Posts Tagged ‘business planning’

Strategic plan has you seeing red? Try blue.

When most of us think about how to get an edge, we look around at our competition. We strategize about how to outperform our peers and raise more funds from the same donor pool.

Blue Ocean Strategy authors, Chan Kim and Renée Mauborgne would argue that approach is exactly why you’ll fail.

Instead, they ask you to imagine a market universe composed of two sorts of oceans: red oceans and blue oceans. Red represents all the industries in existence today or our current market space. Blue oceans denote all the industries not in existence.

The red ocean or existing market space gets crowded as more compete for a greater share of existing demand. Cutthroat competition turns the ocean red. Blue oceans, in contrast, consist of untapped market space where there is opportunity for sustainable growth and where competition becomes irrelevant.

Ringling versus Cirque:

The premise of Blue Ocean Strategy is aptly described by the authors through the exploration of Cirque du Soleil, one of Canada’s largest cultural exports. In less than 20 years, Cirque has achieved revenues that took Ringling Bros. and Barnum & Bailey—the global champions of the circus industry—more than 100 years to attain. What makes its success remarkable is its achievement in a declining industry. Cirque has succeeded by creating a new, uncontested market space that has made the competition and declining circus market irrelevant. They have appealed to a whole new group of customers: adults and corporate clients rather than children.

While you may feel like you run a three-ring circus that happens to have a 501c3 status, you’re not alone. Kim and Mauborgne encourage you to quit competing with so many peers, and instead, create your own uncontested market space.

A nonprofit planning perspective of Blue Ocean Strategy®

We asked Heather Gowdy, coauthor of The Nonprofit Business Plan: A Leader’s Guide to Creating a Successful Business Model (2012), to discuss the merits of Blue Ocean Strategy with us in light of her unique perspective on business planning.

CausePlanet: Heather, thank you for serving as our guest author for this interview. As a member of the La Piana Consulting team and coauthor of The Nonprofit Business Plan, you bring a unique and welcome nonprofit perspective that’s especially relevant to this business book and to building a successful business model. What do you appreciate most about Kim and Mauborgne’s Blue Ocean Strategy®?

Heather Gowdy: First and foremost, I love the emphasis on stepping back and taking the time to truly think strategically about your market, your customers and your noncustomers. So often organizations get trapped in the same grueling competitive cycles, searching for ways to incrementally adjust what they do to better meet the needs of clients, customers, individual donors or institutional funders. There is real value in thinking “out of the box” and looking for blue ocean strategies that might better enable you to advance your mission–strategies that may not be at all obvious now, but will lead to greater impact and sustainability in the long term.

In what color ocean does your current plan have you swimming? What appeals to you most about the Blue Ocean Strategy®? In my next post, watch for more interview excerpts with Heather and why you should be seeing blue instead of red.

See also:

Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant

The Nonprofit Business Plan: The Leader’s Guide to Creating a Successful Business Model

Which comes first: the partnership or the plan?

Image credit: Cirque du Soleil

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So you want more but do you know why?

According to David La Piana and his coauthors, a nonprofit needs a business plan just as much as a business does. “Perhaps more so given the narrower room for experimentation and the high consequences of failure—both of which can be traced back to often narrow operating margins and lack of adequate capital.”

Why do you need a business plan?

A business plan can help you recognize a limited or broken model that may be holding your organization back.

Business planning can also help you assess and prepare for substantial changes in your scope of work.

As nonprofits seek to develop solutions that are repeatable and scalable, business planning becomes the centerpiece of these patterns because you don’t want to replicate or scale up mediocre programs—you want to be sure you’re expanding your reach and your return.

I asked coauthor, Lester Olmstead-Rose about the most important take-away from the book. His answer builds on the reasoning above and challenges you to know why you want a business plan.

CausePlanet: What’s the most important idea you want readers to take away from your book?

Olmstead-Rose: One of the most frustrating things we come up against is nonprofits (and actually, just as often, their funders) saying, “We need a business plan,” but really using the phrase as a kind of catch-all description of a strategy that includes numbers or a program implementation plan or a way to balance the budget. In other words, it has come to mean vaguely, “more.” As in: “I need something more than I’ve been able to describe about planning, growth, how I operate, where I go next, or how to implement.” This book is about demystifying what that more could be around planning, decision making and implementation–and making it accessible.

Olmstead-Rose’s answer reminds me of Veruca Salt in Willy Wonka and the Chocolate Factory. She wants the golden goose (and everything else she sees!) but doesn’t have a reason. Rather than asking for more, figure out what you need so the business planning process has a chance to succeed.

You can read the complete author interview and learn more about what’s inside The Nonprofit Business Plan: A Leader’s Guide to Creating a Successful Business Model by downloading a Page to Practice™ book summary at CausePlanet.org.

For those of you new to CausePlanet, we aim to satisfy professional curiosity in busy nonprofit leaders through Page to Practice™ book summaries, author interviews and relevant discussion by peer contributors. Download this book or dozens of other titles by visiting our summary store or subscribing to summary library. Or try us out by printing a free sample.

Watch for next week’s Page to Practice™ feature of Chris Zook and James Allen’s new book, “Repeatability,” which builds on what the La Piana Consulting team explores about solutions that are scalable and repeatable.

Image credit, Willy Wonka and the Chocolate Factory

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What’s the best reason for reinventing your business model?

Many of us recall David La Piana’s Nonprofit Strategy Revolution, which pushed past our traditional notion of strategic planning and brought more time-sensitive, relevant thinking to the forefront. La Piana acknowledges that even while Revolution was being published, clients began to raise the common questions surrounding the economic and operational implications of strategic decisions. Specifically, how could they effectively connect their strategy with an execution plan that would truly grow the organization? Answering this question involved developing a rigorous methodology for connecting mission, strategy and execution.

The methodology described in The Nonprofit Business Plan roots strategic decision making in a strong financial analysis. Known as “DARE2 Succeed,” the principles in the methodology have been repeatedly tested in La Piana’s consulting practice to ensure the book represents practical and workable approaches to improving your organization’s outcomes. I asked coauthor, Lester Olmstead-Rose, about the most common reasons for pursuing a new business model. I loved his answer so I’m sharing it with you.

CausePlanet: You explain every nonprofit should engage in ongoing strategic planning but the “deeper dive” of business planning depends upon your circumstances. What is the most common reason nonprofits should consider formulating a business model?

Olmstead-Rose: The most common need for business planning is when you know or discover your business model is broken. An obvious example of this is when you can’t pay for what you are doing and you need to come up with a new approach to pay your bills.

We had an executive director come to us who had a really descriptive phrase about why she wanted to enter into a strategy development process followed by business planning. She said, “I can’t keep raising a million and spending a million!” Isn’t that what so many nonprofits do, living right on the edge all the time and under constant threat of collapse? It means their economic logic isn’t working; they haven’t created a good mechanism to pay for the extent of work they have taken on. But in considering a broken or stressed business model, don’t forget it is not just a question of money. Any part of the scope of your program or organization may be challenged–for example, the population you serve has changed dramatically or your geographic reach is too big or too small.

Beyond addressing a problem in the business model, business planning is also a great tool to use when thinking about expansion. We get organizations coming to us saying, “We do this great work, now we want to take it to scale.” Business planning can identify the avenues for doing that and let you know if it’s viable, or if you’re going to lose your shirt and undermine the good you’re already doing.

We’ve had an organization approach us that wanted to start a capital campaign to build new facilities and then use those new facilities to both expand current programs and start new work. Business planning is a perfect approach for them to make sure they can sustain those programs in the long run.

You can read the complete author interview and learn more about what’s inside The Nonprofit Business Plan: A Leader’s Guide to Creating a Successful Business Model by downloading the Page to Practice™ book summary. Or try us out by printing a free sample.

Image credit, AustinArtist, via iStockPhoto.com

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