Posts Tagged ‘business model’

Living the brand means rethinking the business model

Co-creation of brands

A brand is much more than a logo, tagline or key message. It is an authentic expression of a nonprofit’s promise to the world. Branding experts agree our organizations alone don’t control our brands. Brands are co-created with our stakeholders–-our audiences, volunteers, board members, funders, partners and service recipients. One’s perception of The Red Cross, for example, is informed by what it communicates directly, but also what our friends, family and social network say, as well as our own experiences. Those impressions ultimately create a collective consciousness of the brand itself. Our impressions of a brand and the authentic manifestation of that brand promise in the world influence how we engage with that nonprofit as donors and ambassadors.

Brand + business model

How can we more effectively engage stakeholders in the mission of a nonprofit? While brand engagement is critical to consider, we must think beyond the marketing function alone. It is time to fully imbed our brand promise in the way we do business day in and day out, which necessitates new thinking about business model design. At the core, we are talking about operating in new and different ways.

Value creation in your business model

A well-designed business model creates and captures value. Value, like beauty, is in the eye of the beholder. Fueled by the interests of our stakeholders, we can leverage organization-driven and user-driven experiences to inform, engage and influence opinions and actions. Data-driven strategies and tools can improve marketing, fundraising and volunteer engagement. The trick is not solely beginning and ending there. It is time to intentionally design your nonprofit’s business model to add value to your key stakeholders on a regular basis, recognizing the unique and overlapping needs of each group. By keeping an eye on value creation–-from the point of view of your stakeholders–you will capture more value within your nonprofit in the form of financial support and active ambassadorship for your cause.

So, where to start?

1.       Begin with clarity of brand promise.

2.       Design your business model to activate the brand promise.

3.       Use data to refine and reevaluate along the way.

4.       Keep an eye on creating and capturing value via a scorecard that tracks key metrics.

Three-component business model

The case studies profiled in Rippling by Beverly Schwartz and Forces for Good by Leslie Crutchfield and Heather McLeod Grant evoke a three-component business model, one that is designed to maximize 1) programs and services, 2) financial resources and 3) community engagement. It’s no longer sufficient to merely consider what you offer and how you fund operations. As the growing recognition of the importance of nonprofit brand suggests, a well-designed business model creates and captures value through imbedded approaches aligned with brand.

See also:

Rippling

Forces for Good

Breakthrough Nonprofit Branding: Seven Principles to Power Extraordinary Results

 

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Model statement versus mission statement: Do you have both?

When engaged in decision making, nonprofit leaders typically look at financial sustainability and programmatic sustainability in isolation from one another. Because a blended approach is seldom used by boards and leaders, important decisions are made out of context, leaving the organization at greater risk for future viability.

In Nonprofit Sustainability, the authors demonstrate how to use an adaptable tool called the “Matrix Map,” which is extremely helpful in visualizing what programs merit nurturing, require dissolving or compel us to maximize them based on their profitability and impact. Matrix mapping can be used for simple decisions, complex collaborations, mergers, planning and fundraising feasibility. The authors claim that Matrix Maps foster discussion, facilitate strategic options and ensure that decision makers keep both aspects of sustainability front and center.

Nonprofit Sustainability uses three fictitious organizations to illustrate how to use the Matrix Mapping tool and introduce the concepts of business models, sustainability and financial viability in the nonprofit setting. According to the authors, financial sustainability is not only a legitimate goal, it is a necessary and intrinsic goal. Furthermore, most nonprofits are now employing hybrid revenue strategies where they combine donations, earned income, contracts, grants and other income types. Consequently, financial goals must be set and managed differently for each revenue stream.

Whether it is purposeful or not, every nonprofit has a business model, say the authors. Even though every program is managed individually, each must operate within an overall strategy. The authors assert that leadership’s role is to develop and communicate that strategy so all the activities operate within one vision, which makes the business model viable.

CausePlanet: One of the most intriguing imperatives I read in this book was the importance behind describing what success will look like. So I asked Bell, Masaoka and Zimmerman “What is the best use of a business model statement as it relates to the mission statement?”

Zimmerman: “Mission statements discuss what the organization wants to accomplish typically in broad, inspirational terms. Business model statements are more specific and provide details not only on how the organization carries out its mission but also how it pays for it. So, for example, an early childhood education center’s mission statement might be:

“To support the intellectual, physical, spiritual and emotional development of children so they become self sufficient, contributing members of the community,”

but their business model statement might read:

“We provide early childhood education and daycare services for children ages three to five supported by government funding and subsidized through the generosity of individuals.”

The statement acts as a guide for the board in explaining the business model and helps focus them on the programs and revenue strategies that create a successful organization.

For more discussion about Nonprofit Sustainability, you can follow the authors: Jan Masaoka at Blue Avocado (www.blueavocado.org), which is an online magazine for nonprofits where the discussion on this topic and many others is continuing. Both Jeanne Bell and Steve Zimmerman contribute there and can also be reached via their respective organizations: Compasspoint (www.compasspoint.org) and Spectrum Nonprofit Services (www.spectrumnonprofit.com).

 

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Learn how to revise your business model with Matrix Maps

Free Nonprofit Sustainability webinar

Based on the book Nonprofit Sustainability: Making Strategic Decisions for Financial Viability, co-authors Jan Masaoka and Steve Zimmerman will present a webinar on the Matrix Map tool for understanding and revising your business model to address both financial and mission impact at the same time.

If you attend the webinar, you will also receive a coupon for a 25% discount on the book. Thursday, June 16, 11:00 am Pacific time. Click here to register for free. Limited to the first 500 registrants.

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Thriving on reinvention

“Regardless of the timeline for the U.S. economic recovery, emerging trends in competition, technology, demographics and consumer behavior are the major drivers of future opportunities for nonprofit organizations. These trends will shape a marketplace that is vastly different from the one that existed prior to the recession. These changes require a thoughtful examination of every aspect of your organization. The conversation begins with the organization’s business model. How does your organization create, deliver and capture economic, societal or other forms of value?”

This introduction was quoted from one of our valued contributors at CausePlanet, Raylene Decatur, who will be presenting this topic in Denver, Colorado on March 8 for executive leaders called “Thriving on Reinvention.” In the session, she will discuss the following questions with local leaders:

  • Which results are we accountable for achieving?
  • How will we achieve these results?
  • What do these results cost and how will be fund them?
  • How do we build the organization needed to deliver results?

Decatur also touches on these questions and some ideas surrounding the topic of thriving on reinvention in an earlier article we posted last March at CausePlanet.

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