Leading and the Downturn - Part 3
Strategizing in the midst of today’s turbulent economy can be a thorny problem for independent school boards of trustees and administrators. Gaining any sort of accurate sense of the future is so challenging that one could end up simply concluding that now is not the time to plan. That would be a big mistake! Avoiding planning runs a dual risk—on the one hand it leaves the school rudderless in a stormy sea, and on the other it may cause the school to miss some very real opportunities.
A better approach would be to acknowledge that, while the future is never truly certain, tomorrow looks much less knowable than we might like. Then, fully embracing uncertainty, the challenge is to map strategies that serve the school well in multiple scenarios, plus a back-up strategy in case conditions deteriorate even more. The key to doing this is in understanding the four most likely future economic scenarios: The “V”, The “U”, The L”, and The “W”.
A monograph from Deloitte contains the figure reproduced below that illustrates the economic trend line over time that is associated with each letter. The most optimistic model is The “V”, wherein the recession is short and recovery complete. More gloomy are The “L” and The “W”, both of which suggest prolonged pain.
What would each scenario mean for your school? What effect could it have on your admission funnel or annual and capital campaigns? As you think about how strategy might look different given each scenario, what common elements seem to appear in each version?
Next, working from an inventory of the resources your school has for delivering on its mission (resources, in the nonprofit context, means something different than when this term is used by a corporation), gauge whether each fits the common strategic elements from the above analysis. The school’s educational programs, extra-curricular activities, professional development opportunities, parent education sessions, and so forth all qualify as resources. So, too, does its cash on hand, liquid reserves, and invested endowment.
The basic idea is to determine whether implementing strategy requires acquiring, diverting, avoiding or maintaining resources (see the table below).
Strategizing and decision-making are easy when there is no relevance to any scenario or there is solid relevance to all scenarios (V, L, U & W). The tricky part is when there is relevance to one or two of the scenarios, but not across the board to all. As an example, let’s say that the school’s new learning support program for special needs students is a competitive advantage if the downturn is brief (the V and U scenarios), but quickly becomes a costly burden if money stays tight for a longer time. In that case, families will likely accept whatever learning support is available in the local public district and thus depart your school for good. The best option in this case might be to scale back or limit new investment in the learning support program until it becomes clear which h scenario will play out.
Similarly, assume your school lacks quality athletic facilities, and has previously identified these as being important for future enrollment growth at the high school level. The facilities are an asset under the V scenario, but become less attractive if it’s a W. Therefore, the best approach might be to take some preliminary steps that leave your options open—such as purchasing some land, but holding off on construction—until the situation clarifies or stabilizes.