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.
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.
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
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.
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 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.
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.
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