Need for Strategic Planning

Phil Kenkel

Bill Fitzwater Cooperative Chair, Oklahoma State University

In a recent national project, academic researchers, cooperative managers and members, USDA, agricultural foundations and other stakeholders collaborated to identify the critical issues facing agricultural cooperatives. A two-stage Delphi survey was conducted, followed by expert panel sessions in Washington, D.C. and Minneapolis, Minnesota. The material below summarizes some of the findings from the project.

Numerous studies over the years have identified regular and effective strategic planning as a critical activity for cooperative firms. This most recent research project was no exception. Almost 90 percent of the cooperative leaders ranked strategic planning as an extremely important or very important issue. All businesses, not just cooperatives, need strategic planning. Cooperatives face some unique drivers for strategic planning.

Most cooperatives were established for a very simple business proposition with a homogeneous set of members. As the cooperative matures, member characteristics and needs become much more heterogeneous. This creates a continuing need to define what the cooperative is and what it should do. Strategic planning allows the board to consider how the cooperative’s resources can best be focused and employed to meet evolving member needs.

A cooperative’s governance system also creates a need for strategic planning. Most successful cooperatives have a healthy level of turnover on the board. This creates new perspectives and new linkages with the customer owners. The downside is that new board members do not have the long-run perspective and institutional memory of the issues and decisions facing the cooperative. The planning process provides board members with the opportunity to educate themselves on the forces impacting their industry. Regular strategic planning generates planning documents and a shared vision that provides continuity in strategic direction even as the board composition evolves.

Strategy remains an important topic for directors and managers. Clearly, cooperatives should recognize the unique nature of the cooperative as an extension of the member’s farming operation in strategy formation and implementation. Cooperatives face a wide range of pressing issues, including issues relating to finance, governance, communication and human resources. These issues are also interrelated with the strategic planning process.