Posts Tagged ‘strategic 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

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CEO Survival: Thou shalt not get (too far) ahead of thy board

It’s the first commandment of nonprofit CEO survival: thou shalt not get ahead of thy board. At least, not too far . . . But you do need to be a little ahead of them . . . Just not so much that they notice and get offended.

If you’re confused, you’re not alone. Most veteran nonprofit CEOs have a sack full of stories about interactions with their board. One of the mistakes that is most frustrating — and potentially damaging — is getting too far ahead of a board of directors. The result is the collapse of a seemingly promising idea or policy change, and possibly a severe dent in the CEO’s credibility.

What follows are some thinking points to help negotiate this always treacherous interpersonal whitewater. The central premise of each approach is simple: Ideas and concepts are easily discussed and changed, and this is the proper role of leadership, including the board. Plans are also easily changed, but the effort that goes into them increases the commitment to their plans. Stick with ideas in the boardroom, plans outside of it.

Too far out on growth (Egos and economics)

Two of the most powerful motivators swirl around the intersection of the CEO and the board: ego and economics. By tax law, neither board members nor executives can have a private ownership stake in a nonprofit. But the executive (and other staff) have a potential economic interest, in the form of salary and benefits, financial stability, and improved systems. They also have an ego investment in the form of pride of performance. Together, these constitute a compelling package. This is one of the many reasons why executives will be more likely to propose growth strategies than will board members.

Board members can only invest their egos, so when presented with plans for growth their biggest ego investment can often be summed up in the question: “What if it fails?” This is one of the reasons why board members will be more likely to oppose growth than will executives.

To avoid getting too far out on growth, the CEO can frame the proposed expansion in terms of organizational ego. This approach might use arguments such as “this is an extension of what we already do well” and “if we don’t do this, [another organization] will, but we’re much better at it.”

Too creative (Divergent and convergent thinkers)

During the 1960s, a researcher named Joy Paul Guilford suggested that people think in two different ways — divergent or convergent. Divergent thinking is creative in nature, while convergent thinking seeks the “right answer.” Most individuals are instinctively comfortable with only one of these approaches.

Nonprofit CEOs, because of the nature of their pro- scribed roles, are more likely to engage in creative thinking. Boards are more likely to prefer discovering the “right answer.” This also tends to be true because the CEO is usually more knowledgeable about the field than the board as a whole, since board members are typically volunteers without extensive opportunities to learn about the sector. This tendency of boards to seek the “right answer” also explains why so many motions are passed unanimously.

The creative (divergent) CEO will sometimes have a difficult time with the board because of this difference in thinking styles. When the CEO is too creative for the board’s taste, outsiders such as authorities, respected peers, and consultants can often be a buffer. Note that the board doesn’t necessarily want to diminish the CEO’s creativity – which they probably respect. They want to find independent reassurance that they’re on the right path. Convergent thinking is often done in stages. We drill down to the first correct answer, then the next one, then the next. Bringing the board along might also need to happen in stages.

Acting before deliberation (Getting it done versus deliberating over it)

CEOs are in charge of getting stuff done. Boards are in charge of deliberating about stuff. The tension is obvious. Putting these two approaches carelessly together can result in wasted time, hurt feelings, and worse.

While taking action and deliberating policies are about as different a pair of activities as it is possible to have, a little role clarity will help things go more smoothly. Translation: with a little mutual candor, the CEO won’t always be trying to jump ahead while the board won’t always be trying to slow things down.

At the risk of oversimplification, boards make choices and executives make decisions. Individuals tend to be good at sizing up a situation, making a decision, and carrying it out. Groups, on the other hand, are simply better at refining and improving ideas, plans, and strategies. The CEO will not get dangerously in front of their board if they build in the opportunity for its members to sincerely try to improve the quality of the CEO’s decisions.

This is not second-guessing. It has been proven that groups  that  emphasize  collegial  conversation  and  can evaluate  themselves  honestly  make  better  decisions than  do  individuals.  The inevitable problem is process and time required to get there. Researchers have also shown that people tend to have an exaggerated sense of their own individual capabilities, which is why the CEO/board split can be particularly intense.

The ideal situation exists when an executive’s approach to an issue is vetted by the board in a supportive way. This fits the expected roles — the CEO by definition has to be the public face of the organization, while the board should concentrate on the quality of the outcome (the choices above).

Too risky (Lead with ideas, not plans)

It will come as no surprise to veterans of nonprofit board rooms that CEOs can get too far out in front of their boards on all matters involving risk. This is a structural inevitability — the CEO (as well as other executives) is almost required by the uniqueness of their position to be the designated risk-taker.

The real challenge from a risk management perspective is how quickly the CEO can bring the board around to their position. Considering the baked-in conservative nature of most nonprofit boards as described earlier, this could take some time.

One good way to gain board support for a strategic risk is, again, to lead with ideas, not plans. This is one of the reasons why good strategies, as opposed to strategic “plans,” are not filled with details such as assignments, dates, and activities. Most boards go through three stages of reaction when confronting new ideas for the first time: learning, analysis, and acceptance. Committing to details too soon disrupts this flow and can waste time.

Leading with ideas also makes it possible to work through various scenarios without committing resources. If the dialog is genuinely open it enables the board to safely explore the risks abstractly before encountering them in real time. Note that all parties must be sincere about this process. It can lead to long board meetings, but the offset is that board members will be more committed and will usually report greater satisfaction in their roles.

Another way to avoid getting too far out front is for the CEO to anticipate and cope with real risk as a regular practice. Dealing with a board’s fear of risk is a different problem. This should happen anyway, but doing it routinely helps the CEO establish their conservative bona fides.

The first commandment of CEO survival is to never to get too far out in front of the board of directors because they too have a responsibility to shape the future. But the CEO doesn’t want to be behind the board, because their job is to lead. It’s a structural dilemma, but most of the pathways to success are based on the second commandment of CEO survival: Lead with ideas, then talk about plans.

See also:

The Practitioner’s Guide to Governance as Leadership: Building High-Performing Nonprofit Boards

The Ultimate Board Member’s Book

Super Boards: How Inspired Governance Transforms Your Organization

Reprinted with permission by The Nonprofit Times and Thomas McLaughlin.

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Build on your organization’s strengths when developing strategy

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.

Third principle: Make decision-making criteria explicit

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.

See also:

The Nonprofit Strategy Revolution

Building Nonprofit Capacity

Nonprofit Sustainability

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Get back to basics with the first principle of strategy development

This article is Part 1 of 2. The second article continues with the next two principles after Know Thyself: building on your strengths and making decision-making criteria explicit.

We all carry unexamined – or unstated – assumptions with us. When organizations initiate strategy development processes, these unexamined assumptions can lead to unsatisfying results: mis-communication along the way, time wasted gathering information you don’t need, or agreement to words that merely paper over differing understandings.

Many of these pitfalls can be avoided by beginning any strategy development process with three principles.

First principle: Know Thyself

Whether as individuals or as organizations, we often forget to remember who we are. For individuals, this might mean spending time with an old friend or a sibling, someone who brings you back to your fundamental self. For organizations, this means reviewing the most basic questions of the organization.

At the beginning of any strategy process, be sure to spend time up front reviewing a few deceptively simple issues with both board and management.

Mission. This is, of course, a common starting point for assessing an organization’s identity, and for good reason. Focusing first on mission reminds us why we have dedicated so much of our time, and even so much of our lives, to a nonprofit cause. Rather than just repeating the words of the mission statement, exercises that describe the mission or the hoped for impact can be more inspiring and also more accurate. Explaining benchmarks your organization will achieve in five years, or on what will change in the world because of your work, are simple ways to refocus on the meaning of the mission.

Geography. How would your board, executives and staff describe the geographic area served by the organization? Sometimes this is an extremely simple question; more often than not, it uncovers nuances about how the organization is focused that are vital to moving forward. For example, in my work with one health care organization, we found that while its literature described a “metropolitan” service area, in fact nearly all their clients came from a handful of inner city zip codes.

Customers. This question can be answered in different ways. First, most nonprofits can describe direct customers: patients in the example of a health care organization above, patrons for arts organizations, recipients of service for social service organizations and so on. However, it’s good to make sure you understand the secondary customers, or audiences, your organization must serve: funders of programs, local political leadership, nonprofit collaborators and more. For nonprofits, defining customers means understanding who you are accountable to – and speaking to those audiences.

Programs. Programs are, of course, the primary vehicle for achieving organizational mission. I have served on the board of a small nonprofit organization for several years, and during that time I have experienced the regular occurrence of a board member reacting in surprise at a board meeting: “Oh!  I never knew we did that!” It can be notoriously difficult for some organizations to educate board members about the details of program work, but it is essential that board members understand the basic category, or “buckets,” of program work before considering questions of strategy – since considering strategy often means redirecting existing programs or establishing new activities.

Funding. Many board members and managers are familiar with their organization’s overall budget, but may be less familiar with the relative importance of different funding streams. A basic analysis of revenue by category – government grants, fee for service, foundations, general contributions – is essential knowledge for nonprofit leaders.

When I work with nonprofits, I sometimes worry that these questions are too simple. But again and again, as we talk through these fundamentals, I discover that they offer a clear definition of an organization’s basic identity. On top of that, I have never once been in a situation where the entire board and management team involved in developing strategy began with a shared understanding of these fundamentals. Walking through this discussion may be elementary for the executive director, but it can be illuminating for board members.

Another way to think about the Know Thyself principle is that for an organization, the entire leadership must be self aware.

See also:

The Nonprofit Strategy Revolution

Building Nonprofit Capacity

Nonprofit Sustainability

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Five staff responses to change you can’t afford to overlook

As a nonprofit leader, chances are at some point you’ve been involved in either instituting or supporting change in your organization. The question is, if the need for change is so obvious to you, why isn’t the rest of the organization jumping up and down with excitement?

Over the years, The Management Centre has carried out a significant body of research on, and change work with, a wide range of nonprofit organizations. And we’ve found that there are five core reactions to change that we call the 5 Cs. To be an effective change manager, you need to understand these five reactions in your colleagues so you can anticipate them and adopt appropriate strategies to deal with them.

The 5 Cs: Responses to change and how to handle them

We tend to sell organizational benefits when planning change. But not everyone judges the impact of things through organizational perspectives. To be successful, it’s essential to reflect on how individuals in the organization will react or respond to your change announcement. Be prepared, and plan an approach for each of the 5 Cs:


Champions – perhaps 5 to 10 percent of the total – are those who are prepared to stick their necks out, run with an idea and own what happens. After announcing the change you propose, these are the people who’ll crowd around you smiling and shaking your hand.

Tempting as it is to embrace their enthusiasm, you need to treat champions cautiously. The advantage of their unstinting support for the change is balanced by some serious disadvantages. For one thing, champions generally champion everything – even painting the office in stripes. Their enthusiasm could give you a false impression of how everyone else is feeling. And champions won’t question you closely on the merits of your proposal. You need some challenge to ensure your idea has rigor.

Give champions something practical to do which absorbs their energy. Be careful about using them as advocates; they’re likely to be treated with skepticism by others.


Chasers – 15 to 20 percent of the total – don’t immediately respond positively to your proposal for change. At the end of a briefing, they look around to see who’s signed up. They want to discuss your idea with others before forming a judgment, and will generally look to a key opinion maker or “trigger” person for guidance.

The great advantage of chasers is they give you a more accurate view of how your proposal is going down. When they join, you’re making progress and, once committed, they’ll stay. And the disadvantages? Well, you’ll have to convince the right trigger person to convince the chasers. And that trigger person may well be someone who has social rather than organizational power in your organization. So, you can’t tell them to back your idea. And still, chasers won’t come on board immediately – they may have their own very specific concerns; for example, if you’re going to restructure, what will be the impact on their team?

Identify the trigger person at different levels in your organization and brief them in advance, so that they encourage the chasers to sign up to your project.


At 30 to 40 percent of the total, converts are the biggest single group in your change audience. They listen in silence to the proposed change and don’t ask questions. But don’t confuse their silence with negativity. Converts want solid evidence in favor of the change in order to come on board. They’ll also need reassurance about what impact the changes will have on them. Their passivity means you often have to ask questions on their behalf and then answer your own question – FAQs. They want the answer, but they’re not happy to ask the question.

Converts have two advantages: First, bringing them on board tips a sizable majority of people into the “mostly positive” camp and ensures your change proposal will be adopted. Second, although they can be slow to adopt a change, they are equally slow to let it go. Once they’re convinced, you have momentum.

The main disadvantage with converts is that they may take so long to come round that your initiative loses momentum.

Think about and try to address converts’ concerns before launching a change process. That way you’ll be able to bring them on board more quickly. Try producing a list of FAQs in advance – it shows you’re thinking about the individual as well as the organization.


Challengers – 15 to 20 percent of the total – ask difficult questions initially and then … continue to do so. Their approach is to confront and be awkward, because they have a strong stake in the outcome.

It’s a personality trait not a personal attack, so don’t treat it as an attack. Because challenging is a personality trait, it’s unlikely you can convince challengers that the change will be a good thing. What’s more important is that others will be watching how well you handle the challenger’s interventions.

Despite appearances, there are advantages to challengers: Their questions force you to be rigorous in your thinking. And, because they ask the questions others merely think, addressing their issues may enable you indirectly to reassure others.

The disadvantages are twofold: Challengers can carry on asking difficult questions beyond usefulness. They may also ask questions on areas not up for discussion.

Handle challengers’ queries fairly, however irritated you feel; others are watching. Be firm with them about what’s “off the agenda”; provide ground rules and stick to them.


Changephobics – 5 to 10 percent of the total – will not ever be convinced. They can slow down or even derail change. They cause dissent and are essentially immovable. Changephobics are tough. However, if you’re seen dealing with them honestly and fairly, you’ll gain brownie points from others for being evenhanded. And, however hard it is, keep in mind changephobics don’t oppose because they’re bad people, but because they feel you’re destroying something they hold dear.

Changephobic disadvantages are legion – doing their best to stop your initiative, providing unstinting opposition, significantly lowering morale.

The harsh reality is that you have to get rid of changephobics as quickly and effectively as you can, whether it’s to another department or out of the organization.

When you lead your change process, you will need to consider how you might deal with the 5 Cs. Think about all the different stakeholders in your organization – staff, volunteer, boards and even users. Which of the 5Cs would they fit into? What can you get the champions to do so they feel positive, but stay out of your way? Who do you need to convince to get the chasers on board? What questions do you need to answer for the converts? Who are the challengers? What flaws might they spot? Who are the changephobics? How can you get them to leave or help them go?

As we all know, implementing change is no walk in the park. Preparing for the individual responses to change will certainly help you leap ahead of some of the inevitable stress – if not all of it.

See also:

Switch: How to Change Things When Change Is Hard

Accelerate: Building Strategic Agility for a Faster Moving World

Buy-In: Saving Your Good Ideas from Getting Shot Down

A Sense of Urgency (How to Overcome Complacency In Your Organization)

The Six Secrets of Change

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Strategic planning: Is your board focusing on five external forces?

Strategic planning often gets a bad rap. And it’s easy to see why. Usually, we have a board retreat or take the staff off site and hold a big meeting. Much is said and brainstorming is vigorous, but little is written down and less is quantified. We return to the office on Monday, with few decisions made. The retreat or meeting didn’t help your organization change anything.

In order to be successful, organizations, teams and individuals must plan and set a defined course for change. How does planning focus energy, change outcomes and result in greater job satisfaction for the board and staff? In the end, the insights gained during planning should influence the hundreds or thousands of individual actions that take place in an organization on a daily basis. Sounds good, but how do you do this, and what does it look like in daily application?

A case study

Let’s assume you are the CEO of a large nonprofit with international operations scattered across the globe. Your staff and volunteers work with people who have enormous health, education and economic needs in some of the most challenging places on the planet. Information cascades into your organization daily—from the Web, news reports, donor feedback and field reports. Last year, you, your staff and your board worked hard on a five-year strategic plan. What difference is that plan making today on how you face challenges?

An effective planning process begins with rigorous advance preparation. The quality of the end product is directly correlated with the development of comprehensive external and internal scans. An external or internal scan represents a quick check by a planning team of trends in key areas of the environment.  All organizations risk losing touch with those key trends, internally or externally, that signal major changes ahead for the organization. These environmental scans create a context for the dialogue during the planning process. The process focuses the board’s attention on strategic thinking and the forces that are shaping the organization’s future. Which of the rapidly changing forces in this organization’s environment will have the most significant impact on the organizations results in the future? The outcomes of the strategic thinking dialogue are then used to define the organization’s strategic direction, goals, objectives and, ultimately, action plans and budgets. The key is to identify the right questions for the next business cycle of the organization.

The board of this nonprofit focused on the strengths, limitations, opportunities and threats in the external environment. Five forces of change were identified that warranted the board’s attention, not just during the planning retreat, but in ongoing discussions during board and committee meetings for years to come.

The five forces are:

Demographic upheavals
Rising expectations
Explosion of new technologies
New forms of organizing work

Based on the deliberations of the board and staff during the retreat, the specific strategic drivers and key questions for this organization to address over the next five years were identified as:

The world is flat. How does globalization impact the structure of our organization? What new competitive forces will impact our ability to attract the talent and people we need in the regions we serve? How could we organize our work differently and employ technology more effectively to serve targeted populations? How do we, as a board and staff, stay informed and proactive in rapidly changing environments?
Security of operations. Security has the single greatest impact on effectiveness of global operations. There is no service to targeted populations if operations are removed or restricted. Security is an issue for the safety of an organization’s people, capital resources, equipment, programs and technology. How do we enhance our efforts to monitor and adapt quickly to changing security issues? Can our organization be more nimble?
Competition for support. Trends indicate that government support in all forms will be reduced for non-governmental organizations and all other nonprofit organizations in current and future years. This will result in greater competition for remaining government funds. How can this organization compete most successfully to sustain the largest percentage of government support possible, while simultaneously diversifying private support from individuals, corporations and foundations? What are the expectations of our existing and new donors?

The progression from a broad external scan to forces of change to key strategic drivers clarified for board and staff where they should be focusing their attention. Rivers of information are now sorted by how they impact the nonprofit’s structure, staffing, security and fundraising. There were many other worthy issues to focus on, but these priorities emerged as the key ones for this organization over the next five years. The CEO identified opportunities for board and staff to monitor these issues on an ongoing basis, in order to make decisions and take actions to positively impact the result this nonprofit strives to achieve.

Internal environmental scans focus on the core components that are essential to every organization. Regardless of its structure, stage of organizational development or field of activity, every organization consists of five essential components—without which it cannot come into being, sustain its existence or grow.

These five components and their definitions are:

Market. Anyone who uses, or has the potential to use or fund the programs, products and/or services created, distributed or funded by this organization.
Program. The content and methodology an organization creates and distributes through products and services to define audiences.
Organization. The network of structures and systems through which an organization creates and distributes programs, products and services to its market.
People. The human resources available to an organization to create and deliver programs, products and services to its market.
Capital. The non-human resources available to an organization to create and deliver programs, products and services to its market.

Growth comes when an organization energizes one or two of these components. Sustained capacity building depends on an organization’s effort to balance the development of every component. Organizational stress is a signal that the development of one or more components is lagging behind the development of the most energized component. Alignment among and between components can propel an organization to the next stage of its organizational lifestyle (i.e. from start up to growth mode), or a lack of alignment can stymie an organization’s development for years. This analysis of internal capacity must be measured against the challenges this organization will face to achieve success, however success is defined.

Based on an internal scan of this nonprofit, the following key opportunities were identified:

Cultivate new donors while retaining existing donors to raise net contributions and diversify funding sources.
Build development/fundraising/outreach/communications functions and systems to cultivate lasting relationships with funders and collaborators, while raising more money to support the mission.
Coach, develop and grow capacities and skills of the executive management team to build the capacity to deliver on its mission and support the work of the organization.
Clarify goals and quantify objectives for vice presidents to further develop their skills as self-directed managers.

The board and staff identified many ways that this organization could improve performance on the five components. The four opportunities sited above are the ones that are central to the growth and development of this organization during the current business cycle.

The three drivers resulting from the external scan and the four drivers resulting from the internal scan formed the basis of a Statement of Strategic Direction, which captured the seven priorities for this organization over the next five years. There were other worthy priorities, but these seven were critical to the organization’s future growth, development and ongoing success.

The staff took the next step and crafted five-year goals, supported by quantified objectives. The board reviewed and approved these goals and objectives. The staff writes annual detailed action plans to support the outcomes defined in the objectives. The action plan development dovetails with the creation of an annual budget.  The systems are in place to support the desired outcomes.

The key issues are clear: Every board of directors’ meeting must include time for discussions about security, competition for support, growing the capacity of staff, or how the systems support the desired outcomes in donor relations. The board has a greater awareness of and growing knowledge of the most important strategic issues. The staff feels empowered to sort the incredible amounts of information that bombard them daily and use the most relevant information to address the core issues for their organization. Most importantly, the CEO, in conjunction with the board and staff, fosters the ability of the staff, volunteers and key stakeholders to see what truly exists today and, perhaps more importantly, fosters the capacity to see what will exist tomorrow.

See also:

The Nonprofit Strategy Revolution

Nonprofit Strategic Positioning

Nonprofit Sustainability: Making Strategic Decisions for Financial Viability

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Rolling your eyes at the thought of strategic planning? Try 4 simple rules

Last week, a colleague called me about facilitating strategic planning for a new group he is managing through his association management firm. He warned me that the executive committee didn’t hold much value in strategic planning, but they had agreed to an initial conference call to, as he put it, “hear me out.”

At least half the calls I get from clients about strategic planning include dire warnings that they don’t really want to do planning, but feel it is a “necessary evil.” I became so intrigued by this apparent aversion to planning that I did my own investigating. What makes boards roll their eyes and shake their heads over the suggestion of annual planning?

Here’s what I found. For many boards (and nonprofit executives), strategic planning means:

1. A lecture from a “talking head” consultant;

2. General, unfocused discussion about what went wrong in the past year;

3. Participation in the dreaded “team-building” exercises;

4. Two to three days out of the office at a remote location (translation: misuse

of volunteer time and organizational resources); and

5. An added cost the organization either can’t or does not want to bear, because

they do not see the benefits of planning.

These perceptions from leadership are insightful. Who among us doesn’t cringe at the thought of two days devoted to strategic planning? Don’t we wonder what we’ll do and how (if) it will really help the organization? What if leadership doesn’t see the value in planning? Will the board only commit a couple of hours to planning as part of its regular board meeting?

To address board apprehensions about strategic planning, I follow a simple set of rules that guide my work with nonprofits:

Rule 1: An organization must devote one full day to strategic planning, with no other business conducted during that day.

Successful strategic planning requires the undivided attention of board and management, conducted with total commitment to the organization’s well being and its focus on the future. Too often boards try to maximize their allotted time together by attempting to conduct business, elect board members and do strategic planning work all at one meeting.

Example: One organization that hired me for a day of strategic planning ended up conducting a quarrelsome board meeting for five of the eight hours originally allotted for planning. The acrimonious nature of the meeting made it virtually impossible for the board to move into team planning, so we ended up rescheduling. Both the organization and I were frustrated about losing both time and resources due to their lack of focus on planning.

Rule 2: The board and management must commit to at least two days preparing for planning.

Successful strategic planning requires advance preparation to ensure the best use of time and organizational resources. I am a firm believer that planning can be accomplished in one day. However, in order to accomplish this, both the consultant and the planning participants must be prepared. Working with the organization’s leadership, I develop a pre-planning survey that is sent to all participants 30 to 45 days before the session. The survey asks for input about organizational value (current and future), mission, future goals, governance and financial issues. The survey results are used to finalize the agenda and identify relevant planning materials. (The survey also greatly decreases the chance of the planning being derailed by a hidden issue.)

Example: A newly-merged association I had been working with insisted they could not do planning in less than two days, even with all the preparation. They made arrangements to spend three full days in planning and board meetings. However, because of the pre-planning work we did, we wrapped up their planning agenda by 4:00 p.m. on the first day, allowing them to do a quick board meeting the next morning and head for home. The results from employing this process were gratifying for the association, as well as for me.

Rule 3: The board must come to consensus around issues discussed.

There is nothing more frustrating than spending a day of planning with no tangible results. An important component of strategic planning is the actual decision making around goals and issues important to the organization. Moving the board to consensus around strategic organizational components such as vision, mission and goals is essential in order to establish a clear direction for management to act upon.

Example: Working with the management of a local credit union (a not-for-profit financial institution), we designed parameters for the board to address at their annual board retreat. The board engaged in an exercise where they “voted” on their comfort level related to institutional growth and risk. The resulting board consensus was used by management to set goals for the upcoming year.

Rule 4: The organization must commit to developing a business plan with a budget and work timetable.

Successful strategic planning requires developing a business plan that becomes the organization’s roadmap for success. The most valuable outcome of strategic planning should not be the session report, but a true business plan with goals and strategies that lead the organization to accomplish its vision and mission. The board’s role is to set the direction by confirming vision, mission and three-year goals. Management’s role is to create a business plan that develops strategies, tactics and tangible outcomes that drive achievement of the goals set by the board.

Example: One organization that has been a client for several years created a “dashboard” that is reviewed at every board meeting to check progress and make strategic decisions about goals and strategies. They have had the same business plan for over three years, using their annual strategic planning to update the plan. In essence, they have created a “rolling business plan” that is carrying them to an ambitious future vision.

What happened to the group that asked me to justify their need for strategic planning? The subsequent call went well, because I had sent them a detailed contract with these four rules and a copy of a business plan to show them the results they would achieve from a day of planning. I’ll be facilitating their strategic planning later this year.

See also:

The Nonprofit Strategy Revolution

Nonprofit Strategic Positioning

The Nonprofit Business Plan

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Strategy from the inside-out: an introduction

This series of articles, of which this is the first installment, from Mike Stone explores the core concepts of a strategic planning approach for nonprofits. Mike welcomes feedback on these concepts, which will be included in a book manuscript.

“In an effort to save the bottom line, the modern nonprofit risks losing its soul.”– Bill E. Landsberg (“The Nonprofit Paradox: For-Profit Business Models in the Third Sector,” The International Journal of Not-for-Profit Law Volume 6, Issue 2, January 2004)

The Need for a Nonprofit Model of Strategy

One challenge in the development of nonprofit strategy is the absence of an approach that is sensitive to the nuances of the nonprofit environment. Granted, basic business practices and controls are essential to a healthy nonprofit. But the traditional for-profit models of strategic planning do not serve nonprofits because they ignore the fundamental differences between the two sectors. For example:

•          Nonprofit growth is constrained by a social mission. The overriding goal of a for-profit company is to stay in business, usually by expanding markets and increasing profits. For all the social good that may be created by for-profit businesses, the fact remains that they are unencumbered in their desire to shift products and services when a market opportunity presents itself. Not so for nonprofits, which operate under the influence of a governor of sorts, keeping the organization from exceeding the limits of its stated social mission.

•          Nonprofits cannot create uncontested market space. For all the wisdom of the pioneering approach to market expansion, “blue oceans” exist for nonprofits only if those metaphorical waters are populated with potential clients and willing payers. Whereas for-profits can respond to consumer demand based on the traditional free market relationship between buyer and seller, a nonprofit must have both consumer need and third-party support in order to succeed in a given market.

•          Bigger is not always better. The economic reality is that many nonprofits lose money on every client served (which is why the traditional market will not support the work and consequently, why fundraising is so important). For these nonprofits, reaching more people, a common strategic goal, means losing even more money. Strategic growth, a more appropriate goal, may mean doing less, perhaps for fewer people, but with greater precision and intensity. Greater mission impact is always better.

An Alternative Approach to Strategy

The central premise of my approach to strategy development is that nonprofits, like people, are at their best when they start from an inner core of self-awareness and then move outward into the world. For individuals, this means not trying to be someone you are not. For nonprofit organizations, it means pursuing mission impact rather than growth for the sake of growth. Individuals call it vocation. For nonprofit organizations, it is called strategy.

At its base, strategy is about organizational positioning. More specifically, nonprofit strategy is about finding that organizational “sweet spot” that allows for the greatest amount of mission impact in the most financially sustainable manner. The strategic position centers on the formulation of position statements in three areas:

–          The Program Position, which states what you will do, for whom, and to what end.

–          The Market Position, which defines how you will relate to those within your domain of operation.

–          The Resource Position, which outlines the desired mix and sources of funding.

For nonprofits, strategy inheres in the bringing together of the three elements of organizational position into a cohesive vision for the nonprofit. But like young college graduates trying to find their way in the world, the greatest challenge for nonprofits often is knowing where to start.

The Organizational Core

Building strategy from the inside-out begins with two fundamental questions:

1.         Who are we as an organization?

2.         How can we build on who we are to create the greatest mission impact in the most sustainable manner?

The starting point for nonprofits strategy development is the organizational core. The organizational core represents a distillation of the organization’s activities to reveal the basic elements – the organizational essence – from which its impact emanates. The organizational core is comprised of the four organizational characteristics contained in the following statement:

•          The use of your defining qualities to address the highest priority needs of your primary clientele within your domain of operation.

The organizational core is the building block of nonprofit strategy. To begin, the core provides a framing mechanism through which current programs and services are assessed for strategic fit. This is useful particularly in organizations that face challenges related to long-term sustainability. And as organizations look forward, the core provides a lens through which the organization can identify strategic growth opportunities.

The strategy driver is derived from the organizational core and provides the impetus for strategic growth. Using the organizational core as the starting point, nonprofit strategy can be driven in one of three ways:

•          A client-driven strategy builds on current efforts to meet the highest priority needs of the organization’s primary clientele.

•          A service-driven strategy builds on the defining qualities (i.e., competencies, expertise, etc.) and seeks to apply and/or adapt programs and services to new populations with similar needs.

•          A domain-driven strategy takes as the starting point the needs, interests or priorities of the key stakeholders within its defined domain and seeks to address additional unmet needs within that domain.

It takes a great amount of thought, reflection and analysis to define the organizational core and identify the appropriate strategy driver. And once these two foundational elements are identified, there are a host of other considerations, questions and possibilities that will come into play. But if we begin from a point of clarity about who we are as an organization, we are more likely to avoid temptations and distractions that, while attractive in the short run, may in the long-run result in strategic confusion.

In the next essay, I will provide an example of a nonprofit using this approach to organizational strategy. The essay will highlight the process by which the organization developed its organizational core and identified its strategy driver.

Stay tuned!

See also:

Nonprofit Strategic Positioning: Decide Where to Be, Plan What to Do

Nonprofit Sustainability: Making Strategic Decisions for Financial Viability

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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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Small but mighty: game-changing strategy in small to mid-sized nonprofits

Many nonprofits use periodic strategic planning to tune up their strategies or make adjustments to their route along a fairly steady course over the near-term future. Sometimes, however, organizations have a bigger, bolder agenda, often driven by a big challenge. My recent column on “Game-Changing Strategy” in The Nonprofit Times (February 1, 2013) examined this phenomenon through the lens of our consulting work with large, national nonprofits and foundations.

Since its appearance, I have been asked if the only groups suited to developing game-changing strategies are these big, well-resourced institutions. The answer, most emphatically, is “no way!” Game-changing strategy is available to any nonprofit facing a need to change direction, respond to a major challenge, or seize a new opportunity if it has the capacity and the courage to undertake a large, sometimes daunting change process.

Strategy is about making hard choices

I remember an early experience with game-changing strategic change. It wasn’t with a big household-name nonprofit but with a small, state humanities council. As we began the engagement, the challenge was this: We have limited resources with which to pursue our broad mission to promote the humanities across a large, diverse state. In response we currently offer an array of programs, none of which are at sufficient scale. The council had set itself the task of narrowing its portfolio to concentrate more resources on a few core activities. The problem was that the varying interests among the staff and board were aligned in such a way that making hard choices–invest more here and thus less there–was not possible. They were at an impasse. Thus the wide array of poorly supported activities.

At one point early in the strategy process we asked: “If you were building the council from scratch today, what would you make sure to do and what would you avoid?” By moving the discussion away from an unwinnable debate over the relative merits of current programs, we facilitated engagement in the struggle to actually think strategically. The group soon decided unanimously the answer to our question was: “We would make sure to do only one thing and to do it really well.”

Bold thinking pays off

This conversation opened the council’s horizons to think differently and we exploited that opening. For the next few months it considered various ideas for “the one thing.” In the end, it found it, tested it widely throughout the state, even using a public polling firm, and defined a bold signature project: an initiative to engage the entire state in an effort to tell stories about how residents’ families came to live where they did. Whether the family had arrived last week from China, last year from another state, or in the last century from Mexico, it turned out that everyone had a story he/she wanted to tell.

This new effort was a true game changer for the council. As the idea gained traction, the board supported the management’s plans to shed existing programs in a responsible and orderly way, either by transfer to another host entity, spinoff as an independent new nonprofit, or phase-down. The council soon concentrated all its effort on the new initiative. As a result of its intense focus on a winning idea, private funding increased, libraries and schools around the state lined up to implement the project in communities, and the council’s profile rose immeasurably.

Small organizations, big ideas

This was not an isolated instance of courageous thinking reshaping a small organization: far from it. Consider: the merger of two small environmental nonprofits that decided to trade their independence for greater power in pursuit of their shared mission; a half-dozen small and mid-sized human services groups that co-located to save a precious but expensive-to-operate facility for the disabled; or the bold campaign launched by a grassroots HIV/AIDS service organization to redefine treatment as prevention in its community. These groups were not large but their ideas certainly were.

So, if you are a leader in a small or mid-sized organization embarking on an examination of your strategy (perhaps for no other reason than “it is time,” three years having passed since your last effort), here is my advice. Before you begin tweaking your current efforts–”We’ll raise 10% more money” or “We’ll serve 5% more people”–consider for a moment how you would go about pursuing your mission if you were to start your organization over today, free from all impediments to bold action. You might decide you would build the organization just as it is now. But if not–if you can imagine a better way–consider whether it is time for a game change.

See also:

The Nonprofit Strategy Revolution: Real-Time Strategic Planning in a Rapid-Response World

Nonprofit Strategic Positioning: Decide Where to Be, Plan What to Do

Nonprofit Mergers and Alliances

Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant

The NON Nonprofit: For-Profit Thinking for Nonprofit Success

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