Insight and Innovation
Volume 26 | Fall 2019
Latest News from The Hill Group:
Message from the President
Dr. Chris W. Brussalis, President & CEO
We hope that you will enjoy reading this latest issue of Insight and Innovation, our firm’s newsletter that is intended to share some of our thoughts on leadership of organizations across sectors. Our work as management consultants, working within the private, nonprofit, and government sectors, positions us to identify synergies, tools, and trends that can benefit all leaders, regardless of sector or industry.
We will share some of my latest research in the study of regional economic development. Collaboration among universities, industry, and government can be quite effective to impact regional economic development. My research identified key factors that can be utilized and leveraged by universities to serve as a catalyst to enhance regional economic development. More can be accomplished to advance a region through tripartite collaboration among universities, industry, and government
While my research identified the importance of planning and stakeholder engagement in multi-sector collaboration to advance regional economic development, Jordan Pallitto shares his perspectives on the relevance and impact of strategic planning for any organization. As part of Jordan’s doctoral research in business administration, he provides a brief meta-analysis on some of the risks and benefits of planning with insights into our firm’s 66-year track record in partnering with organizations to develop strategy.
Finally, Hill Group alumna Courtney Chapman shares an interesting essay on competition and how nonprofits can navigate the land of substitutes when planning for the future. While this article highlights the importance of differentiation and relevance in the nonprofit sector, Courtney’s thoughts are compelling and relevant across all sectors.
We value our relationship with you, and we hope that you enjoy this newsletter.
Dr. Chris W. Brussalis
President & CEO
University Collaboration in Regional Economic Development
Dr. Chris W. Brussalis, President & CEO
Throughout much of our nation’s history, universities have played an important role in improving the quality of life and economic prosperity of the regions that they serve. However, as federal purse-strings have tightened in recent years and grant spending to states has decreased, communities in need of revenue are looking toward universities to pick up even greater slack to stimulate regional economic development.
This comes at a particularly challenging time for universities as they face a substantial shift of responsibility for financing education to net tuition. When revenue opportunities are reduced for universities, institutions must make difficult choices on whether to decrease academic services or operating costs, raise tuition, develop new income streams, or engage in some or all of these tactics in order to operate within a balanced budget. Leaders of fiscally strained universities often feel constrained to focus first on their own institution’s survival before expending programmatic resources to stimulate regional economic development.
Fortunately, universities do not have to make a choice between the two scenarios. Institutions of higher education can be relevant and critical civic partners in their regions and states while also enhancing their own sustainability through partnerships with policy makers and industry. A tripartite collaboration between university-industry-government partners to pursue economic development initiatives can be facilitated and furthered through the following several key factors:
- Proactive Leadership is a primary factor of successful collaboration in regional economic development. University leadership is critical to initiating and sustaining tripartite collaboration, and the reputation, respect, and interpersonal trust of leadership was critical to gaining a commitment from partners. Government tends to interject its leadership in tripartite collaboration through programs and incentives, generally providing an open and encouraging environment for collaboration. Industry provides integration and adds value through advice, technical expertise, services, and other support;
- A Discipline of Planning and the importance of purpose is essential to initiating collaborative regional economic development efforts and to attract partners. A discipline of planning is important in the prioritization and allocation of resources for all three sectors. Development of a shared vision, which is also a leadership practice, is key to the sustainability and success of collaborative efforts. The planning process provides structure for stakeholder engagement;
- A Robust Stakeholder Engagement Process is essential to the development of a shared vision and success of collaborative efforts. Stakeholder engagement is instrumental to ensure quality and buy-in. Leaders across sectors understand the importance of stakeholder engagement and appreciate the process; and
- Self Interest is a major motivating factor for collaboration across sectors. Partners in collaborative regional economic development initiatives make a commitment to collaborate because it is in their interest to do so. The value of tripartite collaborative efforts must exceed the potential risks and costs by each of the partners.
These factors have several implications of practice for universities. As fiscal pressures mount across all sectors of the economy, universities will have to acquire more resources prior to engaging in tripartite collaborative efforts. University leadership and resources are becoming more important in launching collaborative efforts in regional economic development. The days of government and industry investing big money in regional economic development projects where universities have an interest are fewer and far between. Universities may also consider more collaboration with peer institutions in order to leverage precious resources to enhance regional economic development.
Universities must also critically examine their potential, limitations, and realistic role when considering whether or not to expand their mission to include regional economic development. Universities that are perceived as reliable economic development partners in their communities will be targeted for collaborative opportunities and rewarded with investment. Universities could also develop undergraduate and graduate courses with field study opportunities, capstones, and co-ops to develop collaborative engagement opportunities.
Traditionally, private industry, government, and universities have pursued their respective goals in isolation; however, these sectors have come to realize that more can be accomplished collaboratively rather than working independently of each other. With scarce resources, this is an opportune time for policy makers and university and business leaders to work together to improve the vitality of regions.
Dr. Chris W. Brussalis is President & CEO of The Hill Group, Inc. and Adjunct Professor of Management and Policy at the Heinz College of Information Systems and Public Policy, Carnegie Mellon University.
The Relevance and Impacts of Strategic Planning
Jordan Pallitto, Vice President
Is strategic planning still necessary? As we approach the year 2020 and nearly every organization – large and small, for profit and not for profit – thinks about achievement of their “20/20” vision, it is important to consider if and how strategic planning remains relevant. As planning professionals, we interface with a gamut of opinions on planning. Most organizations and leaders believe that some level of strategic planning is beneficial. Some do not. Most research supports the positive impacts of planning, likewise, some does not. More than a half-century of scholarly research on planning tells two stories, but our firm’s experience with hundreds of clients over more than sixty years crystallizes several lessons to ensure that your planning is positive and transformational, not a lackluster waste of precious time and money.
Skepticism about planning
Leaders in the latter group can pose important skepticism about planning. “With the world changing as a rapid pace, how could we possibly project five years out?” “We’ve been planned to death over the years, it is time for action.” “Planning is helpful, but we don’t have the time and attention to devote to a planning process right now.” “For us, planning just doesn’t seem to work.” These leaders are not alone, and they are not necessarily wrong.
Over the years, several scholarly researchers have questioned the value of strategic planning. Studies dating back a half-century are skeptical of the impacts of planning on organizational performance. Ringbakk (1969) found that long-range planning lacks impact because it is not well-accepted nor well-practiced. Gerstner (1972) suggested that planning activities were too academic and had little-to-no impact on corporate bottom lines. Stonich (1975) suggested that planning systems fail due to a lack of focused approach, an over-emphasis on scientific forecasts, and a separation between formal planning systems and management and operations. Kudla (1980) sought to assess the economic impact of strategic planning and could not conclude a relationship between planning and performance.
Mintzberg (1994) describes the pitfalls of strategic planning that organizations reduce creativity and healthy risk-taking, among others. He presents deep-seated skepticism of many of his contemporaries who, he claims, inaccurately describe the business world as increasingly-turbulent compared to the more-stable and predictable past. He goes on to suggest that planning itself is to blame for the appearance of turbulence because traditional, rational, control-focused plans box organizations on a particular path that even the slightest external change may influence or agitate. A critic of traditional planning methods, Mintzberg suggests that models of planning related to continual visioning and learning may lead to adaptability and success.
Support for planning
There is, of course, a mountain of scholarly research dating beyond the last 50 years that evidences the positive impacts of strategic planning. Emery and Trist (1965) describe industrial environments that are increasingly turbulent and suggest that planning and adapting are required for organizational longevity. As a foundational premise of this, they cite biologist von Bertalanffy who distinguished between living organisms and inanimate objects by describing that living organisms survive by importing into themselves certain types of material from their environments, transforming those materials, and exporting other types of materials into the environment – a necessary condition of adaptability to environmental variance. This resembles, of course, an often-heard platitude about organizations that fail to adapt to environmental changes will cease to exist.
Toffler (1970), the futurist, describes the emergence of a super-industrial society where a radical increase in the rate of change requires individuals to make radical adaptations to successively new situations.
Ansoff (1970) performed a study, self-proclaimed as the most substantive to-date at the time, of the impact on financial performance of firms who were “planners” versus firms who were “non-planners.” On nearly every financial criterion, planners outperformed non-planners, and planners performed more predictably because they appeared to reduce future uncertainty through the planning process.
Also, in 1970, Thune and House studied the impacts of planning formality on firm economic outcomes and whether the relationship between the two varies by industry. Economic outcomes were measured by sales, stock prices, earnings per common share, return on common equity, and return on total capital employed. Planners significantly outperformed non-planners on earnings per share, earnings on common equity, and earning on total capital employed. In fact, planners even outperformed themselves when comparing pre-planning and post-planning economic outcomes.
As a follow-up to Thune and House, Herold (1972) showed that, over a seven-year period of study, planners outperformed non-planners on sales and profits (a dimension not studied by Thune and House) and planners tended to significantly outspend non-planners on research and development, which itself was found to be significantly related to firm success. A study of different industries by Malik (1975) corroborated these results, summarizing that, “planning pays.”
A heavily-cited study by Pearce, Robbins, and Robinson (1987) deepened the theory on the impacts of planning by expanding beyond a dichotomous planner versus non-planner classification, showing that more formality in planning led to more economic success.
Miller and Cardinal (1994) acknowledged the inconsistent planning-performance findings that arose in traditional strategic planning research and performed a meta-analysis of 26 previously-conducted studies, including some of those reviewed above. Accounting for methodological inconsistencies in prior research, they found strategic planning to positively affect firm performance and suggested that critics such as Mintzberg and others “appear to have been incorrect” (Miller & Cardinal, 1994, p. 1662).
While research on planning in the last half of the twentieth century was dominated by an assessment of financial outcomes and impacts, significant research in the last 25 years provides insight into the important, positive, non-financial impacts of planning. In the years that followed the traditional analyses of Ansoff; Thune and House; Pearce et al; and many others, research instead focused on more intermediate and proximate outcomes of planning such as strategic decision making and strategic coordination of actors within an organization (Schwenk, 1984), (Sinha, 1990), (Andersen, 2004), (Grant, 2003), (Jarzabkowski & Balogun, 2009), and many others. Other proximate outcomes included in Wolf and Floyd’s Map of Strategic Planning Research (2017) are integration, communication, legitimation, shared understanding and commitment, strategic thinking, and planned emergence. These proximate outcomes of planning may eventually impact distal measures like capability, adaptability, and organizational performance.
With ample research on both sides, what are you as a leader or manager to do about planning? Should you invest the time and attention needed even though one side of the scholarly research portfolio and possibly your own experience makes you skeptical about the impacts? We think you should. Will doing so guarantee the positive financial and non-financial impacts that the other side of the research portfolio identified? Of course not.
In our experience at The Hill Group with hundreds of clients over more than 60 years, strategic planning is transformational when done well, helpful when done at all with good intent, and worthless if done with fleeting attention simply to “check a box.” Here are some things to consider helping ensure that your organization’s approach to planning brings you positive and transformational results.
- Plan to plan – Do not enter blindly into a strategy development process. Define the steps in the planning process, identify where and when certain planning milestones will occur, engage cross-functional and multi-level stakeholders (more on this later) to help define the process itself, and ensure that open, honest, and transparent communication about the process is provided in a timely manner.
- Assemble a team of strategic thinkers – Any group of individuals engaged in a well-designed planning process can achieve helpful outcomes. Transformation, on the other hand, requires the right people engaged at the right time, in the right way, throughout the planning process. Your planning team or steering committee should include diverse individuals with a collective breadth of experiences and perspectives but all of whom share a penchant for strategic thinking. Ford (1977) conducted a multi-year analysis of high-performing “elite” decision makers and suggested that they commonly share a “crux-sensitivity” through which their mental radars distinguish between important and unimportant factors. Bates and Dillard (1993) suggested that these sorts of strategic thinkers are not necessarily confined to the C-Suite in organizations and sourcing them from all levels of the organization is key to creating a successful core committee. More recent research from Casey and Goldman (2010) and Goldman and Scott (2016) begins to identify processes and approaches for individuals to build strategic thinking competencies such as scanning, questioning, conceptualizing, and testing.
- Ponder the future through primary and secondary research – Once you’ve assembled a diverse group of strategic thinkers, arm them with the information and intelligence needed to characterize the past, understand the present, and ponder the future. Characterizing the past can occur through a synthesis of past performance reports, historical financial data, recent sales trends, and many other sources that are readily available. Understanding the present may involve some very recent financial, administrative, or programmatic data plus information on already-in-motion initiatives or issues that are planned or that the organization may be facing in short order. Pondering the future is more difficult and more important, particularly if you believe that your industry or the needs of those you serve are evolving faster than ever before. A scan of recent Harvard Business Review and similar titles shows topics like artificial intelligence, augmented reality, robotic process automation, remote workers and the gig economy, trade and tariff threats, changes to minimum wage, rapid innovation, and even four (yes, four) dimensional printing, and much more. It is imperative that you and your team of strategic thinkers research and think about how these emerging trends and many others will impact you, your industry, your partners, and your clients or customers.
- Meaningfully engage stakeholders – This is a core tenet of The Hill Group’s planning philosophy. Even the best and brightest strategic thinkers do not have all the answers, and they certainly do not control “buy-in” and acceptance for all stakeholders. Designing a planning process to maximize the number of individuals who are involved, provide feedback, and create buy-in from your stakeholders will ensure that your strategies will be implemented and goals achieved.
- Act – Once your plan is complete, use it or lose it. Transition from strategic planning to a discipline of strategic management. Engrain the plan in your operations, evaluations, and more. Reconvene with the strategic planning committee on a regular, perhaps semi-annual basis to review progress versus plan and review it for continued relevance and rigor. Part of this should include the development of a culture of “strategic thinking.” Every member of your organization should feel equipped and empowered to raise questions, voice concerns, and promote new and more efficient ways of working. Executives, in particular, need to set aside ample time for reflecting on strategies and perfecting their implementation.
If you or your organization seeks more information on the research or advice presented in this article, feel free to contact The Hill Group.
Andersen, T. J. (2004). Integrating Decentralized Strategy Making and Strategic Planning Processes in Dynamic Environments. Journal of Management Studies, 41(8), 1271-1299. doi:10.1111/j.1467-6486.2004.00475.x
Ansoff, H. I., Avner, J., Brandenburg, R. G., Portner, F. E., & Radosevich, R. (1970). Does planning pay? The effect of planning on success of acquisitions in American firms. Long Range Planning, 3(2), 2-7. doi:10.1016/0024-6301(70)90001-4
Bates, D. L., & Dillard, J. E. (1993). Generating strategic thinking through multi-level teams. Long Range Planning, 26(5), 103-110. doi:10.1016/0024-6301(93)90082-Q
Casey, A. J., & Goldman, E. F. (2010). Enhancing the ability to think strategically: A learning model. Management Learning, 41(2), 167-185. doi:10.1177/1350507609355497
Emery, F. E., & Trist, E. L. (1965). The causal texture of organizational environments. Human Relations, 18(1), 21-32. doi:10.1177/001872676501800103
Ford, C. (1977). The “elite” decision-makers: What makes them tick? Human Resource Management, 16(4), 14.
Gerstner, L. V. (1972). The practice of business: Can strategic planning pay off? Business Horizons, 15(6), 5-16. doi:10.1016/0007-6813(72)90056-0
Goldman, E., & Scott, A. R. (2016). Competency models for assessing strategic thinking. Journal of Strategy and Management, 9(3), 258-280. doi:10.1108/JSMA-07-2015-0059
Grant, R. M. (2003). Strategic planning in a turbulent environment: evidence from the oil majors. Strategic Management Journal, 24(6), 491-517. doi:10.1002/smj.314
Herold, D. (1972). Long-range planning and organization performance – a cross-variation study. Academy of Management Journal, 15(1), 91.
Jarzabkowski, P., & Balogun, J. (2009). The Practice and Process of Delivering Integration through Strategic Planning. Journal of Management Studies, 46(8), 1255-1288. doi:10.1111/j.1467-6486.2009.00853.x
Kudla, R. (1980). The effects of strategic planning on common stock returns. Academy of Management Journal (pre-1986), 23(1), 5. doi:10.2307/255493
Malik, Z., & Karger, D. (1975). Does Long-Range Planning Improve Company Performance? Management Review, 64(9), 27.
Miller, C., & Cardinal, L. (1994). Strategic planning and firm performance: A synthesis of more. Academy of Management Journal, 37(6), 1649. doi:10.2307/256804
Mintzberg, H. (1994). The fall and rise of strategic planning. Harvard Business Review, 72(1), 107.
Pearce, J. A., Robbins, D. K., & Robinson, R. B. (1987). The impact of grand strategy and planning formality on financial performance. Strategic Management Journal, 8(2), 125-134. doi:10.1002/smj.4250080204
Ringbakk, K. (1969). Organised planning in major U.S. companies. Long Range Planning, 2, 46-57.
Schwenk, C. R. (1984). Cognitive simplification processes in strategic decision‐making. Strategic Management Journal, 5(2), 111-128. doi:10.1002/smj.4250050203
Sinha, D. K. (1990). The contribution of formal planning to decisions. Strategic Management Journal, 11(6), 479-492. doi:10.1002/smj.4250110606
Stonich, P. (1975). Formal planning pitfalls and how to avoid them. Management Review, 64(7), 29.
Thune, S. S., & House, R. J. (1970). Where long-range planning pays off Findings of a survey of formal, informal planners. Business Horizons, 13(4), 81-87. doi:10.1016/0007-6813(70)90162-X
Toffler, A. (1970). Future shock. New York: Random House.
International Journal Of Human Resource Management, 13(8), 1299-1310. doi:10.1080/09585190210156521
Wolf, C., & Floyd, S. W. (2017). Strategic Planning Research: Toward a Theory-Driven Agenda. Journal of Management, 43(6), 1754-1788. doi:10.1177/0149206313478185
It’s All Competition to Me: How Nonprofits Navigate the Land of Substitutes
Strategic planning involves a thorough SWOT (strengths, weaknesses, opportunities, and threats) analysis, which includes an examination of threats. While threats can differ depending on everything from industry to political climate, one ever-present threat is competition.
Competitors are not always easy to spot, especially when they are “unassuming substitutes.” For example, while nonprofits related to children, health, and the environment all seem very different, there is often an overlap in funding sources, regardless of a nonprofit’s mission. Through the eyes of donors (one type of nonprofit “customer”) one could argue that almost every nonprofit is a substitute for every other one, making it acutely difficult for nonprofits to distance themselves from one another.
In the for-profit world, a pet supplies company and a hardware company are, for the most part, not competitors. In the nonprofit world, an organization dedicated to helping animals and an organization dedicated to building homes for those in need are likely fulfilling the same need for many donors. Spending $50 on dog food at a pet supply store will not get in your way of spending $50 on a drill at hardware store because these items fulfill different needs. However, donating $50 and 10 hours of time to an animal-focused nonprofit will likely cause you to donate less money and time to the home building organization, if any at all. While there are people that have a special connection to the mission of one organization or another, more often people feel moved by many organizations but can only donate time and money to a few.
In the acclaimed article, “The Five Competitive Forces That Shape Strategy” (2008), Porter writes that an organization must, “distance itself from substitutes through product performance, marketing, or other means” or else suffer in terms of profitability and growth. Substitutes, however, can be easy to overlook. Porter’s book On Competition notes that, “[Substitutes] may appear to be very different from the industry’s product: To someone searching for a Father’s Day gift, neckties and power tools may be substitutes” (1998). If many nonprofit organizations fulfill the same needs for donors, how are they to differentiate and distance themselves from the competition?
One solution lies in the reasons people donate time and money. Network for Good (How to get donations, 2015) lists 14 reasons why people give money, noting everything from self-image to memorialization, while National Council for Social Service (Why volunteer?) lists reasons that people volunteer time, including making a difference and enhancing a resume, among others. While the reasons listed may seem obvious, donor or volunteer motivation can easily be overlooked. Nonprofits often emphasize the power of their mission statement and the impact of their programming to get donors. While important, many nonprofits have moving missions and effective programs, so those elements alone are not enough to differentiate a nonprofit from its competition.
Nonprofits can distance themselves from one another by tapping into specific donor needs. For example, Livestrong capitalized on the fact that people donate to enhance their self-image and feel part of a group. Donating, however, is often anonymous, so in exchange for a Livestrong donation people received an expertly marketed yellow wristband—a unisex item that can be worn daily. To date, over 80 million wristbands have been sold, meaning over $80 million in sales for the Livestrong Foundation.
There is another type of competition that you might miss if you don’t look closely, invisible competition. Kenneth Fox of The Soundings Group, LLC discusses this idea in his article, “Invisible Competition: Think Differently.” Fox defines this term as, “When two seemingly disparate companies or organizations, often representing different industries or product categories, form an alliance or joint venture to create a new and different type of product or service offering.” For example, look at the partnership formed between Colgate-Palmolive and Nestle to develop a line of oral care gum. The gum is both a confection that fulfills all the needs someone has for gum but also fights plaque, whitens teeth, and freshens breath, fulfilling the needs someone has for mouth wash. In the nonprofit sector “invisible competition” can also be viewed by the different categories an organization can fall into and needs it can meet. One organization can fulfill education, arts, and health and wellness, for example.
Whether your organization is a startup or well established, having a direct competitor emerge can be hard to handle. When you identify a clear competitor, you must define your point of difference. Competition requires organizations to get specific, particularly about areas like target market and mission. One way for organizations to competitively position themselves is by writing customer personas—donors, volunteers, and participants. Creating these personas can help you identify who your true competition is and where your weak spots are. You may find that people you thought were your competition actually have a very different customer base.
In the social sector, you’re competing for much of the same funding. No matter how different organizations seem, they may all satisfy the same need for donors—doing good. This is why it’s important to think outside of the box when it comes to your organization’s competition. Why should someone invest in your organization instead of your competitor’s? What makes your organization that much better for society? Who are your indirect competitors?
When it’s time for you to complete your next strategic plan and you sit down to do a SWOT analysis, think about your competition in a new way. It won’t just allow you to create a more effective plan, it will also encourage you to innovate and give your organization a competitive edge.
Porter, M. (2008). The Five Competitive Forces that Shape Strategy. Harvard Business Review, 86(1), 78–93. Retrieved from http://search.proquest.com/docview/227792464/
Porter, M. (1998). On competition. Boston, MA: Harvard Business School Publishing.
How To Get Donations, 14 Reasons Why People Donate. (2015, October 06). Retrieved from https://www.networkforgood.com/nonprofitblog/how-to-get-donations-14-reasons-why-people-donate/
Why volunteer? (n.d.). Retrieved from https://www.ncvo.org.uk/ncvo-volunteering/why-volunteer
Latest New from The Hill Group
Pallitto named by Consulting Magazine as a Rising Star
We are excited to report that our own Jordan Pallitto was honored as a “Rising Star of the Profession” in the newest issue of Consulting Magazine. Thirty-five professionals under the age of 35 from large and small firms all across the country are highlighted annually for their contributions to leadership and client services across industries. Read More
Hill Group CEO, Dr. Chris W. Brussalis, featured on the The Scroll of Phi Delta Theta
Dr. Chris W.Brussalis was featured on the cover of The Scroll magazine as the President of Phi Delta Theta International Fraternity. The article highlights how his bold vision and strategy expertise helped to transform the organization over the past decade and outlines his plan to lead the fraternity to greater success. Read More
The Hill Group welcomes Dayna Sear to the firm as a Senior Consultant. Dayna specializes in public and private sector business start-up and turnaround. With over 30 years of diverse leadership experience, she has held executive positions as CEO, Executive Director, Program Director, and Strategist in the arts, education, philanthropy, investment and insurance, and social service industries. Passionate about arts, business, and education, her thesis regarding creative education and workforce development was published as a book in 2010 entitled, Educating in the Creative Age. Dayna holds a Bachelor of Science in Economics from Allegheny College, Master of Business Administration from Clarion University, Master of Arts in Arts Administration from Goucher College, Certified Masters in Dance Direction from SUNY Buffalo, attended the Nonprofit Management Institute at Stanford University, and recently received certification in Mergers & Acquisitions from one of the most prestigious business schools in the world, the Columbia Business School Executive Education.
Brussalis Elected to University Board of Trustees
President & CEO, Dr. Chris W. Brussalis, of The Hill Group, was recently elected to the Point Park University Board of Trustees.