Governing strategy: why measurement is the hard part

There is often a lot of energy around developing a new strategy.

There are interviews, workshops, board papers, strategic discussions, drafts, revisions and eventually, hopefully, a clear plan that everyone can get behind.

Then comes the harder part. Governing it.

For not-for-profit boards and executives, the challenge is rarely whether the organisation cares about impact. Of course it does. The challenge is whether the organisation has a clear enough way to understand progress, learn from it and make better decisions along the way.

This is where strategy often gets stuck. Boards receive long CEO reports, operational updates, financial papers, risk registers, program data and compliance information. There can be a lot of information, but not always a lot of clarity. Directors are busy. Executive teams are stretched. Staff are delivering the work. Everyone is committed, but it can still be hard to answer a simple question:

Are we making progress against the strategy?

This is why impact measurement is one of the hard yards of governing strategy. It is also why measurement should not be treated as a technical exercise that sits somewhere off to the side. Done well, measurement is a leadership tool. It helps a board and executive team stay focused on what matters, understand what is changing and decide where to adjust.

The starting point is to be clear that not everything can be measured equally.

Not-for-profit organisations are often working on complex social, community or systems challenges. Many of the outcomes that matter most are long term, shared with others and influenced by factors outside the organisation’s control. That makes measurement harder, but not less important.

The answer is not to measure everything. It is to be much clearer about what is most important.

One of the most useful disciplines in strategy governance is narrowing the focus. This can feel uncomfortable in the not-for-profit sector because everything feels important. There are always more needs, more stakeholders, more funding requirements and more opportunities than there is time or money.

But if everything is treated as equally strategic, nothing really is.

A good strategy should help the organisation identify the few outcomes that matter most. A good measurement approach should then help the board and executive understand whether progress is being made towards those outcomes.

This means thinking about both lag and lead indicators.

Lag indicators tell you what happened after the fact. They are useful, but they are often too late to support timely decision making. Lead indicators help you understand whether you are on track while there is still time to act.

For example, if an organisation is trying to strengthen community engagement, a lag indicator might be the number of people who report increased connection at the end of the year. A lead indicator might be repeat participation, referrals from community partners or the number of people moving from one-off contact to deeper involvement.

If an organisation is trying to increase financial sustainability, a lag indicator might be the end-of-year surplus. A lead indicator might be grant pipeline strength, conversion rates, unrestricted income growth or reduction in unfunded activity.

If an organisation is trying to influence policy, a lag indicator might be a formal change in government position. A lead indicator might be the number of strategic meetings, the quality of relationships, references to the organisation’s evidence or uptake of recommendations in sector conversations.

The point is not to create a perfect dashboard. The point is to create enough visibility to support better conversations.

This is where many board reports need to evolve.

Too often, board reporting is structured around functions, programs or historical habits. The board receives an update from each area, but the information is not always connected back to the strategy. The result is that directors can spend more time absorbing activity than governing progress.

A better approach is to align reporting to the strategy itself.

If the strategy has three major outcomes, the board should regularly see reporting against those outcomes. If the strategy has clear priorities for the year, the board should understand what progress is being made, where momentum is strong, where delivery is stuck and what decisions may be required.

This is where frameworks such as OKRs can be useful.

Outcomes and Key Results, or OKRs, help organisations define what they are trying to achieve and the key results that would demonstrate progress. In a not-for-profit context, they can be particularly helpful because they connect big strategic outcomes to more tangible annual progress.

A strategic outcome might be long term and ambitious. A key result should be more immediate, observable and useful. It should help the organisation say:

•       Did we do what we said we would do?

•       Is there evidence that this is making the difference we hoped for?

•       What are we learning about the pathway to impact?

The best OKRs are not just operational task lists. They are a bridge between strategy and evidence.

Another useful approach is the Four Disciplines of Execution, particularly when an organisation needs to make progress on a critical internal priority. This might be improving cashflow, implementing a new system, lifting service utilisation, growing fundraising or strengthening workforce retention.

The strength of this approach is focus. It asks organisations to identify the wildly important goal, act on lead measures, keep a visible scoreboard and create a cadence of accountability.

Again, the language may not always feel natural for every not-for-profit organisation. But the discipline is useful. It reminds boards and teams that progress is rarely achieved through aspiration alone. It requires focus, leverage, visibility and accountability.

For boards, the key is not to become overly technical. Directors do not need to design every measure or manage every data point. But they do need to ask good questions.

•       What are the few things we most need to understand this year?

•       What would tell us that the strategy is working?

•       What would tell us that it is not?

•       Are we looking at activity, or are we looking at change?

•       Are our measures helping us make decisions?

•       What will we do differently because of this information?

This last question is critical.

Measurement is not just about proof. It is about learning. In the not-for-profit sector, there can be a temptation to use impact measurement mainly to show that the organisation is doing good work. That matters, especially for funders, partners and community trust.

But internally, the greater value is improvement.

Good measurement helps an organisation see what to continue, what to stop, what to scale, what to redesign and what to question. It creates a more honest conversation about progress and a stronger link between governance, strategy and operational planning.

This is not always easy work. It can expose gaps. It can challenge assumptions. It can show that a cherished program is not creating the change hoped for. It can reveal that an ambitious strategy needs more investment, more discipline or more time.

But that is the point.

Governing strategy is not about approving a plan and waiting for success to happen. It is about staying close enough to the right information to steward the organisation’s purpose, resources and impact.

The organisations that do this well tend to have a few things in common.

•       They narrow the focus.

•       They measure along the way.

•       They connect board reporting to strategic outcomes.

•       They use evidence to learn, not just to prove.

•       They keep asking whether the work is making the difference intended.

•       That is the hard yards of strategy.

•       And it is also where strategy becomes real.