What Drives the Cost of Strategic Planning?
OPG provides strategic planning services to organizations whose staff size ranges from three people to thousands, and with budgets ranging from $300,000 to billions of dollars. Strategic planning costs can range from just staff time (if the planning is done without a consultant or facilitator) to millions of dollars. What is driving that range of costs?
When a leader makes that first call to us to ask about strategic planning, we ask them a lot of questions about the organization’s condition, its recent and longer-term history, and what is driving the need for strategic planning. As part of that conversation, we review the factors that we have discovered drive the cost of planning:
- the degree of inclusion desired
- the amount of time since the last plan was written
- the amount of research and benchmarking needed
- the need for more creative approaches to strategic planning versus more traditional approaches
- the amount of time the leader and the planning group will have available to do some of the background work versus our consulting team
- the organization’s trust in the leadership team
- cultural practices around decision making
- management, leadership, and facilitation skills in the organization
- the desire for the planning process itself to change the organization
Let’s look at each one.
Degree of inclusion
The planning process can include a wide range of constituents and a significant number of people in each constituent group. The degree of inclusion desired is often driven by the need for buy-in to the ultimate plan. Inclusion can impact who is on the strategic planning committee, which constituents are interviewed or included in focus groups, whether surveys are conducted, or whether other types of outreach and inclusion are done. Inclusion also involves how frequently the organization’s constituents are communicated with about and during the planning process.
Time since the last plan
If the organization has not written a plan in more than five to six years, it is highly likely that they will need to start fresh, and that there will have been significant changes in their internal and external environments that the new plan will need to consider. This increases the research, benchmarking, and inclusion costs.
Research and benchmarking
Some of our clients have not looked at what similar organizations are doing out in their field for a long time. Instead, they use their own historical performance as a benchmark. We encourage them to look at the external standards for both average and high performance in their field. Conducting research and doing benchmarking can help the organization determine where it needs to get better. For example, in museums, one can look at the cost of accessioning an artwork and see if the museum’s cost of accessioning is below, at, or above the benchmark. Museums generally want to keep accessioning costs to a minimum, but not to the point of hurting the care and conservation of the artwork.
Creative versus traditional approaches
Each planning process should be designed to align with the character and culture of the individuals in the organization and their professional training. For example, if we are doing planning with a group of artists, we use different techniques than we might with accountants. This is not to say that both groups couldn’t learn a bit from each other’s styles, but we don’t want to create a planning process that runs completely counter to the way the staff’s minds have been trained to work and what their general mission and purpose is.
Time constraints for leader and planning group
Planning can consume a huge amount of staff time even when a consultant is involved. The process must take into account how much time the leader will have to do extensive writing and editing, how much time the planning group will have for meeting and doing homework in between meetings, and how much capacity constituents have for other time demands that a strategic planning process creates.
Most plans take a minimum of five months to create, and they can take upwards of a year on the far end. The time demands on the staff and the planning group can be reduced by outsourcing some of the planning work to the consulting team. But it is not advised, at least from our view, to outsource all of the planning work since this decreases buy-in, and the plan is not embraced in the same way that a more ‘home-grown’ plan is. There are some planning firms that write plans more independently of the organization’s staff. There are situations where that might make sense, but it is not a method that we use.
Trust in the leadership team
We consider how much trust the organization, its governing bodies, and other key constituents have in leadership. This issue is also tied to the next factor, which is practices around decision making. If the leadership is brand new, we advise them to be as inclusive as possible, which will slow down the process but will help build trust in them.
If the leadership has been there for a long time, and people generally trust the leadership group and the leader to make good decisions, the planning group can be smaller and move more quickly. It is essential to be careful not to erode the trust that has been built over the years by creating a planning process that is opaque.
Cultural practices around decision making
Every organizational culture has its own practices around decision making that have grown out of the type of work they do and the history of the organization, including its leaders’ styles over the years. A leader could choose to change that decision making culture by the very design of the planning process. It is also possible to continue to use that culture’s decision-making styles to design the process. For example, if the culture is more hierarchical and more authoritarian (which is not a bad thing in the right settings), the planning process can be done more quickly with a much smaller group.
Management, leadership, and facilitation skills in the organization
As part of our planning processes, we build in management, leadership, facilitation, and teamwork skill building. Some organizations come to us with higher levels of these skills, but we often find that our clients need to move the needle on all of these skills. The way we design the process embeds training and modeling of better skills in these domains.
Desire for the process to change the organization
Some of our clients want the process itself to change the organization. You can hear this thread in the factors I have listed above. For some clients, they want to make a major shift in culture. The planning process can be designed to do this. For example, if the organization has been overly hierarchical and opaque, the process can be designed to be more democratic, inclusive, and transparent.
Tips for moving forward
- Hire a consultant if you do not have the expertise, the time, or the neutrality to conduct the planning process.
- Be sure to discuss all the factors in this column with your consultant.
- Get at least three bids to ensure you find a consultant or firm whose style and approach match your organization’s style.
- Create as flush a planning budget as you can so you have room to pivot or expand the process as information comes in.
- Plan your timeline with 1-2 months of project start-up built-in and assume at least five months of planning after that start-up period, particularly if you want high inclusion and you have a large organization.
Looking for More Support?
- Read more about strategic planning with OPG here.
- Email info@orgpg.com if you’d like to talk more!
This post was originally published in Wiley Publishing’s Dean & Provost in December 2024.
