Posts Tagged ‘nonprofit planning’

Nonprofit decisions: Complexity made clear with matrix mapping

According to a recent Nonprofit Finance Fund’s State of the Sector survey, “Forty-two percent of organizations reported that they do not currently have the right mix of financial resources to thrive over the next three years.”

This level of economic uncertainty requires the kind of adaptive leadership and system-wide reckoning that feels like a daunting task until now. Authors Steve Zimmerman and Jeanne Bell have introduced a proven method for change management called matrix mapping. The matrix map cultivates sound decision-making that embraces the entire organization’s capacity rather than one program or person.

Zimmerman and Bell have accumulated a deep understanding of how the matrix map tool is working for nonprofits thanks to five years in the field with their first book, Nonprofit Sustainability. Today, The Sustainability Mindset builds on the candid self-reflection and bold decision making created by the first title.

Introduction to the matrix map

Simply put, the matrix map allows organizations to view both their impact and profitability at the same time. Often, during a strategic planning meeting, organizations will look at the success of their programs in one conversation and then their budget in another. The map gives them a combined look so they can make better decisions. For example, if one program shows high impact but low income, the organization can turn to other sources of income that can cover the expenses. To see a sample of the map, click here.

Zimmerman’s favorite example of the matrix map in action

We asked Steve Zimmerman to tell us about one of his favorite case stories where the matrix mapping process brought to light the critical observation of impact and profitability simultaneously.

CausePlanet: Would you tell us about your favorite case study that implements the matrix map?

Zimmerman: One of my favorite uses of the matrix map is to help organizations make decisions that have been put off for too long. An example of this comes from a 100-year-old social service agency that had offered mental health counseling for their constituents among several other programs including financial literacy, job training and a day care program.

Over the years, the counseling program had fallen on hard times, but because it was the founding program of the agency, they kept re-tooling it and bringing in new supervisors to improve the program. When the matrix map was completed, it showed counseling, financial literacy and job training operating at financial deficits. However, counseling also was considered a low-impact program.

Deeper analysis showed that while the program was important for the organization’s impact, there was a lot of competition for quality counselors and the organization couldn’t match competitors’ salaries. This led to poor outcomes. What is more, the job training program showed very high impact but was relatively small because the organization didn’t have enough resources to grow the program.

The organization used the matrix map to engage in a robust discussion about the future of counseling and decided to close the program. Because it was still an important component of the organization’s overall impact, it partnered with another agency in the city to deliver those services to constituents. It then invested the money that had been utilized to subsidize counseling to expand the job training program. This included partnering with local corporations for job placement on a fee-for-service basis.

The opportunity cost of decision-making

This example demonstrates using the matrix map to highlight the opportunity cost of decisions. The leadership often thinks in terms of “Should we offer Program A or not?” when the correct question is, “Should we invest in Program A or Program B?” By investing in the high impact program, the organization was able to increase its impact and financial viability. It would not have had the resources or capacity to do so unless it focused its program offerings. By presenting the map in this way, even those leaders who strongly supported the counseling program came around to see the organization and its constituents were better off as a result of this decision.

If you’ve historically looked at your budget and your programs in isolation of one another, Zimmerman and Bell would argue that this kind of decision-making will only lead to poor sustainability for your nonprofit. Get a copy of The Sustainability Mindset and turn complexity into clarity.

See also:

Nonprofit Sustainability: Making Strategic Decisions for Financial Viability

The Nonprofit Leadership Transition and Development Guide

Building Nonprofit Capacity: A Guide to Managing Change Through Organizational Lifecycles

Image credits: julianreese.com, vbpm.org, wallbasehq.com

 

Leave a reply

Nonprofit planning: Mindset over matter

Last week I enjoyed a keynote address delivered by The Sustainability Mindset coauthor Steve Zimmerman in Baton Rouge, Louisiana. With smarts and wit, Steve enlightened a room of nonprofit executives about the advantages of looking at financial and programmatic sustainability in the same conversation. According to Steve, most nonprofits look at these critical elements in isolation of one another, which deprives them of accurate sustainability evaluation and productive planning.

What is the mindset?

You might be asking what mindset means. The Sustainability Mindset is about financial sustainability: meeting the needs of the present without compromising the future. It’s also about programmatic sustainability: the ability to develop, grow and retire programs in sync with your constituencies. Because this is easier described than done, Steve Zimmerman and his coauthor Jeanne Bell provide experienced-based guidance and a specific framework to follow using their supremely helpful visuals and templates.

Introduction to the matrix map

The primary visual that facilitates the authors’ process is the matrix map. The matrix map allows organizations to view both their impact and profitability at the same time. Often, during a strategic planning meeting, organizations will look at the success of their programs in one conversation and then their budget in another. The map gives them a combined look so they can make better decisions. For example, if one program shows high impact but low income, the organization can turn to other sources of income that can cover the expenses.

How it works

This map can provoke strategic discussions on how to strengthen the model. For example, the organization can look at the upper left quadrant (see below) to decide if the Youth Services and Adult Education & Family Literacy are worth the expense for a high mission impact. If they are covered by other
bubbles and if they provide a necessary service that no one else provides in the community, they may be worth the expense.

Organizations can create these maps during strategic planning, annual budgeting and operational planning meetings, loss of funding, new opportunities, or changes in external environments.

Depending on the purpose, the map can either be a quick look or a more detailed vision of the organization’s status. Again, depending on the purpose, various people should be involved. For example, funders and constituents could be surveyed for a closer look at mission impact in a more detailed version. Otherwise, the senior leadership, staff and board can be involved in the input and can learn more about the organization through this process.

Ultimately, the map provides what is for many leaders the first time they’ve seen their nonprofit programs mapped according to their financial and programmatic viability in one single action.

What are the stages?

In the book, the authors cover these stages of the matrix map process: 1) introductory meeting, 2) articulating intended impact, 3) defining programs, 4) assessing mission impact, 5) determining profitability, 6) plotting your map, 7) analyzing your map, and making strategic decisions.

When looking at these stages, my editor and I were compelled to ask Steve and Jeanne about where most leaders experience challenges when applying the matrix map process and what is the most critical step within the process:

CausePlanet: At what point do nonprofits experience challenges when trying to apply the matrix map to their organizations and how do they overcome them?

Zimmerman: Senior management teams are often not used to having open, candid discussions about the contribution a program makes to the organization’s intended impact relative to other programs or about how the program is differentiated from other offerings in the community. As a result, assessing mission impact can be a challenge in the matrix map process. These conversations can be frightening, as participants often fear hurting a co-worker’s feelings or being vulnerable in front of a group. However, the leadership’s efforts in creating a safe environment where candid feedback and discussion is encouraged, appreciated and respected will ensure the success of the matrix map process. Everyone in the room is committed to the organization’s mission and with the appropriate lens of continuous improvement, the organization will have an opportunity to better understand the perception and reality of its programs’ impacts.

CausePlanet: What is the most critical step in the Sustainability Mindset process?

Zimmerman: Moving toward greater sustainability requires making hard decisions. It isn’t that the leadership doesn’t necessarily want to make decisions, but they’re fraught with implications. Constituents who depend on services may find them suddenly not available or the staff may find shifts in their jobs. These are difficult decisions. The leadership may feel it doesn’t have enough information or even worse, may have conflicting information about which decision to make. Like any strategic decision, the leadership is ultimately guessing at what the future may hold. The matrix map is a useful tool for engaging key stakeholders in a discussion about what the future should be. However, it is just a tool. It ultimately is up to the users to make a decision, learn from implementation, adjust and learn again. We say often that sustainability is the integration of financial viability and mission impact, but there is a third equally important component–leadership. The most critical step is the leadership ultimately making a decision to begin implementation and move toward greater sustainability.

If you and your fellow leaders on the board are in a place where you could benefit from taking a rigorous and candid look at the viability of your current programs, I encourage you to get a copy of the The Sustainability Mindset. You may never allow yourself to look at sustainability the same way again.

See also:

Nonprofit Sustainability: Making Strategic Decisions for Financial Viability

The Six Secrets of Change: What the Best Leaders Do to Help Their Organizations Survive and Thrive

The Necessary Revolution: Working Together to Create a Sustainable World

Image credits: pixabay.com, wiley.com, Steve Zimmerman and Jeanne Bell

 

Leave a reply

Using Real-Time Strategic Planning to evaluate nonprofit partnerships

Image credit: www.PoweredbySearch.com

Many nonprofits are considering the spectrum of strategic restructuring options, such as partnerships and mergers, as potential strategies to enhance financial viability and achieve greater sustainability. With more than a decade of experience in this area, I have learned one crucial lesson for those seeking a successful partnership: It must be considered within the context of a broader organizational strategy.

In this time of economic uncertainty, organizations may seek a partnership out of expediency without considering how the partnership may advance, or derail, their organizational strategy. Nonprofit leaders may lack the time, resources and data to undertake strategic planning while exploring potential partnerships. La Piana Consulting has developed a research-based and field-tested methodology called Real-Time Strategic Planning (RTSP) that allows organizations to consider their strategic focus effectively and in a fraction of the time required by traditional strategic planning.

RTSP and strategic restructuring

Within the context of a merger or partnership, nonprofit leaders should refer to the following elements of the RTSP process.

Business model

The term “business model” can overwhelm many nonprofit leaders by conjuring thoughts of corporate executives plotting money-making schemes. However, RTSP provides a simple way to think about your nonprofit business model to turn it into an effective tool for decision making. When considering a partnership, nonprofits can define their business model into easily understood and efficiently analyzed themes:

Who you are – your mission and brand;
What is your scope – the geography, activities and clients served;
What is the source and distribution of funding – where funding comes from and how it’s spent.

Once you have a clear understanding of your current business model, it is important to consider potential gaps and opportunities that a prospective partnership may impact, i.e. new geography, clients, funding, or more efficient operations.

Market awareness

Understanding your business model will make it much easier to understand where you “fit” into the market. Therefore, conduct an honest assessment of your market. Ask yourself, is demand for your services growing or shrinking?

Other key considerations include: Who else is providing similar services? With what organizations do you compete or collaborate? What are their strengths and weaknesses relative to your organization? What do they bring to the table that strengthens their position in the market? Look at these competitors and analyze how they compare to you.

Answering these questions will help you better understand your own market position, as well as how a partnership can strengthen your organization and better fulfill its mission

Competition

As described above, a large part of market awareness is recognizing your organization’s competition. Although the concept of competition may not be commonly referred to in the nonprofit sector, nonprofit leaders must address competition in order to ensure an organization’s success. Consider the various types of competition your organization faces, including competition for funding, staff, board members, media attention, clients, etc. Understanding competition is a stepping stone to understanding your relative strengths as an organization, and being able to leverage them in support of your mission.

Trends

No one can predict the future, but having a general understanding of the trends facing nonprofits, and your organization in particular, is critical. Consider trends in demand for services and funding. Many nonprofits find themselves in the unpleasant situation of seeing their financial support (from government, donors and foundations) decline at the very time the demand for services is increasing. Nonprofits facing this dilemma should consider how partnerships can enhance their ability to serve more people in the most efficient way possible. Partnerships can offer potential funding opportunities if they are well designed and well promoted.

Competitive advantage

Competitive advantage in the nonprofit sector is defined as “your organization’s ability to produce social value using a unique asset, outstanding execution, or both.” By gaining an understanding of your market, competition and the trends that impact your work, you will be better able to hone your organization’s unique strengths. Again, understanding your competitive advantage and those of your competitors and collaborators is the first step to considering how to build on your strengths or mitigate any weaknesses. Furthermore, combining the strengths of two or more organizations and aligning competitive advantages can significantly enhance an organization’s ability to compete, and minimize each organization’s weaknesses.

Strategy screens

In considering a partnership, your nonprofit organization should create explicit criteria to help guide decision making. A strategy screen is a set of criteria that are applied to any potential strategy to help determine its appropriateness. The decision-making criteria in such a screen are rooted in your nonprofit’s business model and competitive advantages; in fact, you should look for partnerships that build on what you currently do well. A strategy screen can help you to determine the relevance of potential partnership strategies. Strategy screens can also be used as a quick way to determine the appropriateness of a potential organizational partner. 

Putting it all together

Use these concepts when considering a strategic restructuring partnership, whether it is a merger, administrative consolidation or joint programming effort. Like any organizational strategy, partnership development needs to be carefully considered and not just pursued because an exciting opportunity crops up.

Moreover, the initial exploration with a potential partner does not have to take up huge amounts of time or resources. The RTSP process is designed to be quick and efficient, usually taking one or two days of facilitated discussion, with basic information gathering prior to the session.

Wherever you are in the partnership development process – assessment, negotiation or even integration – the Real-Time Strategic Planning process can help you determine if the partnership supports your nonprofit’s organizational strategy and advances the mission.

See also:

The Nonprofit Strategy Revolution

Building Nonprofit Capacity

Nonprofit Sustainability

Image credits: poweredbysearch.com, businessnewsdaily.com, euroross.blogspot.com

Leave a reply

Welcome! Please provide your log-in information below.
Forget your password?
Enter your email or user name and your log-in information will be sent to the email on file.