The Benefits of Process

In my previous blog, A Case for Process, I used some of the issues associated with the commercial adoption of LLMs and the tools built upon them to highlight the importance of developing a process for making resource allocation decisions. I am taking this opportunity to speak more generally about what I see as the benefits of applying a structured, process-oriented approach to decision-making. The specifics of the process used can vary, but what it should offer in the form of tangible benefits is described below.

A well-designed process should, at a minimum, help you:

Define your objectives – Establishing the objectives specific to a new program or initiative and articulating how meeting those objectives supports the mission of the organization is generally understood as an important starting point. What receives less attention at this early stage is a conversation about how success will be defined. Taking the time to develop the quantitative and qualitative metrics that will be used to measure progress allows for consensus building around the infrastructure needed for documentation and data collection. It also ensures documentation and data collection begins when it should. . .at the launch of the new program or initiative. Failing to capture data as it comes in means crucial information is lost simply because specifics around what needs to be collected and a mechanism for doing so are left out of the planning discussion. Frequently, there is no remedy for this oversight once it comes to light because the requisite information cannot be reliably created or collected retroactively.

Assuming the project or initiative has a longer time horizon, one that extends beyond a year or so, the defined outcome metrics should measure progress toward short-, medium-, and long-term milestones. Ideally, the shorter-term objectives and the metrics that accompany them will support those that follow. In other words, early successes should increase the likelihood of success in the longer term. Refinement of metrics established during the planning stage may be required as time progresses to account for changes in data availability, technology, the social/political/economic environment, etc. The goal is not to establish a set of rigid benchmarks. Rather, it is to provide clarity about expectations in a manner that is both transparent and responsive.

I am going to do a deeper dive on these final two points related to what constitutes “good” metrics, but I want to highlight them briefly here. First, a collaborative approach to developing performance metrics should be taken whenever possible. Developing a set of metrics that appropriately inspires high effort and considers real world constraints cannot be achieved without engaging with the perspectives of different stakeholders operating along the chain of responsibility. Second, it is crucially important that the metrics used to measure progress are as closely aligned with the organization’s objectives and mission as possible. Poorly defined and misaligned metrics are a distraction, drawing attention away from what the organization is trying to achieve for the sake of meeting or beating benchmarks.

Discipline your thinking – Implicit assumptions are pervasive and often go unnoticed because of one’s proximity to the work. Applying a process that includes data analysis can push those implicit assumptions to the surface and expose them to the harsh light of day. Once assumptions have been explicitly identified, they can be properly examined. One of the most important questions to be asked during this time is whether the assumptions held are representative of what is or what was? The current social, political, and economic environments are more volatile than they have been in some time. Therefore, it is essential to examine and reexamine assumptions regularly held to determine whether they need updating. The goal is not to discourage ambitious action. Rather, it is to offer a broader understanding of the operating environment and the forces within and outside of one’s control that can influence outcomes.

Diagnose your weaknesses – Progress toward objectives can slow, stall, or reverse for any number of reasons. Minimizing the damage, whether it is reputational, financial, or otherwise, requires early detection and remediation. Developing the tools to perform oversight/monitoring of program performance facilitates the work required to identify problems and provides a roadmap for finding the root causes of outcomes that fail to meet expectations. The goal is not to prevent every hardship or avoid every challenge. Rather, it is to provide a starting point for deliberation and relieve pressure at a critical point in time.

Determine your strategy – Understanding the root causes of poor performing programs is essential to deciding what comes next. Has the environment changed? Do those changes reflect a shift that is expected to persist for the foreseeable future? Are more or different resources necessary to achieve your goals? Should resources be directed elsewhere? The preparatory work required to build internally generated oversight mechanisms provides the opportunity to develop a set of optional paths to take in the event an inflection point is reached. The goal is not to stifle the development of creative solutions in the moment. Rather, it is to build resilience in advance when it is most cost effective and make the troubleshooting process more efficient, allowing for a timely response.

Describe your progress – The information environment around nonprofit organizations has been characterized as opaque as the reporting requirements, when compared to for-profit organizations, are minimal. This topic is one that I am going to bring to the fore frequently as it creates problems downstream. Suffice it to say that I believe the market-based reporting framework employed by for-profit enterprises has been improperly imposed upon and adopted by the nonprofit sector. As a result, the primary metrics used to assess nonprofit performance emphasize financial management (efficiency) as opposed to program effectiveness to the detriment of nonprofits and their stakeholders. Consequently, organizations are starved of the resources necessary to build internal infrastructure to support their programs. Solving the resource allocation problem necessarily involves improving the information environment in a manner that properly supports the funding of effective programs. The goal is not to increase the administrative burden for a sector that is already resource constrained. Rather, it is to develop a reporting framework that extends naturally from an established internal decision-making process and facilitates transparent communication between the nonprofit and its funders.