The Problem with Strategic Planning

The term “strategic plan” has become so misused and abused in the nonprofit sector that it has almost become meaningless. So many organizations have undergone a poor strategic planning process that the idea of “strategic planning” has almost become laughable. But the fact remains that to be truly effective at creating social change a nonprofit organization MUST have a strategy for the future and a plan for how they will get there.

There are some very clear ways that a good strategic plan differs from a poor one:

• A good strategic plan starts from an in-depth understanding of the outside community marketplace in which the nonprofit operates (trends in clients, funders, competitors, etc). Whereas a bad strategic plan is created in a vacuum among only board and staff. One nonprofit told me that at a board retreat years ago, board members were asked to write their goals for the organization on post-it notes, which were then tacked all over the room and voted on. And like that, their  strategic plan was born.

 

• A good strategic plan forces the organization to articulate its value proposition, i.e. how the organization uniquely uses community inputs to create significant social value (change to a social problem). A poor strategic plan fails to articulate a value proposition and assumes that everyone outside the organization loves it and understands its value just as much as everyone inside the organization.

 

• A good strategic plan puts everything on the table and allows no sacred cows. Board members with pet interests are reigned in and staff members who are not contributing are encouraged to realign themselves with the new plan. A poor strategic plan only deals with the easy or non-controversial issues and leaves the difficult questions aside.

 

• A good strategic plan makes sure that the strategy for programs is aligned with the organization’s business and financial model so that the resulting strategic plan includes programs, financing and operations in an integrated way. A poor strategic plan focuses only on programs and assumes that the money will somehow follow.

 

• A good strategic plan includes a tactical plan so that the broad goals are broken down into individual steps to get there. This allows the organization to monitor and revise the plan on an on-going basis. A poor strategic plan has no tactical plan or monitoring system attached to it. Once approved, staff or board don’t see it again and it certainly doesn’t drive the day-to-day activity of the organization.

 

• A good strategic plan is inspiring and compelling to potential funders. It sets forth a bold vision for the future and a specific road map for getting there, which inspires confidence and investment. A poor strategic plan is boring, maintains the status quo, and elicits only nominal external support.

It’s not enough to go through the “strategy” motions. A real strategic plan is bold, compelling, tactical, well-financed, integrated and inspiring. It gets everyone (staff, board, funders, volunteers, clients) moving forward in a common direction from which real change flows.

If you’re interested in exactly what Social Velocity’s strategic planning process looks like, go here.

Photo Credit: HikingArtist.com

Tags: bad strategic planning, Board of Directors, how to create a strategic plan, nonprofit alignment, nonprofit planning, nonprofit strategic planning, nonprofit strategy, strategic plan

Can Reactive Clark Kent Become Strategic Superman?

Note: This post originally appeared on the Change.org Social Entrepreneurship blog earlier this year.

For the nonprofit sector to truly climb aboard the social innovation train, as opposed to being abandoned by it, nonprofit leaders need to move past the reactive toward the strategic.

But is that possible? Have nonprofits been stuck in a resource-constrained, charity mindset for too long to be made strategic, bold, big thinkers? It’s been a vicious cycle. Nonprofits lack adequate resources so they become very protective of what they have and wary of any actions which might threaten those resources. Therefore they become exceedingly risk averse and fearful of innovation. They focus more often than not on keeping the doors open as opposed to investing time, energy and resources in long-term strategy.

But that’ s just not going to cut it anymore. These times demand a radically different mindset and approach. The nonprofit sector must move from the reactive to the strategic. So how does a reactive approach differ from a strategic one? It looks like this:

When a financial crisis hits the organization, the reactive approach is to focus on keeping the doors open and staying afloat. But a strategic approach focuses on what caused the crisis and how to fix the underlying problem, model or system so that they never return there again.

When a funder wants to award a significant sum to an organization for new programs that detract from, rather than bolster, the organization’s theory of change, a reactive approach focuses on the increase in revenue, but a strategic approach recognizes the misalignment and turns the money down.

A reactive approach allows program staff to continue with a status quo method of program delivery, but a strategic approach constantly asks hard questions, tracks results, pushes outcomes, restructures inefficient processes, gets underneath the surface to make programs better, stronger, more impactful, more sustainable.

A reactive leader arrives at board meetings with reports, charts and status updates, gets a rubber stamp on day-to-day activities and breathes a sigh of relief that the board didn’t ask too many questions. But a strategic leader analyzes the unique contributions each individual board member and the board as a whole can make and leverages those contributions effectively, engages the board in meaningful discussions and actions around where the organization is going and trends in the external marketplace, and focuses board work on big picture issues and opportunities, creating key external networks, and building a strong financial future.

A reactive approach helps the board recruit new members that fit narrow definitions of experience, gender, ethnicity, and size of pocketbook. A strategic approach compares the long-term goals of the organization to the competencies, networks, experience and resources required and creates an intentional board recruitment strategy to get there.

A reactive leader crosses things of their daily to do list and feels satisfied because the trains ran on time, crises were avoided, and everyone got a paycheck. A strategic leader is rarely satisfied and constantly works to build key alliances with external partners, learns new skills, pushes their staff harder, evaluates their work, continually refines their model and responds effectively to a constantly changing environment all in the name of greater impact.

A reactive leader allows the natural uncertainty of running a nonprofit to cause fear and inaction. A strategic leader, like a true entrepreneur, recognizes the opportunity for innovation that uncertainty offers and embraces and uses that opportunity to continually mold the organization’s solution to the external market of need and funding.

It remains to be seen whether a reactive leader can transform into a strategic one. I would bet that the success of the social innovation movement as a whole rides on it.

Photo Credit: Loren Javier

Tags: charity mindset, nonprofit innovation, nonprofit leadership, nonprofit strategy, reactive nonprofits, reinventing nonprofit sector, social innovation

8 Nonprofit Inflection Points and How to Seize Them

In the lifecycle of any nonprofit there comes a time when something needs to change. Call it an inflection point, a resetting, a fork in the road. I see it all the time. Someone in the organization takes a step back and realizes something just isn’t going to work anymore. It’s a critical point. It’s the point at which you decide whether you are going to take the leap and make this a year of real change.

When that moment comes, and you feel the urge to really do things differently, don’t shy away from it. Take the leap.

Here are eight of the most common nonprofit inflection points and how Social Velocity can help you seize the opportunity they present:

1. Board and staff are floundering and don’t know where the organization is going:
   • Download the Is Your Nonprofit Ready for a Strategic Plan? tip sheet
   • Check out Social Velocity’s strategic planning process
   • Read about other nonprofits who found clarity through a strategic plan
2. Everyone is fed up with fundraising
   • Check out our step-by-step Revenue Plan Guide
   • Read our Financing not Fundraising series
   • Read how English at Work and BookSpring transformed their organizations through a comprehensive revenue plan
   • Explore Social Velocity’s organizational assessment and revenue plan services
3. Your approach to a community problem has become too narrow
   • Read The Risk of Small Thinking
   • Read If We Could Be So Bold
   • Read Losing the Charity Mindset
4. Your board is not helping to move the organization forward
   • Watch the Getting Your Board to Fundraise webinar
   • Download the How to Get Your Board Fundraising tip sheet
   • Invite Social Velocity to train your board on fundraising, social innovation or nonprofit growth
5. You can’t effectively articulate your nonprofit’s value to the community
   • Download the Strengthen Your Nonprofit Through a Theory of Change tip sheet
   • Read What Social Value Do Nonprofits Really Create?
   • Read Where Do You Fit in the Market?
6. You need money to strengthen the organization, but don’t know where to look
   • Read Making Donors Organization Builders
   • Read Can’t Small Nonprofits Raise Capital Too?
   • Learn how Social Velocity can help you create a funder pitch and strategy for capacity capital
7. There is a much greater need for your nonprofit’s programs, but you can’t afford to grow
   • Read Fixing the World Requires Disruptive, not Incremental, Change
   • Explore Social Velocity’s growth planning process
   • Read Bringing Small Nonprofits to Scale
8. You’re worn out and need to be inspired
   • Read the Social Velocity interview series with social innovators

Photo credit: besar_bears

Tags: Board of Directors, BookSpring, English at Work, fed up with fundraising, Fundraising, growth capital, growth planning, nonprofit change, nonprofit inflection point, nonprofit strategy, revenue plan, Social Velocity, strategic plan

What Social Value Do Nonprofits Really Create?

This post originally appeared on the Change.org Social Entrepreneurship blog earlier this year.

There is a concept that good entrepreneurs know only too well, but nonprofits could stand to explore. A “value proposition” is the unique value a product or service provides a consumer. Without a value proposition a business has no place in the market. For a nonprofit, a social value proposition is just as critical to success, but often ignored. In an increasingly competitive marketplace, due in part to the growth of for-profit social entrepreneurs, nonprofits must analyze, articulate, and deliver on a social value proposition.

In the past, nonprofits could exist without a value proposition. Donors wouldn’t argue that a library, homeless shelter, food pantry or school provided a necessary service. But as we move further down the road of social innovation, the assumption that money will automatically follow good works is no longer valid.

The issue is complicated by the fact that nonprofits have two sets of consumers: those who benefit from the product or service (clients) and those who buy the service (funders, investors, philanthropists). There is increasing competition for both sets of consumers.

In order to attract the consumers who buy services (and who, by the way, increasingly want a social return on their purchase) nonprofits must articulate the value that the consumer (donor, investor, philanthropist, sponsor, whatever you want to call them) receives by writing a check.

In the nonprofit sector the closest thing to a value proposition has been a case for support. But when this is created (which isn’t often) it tends to focus on the organization and its needs rather than on the potential social return on investment for the funder. A good value proposition articulates how an organization is uniquely positioned to create significant social impact that is much greater than the costs associated. It involves an organization analyzing, understanding and delivering on three very important things:

1. Capability: What is the organization uniquely positioned to provide to the community (the marketplace). Why is this organization better positioned than other organizations (nonprofits, for-profits, government) to deliver it?




2. Social Impact: What change is the organization creating in the community, region, world? Why is this significant? Why should/will consumers (funders) care?




3. Cost: How do the costs of the service being delivered compare to that social impact? Is there a social profit being achieved, i.e. are the costs involved in delivering the service significantly less than the benefits? Will a funder (who is paying these costs) receive a significant social return on their investment in the organization?

A value proposition is less about a well-articulated statement and more about an organization’s ability to think through these questions and really understand the marketplace in which they operate. More and more the nonprofit that can effectively execute on a social value proposition will find the financial stability that ultimately leads them to create lasting social change.

Tags: case for support, nonprofit competition, nonprofit strategy, nonprofit value proposition, social impact, social return on investment

The Perils of Nice

This post originally appeared on the Change.org Social Entrepreneurship blog last spring.

The nonprofit sector often suffers from a propensity toward niceness. Indeed, according to a recent study by researchers at Stanford and two other business schools, nonprofits are perceived as “warm, generous and caring organizations, but lacking the competence to produce high-quality goods or services and run financially sound businesses.”

In other words, we think they are nice — but not competent.

But this perception stems from a reality that is often imposed on the sector. Nonprofits are encouraged to collaborate instead of compete, hold onto under-performing staff, accept martyr-like salaries, smile and nod when funders push them in tangential directions and keep quiet when government programs want the same services at a lower price.

This demand that the sector play “nice” is the result of (at least) two things. One is its focus on the social. The sector exists to address and (hopefully) solve social problems. Thus, by definition, it’s socially oriented and has a tendency toward an inclusive, consensus-based approach to doing business. Secondly, the sector is structured so that a nonprofit has many more constituents to answer to than its for-profit counterparts do.

For example, nonprofits have two customer groups, instead of the one customer for-profits have: 1)those who benefit from the services they provide (the clients) and 2)those who pay for those services (funders). And nonprofits are led by volunteer committees (board of directors) that need to be corralled. The end results is that funders, volunteers, board members, staff and clients must somehow be brought together and moved toward a common direction.

This demand to collaborate, build consensus — and play nice — probably helps explain the label of inefficiency that often is attached to the sector.

But in order to innovate and work toward real solutions, in order to get out from under consensus-based mediocrity, nonprofits need to break free from the niceness trap. They need to get meaner, uglier, messier.

In other words, they need to:

• Make an honest assessment of their core competencies, competitors and consumers so that they understand and can articulate where they fit in the marketplace — and make a market play if they can deliver a competing service more effectively. The end goal is to solve problems, not get along, right?




• Take more risks in how they deliver solutions and how they fund them. The status quo is not enough, so think big and act accordingly.




• Say no to funders who demand new programs or changes to programs that detract from the organization’s theory of change or core competencies.




• Diversify revenue streams so that they are not beholden to any one funder or funding stream.




• Demand that board members invest significant time and money in the organization, or get out.




• Fire under-performing staff. This is such a taboo in the sector, but with limited resources and mounting social problems to be addressed, do we really have time to invest in people who can’t deliver?




• Be brutally honest with funders, board members, others about the true costs of running operations effectively and don’t apologize for, or hide, administrative expenses




• Create a bold strategic plan that will drive the organization toward social impact and sustainability, not mediocrity.

Enough with the nice. If we’re really going to get things done, we have to take a stand, be bold, be honest — and do the right, hard thing.

Photo Credit: eyesplash Mikul

Tags: moving nonprofit sector forward, nonprofit collaboration, nonprofit effectiveness, nonprofit nice, nonprofit strategy, overcoming fear, overcoming fundraising hurdles, playing nice

Where Do You Fit in the Market?

Because nonprofit organizations exist to do good, as opposed to generate profit, they often view their activities as outside of the market economy. But the fact is that nonprofits are very much part of a market economy and the sooner they determine where they are best positioned within that market, the more successful they will be at creating social change.

A nonprofit is best positioned where their core competencies (those organizational assets they have that cannot be easily taken or replicated) intersect with a community need, apart from where their competitors are strongest. Which looks like this:

This may seem simple, but it is rarely articulated in the sector.  And the pressure to collaborate, partner, network and “do as much good as possible,” makes this analysis tricky, if not politically challenging, to undergo. The idea is that if a nonprofit organization can figure out what part of the solution to a social problem they offer and how that relates to the piece their competitors have to offer, then they can start to chart their way forward.

Let me give you an example. Emancipet is a nonprofit that spays and neuters animals in order to reduce, and eventually eliminate, the need to euthanize a growing population of unwanted pets. Their organization is part of an extensive continuum of domestic animal services in their region, which includes animal shelters, vets, pet stores, etc. Over a year ago Emancipet wisely conducted an analysis, with several of their collaborators and competitors, to delineate each group’s role in the overall effort to create a healthy domestic animal population in their region. This marketplace mapping can’t always be so collaborative, but is still very much required.

With a marketplace map in hand, a nonprofit can:

• Better articulate to funders what they are uniquely positioned to do
• Forge partnerships with organizations who supplement weaknesses the organization has
• Stop wasting resources on “doing it all” and focus on the 1-2 things they do exceptionally well
• Reduce competition for resources

To name a few.

So, how do you figure out where you fit in the marketplace? Start by asking your organization some key questions and answering them openly and honestly:

• What do we do better than anyone else?
• What are the community needs/problems we are trying to address?
• Who are our competitors and potential collaborators?
• What do they do better than us?

Simply having these kinds of discussions with your staff and board is a huge step forward. Once you have started to answer these questions and begun to plot your position in the market, you can chart a strategy forward. And that strategy will be infinitely stronger and more achievable because it was not created in a vacuum, but rather informed by the market in which you operate.

Photo Credit: Amy McTigue

Tags: Emancipet, marketplace mapping, nonprofit collaborators, nonprofit competitors, nonprofit core competencies, nonprofit strategy, strategic planning

Can Reactive Clark Kent Become Strategic Superman?

For the nonprofit sector to truly climb aboard the social innovation train, as opposed to being abandoned by it, nonprofit leaders need to move past the reactive toward the strategic.

But is that possible? Have nonprofits been stuck in a resource-constrained, charity mindset for too long to be made strategic, bold, big thinkers? It’s been a vicious cycle. Nonprofits lack adequate resources so they become very protective of what they have and wary of any actions which might threaten those resources. Therefore they become exceedingly risk averse and fearful of innovation. They focus more often than not on keeping the doors open as opposed to investing time, energy and resources in long-term strategy.

But that’ s just not going to cut it anymore. These times demand a radically different mindset and approach. The nonprofit sector must move from the reactive to the strategic. So how does a reactive approach differ from a strategic one? It looks like this…

This is an excerpt from my latest post at the Change.org blog. You can read the entire post here.

Tags: nonprofit charity mindset, nonprofit sector, nonprofit strategic plan, nonprofit strategy, social innovation

The Strategy of Disruption

Competition is often a dirty word in the nonprofit sector.  Indeed, playing nice is the norm. But to truly solve social problems, nonprofits have to  not only compete, but compete well.  This means understanding how their strengths compare to their competitor’s weaknesses, and how to take advantage of that.

Umair Haque, Director of the Havas Media Lab, writing on the Harvard Business Review blog argues that rather than trying to beat their competitors at their best game, businesses need to follow the “golden rule” of competitive strategy, which is “What your fiercest rival does badly, do incredibly well.”

He finds fault with the normal competitive strategy in the business world, which is to compete on similarities. This kind of competition leads to mediocrity. To truly be disruptive, innovative, game-changing, businesses must be markedly, competitively different: “In difference lie the seeds of disruption. In similarity, only obsolescence, and decay.” He cites the auto, food and media industries that were suddenly overtaken by competitors who realized that disruption was the way to go:

Ford, Chrysler, and GM spent a decade trying to best another at churning out the biggest, hungriest SUV — but none tried to do what all sucked at: make a smaller, cheaper, more fuel efficient car instead…Big Food has spent half a century trying to make food cheaper, with artificial flavors, colors, and ingredients — but none tried to do better what all sucked at: make food more nutritious instead…[Media] incumbents tried for decades to lock down content in walled gardens — but none tried to open it, unlock it, and free it. Enter a new set of revolutionaries, wielding the Golden Rule like a superweapon. Who did well what auto incumbents did badly — making a smaller, more fuel efficient car? Tata, with its revolutionary Nano. Who did well what food incumbents did badly — delivering healthier food? Whole Foods. Who did well what media incumbents did badly — freeing and unlocking content, so it was easily discoverable? Google.

Nonprofits can learn a lot from this argument. The sector is by definition about disruption. It exists to change some sort of disequilibrium, to right some wrong, to fill some gap not addressed by the market. Disruption is the name of the game.

But in order to be truly disruptive, nonprofits must be strategically competitive. It is of no use to recognize a gap in the market (children who are not being fed, elderly people who are not being housed, sick people who are not receiving medical attention), create a solution to address that gap, and then sit back and “collaborate” with other nonprofits or government agencies who are delivering a mediocre solution.

Don’t get me wrong. I understand that the nonprofit sector, unlike the business sector, is based on concensus and collaboration. But sometimes those concepts serve as a crutch rather than a tool.

If the ultimate end goal is to solve a gap in the market, doesn’t it make sense to analyze the other solutions out there, their strengths and weaknesses, and then create a strategy accordingly?  If a nonprofit exists alongside another nonprofit that is delivering an inferior solution, doesn’t it make sense to compete in order to make better use of the funding, support, volunteers and other resources that the inferior organization is collecting?  The alternative is that solutions become mediocre instead of disruptive. And we need a lot more disruption right now.

Photo Credit: Tony the Misfit

Tags: competitive strategy, Harvard Business Review, Havas Media Lab, nonprofit strategy, Umair Haque