210 Strategic Leadership
Countless campuses have similar stories that give the campus a voice in its
narrative of identity. So master plans and decisions about major renovations also
are crucial parts of educational strategies for the future. A building has an impact
on its human community and the natural environment, which is itself a vital issue
in contemporary decisions about facilities. Its physical fabric and infrastructure
are critical considerations for efficiency, effectiveness, and sustainability but also
for the meanings that it carries. Campus designs and buildings ground the identity
and the heritage of a community. In all these ways campus space and architecture
are parts of an integral strategy that moves the organization toward the vision it
has defined for itself.
STRATEGY AND FINANCIAL RESOURCES
Those who study collegiate strategic planning reports and documents soon
come to a surprising realization. Many plans do not include either a financial
model to test the cost of the initiatives being proposed or a method to fund them
within a designated period of time. This is more than a little odd, since strategic
planning has precisely to do with creating goals and allocating resources to trans-
late them into reality. Without a sense of financial capacity, many of the goals
in a strategic plan become what its critics complain that they are anyway, either
wish lists or a safe place to store the excess baggage of campus opinion and desire.
Without financial feasibility, a strategy compromises its credibility and loses an
effective mechanism of decision making and leadership.
Many institutions are diffident to define their financial capacities and priorities
because there can be political risks in doing so. To signal that some units or pro-
grams may have a higher priority than others is dangerous. In adversarial contexts,
the setting of priorities may unleash a torrent of conflict. Yet these challenges
should not prevent us from exploring the possibilities of an optimal process, even
if its application may have to be tailored to a variety of circumstances.
Financial Models
A fundamental requirement for effective strategic planning is the use of an
analytical financial model. The model can be quite simple but should capture the
key points of leverage that determine the institution’s financial position. Effec-
tive decision making requires that these leverage points be deeply understood and
carefully charted, including the key ratios that indicate financial position. Our
suggested dashboard of strategic indicators in chapter 5 shows data that should
be included in a model or in an accompanying analysis of financial position.
Key ratios and indicators such as debt to assets, debt payments to revenues, net
tuition after discounts, and unrestricted net income have to be understood both
operationally and strategically. Most accounting firms can provide a set of ana-
lytical and comparative ratios for colleges and universities, and bond agencies
create powerful sets of metrics in issuing ratings. Strategic thinkers and leaders