Posts Tagged ‘Heather Gowdy’

Which comes first: the partnership or the plan?

Our firm La Piana Consulting works with dozens of organizations each year on planning: strategic planning, business planning, succession planning—you name it. We also specialize in strategic restructuring: mergers and other forms of partnership between and among nonprofit organizations. All nonprofits engage in the former, many in the latter. Our belief is an organization should never tackle one without giving serious consideration to the other.

Every nonprofit does at least some of its work in collaboration with others. Most could go further, however. Joint programming, back office consolidation, joint venture, merger, collaborative scaling, networked action, collective impact—there are many ways to increase impact by working with others. How and when should an organization plan for this? What kind of planning is called for? What should an organization tackle first? To answer these questions, we consider planning from three angles.

1. Planning as catalyst

Strategic planning is the most common approach to strategy formation. Organizations also form strategy in “real time.” The latter approach is a big focus of ours and the topic of one of our books, The Nonprofit Strategy Revolution: Real-Time Strategic Planning in a Rapid-Response World, which argues the environment is changing so rapidly, nonprofits need to be forming, evaluating, and updating strategy on an ongoing basis, not just every two, three, or four years, when the latest strategic plan expires.

Regardless of the model used, strategy formation involves careful consideration of internal factors (mission, vision, business model, big questions) and external realities (trends, competitive landscape, market position, competitive advantage, need/demand). A single organization may begin a strategy formation process without any specific intent to partner, but the simple act of addressing the question, “Is there anyway in which partnership could allow us to better advance our mission?” may open doors to previously unrecognized opportunities.

Succession planning is another opportunity to consider partnership. Succession planning is the ongoing process of defining the organizational roles and capacities needed for success and of identifying and developing personnel to prepare them to fill those roles as needed. It may also involve considering “out of the box” responses to future leadership transitions. For example, “Would sharing an Executive Director CFO/Director of Human Resources with another organization help us to be more efficient and effective as we go forward?” Here again the planning comes first, but when done well, includes consideration of future strategic restructuring options and opportunities.

2. Planning to inform negotiations

While a formal planning process may lead to a decision to explore options for strategic restructuring, opportunities for partnership can and do arise at anytime. Planning isn’t far behind, however, and is in fact an integral part of the negotiations process. Sometimes that planning is at a very high level: “What is the programmatic scope of the partnership? How will [our combined effort] be structured, governed, managed, staffed, and financed? What will we continue to do independently?” In many cases, agreement on “the basics” may be sufficient to secure agreement from all parties to move forward.

In other cases, a potential partnership may be sufficiently complex as to require a full business planning process prior to a decision to move forward, either because of the number of parties involved, the complexity of the proposed business model, or the nature of the questions posed by key stakeholders such as board members or funders. The deeper dive of business planning allows those involved to develop, define and consider the parameters of an economically and operationally successful undertaking—and then make an informed decision based on the result.

3. Planning for implementation

Once two or more organizations have agreed to work together, they must implement. In a straight forward partnership (a jointly developed education program for new parents, for example, or an agreement to share a CFO) an MOU and an action plan may be all that is needed. In a more complex or highly integrative partnership (a merger, perhaps, or newly-formed coalition of similarly-focused advocacy organizations) a full-fledged strategy formation process may be called for. Or, if the partnership is focused on starting or scaling something new, large, or high-risk, business planning may be appropriate. As with planning to inform negotiations, the opportunity for partnership may have arisen outside of a formal planning process, but a formal planning process will very often follow the decision to partner.

Have those leading your organization considered the possibility of partnership recently? If not, and you have a planning process coming up, consider including a discussion of how working with others could help you better advance your mission and achieve your vision. It is certainly an appropriate question at anytime an organization is considering its future. For those occasions when the partnership opportunity comes first, get ready to jump into planning—together—for a whole new level of success.

See also:

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

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Minimize your “big idea” risks by asking 4 questions

Have you ever loved a new idea so much you’re willing to forgive the nagging uncertainty of its financial viability? I’ve been there. You’ve already created the catchy name, bought the URL and outlined the program details. To ease your conscience, you tell yourself you’ll just work harder at selling it.

The authors of Blue Ocean Strategy would say a great idea isn’t enough. They’d put you through what they call a strategic sequence of questions.

Blue Ocean Strategy (BOS) emphasizes a focus on blue oceans of uncontested market space. In contrast, red oceans or existing market space get crowded as more compete for a greater share of existing demand. Cutthroat competition turns the ocean red. Blue oceans consist of untapped market space where there is opportunity for highly profitable growth and where competition is rendered irrelevant. As nonprofits more frequently turn to alternative funding sources, they don’t have the luxury of crashing and burning on a bad idea. That’s why the BOS methodology is essential for nonprofits during any form of planning/forecasting.

An integral part of BOS approach is creating a business model that is viable and makes a healthy profit in the blue ocean. If you follow the correct strategic sequence and test your blue ocean ideas against criteria in that sequence, you can minimize your risk. The sequence stems from the authors asking the following questions.

If you answer “no” to any question, your blue ocean potential stops.

Buyer utility—Is there exceptional buyer utility in your business idea?
Price—Is your price easily accessible to the mass of buyers?
Cost—Can you attain your cost target to profit at your strategic price?
Adoption—What are the adoption hurdles in actualizing your business idea? Are you addressing them up front?

We asked our interview guest, Heather Gowdy, and coauthor of The Nonprofit Business Plan: A Leader’s Guide to Creating a Successful Business Model (2012), to discuss the merits of the strategic sequence in light of her unique perspective on business planning.

CausePlanet: The strategic sequence (on page six of the Page to Practice™ summary) reinforces a closer look at the financial aspects of a potential blue ocean. We know from The Nonprofit Business Plan, you would endorse thoroughly understanding the financial aspects of any potential strategy. Will you comment on the importance of questions like these in the strategic sequence?

Gowdy: It is absolutely critical to understand the financial implications of a potential strategy—just as it is important to understand the implications for mission advancement. Many nonprofits excel at doing both, but just as many struggle with aspects of business model analysis. Which is understandable: doing so can be even more complex in the nonprofit sector than in the business sector. A nonprofit organization’s “buyers” or customers are not just the individuals and groups availing themselves of a particular product or service. Given that those customers typically do not pay market rate for what they receive, the nonprofit must make up the difference with funding from other sources. Those third-party payers are also customers (buyers) although they may not receive anything directly in return. Nonprofits must continually consider, attract and satisfy both types of customer. The price versus cost question can be equally challenging. Nonprofits can, do and often must provide services that do not in and of themselves generate a financial profit. The question becomes, does the mission value of doing so warrant moving forward, and if so, what other aspect of the business model will support that? Jumping to implementation without having clear answers to these questions is risky at best.

When you’ve considered launching a new idea, have you asked yourself questions similar to these contained in the authors’ strategic sequence? If you answered “no” to any of the questions, did you still carry on with the plan or make adjustments?

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?” by Heather Gowdy

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Getting at real transformation: advice for aspiring change leaders

I recently asked a group of smart, experienced people what advice they would give others about managing change in an organizational context. The first response (after a short period of silence): “It takes time, and grit.” While subsequent suggestions may have been a bit more specific, the honesty and accuracy of that first response stole the show. It does take time, and leading change—particularly large-scale change—is not for the faint of heart.

How do you describe a change leader?

Emotional intelligence certainly helps. Change leaders must recognize, acknowledge and address both personal and organizational feelings of loss, uncertainty about the future and fear of the unknown. They must be willing to invest time, energy and resources in helping the organization move through the process and in managing resistance along the way. Change leaders must engage other change leaders, continuously building and supporting a team of individuals to champion and guide the change process. And they must emphasize communication. Great change leaders are optimistic and consistent in delivering a message of moving forward. They communicate regularly, talking with people face-to-face as well as virtually. They continually check the pulse of the organization.

John Kotter’s eight stages to transform

One of the most challenging aspects of leading change is ensuring that all stakeholders—clients, customers, managers, line staff, volunteers, board members, even funders—grasp the need for change. In times of stress (and who isn’t experiencing stress these days?), maintaining the status quo is tempting, as is “nibbling at the edges” by opting for small,less-painful adjustments over true transformation.

John Kotter speaks eloquently to this in his 2007 Harvard Business Review article “Leading Change: Why Transformation Efforts Fail,” in which he outlines eight stages that must be managed in order to give your transformation effort the best chance of succeeding:

1. Establish a sense of urgency.
2. Form a powerful guiding coalition to lead the effort.
3. Create a vision to direct the change initiative.
4. Communicate the vision, using every vehicle possible.
5. Empower others to act on the vision, e.g., by encouraging risk taking.
6. Create short-term wins.
7. Consolidate performance improvements and produce more change.
8. Institutionalize new approaches developed during the initiative.

The danger of quick fixes

Over the years I have seen many organizations struggle to institute some kind of major organizational change, recognizing only later they had stumbled at Step 1: establishing a sense of urgency. Sometimes the impetus for change comes from the board and staff never fully buy into the need. Other times it is a charismatic ED, someone who knows the organization needs to change and sees a clear path forward, but doesn’t fully appreciate the doubt that still exists among line staff. Even those who see and acknowledge a need for change may not feel a sense of urgency. That is often when a range of “quick fix” suggestions are made.

Our clients don’t feel heard; let’s set up a Facebook page and encourage dialogue through social media. Turnover has been high; we need to re-evaluate our hiring process and make sure we are attracting the type of candidate who would succeed here. Our competitors are expanding the range of services they offer; perhaps we, too, need to consider offering a more comprehensive range of services. These may or may not be good ideas, depending on the situation, but chances are these actions in isolation will not solve the larger problem, or get the organization to where it really wants (and needs) to be.

Questions to start the change conversation sense of urgency? The following questions can help jumpstart the conversation.

What is happening internally that might indicate a need for change? What is happening externally?
What is (or will be) the impact on mission attainment, service quality, client/customer satisfaction, financial sustainability, and morale among staff and board members if these things continue?
How have others in the field addressed similar challenges and/or opportunities? Did they seek change? Why or why not? What was the result?
What could happen if we change?
What will happen if we don’t change?

That last question may be the most important. Sometimes it is the acknowledgement that the status quo will not, in fact, best serve the organization and its mission that is the most powerful driver. Change is hard, but in the long run, not changing might be a whole lot harder.

See also:

A Sense of Urgency

Switch: How to Change Things When Change is Hard.

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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.

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Big changes start with small steps

It has been almost two years since the release of “Convergence: How Five Trends Will Reshape the Social Sector.”In that piece, my colleagues and I looked at how the combined effect of demographic shifts, technological advances, increasing emphasis on working via networks, evolving norms around civic engagement and volunteerism, and the blurring of boundaries between sectors was putting enormous pressure on nonprofits to think differently and work differently–to become true “futurists” in pursuit of mission advancement. Much has changed in two years (put down that iPad–you can check responses to your organization’s Twitter feed in just a few minutes), but one thing has stayed the same: the “future” is a moving target. Keeping current can feel like drinking from a fire hose, and adapting is hard.

The response to “Convergence” was fascinating from the start. Even in 2009 there were organizations saying, “Of course! We’ve known this for ages and we’re on top of it.” Much more commonly, however, the following reaction has occurred: “Where do we start?” Or, “We’ve started, but just barely.” And, “We’re strapped. What can we realistically do now? How do we move forward, even in just one or two areas?” Prolonged economic battering has made a difficult task next to impossible for many organizations, especially those that were under-resourced to begin with.

So where can you start, if you’re not one of the fortunate few setting the pace for the rest of the sector? The following questions can help focus your efforts:

1.    What do you want to do differently? Reach out to a broader audience via as-yet-untried social media tools? Engage more supporters in ongoing strategic planning? Shift from a traditional membership model to one that encourages broader participation from a wider network? Build (and truly leverage) a more diverse board or staff team? Consider a multi-sector partnership? Engage in some spirited discussion about where the need for change is most pressing?

2.    Why? How will making that shift help your organization to better advance its mission? What is the change imperative that will drive your organization and its staff, board members, and volunteers to truly do things differently?

3.    How can you take the first steps forward in each area? What information do you need and how will you get it? What “baby steps” can you take to start down the path (or paths) you’ve identified?

4.    Who can take the lead? Is there a champion for this change? Who will do the actual roll-up-your-sleeves work of making things happen? Is this something a volunteer or one staff person can handle? Perhaps a team? Or are you looking at the need for a culture change throughout the organization?

5.    When and how will you evaluate your progress and its effect on your organization’s ability to advance its mission? There are a thousand, even a hundred thousand, things you can do to step further into the future–you must choose carefully and learn from each success and failure.

Of course, taking time for this type of conversation isn’t always easy, nor is sustaining the momentum generated when you do. Ideally, questions like this are a regular feature of your board meetings, staff retreats and planning sessions. If they are not, think about where you might be able to introduce them. We encourage our clients to commit to a protected piece of time on both board and staff agendas at least once a month for truly strategic discussions. Wrestling with how to respond and adapt to the rapid changes facing everyone in the sector certainly warrants the time and attention.

Don’t let the enormity of the topic intimidate you. It’s easy to dive into “what” and “why” and find yourself back to the question that brought you to the discussion in the first place: Where do we start? Start small. Identify your top three questions and go find answers. Test your idea. You may fail, but you’ll learn from it. Be specific, and be willing to check in and articulate the next three steps when you reconvene.

Change is never simple. External change can be overwhelming, and internal change rocky. Starting with the basics–what, why, how, who and when–can help make it more manageable.

See also:

The Nonprofit Business Plan

The Nonprofit Strategy Revolution

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