Strategic Leadership|Strategic Position: The External and Internal Contexts
As we begin to analyze the idea of strategic position, it is important to
emphasize that strategy is an iterative process. The same topics may be
considered several times in different contexts before taking form in a written document. In terms of chronological order, for example, the assessment of an
institution's position in its environment might logically be done before a vision is
created. Without defining the institution's external context, how can one project
its best possibilities? But it is equally true that the meaning of trends in the external world can only be understood with reference to the organization's identity,
mission, and vision. The tasks of external analysis and internal self-definition
stand in reciprocal relationship to one another. Thus, there should be continuous
connection among the different steps in a strategy process, especially when it is
driven by the integrative orientation of strategic leadership. Findings are subject
to revision and reformulation as the work proceeds. The image of a spiral rather
than a straight line best captures the process.
STRATEGIC LEADERSHIP AS A DISCIPLINE OF CHANGE
Echoing ideas presented in our earlier review of leadership, James MacGregor
Burns keeps us riveted on the centrality of change: "Of all the tasks on the work
agenda of leadership analysis, first and foremost is an understanding of human
change, because its nature is the key to the rest" (2003, 17). We find once again
that the leadership perspective takes us below the surface of events to seek their
deeper significance. Just as it is with narratives, values, and vision, so is leadership
also preoccupied with change. Each of these concepts provides a depth dimension to the strategy process that helps it to see human and social realities that are
156 Strategic Leadership
hidden in the segmented steps of strategic management. In this chapter we shall
focus on the external forces of change, and in chapter 12 on intentional change
within the institution. When strategic planning functions at its best, it often
reaches the level of leadership tacitly by making sense of change systemically and
by creating a compelling agenda for action.
Change and the Paradigms of Human Agency
We should recall from our earlier discussion of paradigms that a discipline of
strategic leadership requires a conceptual framework that can effectively interpret
the meaning of change. We encounter again the fascinating and central question
of how academic organizations and the professionals who inhabit them should
think about their work in relation to change and external realities. Once more,
thinking about the presuppositions of our own thinking becomes a preliminary
step in understanding strategic leadership as a discipline of change. Organizations
devoted to learning need to become learning organizations.
In its purest form, the teleological assumptions in the paradigm of the academy
define the highest good as a self-sufficient world of ideas where change does not
really exist. In such a perspective, the university is the place where a collegium
of scholars sets unchanging standards of excellence for a scholarly community.
Although this model creates a powerful narrative of meaning, it cannot create
an understanding of the nature of change and how to respond to it. Change falls
outside its systems of significance and intelligibility.
The concepts that change can improve things, that innovation is able to
enrich tradition, that initiative is possible, and that discontinuities offer new possibilities all belong in a different order of thought. These perspectives all fit with
the master image of responsibility. As we have seen, this paradigm of thought is
rooted in the capacity of human agents for intelligent response, adaptation, and
initiative in coming to terms with the changing field of forces in which they live
(Niebuhr 1963). The motifs of responsiveness and response-ability take us into
a world of thought that illuminates the ways that leadership functions strategically in response to the reality of change. Effective leaders seek to anticipate and
understand change creatively and congruently, all in dialogue with a community
as they together choose a direction for the future.
THE ENVIRONMENTAL SCAN
If strategic leadership is to respond effectively to change, it needs a set of disciplinary tools, not just models of thought. It has to find appropriate ways to grasp
the realities of change in the wider world. In the standard practices of strategic
planning, this is called an environmental scan. As we have seen in other contexts,
strategic leadership must try to turn the insights about social and historical forces
into occasions for self-understanding. Ultimately, an understanding of change
outside the institution has to be transformed into intentional change within it.
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The first step in that process requires a disciplined method to discern the driving
forces in the wider world.
Ironically, the strategic plans of many institutions, especially of smaller colleges, often offer little, if any, serious analysis of the realities of their context.
When they do, they often contain a long and fragmented list of events, data,
trends, and contingencies that may or may not have a significant bearing on the
institution itself. In another common approach, strategic plans often describe in
general ways the unprecedented pace of technological and social change, but its
implications are not translated into an agenda of intentional change. The lack
of focused attention on the meaning of change represents a void in the fabric of
strategy development.
There are good reasons to be cautious about environmental scans, but not
enough to abandon them. Like strategy development itself, everything depends
on how it is done. To be sure, they often misfired in earlier generations of strategic
planning, frequently because they tried to predict the future. Fifteen years ago, for
example, planners inside and outside of the academy knew for a fact that information technology would make most brick-and-mortar universities obsolete by the
early twenty-first century. Both in higher education and the corporate world, the
enthusiasm for futuristic thinking dims when it tries to predict specific events and
trends and their precise impact on an organization. Whatever else it may be, the
future is inherently uncertain.
PEEST
The proper diffidence about prediction should not, however, discourage a disciplined approach to reflection about change. The aim should be to develop a
multidisciplinary capacity to think systematically about the meaning and direction of trends that have already appeared, and that are inescapably shaping the
institution's future. Technology, for instance, may not replace fixed-site universities, but it is transforming the practices and capacities of education within them.
The capacity to assess systematically the future consequences—the futurity—of
inexorable driving forces such as technology becomes an essential dimension of
the work of strategy, especially as a method of leadership.
To analyze the forms of change, many institutions use a strategic approach
that has come to be called the PEST method, which is an acronym for the basic
categories of political, economic, social, and technological trends. Depending
on the industry, organizations may add other trend lines. Natural resource and
manufacturing companies would be shortsighted not to add environmental
trends to their list of domains to watch closely. Educational institutions should
obviously include educational trends within the set of realities to which they
must respond. Thus, we have PEEST as an acronym for an environmental scan
for higher education. Already apparent is the need for flexibility in devising the
factors to analyze continuously. If the PEEST categories strike the members of
a planning team as too limited or artificial, they can and should define a set of
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classifications or issues that are more illuminating for their work. The groupings
are simply a device used to focus on the characteristics of change and to think
systematically about them (cf. Bryson 1995; Rowley, Lujan, and Dolence 1997;
Sevier 2000).
The systematic collection of information about external influences becomes a
precondition of effective strategy formation. In large institutions, planning and
research staffs are available to spearhead the effort, while in smaller colleges the
task can be divided among several offices. In all cases, the work is substantially
assisted by sources of analytical and quantitative information that are readily
available. National educational associations, regional consortia, and state and
local governments are repositories for data, as are periodic special projects on
higher education's future. Needless to say, publications devoted to higher education offer timely and easily available trend analyses. The World Wide Web gives
access to dozens of other possibilities for accessing information, both about higher
education and other spheres of activity, including a wealth of comparative information from IPEDS, as noted in chapter 5 (cf. Morrison and Wilson 1997 for an
excellent list of sources).
A PEEST Illustration
To make the issues more concrete, we shall use an abbreviated PEEST analysis
to display some of the trends and challenges that institutions of higher education
are facing. Even though it is intended only to be illustrative, our exploration
will allow us to draw several general conclusions about the prerequisites of
environmental scans within a process of strategic leadership (cf. Alfred et al.
2006; Newman, Couturier, and Scully 2004; Yankelovich 2005).
In the early years of the twenty-first century it has become clear that higher
education is being shaped by:
Political Forces:
• Accountability and assessment: steadily increasing regulatory controls and
demands for accountability by state and federal governments, including the measurement of student performance and debates about educational policy driven
by sharp ideological divides
• Strained federal resources: a likely restraint or reduction in programs of federal
student assistance and support of basic research that accompanies massive federal
deficits looming far into the future and exploding entitlement and defense costs
and uncertain tax policies
Economic Forces:
• Declining state resources: erratic and uneven financial resources for higher
education, accented by uncertain economic growth, volatile equity markets,
and gyrating support from state governments, in a general pattern of long-term
decline in public revenues as a proportion of total university income, accompanied by a strong pull toward privatization
Strategic Position 159
• Global economic competition: the globalization of technology and the economy
in an interconnected world with the constant outsourcing of U.S. jobs, creating
pockets of unemployment and stagnant middle incomes
Educational Trends:
• Expanding and uneven educational access and quality: the steady expansion of
participation in higher education by people of all ages to unprecedented levels,
accompanied by sharply uneven access and quality, with a heavy emphasis
on professional and vocational programs and the loss of centrality for liberal
education
• Affordability: the continuing escalation of the price of higher education at rates
well above inflation and increases in family income, creating a permanent and
deepening structural problem of affordability
• Engaged learning: a growing focus on engaged, active, and participatory forms
of student learning with inconsistency in application
• Market-driven and global competition in higher education: an ever-increasing
competitiveness in education, propelled by market-driven realities, including
new (often proprietary) providers of education; distance learning; the globalization of higher education and research, especially in science and technology;
differential pricing through tuition discounting; and various forms of resourcedriven entrepreneurial activity and competitive improvements to facilities and
programs
• Rapid expansion of knowledge: a continuing explosion of new knowledge, with
the power to shape the economic future and well-being of human life, both in
individual and collective terms
Social Trends:
• Internationalization: the continuing and profound impact of global cultural and
political interaction in both positive and virulent forms, with a profound impact
on curricular content and programs (languages, area studies, cultural and religious studies)
• Diversity and demography: continuing growth in social and educational diversity, increasingly driven by immigration, and in rising overall high school age
cohorts until 2010, when declines will begin in some regions
• Public criticism: widespread public doubt, anxiety, and ideological debates about
the cost and the quality of higher education
Technological Change:
• Technological transformation: the deep, wide, and continuing global, educational, and administrative impact of information technologies, including the
rapid growth in distance learning
Using the Environmental Scan
What becomes of the potential mountain of information that is gathered on
these critical educational and other trends? The PEEST categories should provide
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a framework for integrative and systemic thinking about the institution's context,
and for the eventual preparation of a summary analysis of its position. The effort
should move systematically by means of statistical and content analysis from
specific data points, trend lines, and events to the patterns and driving forces that
they reveal. The trends spelled out here represent a powerful set of pressures and
opportunities, some of which are approaching end points where change becomes
systemic. The problems related to the affordability of higher education are of this
kind. At the same time that concern is focused on external realities, there should
also be an effort to find connections, themes, and structural relationships in the
trends that are most significant for a particular institution. Achieving this level
of integrative analysis requires an institution to have full command of its story
and identity, its mission and vision, and its management information systems and
strategic indicators.
As it makes these connections between the worlds outside and inside the
academy, the institution is able to construct its own set of contextual issues and
priorities; in effect, it builds a watch list of critical variables and relationships
that will determine its future. Those insights about the forces of change with
the highest leverage will become critically significant as it goes on to define its
strategic position through an analysis of its strengths and weaknesses and its
opportunities and threats.
Brief examples will show how the PEEST process should develop a particular
center of institutional gravity. Within the sphere of social and political trends, for
example, it may be the demography of regional high school graduates, changing
federal financial aid policies, and family income patterns that will matter most to
institution A, a small regional private university. It follows these trends in depth
and develops systematic quantitative analyses because it knows that its tuition
increases cannot exceed wage and salary growth in its recruitment area. For nearby
institution B, a state university with a large variety of professional programs, it will
be patterns and trends of adult educational participation that should receive the
most attention. They are heavily influenced by the tuition assistance policies
of local businesses and the increasing competition from proprietary institutions
and distance-learning providers. They will need to follow employment patterns
and policies closely. Across the state, a large research university, institution C,
is preoccupied by trends in federal and private funding of scientific research and
instrumentation, which are the keys for its overhead income, and its recruitment
of graduate students, who also serve as laboratory instructors. It sharpens its abilities to follow and influence trends in Washington, D.C.
The results of the same PEEST process should look very different in these
institutions, as each tailors it own analysis. It becomes clear that broad categories
like "social" or "economic" are basically markers for the exploration, differentiation, and connection of the most relevant trends. As much as anything, an
environmental scan is important because it intensifies and deepens the process of
self-knowledge that is at the heart of effective strategic leadership. The institution's identity is sharpened as it sees itself over against trends in the wider world
Strategic Position 161
and at other institutions. Participants in the process also learn to question their
own arrogance and defensiveness as they come to see that the future guarantees
nothing, even to the secure and to the virtuous. By promoting thinking in new
ways about change, the work of strategy creates new sensitivities and patterns of
cognition to grasp emerging threats and opportunities that differentiate a responsible learning organization.
Strategic leadership has to do with ways to reconceptualize the presuppositions
of collegiate decision making itself through the model of responsibility. Sustaining academic integrity precisely in a world of market-driven competition is an
increasingly demanding challenge for today's colleges and universities. Both as
to purpose, which is understanding change, and as to method, which is informed
collaboration, an environmental scan is an important component of strategic
leadership. Its aim is to show what truly matters in the forces that affect the
organization and to reveal possibilities that will energize people to come to terms
with change.
In sum, institutions of higher learning need to learn to worry coherently and
creatively about the field of forces that impinge on them. In his study of six
extraordinary university presidents (Hesburgh, Friday, Kerr, Gray, W. Bowen, and
Slaughter), Arthur Padilla (2005) finds precisely this capacity for systemic thinking to be one of the distinctive characteristics of their leadership. He calls it "an
'aerial' or global understanding of the relationships among different parts of the
enterprise and the larger environment" (2005, 255).
Collaborative Strategic Learning
Several other compelling results flow from the analysis of an institution's context
through the perspective of collaborative strategic leadership. As persons serving
on an SPC or one of its subcommittees are immersed in the same data and engage
in a genuine dialogue about trends and realities, something important often occurs
in the dynamics of the group. Unless it is spoiled by adversarial conflict, a sense
of shared reality, trust, and solidarity takes hold among participants. As people
receive the same information and share thoughtful interpretations, they come to
see themselves in a common situation. Barriers between people are lowered, and
the great divide between faculty and administrators recedes. An environmental
scan becomes a pivotal occasion for collaboration, for learning, and for thinking
coherently about problems that hitherto were disconnected.
Competitor and Constituency Analysis
The world of higher education is defined not only by change but also by key
relationships and competition, which need to be assessed strategically. As we have
seen, strategic governance is not limited to the tension between the administration and the faculty but involves relationships with constituencies and stakeholders that have a variety of different expectations (Alfred et al. 2006; Rowley, Lujan,
and Dolence 1997).
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A process of strategic leadership offers colleges and universities a chance to
do something that they often do not do well, which is to listen. What they hear
may be distortions or resentments based on emotion or limited information, or
complaints that serve political or self-interested agendas, yet the voices of dissent and criticism need to heard. They should be drawn into the institution's
self-understanding and become the occasion for hard thinking about its strategic
position. The widespread perception that universities arrogantly resist change and
are unresponsive to the public's needs casts a dangerous pall over all institutions,
whether or not they are guilty as charged. Institutions can use the strategy process
to register critiques from their constituencies that they must address. By considering the issues strategically, they can move them to a higher plane of significance
and make them an appropriate part of their agendas.
Every college or university is more or less conscious of its competitors, although
they are typically so numerous and so diverse that intense bilateral rivalry is
more the exception than the rule. As we have suggested previously, an essential
dimension of strategic self-understanding comes from the comparative analysis of
benchmarks, strategic indicators, programs, and capabilities. Organizations know
themselves best when they can see themselves through a reflexive comparative
lens. It is impossible to understand one's own strategic identity without competitor analysis since strategy has to do precisely with one's position relative to
others. Alfred et al. (2006) spell out many of the factors needed to assess competitive position, including (1) cost, (2) convenience, (3) form of program delivery,
(4) quality, (5) innovation, (6) systems and technology, (7) networks with other
institutions, (8 ) administration and governance, (9) culture, (10) reputation,
(11) resources, and (12) distinctiveness.
Competitor analysis leads in many directions. It may help to reveal and to
define the need for a long-term commitment to increase donor support or show
that salaries must become or remain competitive with a group of peers. In some
cases, the competitive analysis is pointed and specific and leads to the construction of new facilities or to the introduction of a new program of scholarships. If
an institution comes to believe that its competitive position is being challenged,
it often will try to move heaven and earth to keep its place.
SWOT ANALYSIS: STRENGTHS AND WEAKNESSES
Based on experiences in strategic planning seminars on both sides of the Atlantic, I would conclude that if anything is always associated with strategic planning,
it is the SWOT analysis. The analysis of an institution's strengths, weaknesses,
opportunities, and threats (SWOT) is itself a form of integrative thinking that
describes an institution's position in the world. If it is done well, it achieves an
insightful synthesis of the internal and external realties that define an organization's possibilities. Scanning the environment with a focus on what matters
most to a given institution prefigures some of the tasks of an effective SWOT
Strategic Position 163
analysis. The scan describes what is happening in the outside world, and the
SWOT analysis makes sense of it at home.
A SWOT analysis does several important things. It picks out those features of
both the context and of the institution that represent threats and opportunities,
strengths and weaknesses. As it does so, it turns outward to focus on threats and
opportunities, and inward to examine its strengths and weaknesses. But in both
cases, the analysis is relational and contextual. One college's threat is another's
opportunity. Similarly, the strengths and weaknesses of an institution have greater
or less salience depending on external trends.
A SWOT workshop early in a strategy program can be especially useful. It
provides an opportunity for participants to begin to share insights based on
the institution's story and vision and its strategic data. Based on the findings
of the environmental scan, the development of lists of strengths, weaknesses,
opportunities, and threats can be a productive exercise as a first step in the process
(cf. Bryson 1995).
Let us look first at ways of analyzing strengths and weaknesses, and subsequently
threats and opportunities. Colleges begin the task by reviewing a list of institutional elements like the one included in our framework of the strategy process in
chapter 4. As we review the typical components, we find that tangible resources
are of critical importance, starting with the organization's financial resources and
its space and place both with regard to the nature of the campus and its facilities
and its geographic location, either as resources or deficiencies, or often as both.
Other tangible resources such as technology, equipment, and collections also differentiate an institution's capacities. Human resources are at the core of an academic organization's ability to create value, including the capacities of faculty and
staff. Relative levels of scope, quality, and achievement have to be assessed concerning educational programs, including the curriculum, teaching and learning,
research, and student life. Systems and processes—especially those concerning
admissions, enrollment, image, constituency relationships, and fund-raising— are
critical success factors, as are the mechanisms of governance and decision making.
Organizational culture includes strengths and weaknesses regarding campus relationships, values, community, and identity. As a point of departure, it is logical to
create and debate lists of strengths and weaknesses around these elements (Alfred
et al. 2006; Sevier 2000).
But one must be cautious. Strengths and weaknesses come in many forms, some
of which are relatively trivial or have no particular strategic or competitive significance. Many problems may simply be short-term operational issues or may
represent conflicts over governance or between personalities. A modest operating deficit for one year may not a strategic issue, while the inability to solve the
problem within a specified time period decidedly is. The tendency for negativism
and complaints to overwhelm an analysis is real, so the effort should be made to
move the discussion away from the symptoms of the problem to its causes. The aim
should be to find the distinctively strategic and structural forms of vulnerability
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and opportunity, of capacity and incapacity. What forms of strength and weakness
go to the distinguishing and defining characteristics of the organization? What
propels or impedes its ability to compete effectively for resources and talent to
fulfill its mission? Where are the real points of leverage? Using contextual analysis
and relational thinking, the focus should be on the strategic fit between an organization and its environment.
A good SWOT process produces a substantial amount of organizational learning. In particular, those leading the process have to be sensitive to whether people
are able to understand the connections between issues, and to see that strengths
and weaknesses and are part of an interdependent system of relationships.
The learning is not didactic but involves new levels of awareness and enlarged
capacities for systemic thinking. In a word, leaders of the process are often
teachers. As Peter Senge puts it, "Leaders are continually helping people see
the big picture: how different parts of the organization interact, how different
situations parallel one another because of common underlying structures, how
local actions have longer-term and broader impacts than local actors often
realize" (1990, 353).
CORE COMPETENCIES
Over the past two decades, a variety of novel methods of strategic analysis have
shown their value in business and are now beginning to appear in colleges and
universities. They cannot be drawn into higher education without careful reconceptualization, much as needs to occur with the process of strategic planning itself.
One of the responsibilities of strategic leadership is to ensure that the work of
strategy is enriched by insights and methods that will improve its effectiveness.
We intend to explore two analytical methods that can be used to shape strategic
conversations on campus. One has to do with the analysis of an organization's
core competencies as a way to assess its strengths and weaknesses, and the other
with the use of scenarios to study the impact of future trends. We shall begin
with a look at core competencies and related issues, such as a strategic reading of
organizational assets.
As we pursue an inquiry into strengths and weaknesses, we begin to note that
some of the most significant characteristics are not specific programs or assets, but
broad capacities or abilities that generate a range of strengths and achievements.
A high rate of acceptance into graduate study, for instance, may point beyond
itself to a capacity for excellent faculty advising, to rigorous and imaginative
teaching, or to a set of distinctive pedagogies. Behind a set of specific strengths,
we may discover what students of business organizations have come to call core
competencies, a concept that we have already found useful in exploring mission
and vision (Hamel 1994). Known by many names, these concepts shift our focus
to underlying forms of activity, away from surface characteristics. The concept of
core competencies takes us to the set of skills and abilities that are the source of
the more visible and identifiable strengths of the organization.
Strategic Position 165
In the business world it is not a successful product that constitutes a core
competency, but a distinctive level of skill, ability, and knowledge that
produces market leadership in a whole range of products. Canon, the Japanese
manufacturer of copiers and cameras, for instance, developed a dominant ability in lens technologies in the 1970s. This broad capability can be qualified as a
core competency since it serves as the generative source for a variety of specific
product innovations. Many of the innovations are not even used by Canon but
are components in the products of other companies (Hamel 1994).
Besides being a generative activity or skill, a core competency is also distinctive.
It is hard for others to duplicate, so it represents a powerful competitive advantage.
Much of the management task itself resides in nurturing the development of core
competencies (Hamel 1994).
Academic Core Competencies
The idea of core competencies offers a powerful way for institutions of higher
education to understand themselves and make strategic decisions (Dill 1997).
When seen as competencies, for example, an institution's academic program
shows itself to be a repertoire of capabilities by which it defines itself in a world of
challenge and change. To be sure, specific courses and programs of study consist of
important intellectual assets—subjects, topics, and disciplinary methods that have
been created by academic experts and approved by their peers. Yet at the same
time, a program reveals and depends upon a wide variety of distinctive skills and
abilities possessed by the institution's faculty and its students. These may be distinguishing capabilities or competitive advantages, or they could reach the level
of being a core competency. Consider how the following list of demonstrable and
generative abilities in teaching, learning, and research exemplify the idea of core
competencies in the work of different programs, departments, and institutions:
• Creating consistent innovations in teaching
• Developing new academic programs
• Establishing rigorous academic expectations
• Producing effective experiential and active learning opportunities
• Involving students in research
• Producing exceptional levels of original faculty research
• Attracting and retaining outstanding scholars
• Stimulating high levels of student intellectual maturity
• Building thematic connections among courses and programs
• Creating a rich array of interdisciplinary programs
• Using technology creatively and extensively in fostering student learning
• Building exemplary programs in diversity
• Constructing powerful programs of international education
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• Employing comprehensive and effective ways to assess student learning
• Preparing students for lives of leadership and service
• Decisively raising moral consciousness
• Involving students in the critical and integrative study of original texts
• Contributing to personal religious development
The list could be expanded at length, and many educators could suggest the
names of institutions that have become known in the literature for possessing
one or more of these competencies. They are often part of a legacy of identity
for what a place does best. Strategically, the development and articulation of a
broad academic portfolio of competencies and capabilities creates educational
worth and potentially constitutes the competitive advantage of a college or
university.
The competitive advantages may play out, of course, in an enormous variety of
directions, depending on the mission of the institution. Institutions may display
several core competencies, not all of them limited to the academic domain. The
concept of core competency is not a finished doctrine, but an exploratory lens for
discerning activities and skills that cut across an organization's programs (Cope
1994). Core competencies point back to the identity of the organization and
beckon forward through a vision to renew and innovate in those spheres in which
it has developed particular strengths.
Administrative Core Competencies
The analysis of core competencies applies as well to administrative responsibilities. The process begins again with an effort to single out defining
characteristics, assets, and key operational results. The self-evaluation can
then be brought to a new level of strategic insight as it is translated into a
consideration of core competencies. What are the critical processes and
activities—the distinctive skills and abilities that stand behind exceptional
administrative performance? Of many possible examples, consider the following.
Financial Capabilities
Strong or weak financial capabilities, for example, are a function of many
things, including accurate budget projections, good operating controls, effective data systems, and skillful planning and management. Many institutions
have financial management competencies that achieve levels of effectiveness
and efficiency that set them apart from the competition. They are able to build
and fuel a financial system that stays in equilibrium, and they can both support innovation and generate long-term financial flexibility, even in difficult
environments.
Strategic Position 167
Gift and Grant Capacity
The ability to generate gifts and grants has become a defining strategic issue
for all institutions, whether public or private. Successful institutions, regardless
of the wealth of their constituencies, are those that know how to capture a high
proportion of their potential support. Effective fund-raising is always systemic
because it depends on everything from good organization to a powerful story. The
ability to generate resources has become a foundational core competency at many
institutions, and where it has not, it may represent a lost opportunity or a telling
strategic deficiency.
Strategic Leadership and Campus Decision Making
The flaws and weaknesses that are often noted in campus decision-making
systems and cultures, and that have been described at length in this work, are
not a matter of fate but of capacities that can be changed and improved. No
matter how brilliant the idea or promising the innovation, it will go nowhere
without a method of decision making and leadership that can implement it.
Institutions with ponderous or dysfunctional governance systems mired in distrust are not only wasting time and energy, but they are also damaging themselves by their inability to respond to change. Effective systems of strategic
governance, leadership, and management have become a critical capacity, a key
success factor, in the contemporary world of higher education. Institutions that
can develop core competencies in strategic decision making have a powerful
competitive advantage.
These examples of core competencies from both the academic and administrative spheres could be multiplied in many directions, including the vital area
of student life and co-curricular programs. One of the important methods that
connects the illustrations is the strategic differentiation of strengths and weaknesses in terms of levels and forms of fundamental capacity. There is a natural
strategic order to the logic of self-assessment that judges a program or service to
be (1) deficient, (2) adequate, (3) a distinguishing capability, or (4) a core competency. The process of analyzing strengths and weaknesses can be given more
focus and pertinence by these kinds of distinctions. A strategic weakness is tellingly dangerous when it prevents an organization from mobilizing its capacities
to respond to its threats and opportunities.
Although the differentiated assessment of levels of strength and weaknesses is a necessary step in strategic planning, it is not a sufficient one for
the work of strategic leadership. Seeing strengths and weaknesses in terms
of capacities and competencies brings them within the context of human
agency and choice, opening them more clearly to the influence of leadership.
The shift in perspective empowers people to take on problems that otherwise
seem impenetrable. The chance to develop a set of generative competencies
is deeply motivating for it enables people to take initiatives that include them
168 Strategic Leadership
in a larger process of leadership and responsibility. As the work of strategy
moves from description to action, it implicates motivation, which is achieved
through interactive leadership.
STRATEGIC ASSETS
The analysis of strengths and weaknesses performed in a leadership context
also sets the tone for the assessment of the fixed characteristics and given assets
of an institution that may seem impermeable to change. An uncertain mission,
poor location, and lack of resources typically represent serious weaknesses for the
members of a campus community. If strategic self-analysis makes the weaknesses
seem insurmountable, or if assets and characteristics are only portrayed negatively,
then the results are likely to be counterproductive and dispiriting. As a facet of
leadership, the aim of the analysis should be to create a sense of urgency and possibility by mapping assets rather than just listing weaknesses. To do so the first
step is to create a clear sense of the positive assets that the organization possesses,
including the talent and commitment of its people and the possibilities that flow
from its identity, mission, and circumstances.
Suzanne Morse (2004) describes this orientation to strategic thinking in Smart
Communities, her study of successful community development programs in a
variety of cities. Typically the process of seeking improvements in hard-pressed
cities has started with making a list of the deficiencies and problems obvious to
any observer, from empty storefronts to high crime rates. Although the analysis
of the negatives cannot be ignored, it is not the place to begin or to focus the
inquiry. To dwell on the negative is to create an attitude of dependence and
defeatism. If the process begins with a mapping of assets—with an analysis of the
relationships, organizations, people, programs, and resources that are available
to foster improvement—a sense of possibility and empowerment can take hold.
"The fundamental payoff of this approach comes when people see that they and
their neighbors are capable of taking charge of their lives and the future of their
community" (Morse 2004, 90).
Although the particulars are different, there are parallels between strategic
thinking in colleges and universities and communities. If institutions of higher
learning become preoccupied with what they are not, they often enter a downward spiral of self-doubt and self-judgment that drains off energy and initiative.
They tend to compare themselves with an unarticulated model of prestige that
displays their deficiencies and blocks an appreciation of what they are and might
be. If, however, the process of self-analysis is oriented by strategic leadership, it
uses the logic of self-affirmation and possibility. It begins by defining its assets
and distinctive characteristics, and by seeking the potential that may be hidden
in its identity and aspirations. The success stories of the "new American colleges"
charted by Berberet (2007) and described in the preceding chapter provide evidence for this claim.
Strategic Position 169
Virginia Commonwealth University
In the early 1990s Virginia Commonwealth University (VCU) embraced a
vision of leadership as an urban research university. Characteristics that might
easily have been defined as negatives, such as a dispersed urban campus, were
reconceived as strategic opportunities. The university resolved a lingering contentious dispute with a neighborhood bordering the campus that feared absorption. VCU decided to grow on the other side of its urban location, adding new
economic life and opportunity to an otherwise unpromising commercial zone.
As VCU affirmed its distinctive urban mission, it also committed itself to the
economic development of the city and the region. The university addressed the
immense financial challenges of providing health care to low-income patients in
its hospitals. It developed an innovative new school of engineering and launched
an ambitious biotechnology research park adjacent to its downtown medical center. By leveraging the traditional research strengths of its medical programs, it
brought over 1,500 new jobs and hundreds of millions of dollars of capital investment to the city in less than a decade. In spite of an unpredictable cycle of both
substantial budget cuts and increases by the commonwealth, the university has
been able to grow to become the largest university in the state. It has substantially
enlarged funded research and private contributions and has received several
multimillion-dollar gifts. VCU has gained strength and prominence by affirming
the logic of its urban opportunities, emphasizing innovation, and framing issues
in the sphere of possibility. President Eugene Trani and his colleagues have consistently used strategic planning and strategic leadership to enable VCU to be what
it is and might become, rather than pursuing a wistful search for what it is not
(Leslie and Fretwell 1996; Virginia Commonwealth University 1997).
In many of the other examples in chapter 7, we saw a similar process at work.
In mapping assets, the goal is to understand and unfold the promise that comes
with particularity, to unleash the significance of being who one is. Focusing on
assets does not deny the negative or hide it from view but places it in an actionable context. The findings that show weakness and vulnerability are accepted and
confronted, but not considered in isolation. They are interpreted within a larger
pattern of meaning and responsibility, which are components of strategic leadership as a discipline of possibility.
SWOT ANALYSIS: OPPORTUNITIES AND THREATS
The analysis of strengths and weaknesses prepares the way for a translation of
the environmental scan into a specific set of challenges and opportunities for an
institution. As we have suggested, the first step, which is to develop a systematic,
structural, and thematic understanding of the meaning of the driving forces of
change, should be completed within the scan itself. The next step is to analyze the
bearing of these factors on the institution's strengths and weaknesses, understood
170 Strategic Leadership
as its core competencies, assets, capacities, vulnerabilities, and deficiencies. The
insights about the most significant threats and opportunities will be determined
through a process of relational thinking that systematically connects the most
important external trends and internal characteristics. The interpretive process
is highly collaborative and integrates the insights and judgments of a variety of
participants in the strategic conversation. It is driven by quantitative information (comparative benchmarks, strategic indictors, and the environmental scan)
and qualitative perspectives (identity, mission and vision, strengths, and weaknesses) that lend themselves to the integrative task of interpreting and defining
the institution's basic strategic position. For threats, the primary concern is to find
structural situations in the environmental scan, like the affordability of tuition,
that touch on basic organizational vulnerabilities. Conversely, opportunities, such
as the creative use of technology, match an institution's capabilities with a defining feature of the context. From a strategic perspective, the aim is to locate those
threats that disable or frustrate the institution's ability so that it can respond
effectively to change, as well as those opportunities that enable it to dominate its
environment and the competition.
Matrix Analysis
Some students of strategy suggest that this task of sorting out opportunities
and threats (and strengths and weaknesses) can best be done by the use of a
cross-impact matrix that asks participants to rate the influence of factors in
the environmental scan on the institution's key performance indicators, which
are essentially what we have called strategic indicators. Rowley, Lujan, and
Dolence (1997) explain a procedure to create a matrix with a horizontal axis
that records major factors in the environmental scan, and a vertical one that lists
key performance indicators. The task for participants in the process is to give a
numerical weighting to the influence of environmental factors (governmental
policies, high inflation, population increases, etc.) on the key performance indicators. The different weightings offered by individuals are then averaged and
analyzed in terms of standard deviations, and conclusions are drawn about the
institution's most significant threats and opportunities. The process, adapted
from Rowley, Lujan, and Dolence (1997), is represented in table 8.1.
The attempt to do integrative thinking about threats and opportunities through
cross-referencing trends and organizational characteristics is sound, but the quantitative calculus is problematic. To be successful it has to be understood as but one
step in a process that finally depends on rational analysis, dialogue, and judgment.
It may well be useful as a way to start a strategic dialogue about threats and opportunities but should not be the primary or exclusive way to conduct the inquiry.
The reasons are obvious. It is artificial to display external forces in a table that
presents them as isolated events or trends, when in actuality they are always systemically related to one another. It is equally artificial to try to dissect their impact
on a list of separate strategic indicators that are themselves related to one another in a system that is controlled by a large number of variables besides the single
external factor that may be under analysis. How, for example, does one translate
a new governor's pro-education campaign platform (as a political trend) into an
influence on indicators such as the number of applications, the state subsidy, or
retention rates? The governor's ideas may never be enacted, and the influence of
other variables on each strategic indicator makes a numerical measure a misleading indicator, providing more apparent precision than is warranted.
If one uses cross-matrix analysis in a comprehensive way for the ten steps of
the strategy process, as the Rowley, Lujan, and Dolence suggest, it becomes an
extremely elaborate and complex process. It would involve measuring dozens of
trends from the PEEST analysis plus countless more calculations to sort out opportunities and threats and strengths and weaknesses, as well as to assess policies,
procedures, strategies, and goals. The problem is not to do the calculations, but to
be confident of what they mean. What is described as a strategic engine appears to
become a forbidding contraption with no off switch. Surprisingly and significantly,
there is no determinative place in the engine for a vision of the future (Rowley,
Lujan, and Dolence 1997).
TOWS Matrix
A helpful use of a matrix is to juxtapose the conclusions about an organization's strengths and weaknesses against the threats and opportunities that have
been defined in a planning process. The diagram is simple, but it helps to focus
the work of strategy on the issues that most deserve to be pursued and that will
yield the best results. It marks a useful way to begin to turn the strategy process toward the selection of the strategic initiatives and projects that rank as
priorities. Each of the four quadrants in the matrix below suggests an appropriate way to respond to the various interconnections between opportunities and
threats and strengths and weaknesses: to develop opportunities where there
are strengths, to confront threats with strengths, to consider opportunities to
overcome weaknesses, and to avoid threats where there are weaknesses. What
172 Strategic Leadership
some call a TOWS matrix follows this form (see table 8.2, adapted from the East
Lancashire Training Council, n.d.)
SCENARIOS
Environmental scans and SWOT analyses are clearly one of the important steps
in a strategy process. Without trying to predict the future, they are able to monitor and anticipate the way that various trends already in evidence are likely to
affect the organization. Yet even when there is no pretense to predict the future,
the anticipation of the influence of major trends is subject to error and distortion
since forces and events bring constant surprises. In order to deal with these contingencies, many business organizations have turned to the analysis of alternative
scenarios to describe several plausible patterns for the unfolding of future events.
First developed by Hermann Kahn of the Hudson Institute, scenarios became a
celebrated feature of Shell Oil's strategy process and its preparedness for the 1973
oil price shock (Van der Heijden 1996). The use of scenarios is beginning to
appear in higher education (Morrison and Wilson 1997).
As the term suggests through its use in plays and films, a scenario is a basic plotline out of which a full story or script can be developed. A literary scenario often
follows any one of an enormous set of recurrent patterns of dramatic interaction,
such as triumph over adversity, the solitary hero, love versus duty, loyalty and
betrayal, beauty and the beast, and rags to riches. Out of these themes a scenario
is developed that serves to outline the plot.
As they have come to function in organizational planning, scenarios have kept
something of this dramatic flavor. Their creators try to find evocative story lines
that can be easily remembered. Scenarios writers often use images or metaphors
borrowed from the animal world or mythology to capture a motif. So, avoiding or
ignoring problems is the ostrich scenario, while Icarus (the mythical figure who
flew too close to the sun), is the overly ambitious scenario in which the participants initially soar, only to fall to destruction (Schwartz 1991; Van der Heijden
1996).
Scenarios begin in much the same way as a standard PEEST and SWOT analysis,
with a careful analysis of driving forces in the environment and their likely impact
on the organization. Yet important innovations come into play. Scenarios recognize the truth that the future always consists of factors and trends that are largely
predetermined, as well as developments that are uncertain and unpredictable. The
world, for example, is sure to run out of oil, but no one knows precisely when.
Table 8.2
Threats Confront Avoid
Opportunities Develop Consider
Strengths Weaknesses
Strategic Position 173
Although the prediction of future events is impossible, much of the uncertainty
of the future can nonetheless be made more intelligible and become subject to
more effective managerial decision making. To accomplish this, several different
scenarios can be created to capture the most plausible eventualities.
The creation of a scenario is a demanding task. It begins with an awareness of
important events and then seeks to understand them as part of broader trends,
some of which are largely inescapable and others which are uncertain. Once
a series of trends has been recognized and analyzed, then the task is to look at
the structural patterns and the causal forces and relationships that are producing
the trends. A scenario is produced out of these analyses. As Van der Heijden puts
it, "The scenario is a story, a narrative that links historical and present events with
hypothetical events taking place in the future" (1996, 213).
It is possible to trace, for example, the interlocking events, trends, and economic
and cultural realities involved in the extraordinary development and global
influence of the Internet, as Friedman (2005) has done in The World Is Flat. Those
analyses can then be combined with others to create scenarios on such topics as
the future of international scientific research or international student flows among
countries or economic development through information technology.
Although often misunderstood, the purpose of the process is not to develop
the best or most predictive scenario. Rather, the goal is to reduce uncertainty
to manageable proportions by developing several scenarios, each of which
is a plausible possibility for the future. The task is demanding because each
scenario must be internally coherent and based on good supporting information.
One cannot try to make things fit artificially simply to make a point. The causal
relationships in the scenario have to mimic the real world of interacting events,
trends, forces, and powers (Van der Heijden 1996). If they are able to do this,
they also serve the critical purpose of challenging the existing assumptions and
models of reality of the organization's decision makers. We again find the theme
that organizations can learn best when they clear away outworn mind-sets.
Once several scenarios have been created, how are they to be used? They
function as a testing ground for strategy at a variety of different levels (Van der
Heijden 1996). The focus of scenario analysis can be to test a strategic vision,
a broad strategic initiative, a single project, or a major decision. Whatever the
level, its purpose is to assess whether the option in question is adequate to
meet the contextual challenges of each of the scenarios. If not, it will have to
be modified to function effectively under all the plausible conditions it may
face. Obviously, one or more of the scenarios may define conditions that are
more favorable for a given strategic option than the others. Yet the test of the
strategy against an adverse set of future circumstances prepares the organization for success under a wide variety of contingencies. Based on its analysis, the
organization may decide that its proposal meets all the tests, or it may choose
to reconfigure aspects of its strategy in order to come to terms with various
threatening or opportune circumstances; or it could delay acting on the strategic
option until a later time or abandon it.
174 Strategic Leadership
Scenarios at John Adams University
A brief example from higher education may help to give concreteness to the
idea of scenarios. Consider John Adams University, a small public institution
in the West that is developing a strategic plan and is ready to define a series of
new initiatives. It wants to test the coherence of its ambitious strategic vision to
become a state and national leader in funded applied research and in the assessment of student learning. In particular, it has decided to create a truly comprehensive and expensive program of institutional and academic assessment to enhance
its quality. To test these and other strategies, the SPC develops three scenarios
based on a PEEST analysis that reflects changing trends both in the state and
nationwide.
Many aspects of the future environment are known and will be constants in
each of the scenarios, including a consistently high and increasing demand for
educational services in the state, supported by steady population growth. Changes
in the economic fortunes of the state and region are automatically translated
into growing or declining state subsidies, so the nature of the state relationship
and different political philosophies are the primary differentiating characteristics
in each of the scenarios. Over the past decade the state legislature has provided
erratic levels of support for its public institutions, dictated strictly by the state's
revenues. Tuition rates at Adams were cut for one four-year period and then
increased dramatically. There have been some strong signs that the state wants to
foster institutional autonomy, but others indicate that bureaucratic regulation is
a fixture of government. Based on a careful analysis of these and other trends and
political tendencies, the university develops three scenarios for plausible futures:
Business as Usual, Creative Self-Reliance, and the Competitive Marketplace.
Business as Usual
In this scenario, it is clear that the intricate patterns of governmental,
bureaucratic, and university interactions and expectations will not change
substantively or structurally. As far as the eye can see, there will be erratic funding based on the state's changing economic situation, as cycles of political and
bureaucratic control alternate with some movement toward more autonomous
forms of governance, but not in fundamental, coherent, or predictable forms.
Tuition will follow gyrating patterns of stability or increase based on the state's
revenues, and capital funding will be reactive rather than proactive and a function
of the political timing of bond issues.
Creative Self-Reliance
In the second model, the picture is different. This scenario sketches a coherent
plan driven by political leadership to make constructive self-reliance a model of
governance and decision making. State funding increases modestly for the public
universities, but in ways that are targeted to build capacity and to encourage
initiative. Research facilities are funded, for example, but operational support
Strategic Position 175
for them declines after a start-up period. Institutions are enabled to set tuition
themselves and to keep the funds they save in annual operations but are expected
to generate resources for repair and maintenance of their physical plants. Financial
aid funds for low-income students are increased by the state, though it is expected
that the university will share the costs through fund-raising. Incentives for performance in designated areas are periodically defined and funded by the state by
one-time incentive awards, such as matching gifts to endow professorships.
The Competitive Marketplace
The third scenario shares many features of the second. The decisive difference is that the state's political leadership now believes deeply in privatization.
The scenario also reflects a latent resentment toward higher education that has
taken hold in the media, the legislature, and the governor's office. Substantial
new levels of autonomy, as well as significantly reduced funding, are provided for
public institutions. In effect, the relationship between the state and its institutions is conceived as contractual rather than as statutory. While the state does
not disavow its legal control and responsibility, it believes that all agencies,
including institutions of higher education, have to function on a market-driven,
competitive basis. Financing for all facilities is now on a strictly one-to-one
matching basis, with student fees or private fund-raising an essential part of the
funding equation. As intense competition for dollars and students takes hold,
some institutions fare well and raise their tuitions significantly, while other suffer
since they cannot increase revenues in their markets. A gradual decline takes
place in the number of student spaces available in the four-year system. as funds
for the expansion of facilities and programs are not available. Noting the quality
of the state's community colleges, the availability of low-cost education from a
number of new providers, and the easy accessibility of Web-based education, the
state's leadership is not disturbed by the trend.
Scenario Analysis
Having developed these scenarios, Adams University now has a set of templates
against which to assess various aspects of its strategies and goals. Its aspiration
to be the state's leader in applied research is compatible, even desirable, in each
of the scenarios. The analysis also reveals that Adams must make it a priority to
expand its staff and its capacity to secure grants from the government, foundations
and corporations, and donations from individuals. Enlarged financial self-reliance
is an important expectation in each of the scenarios.
Other strategies can also be tested and modified. The project to develop a
core competency in program assessment also proves to be an essential goal in
each case. Because of the near certainty that success will depend on capacities to
perform well in competitive markets for students, resources, and recognition, the
ability to demonstrate achievement will become increasingly important. Thus,
the assessment project moves up the ladder of priorities for funding. Each of the
176 Strategic Leadership
scenarios also makes it clear that admissions, marketing, and fund-raising will
require enlarged resources, although they were not originally projected as major
needs.
As it examines its capacities in information technology, the university decides,
counter to its early expectations, that it does not have the capacity to be a substantial independent provider of distance degrees. The market-driven scenario leads
it to conclude that it will join an alliance of schools that provide online degrees
in certain professional fields.
Scenario Conclusions
The scenario process is stimulating and imaginative, but it is also demanding.
Unlike small colleges, multibillion-dollar corporations and large universities have
the resources to invest in a continuing capacity for scenario building. Yet even the
smallest institutions can ask several staff and faculty members to develop enough
background to lead a scenario workshop as part of its environmental scan, perhaps
with the help of a facilitator experienced in the art.
The development of scenarios is not, of course, an end in itself, especially in the
context of strategic leadership. Scenario thinking offers yet another systematic
language with which to understand change and the organization's relationship
to it. It offers a mechanism by which to embed strategic thinking within the life
of the organization, and to challenge and enlarge the thought patterns of the
campus community. Seeing the interrelationship of forces in a scenario sensitizes the ability to anticipate what is up ahead, and to grasp new challenges and
opportunities that are just appearing. It renders change less daunting, less strange,
and less unwelcome. To be fully effective, strategic leadership has to touch the
values and thought patterns of many, if not most, of the decision makers in an
academic organization, including a good cross-section of the faculty. As they
shape habits of perception, reflection, and judgment, systematic procedures like
PEEST, SWOT, and scenario analysis help to domesticate change. They make
it clear that even academic institutions are situated contextual enterprises that
live in constant interaction with society and time itself. We come again upon
our theme of the cognitive dimensions of leadership and the importance of the
paradigm of responsibility.
STRATEGIC POSITION
These disciplines for understanding change not only contribute to thinking
in terms of the image of responsibility; they play an explicit role in the step-wise
process of strategy formation. They shape an institution's understanding of its
strategic position, of the specific powers, assets, and competencies that it possesses
that help it to make its way in a competitive world. Without a clear-headed
self-estimate that takes form at least tentatively early in the process, the content
of strategy can become vague, diffuse, and an exercise in wishful thinking. A crisp
Strategic Position 177
statement of institutional position in several paragraphs provides focus to the process. It draws out the implications of the SWOT analysis and the environmental
scan and enables a purposeful and coherent selection of specific strategic issues for
intensive analysis and action. Adams University says of itself, for example,
The university is poised to capitalize on its distinctive strengths in applied
research and the assessment of student learning to meet the educational
and economic needs and opportunities of a growing population in its state
and region. It has the focus, resourcefulness, and decision-making systems
it needs to respond to changing circumstances. Through partnerships with
state government, the private sector, and individual donors, it can attract
the resources required to reach its goals. Adams can plausibly set high ambitions for its future.
In choosing the issues to address in its strategies, the analysis of an institution's
position sets a series of demanding conditions. It places the focus on matters that
are genuinely strategic, not primarily operational. An analysis of position also will
be able to put the spotlight on strategic possibilities that offer the best returns for
the effort and resources invested. To choose its priorities meaningfully, an institution has to be able at a minimum to accomplish what it sets out to do (Bryson
1995). The clearer sense of itself that it gains through the definition of its position
provides deepened knowledge of the capabilities that are required. The goal of
strategic leadership is ultimately to find ways to dominate the environment and
to have the abilities and the resources to meet the demands of change resiliently
and responsibly. One of the tasks of leadership is to anticipate what is required to
build a sustainable level of effectiveness to fulfill a vision of the future.
We have proposed that the motif of institutional position is one component
of the fourfold infrastructure of strategic self-definition. When a college or a
university articulates its narrative of identity, states its mission, creates a vision
of its possibilities, and develops a statement of its strategic position, it has put
in place a comprehensive foundation for strategic leadership. On this basis it
can move forward with confidence to craft the specific strategies that it needs to
address the challenges and opportunities of its future. We turn to those subjects—
first the form of strategies and then elements of their content—in the next two
chapters.