This is the second part of a two-part article on strategic planning. Part 1 was “Get back to basics with first principle of strategy development.” Part 2 continues with the next two principles: building on your strengths and making decision-making criteria explicit.
My last article covered the first principle in strategy development – Know Thyself – and provided questions to ask to make sure that nonprofit board members and managers share a fundamental understanding of the organization.
Building on that base, organizations should consider two more principles when developing strategy.
Second principle: Build on your strengths
Knowing Thyself is important for many reasons, but the most important benefit is to guide the organization in making major decisions by doing more of what it does best. Human nature is often to fret over our weaknesses. But individuals are more energized, and organizations more successful, when they focus on their strengths. We all know the energy we get from completing something we are particularly good at – the actor at the end of the show, the athlete at the end of the race or the teacher when a struggling student finally aces a test. The principle is no different for an organization – nonprofits come alive when they focus on what they’ve learned to do best.
The best approach to developing strategy is to use the fundamental organizational identity discussed in the first principle – composed of mission, geography, programs, customers and funding – as a guide to select among strategic options. The option that best fits your current identity – that takes advantage of what you’ve already developed as your area of expertise – is often the best choice.
One piece is still missing, however. Another part of self-knowledge is knowing how your organization is distinct from others or how it is unique in your field. In the for-profit world, this is known as the organizational differentiator or, in a term I find particularly useful at challenging nonprofit assumptions, the competitive advantage.
Nonprofit board members and staff are often reluctant to think about competition because a premium is placed on cooperation. Indeed, nonprofits do and should cooperate. But understanding when and how you compete will give you a real lead in achieving your full potential. To put it bluntly, you don’t deserve to stay in business if your mission is not important enough, or your execution not sharp enough, to attract the resources to carry it out.
Nonprofit competition is different in key respects from for-profit business competition. Both sectors have to consider direct competitors (those doing exactly what you do), as well as indirect competitors (those doing something different, but similar, such as a movie theatre compared to a live theatre). But nonprofit organizations also face resource competition for funding, staff, media attention and board members.
Once you get used to the idea of competitors, then think about your competitors’ strengths. Do they have a program that no one else operates? Have they developed a skill and reputation for working in a community that has been particularly hard to reach? Then ask the same questions of your organization: What is the particular strength we have that differentiates us, makes us unique and helps us make the case that others should support our work? Once you know what your competitive advantage is, do more of it!
I know of several organizations – all in different communities – that had developed particular skills in working with the Latino community. Although the types of services they offered were often similar to those offered by others – health education or leadership development – they were able to develop new strategies that leveraged the trust they had built with the local Latino population by partnering with other organizations. Through this approach, they have been able to generate additional revenue and exert a greater impact in their field.
Although the second principle is to Build on Your Strengths, it wouldn’t be fair to pretend that you should never try to improve where you are weak. At times, organizations must move into a new area to be most effective or to remain financially viable. The point of this principle is that any move to go beyond your basic identity or to develop new core strengths should be driven by the greatest possible necessity and supported by more extensive planning.
Many great leaders make brilliant strategic choices without ever talking about the thinking behind those choices. I’ve heard middle managers in one organization describe a kind of strategic chaos – they do not understand why one program is emphasized over another, or why new programs are taken on. But the CEO and senior managers are credited by everyone in the organization with making remarkably prescient choices. The factors that go into major strategic decisions are somewhat opaque for many in the organization. As a result, the organization has thrived – driven by the decisions of senior managers – but seeds of serious challenges around staff cohesion and succession are readily apparent.
By taking time to identify and communicate the fundamental criteria for decision making, rather than assuming everyone understands these factors, you can build a more cohesive organization and address the latent frustration described by mid-level managers and staff when faced with changing assignments or increased work stress.
These three principles are perhaps simple, but they reflect a lesson we all learned from Julie Andrews in The Sound of Music: “Start at the very beginning.” By naming organizational fundamentals, you can move forward with cohesive guidance for making decisions on a day-to-day basis – or, at the very least, communicating the factors for major decisions throughout the organization.
Image credits: blog.readytomanage.com, sbcvoices.com, vivocoaching.com