S t r at e g i c G o v e r n a n c e f o r S t r at e g i c O r g a n i z at i o n s : Pa r t 2
This four-part series is focuses on building strategic capacity and governance.
Lessons in Strategy from
Companys success despite market turbulence is
by Reed Henderson
I
t is widely accepted that strategic considerations should
be the primary focus of nonprofit boards of directors and
executive staff. Most organizations have conducted strategic
planning processes with their boards. But, all too often, this is
an exercise that is isolated from the ongoing work of the board.
As discussed in part one of this four-part series, I have worked
with several organizations to take a long, hard look at their board
meetings agendas and minutes. Ultimately, the majority of them
indicate that 80 percent of board time is focused on operational
matters that relate to current day-to-day performance. Often
contrary to leaders perceptions, very little time is spent
navigating emerging trends and challenges, or preparing the
organization to meet them.
When the focus is placed primarily on reacting to the challenges
of today, the only assurance an organization has is that there
will be new challenges to confront tomorrow and in the following
days. A strategic orientation shifts the focus from managing
todays problems to anticipating future events and planning to
successfully address them as they arise.
Strategy Is a Deciding Factor
Very little is written about the application of strategic principles
in nonprofit organizations. It is difficult to identify examples
that can serve as models for others to follow. However, a book
describing the turnaround of the Ford Motor Company provides
a clear example of how an acute focus on strategic goals and
objectives can have significant positive impact.
The book, American Icon: Alan Mulally and the Fight to Save
Ford Motor Company, was written by Bryce Hoffman, a reporter
for the Detroit News.1 Alan Mulally was recruited in 2006 to
revive the company, which, like other American automakers,
suffered serious setbacks when the economy declined and
foreign automakers took a greater share of the U.S. market.
Under Mulallys leadership, Ford prevailed as the most profitable
automaker in the world, while other automakers sought
government bailouts and filed for bankruptcy.
How was Mulally able to accomplish this? The answer is
deceptively simple:
clear goals and objectives focused on the problem at hand,
a strategic understanding of the industry, and
an ability to accurately predict future conditions.
Objectives Make Goals Attainable
At the time of Mulallys appointment, William C. Ford Jr., the
companys chairman, identified three goals that needed to
be accomplished:
return the company to profitability,
achieve a competitive share price and dividend, and
restore the brand identity to its previously-held position
With clear direction from the board, Mulally identified six
objectives that must be met to achieve the three goals:
build cash reserves of $15 billion (ultimately $23 billion) to
allow the company to weather the storm and make targeted
investments in long-term viability,
temporarily eliminate dividends to guarantee that all available
cash is directed at assuring the future of the company,
limit production to market demand to eliminate expenses
associated with manufacturing models that are inventoried
because they cant be sold,
downsize operations to production requirement levels to
adjust production costs to market demand,
eliminate management silos to increase effectiveness by
eliminating redundancy and encouraging the collaborative
use of resources, and
sell off non-Ford brands to focus attention on Ford products.
Mulally believed that achieving these six objectives would assure
Fords future and propel it toward meeting the three big-picture
goals laid out for him by the chairmanand he was right.
Ford Motor Company
example for nonprofit organizations
Takeaways for Nonprofit Organizations
As Bill Vlasic reported in the March 16, 2013 edition of the New
York Times, Ford survived without federal help and has thrived
since, posting pretax profits for 14 consecutive quarters through
the end of 2012, while improving revenue and market share.2
I think this example includes several lessons that can be applied
to nonprofit organizations, including those in the Alliance for
Children and Families network.
Goals. The goals put forth by Fords chairman are few in
number and they are unambiguously clear. They provide a
high-level focus for the entire company, not individual pieces of
it. Each has an impact on the entire organization. They address
immediate challenges the company was experiencing, but in the
context of the desired future state.
Measurable Objectives. There is clarity in how the objectives
relate to the goals. The results to be achieved can be clearly
measured, and benchmarks can be established to measure
incremental progress. If progress isnt being made, corrective
action can be taken before significant deviation occurs.
Future Focus. The goals and objectives all relate to assuring a
future state of affairs. The strategies are not intended to resolve
an immediate problem in isolation from longer-term interests.
Immediate challenges are addressed in the context of creating a
long-term solution.
Products. Not all products and services have relevance to the
future, even though they have had meaning and value in the
past. While there was a sound rationale for acquiring non-Ford
products earlier, it came time to relinquish them in the interest
of strengthening brand identity. Maintaining programs and
services for historical or emotional reasons can jeopardize an
organizations future viability.
Organization Structure. Each organization must constantly assess
its structure and be prepared to change it to increase efficiency
and effectiveness. Static organizational structures limit future
effectiveness. During any strategic planning process, board
directors should ask whether or not the organization is set up in
the most effective way to achieve its specific goals and objectives.
Effective strategic plans are big, bold, and include some level
of risk. Alliance member organizations are not as large as the
Ford Motor Company, and their products and services are
very different; however, the Fords story tells us that strategic
planning can provide a very valuable road map when trying to
navigate uncharted territory. n
ENDNOTES:
1. American Icon: Alan Mulally and the Fight to Save Ford Motor Company
by Bryce Hoffman was published by Crown Business in 2012.
2. The article Ford Chief Benefits From Auto Comeback, which was
published by the New York Times March 16, 2013, is available online at:
http://www.nytimes.com/2013/03/16/business/another-lucrative-year-
for-car-executives.html?_r=0.
Reed Henderson is a consultant whose primary
interest is strengthening the strategic capacity of
nonprofit boards and executive staff. Comments
and questions can be directed to him at
reedhenderson@verizon.net.
A L L I A N C E 1 . O R G / M aga z ine 2