Strategic Leadership in Context 211
focus on these comparative trends and ratios and attend particularly to both
marginal income and expense and to the danger zones in their financial metrics
(cf. Townsley 2007). Every institution’s financial engine drives results precisely
through the interaction of its most important variables in revenue and expense,
assets and liabilities. Strategic leaders are often skilled in relating the dynamics of
the engine to the critical success factors in the educational program (Collins 2001,
2005). Although most of the revenue and expense streams have differing rates of
increase and decrease, they can be translated into an analytical and quantitative
model that is able to test the financial consequences of various strategic decisions
and economic trends.
Each of the major task forces and groups developing strategies should use the
model to test the financial results of its proposals and should highlight these
as part of its report. The SPC will select options for further consideration and
implementation with a clear sense of the resources that they will require, and the
steps they will take under adverse circumstances, such as high inflation or serious
recession. Without a clear window into the inner workings of its own financial
world, it cannot meet these responsibilities.
Transparency and Financial Information
A financial model can project plausible scenarios for the future, but the institu-
tion’s basic financial position has to be communicated clearly as well. As we noted
in our discussion of SPCs, governing boards and presidents do well to disclose all
the basic financial information that is relevant to the work of strategy. Although
it can be difficult if the institution is in a weak position, or an especially strong
one, it is far better in the long run that these issues be shared rather than hid-
den. The tendency of some faculty members to deflect hard financial choices to
administrators, and for administrators to keep problematic financial facts from
the faculty, is part of the same unhealthy syndrome. A credible process requires
both shared information and shared responsibility. An ability to deal honestly
with limits and possibilities as defined by context is one of the characteristics of
effective leadership. MacTaggart (2007a) makes this point repeatedly in discuss-
ing institutions that began their academic turnarounds by becoming transparent
about their often-precarious financial positions.
Strategic Priorities
In an environment in which resources for higher education have become
perpetually strained and erratic, each institution will also have to reconfigure
continuously the relationships between its resources and its goals. As a matter
of course, institutions will use their strategy processes to redefine many of the
assumptions about what programs they offer, to whom, and how. The criteria
for priorities in the operating budget will have to become more transparently
and consistently strategic. For some time now, collegiate institutions have used