Malcolm Garrow explores the importance of being intentional about who to engage in the strategy development process, and offers guidance on how to do it well.

Most organisations revisit their strategies every three to five years (sometimes more frequently as a response to major change).

It is a critical activity that sets the organisation’s direction for the coming years and typically consumes significant resources.

However, while organisations are usually clear that they want a new strategy they are not strategic in thinking about how to develop the strategy and specifically how to engage with key stakeholders. This is important for two reasons:

1. Strategy quality – Considering how the best thinking and insights are included in the development of the strategy
2. Strategy implementation – Considering how key stakeholders who are critical to implementation and organisational success will react to the strategy.

That is not to say that every strategy requires wide consultation – far from it. A poorly designed consultation process can lead to ‘paralysis by analysis’ or simply inefficient use of resources.

Sometimes the options under consideration (including mergers, divestments and closures) are too sensitive for wide consultation. In addition, consultation should not be confused with decision rights. Ultimately management has the responsibility to develop the strategy and then the board holds the accountability and the decision rights to approve the strategy.

Using a simple framework at the start of any strategy project ensures that stakeholder engagement is considered upfront in the planning and is not an afterthought (see Figure 1 below).

It requires stepping through each stakeholder group and asking the question ‘Should we consult or inform them about the strategy?’ and ‘If yes, how and when?’

Figure 1  Strategy development stakeholder engagement framework

It is important to be intentional and strategic in selecting a process to develop the strategy. However, there is no single answer for the best approach. The key is to consider your organisation’s context and what is right for you.

This is illustrated below for each stakeholder group using both recent examples from SVA’s work as well as case studies from previous SVA Quarterly articles.

1. Board and management

Getting the balance right between the role of board and management is critical.

To avoid strategy development feeling like a game of table tennis between board and management, get clear on roles upfront and know when and how they might need to change. See ‘Avoiding strategy ping pong: the board’s role in strategy development’.

Recently a board chair of an organisation that supports young people experiencing vulnerability with pathways to education and employment approached us about helping to develop a new strategy.

We were then introduced to another member of the board who was to oversee the strategy development. When, after two meetings we still had not met the CEO or anyone else from management, we raised this as an issue. We wanted to ensure that management felt ownership for the strategy and it was not being ‘done to them’ by the board. As a result, we worked with the board and management to agree each of their roles and the process to be followed in developing the strategy. That intervention enabled the strategy to be successfully developed and it is now in implementation.

2. Staff

Staff is another important stakeholder group. Leaders are often torn between two staff engagement alternatives both of which have pros and cons.

On the one hand you can consult heavily with staff which should lead to more staff ownership of the resulting strategy but comes at a potential cost of distraction from core activities and will increase the time and resources needed to complete the strategy.

On the other hand you can use a small strategy team with limited consultation. This is beneficial if you are dealing with sensitive strategic options and can enable the strategy to progress more quickly. But this can come at a cost of staff not embracing the strategy when it is completed and may also result in less diverse thinking being injected into the strategy.

This theme is covered in ‘To consult or to insult?’ which explores whether organisations are consulting with staff for the right reasons and in the best way and then explores when it is important to consult as you develop your strategic plan.

This theme is also covered in ‘Shared planning: Letting staff determine your direction’ which describes the experience of Alzheimers Australia NSW, now Dementia Australia. The then CEO, The Hon. John Watkins didn’t have a fixed idea on the future direction of the organisation, so engaged staff to develop a strategy that reflected their combined views.

However this engagement was not simply ‘send us your ideas’ – it was intentionally designed with the following process:

1. Develop a common base of facts so that everyone was on the same page
2. Elicit insights from stakeholders using their expertise to analyse the facts, and
3. Let the senior management team develop the strategic goals based on these insights.

At each step, staff would be involved, but how they were involved was critical to ensure that consultation led to engagement and ownership rather than a vague direction for the organisation – a common result of trying to incorporate too many opinions.

3. Customers and end-beneficiaries

The final stakeholder group to consider is actually the most important – the end-beneficiaries. After all, the mission for all for-purpose organisations is ultimately to drive improvements for their end-beneficiaries or, as some organisations now refer to them, clients or customers.

We are currently discussing with a large disability services provider (DSP) how we can support it in developing a new strategy that considers and responds to the major changes happening in that sector including the National Disability Insurance Scheme roll-out; new disruptive DSP business models; and new technological aids that can improve the lives of people living with a disability.

Our client has made it clear that at the core of their strategy is a desire to become more customer centric. Consequently, we are now working with them on designing a strategy development process that directly includes the customer voice rather than representing it through other channels such as on the board and through customer surveys.

This will result in a series of specific customer engagement activities which will include focus groups and co-design workshops. Co-design goes beyond focus groups to engage participants in the design. While typically used for service and program design, co-design can be adapted for use in strategy development.

4. External stakeholders

Of course there are more stakeholders than just the internal ones and end-beneficiaries. When the Centre for Eye Research Australia (CERA) updated their strategy back in 2009, they thought carefully about how they would engage with key stakeholders and partners.

By following a structured process they ended up with stronger relationships, clarity on roles and a better plan, see ‘Seeing eye to eye with stakeholders’.

More recently, SVA worked closely with a leading educational institution to develop its strategy which included an intentional plan to increase its focus on addressing disadvantage.

The institution had a long and proud history with many alumni who were both actively engaged and philanthropic supporters. In addition, it had important relationships with other educational organisations and religious institutions.

The board and management recognised the new strategic focus on disadvantage would raise many questions for important stakeholders. Consequently, the stakeholder engagement process had to be thought through very carefully and required a significant investment of resources and time.

The investment paid off. While there were ‘rumbles’ (you can’t please all the people all the time) the strategy was approved by the board, stakeholders are aligned and implementation is proceeding to plan one year on.

Finally, SVA does a lot of work with organisations considering mergers, partnerships and other forms of collaboration. An important question in those projects, particularly mergers, is when to engage with key external stakeholders.

In the case of funders and regulators, it can be critical to seek their approval for a merger, and early engagement to ‘bring them on the journey’ may be needed.

In the case of organisational members, they may need to vote to approve a merger and so need to be considered early on. When there is a large membership base it would not be appropriate to inform all members of a potential merger prior to board endorsement. However, in some cases where there are very influential members (e.g. organisation founders or their families) some confidential consultation may be required.

Conclusion

In conclusion, development of a new strategy is a critical activity for any organisation. The objective of the strategy is to come out with a clear view on what steps your organisation needs to take to maximise impact aligned with your purpose.

However before embarking on this critical activity be intentional about what process you use and how you will engage with your stakeholders.

For more information, contact Malcolm on mgarrow@socialventures.com.au