Posts Tagged ‘David La Piana’

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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Business planning is the new black

In our monthly Management Café discussion, I was reminded about our current Page to Practice™ feature because the executives on the call were discussing how they constantly evaluate the financial impact (earning power or appeal to donors) of their programs.

This month’s Page to Practice™ feature of The Nonprofit Business Plan: A Leader’s Guide to Creating a Successful Business Model underscores the discussion of financial impact by addressing the economic logic of your nonprofit business model. In other words, business planning is the new black. Authors David La Piana, Heather Gowdy, Lester Olmstead-Rose and Brent Copen argue that business planning is not strategic planning. Rather, it’s the next step after strategic planning—a way to test the economic viability of your strategies. I asked Nonprofit Business Plan coauthor, Lester Olmstead-Rose, to discuss the difference between strategic planning and business planning as well as how they interact. Here’s what he had to say:

CausePlanet: Your book discusses the difference between strategic planning and business planning. Can you briefly touch on this?

Olmstead-Rose: Strategic planning is focused on articulating a strategy or creating a response to an organizational opportunity or threat, which is something organizations need to do all the time. A strategic planning process might identify a business model that isn’t working, such as where the mission impact is low or the organization is not able to pay for its work. But the emphasis in strategic planning is on how you will coordinate your activities and coordinate them to what end.

Business planning specifically tests the operational and economic viability of a major change. It is true that a business plan may pick up where the strategic plan leaves off. Your strategic plan might say, “We need to develop sources of earned revenue.” You can then use the business planning process to identify and test options for doing this. The value of a business plan is in the rigor of the process you go through to test the proposition that a particular undertaking–a program, partnership, new venture, growth strategy, or the entity as a whole–is economically and operationally viable.

CausePlanet subscribers: Don’t forget to register for next month’s live author interview via webcast with Lester Olmstead-Rose about this book.

See also:

Rippling: How Social Entrepreneurs Spread Innovation Throughout the World

Nonprofit Sustainability: Making Strategic Decisions for Financial Viability

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