthrates that have resulted in a shrinking number of traditional students (something that will continue to accelerate). Costs are soaring while the discount rate continues to grow. The number of closures has hit record numbers; from 2014-2018, 1,234 colleges and universities have closed, including 129 private nonprofits, 11 publics, and 1,094 for-profits.
We are concerned that higher ed is in for “Mr. Toad’s Wild Ride” over the next 5-10 years.
Without going into a long treatise on strategic planning as we’ve done that before (see The Change Leader blogs and webinars), there are a number of critical steps that institutions must accomplish to create a viable plan for the future in turbulent times. But before we go into those, let’s briefly review the 11 steps of The Change Leader’s strategic planning process.
- Future Environmental Scan
- Brand Promise
- Ideal Future Vision (vision, mission, values, positioning, and rally cry)
- Key Success Measures (metrics)
- Current State Assessment (SWOT or SWOTTA – traditional SWOT with trends and assessments included)
- Strategy Development
- Three-Year Business Plan and One-Year Annual Plan
- Budgeting Against Plan
- Risk Assessment
- Implementation Planning
- Stakeholder Attunement
Although all the steps are important, there are three that warrant more in-depth discussion when planning in turbulent times: building a shared vision, understanding the future environment in which you will be operating, and risk planning.
Building a Shared Vision through Stakeholder Input and Attunement
Before embarking on any major transformation, smart institutional leaders build a shared vision of the future and how it will be implemented. They understand that a shared vision is critical for implementing the changes their institution needs to survive/transform during industry upheavals. The Change Leader’s stakeholder input and attunement process do this very thing.
When The Change Leader does strategic planning with our clients, we give stakeholders the opportunity to give input into all the key steps and thoughts that the core planning team comes up with through what we call the stakeholder attunement process. The stakeholder attunement process pulls together stakeholder teams to review and give input on the institution’s strategic plan during the planning process. This process serves to educate and engage stakeholders from across the institution, and by doing so, helps to mitigate resistance to change.
There are three ways that this takes place:
- At formal stakeholder input and attunement process (SAP) meetings, core team members facilitate small groups of key stakeholders to present solutions and solicit stakeholder input.
- Core team and stakeholders work together in small teams on “homework” assignments, e.g., gathering data and drawing conclusions.
- At the last SAP, the core team and stakeholders engage in assessing the risks of the overall plan and its strategies.
These processes enable the core team to build rapport and respect with the stakeholders, get valuable information as part of the planning, and most importantly, build a shared vision that mitigates resistance to change for plan implementation. We make it clear that they do not have the final decision, but their input is welcomed and will be strongly considered.
Resistance to change, especially in major transformations, can derail an entire transformation process. The Project Management Institute estimates project failures at 80 percent. Including people in decisions that will affect them before the decision is made can mitigate resistance to change.
As the saying goes, “people support what they help create.”
Gaining Understanding of the Future Operating Environment
One of the most critical things when planning for turbulent times is understanding the future environment in which the organization will be operating. In an article for K-12 schools, Dr. Molly Linda Poole suggests four reasons why environmental scanning need to be front and center in developing a strategic plan:
- Environmental scanning focuses on anticipating the future instead of describing current conditions. Therefore, this type of scanning causes participants to think about forecasting in as many areas as possible.
- Environmental scanning has a wider scope than traditional data collection. This analysis uses an assumption that unsuspected sources – such as social, economic, political, and technical indicators — may cause major impacts on an organization. Thus, planners are looking for signals instead of statistics.
- Environmental scanning allows for participants to analyze the interactions of events and trends.
- Environmental scanning is a critical and ongoing part of the planning process in which information on external events and trends are continuously collected and considered throughout the planning process.
Most organizations use a simple SWOT analysis, which looks at strengths (S) and weaknesses (W) (internal to the organization), and opportunities (O) and threats (T) (external). While doing a good job in analyzing the current state, we believe SWOT is not the best tool to use in analyzing the issues facing an organization as complex as a higher education institution over a 5-10 year period.
Another commonly used tool is the PESTLE (Political, Economic, Social, Technological, Legal, and Environmental). This framework helps organizations analyze external trends, but neglects to look at the organization’s operational capacity. Furthermore, some believe that this framework leads to paralysis by analysis due to the requirement to regularly collect data.
At The Change Leader, we use the SKEPTIC Environmental Scanning Model developed by Stephen Haines. In their book “Reinventing Strategic Planning: The Systems Thinking Approach,” Haines and his coauthor Jim McKinlay stated, “More and different details about the future outcome when you look at all the many key factors in the environment using the SKEPTIC framework.”
Here’s the breakdown of the SKEPTIC components as well as how we see them being used for higher education institutions:
- S (Socio-demographics) – What demographic trends are institutions facing? These include the differences in educating members of different age groups (think Boomers vs. Millennials, for instance) as well as students from different social-economic groups. You can see this category’s importance when looking at the declining enrollments that many institutions are currently facing. Socio-demographics also show up in employee decisions, whether in hiring, policymaking, or training and development.
- K (Competition) – Competition takes on many forms these days, such as higher education institutions in the area as well as entities offering certificate programs. In some cases, corporations and businesses develop their own offerings through professional development, thus serving as potential competitors to higher education. And we can’t forget online competitors such as Smartly that are touting free MBA programs.
- E (Environment and economics) – Environment and economics look at what’s happening locally, regionally, nationally, and internationally. For example, the recent recession changed the composition of many institutions’ enrollments by bringing older individuals who had lost their jobs in the economic downturn back into the classroom.
- P (Political and regulatory) – This category should come as no surprise, considering the animosity expressed about higher education by policymakers at the federal and state levels. Therefore, this category offers the opportunity to think critically about potential long-term ramifications concerning politics, funding, and regulatory decisions.
- T (Technology) – Technology continues developing and evolving; taking these changes into account in developing a strategic plan is critical for higher education leaders.
- I (Industry) – Reviewing the status and future needs of the industry will help determine the viability of current programs as well as identify emerging needs.
- C (Customers) – This category provides an interesting conundrum for higher education leaders. Who are the institution’s customers? Does higher education’s customer base consist of students and their parents? Or are they the future employers of the institution’s graduates? Looking at customers from these different perspectives leads to important “a-ha’s” that can help higher education institutions develop a meaningful plan.
Environmental scanning takes time and effort. While some would limit the time spent on this part of the strategic planning process, environmental scanning offers a chance to delve deeply into the issues facing an institution while also building a sense of community with stakeholders. Ultimately, this process – if done right — can provide a springboard to gain important momentum toward achieving the strategic plan’s goals.
How We Do This. We set up teams comprised of at least one core planning team member and key stakeholders, each of which is responsible for gathering data for the Future Environmental Scan. Using the SKEPTIC mnemonic, each team extrapolates out 5-10 years and make “predictions” on what the future operating environment will be and then present these to the group at the planning session.
Those stakeholders who participate in the future environmental scanning teams find it to be a fun exercise, and it helps them to better understand why the changes are being made.
Risk Assessment for Higher Ed Institutions
When was the last time you planned something for your institution and it went exactly as you had envisioned? I thought so.
Risk assessment and management have taken a more prominent role in strategic planning than ever before. Most major corporations now have a risk component in all of their strategic plans, and their boards are actively involved in this area. In fact, many corporate boards have a strategy and risk standing committee, or risk is incorporated into the audit committee.
The Change Leader’s consultants strongly believe that it’s critical to incorporate risk planning into the strategic planning process, and we do this as part of the SAP. In the last SAP, the core team and stakeholders engage in assessing the risks of the overall plan and its strategies. In addition to this being a critical piece of the plan, it gets the entire organization on board with the implementation. This makes all aware of where things are likely to go off the rails, thus making people more vigilant as implementation takes place.
Implementing the Strategic Plan
As you move through the strategic planning process, it also is important to think through some critical questions to help inform the implementation of the plan:
- How are you going to manage the institutional planning process? What were the assumptions that you made last year and did those assumptions bear out?
- When are you going to start renewing your strategic plan for the next year? Some leaders want to do it in May but that’s not far enough out. Ideally, you need to start your planning process in the fall to get good stakeholder involvement and then budget appropriately.
- How is your planning process going? How are you monitoring the implementation of strategies and tactics that your last plan called for? Have you developed good metrics to know when you’re accomplishing your goals? And even more importantly, how do you take the learnings that you have gotten from the implementation and use them in your program assessment and program review? How do you get the data from your program review from institutional research? How do you plow that data back into your strategic planning process and marketing? This podcast offers some useful insights.
- How do you look outside the organization to determine whether your market conditions have changed or are changing, which will require a change to your current plan or updating your plan? For example, the CFO Colleague suggests that in the very near future a substantial number of students, including your top recruits, will go directly to work for employers who offer a good job along with a college degree. This shift, discussed in this report from Kaplan University Partners, will be one of the biggest disruptors because of the change in students’ pathway to make college part of the career path (as opposed to its own discrete experience).
Wrapping Up Our Approach to Strategic Planning
We have explored three of the critical areas in strategic planning in this blog post. In our next post and newsletter and an upcoming podcast, we will explore how mergers and alliances can help institutions survive and even thrive in the upcoming upheavals and the keys to how they can be successful.