When ‘strategic causality’ was introduced in an earlier post, it was described as “how causes lead to effects“. Of course, all reflections on strategic planning and decision-making have that recurring theme. Hence, my posts on strategic archery, evaluation, and reflective governance can be seen as background reading for this post (see links below).
Dependencies and Variables: Causes and Effects
It would be unexceptional for non-profit boards to say that ‘achievement of our strategic goals depends on our successful use of interventions’. To help us to explore strategic causality though, let’s express this another way:
‘Strategic evaluation requires that we assess the dependent variable effects of our manipulation of independent variable causes.’
This reframed version is summarised in the header chart, with independent and extraneous variables (matters we control and those we don’t respectively) causing outcomes we strive to align with our objectives.
Dependencies and variables each come in many different forms, and this can lead to some confusion for directors and managers who are unfamiliar with these concepts.
Dependencies in strategic planning and project management are factors or tasks that depend on the input of another factor for their timeline, stability, and efficiency. These dependencies can also take several forms and so they are described in different ways, as illustrated in the charts below.
Further examples of ways in which dependencies may be considered in the governance and management of your non-profit are highlighted in the set of four dependency matrices illustrated below. Each of these uses a simple 2X2 quadrant chart to consider the relationships between two factors, namely:
- importance to purchasers and importance to suppliers
- buyer power (utility and scarcity) and supplier power (utility and scarcity)
- the focal organisation’s dependency on stakeholders and the stakeholder’s dependency on the focal organisation, and
- freedom and responsibility
You may wish to analyse other pairs of ‘dependency factors’ relevant to your non-profit using this approach.
What’s constant and what’s variable?
In research theory, the research question or problem statement drives all other parts of the research plan. Applied to the evaluation of non-profit initiatives and interventions, the indicators selected to assess performance should likewise focus on the question or problem directors (and stakeholders) need addressed. In doing so, they should also distinguish between things that remain stable and things that are subject to change.
A constant always has the same value, whether it be qualitative or quantitative. In the context of non-profit governance, it could be argued that the purpose and values of the organisation are enduring and that these should therefore be recognised as constants. While that may generally be true, the purpose of an organisation can change over time. Such change may be due to the changing needs of its stakeholders, but may also be attributed to regulatory or other external factors.
Likewise, different values could be included or excluded in the list identified in the organisation’s strategy as directors reflect on what is most important in their work and relationships. Examples here are the recent inclusion of ‘diversity‘ and ‘sustainability‘ in many lists of non-profit values.
The legal structure and tax status of your organisation could also be considered a constant, except for example, where you choose to change your status by becoming registered as a charity, or as a company limited by guarantee (where previously you were an incorporated association).
A variable has a value (qualitative or quantitive) that is different for each question or problem. At the risk of stating the obvious, a variable is something that may or does change, i.e. a variable feature or factor. Variables can be classified in a number of ways, some of which are illustrated in the chart below.
Strategic choices – variables
When deciding which priorities to address in your strategy, you are of course selecting which things you propose to change (having identified the need or problem) and deciding how that change will be achieved (your response or the solution). While those ‘need and response’ elements of the strategic planning process were captured in the schematic accompanying the original post on strategic causality, some other elements were not included.
The updated version of the schematic appears below in the form of an animated gif. This new version highlights the benefit (outcome) dependencies associated with your intervention or initiative, along with the (independent) variables you will be targeting as the means by which to achieve your strategic ends (dependent variables).
As there is a lot of detail in this elaborated version, you may wish to take a screenshot to examine all of the elements more closely, and to reflect on their implications for your governance responsibilities. (To minimise file size, the loop runs for about 20 seconds, with only 5 seconds for each layer to be revealed.)
Other factors
When we are updating our strategies, we recognise that there are various external environmental factors that create the context in which we work. Those factors include circumstances that are stable and predictable, and others that are changeable, or variable. External or extraneous variables may arise from:
- deliberate overt or covert action by external parties
- cyclic or seasonal developments or
- unexpected and coincidental circumstances.
Internal factors that also have to be considered include the legal powers and ethical obligations of the organisation, stakeholder needs and perspectives, resource limits, risk management, and infrastructure, amongst others. Internal variables may change due to:
- reallocation of resources
- obtaining new or additional resources (e.g. staffing changes)
- developing new skills and capabilities, and
- other modifications determined by directors or managers
Measuring and evaluating success
Our strategic plans take into account all these contextual factors when prioritising and selecting the set of ends (strategic outcomes) to be achieved by means of specific changes (strategic initiatives). When the goals for those initiatives are set, we seek to frame them in a way that allows us to know when they have been achieved. Indicators are identified for each goal, along with criteria by which to evaluate the extent of the success achieved.
A Key Performance Indicator is a measurable value related to something over which the organisation has control, that demonstrates how effectively it is achieving key business objectives.
Corporate versus CEO performance
In the process of developing strategies and/or a set of performance indicators, governing boards generally identify matters which are:
- beyond their control (context)
- matters which they can influence, and
- matters they can control directly.
Not all boards recognise the difference between these three categories, and this sometimes leads to unreasonable indicators being included in performance plans – whether for the organisation, or for its management team.
It sometimes seems that the CEO is expected to treat the organisational strategy and its associated indicator framework as their personal performance plan, despite the board itself bearing some responsibility for the organisation’s performance. Certainly, much of the strategy does need to be reflected in a CEO performance plan, however, these two documents should read more like a Venn diagram than a mirror of each other. For that matter, many of the outcomes sought in a strategy will involve multiple contributors, each of whom plays some role. In some cases, the team (or board itself) should be the accountable party.
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