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SWOT Analysis

Better Strategy for Educational Entrepreneurs

I’m delighted to announce that a book I wrote with Peter Frumkin, head of the RGK Center for Philanthropy and Community Service at the University of Texas at Austin, and Bruno Manno, senior advisor for K–12 Education Reform at the Walton Family Foundation, has just been published by Harvard Education Press. The Strategic Management of Charter Schools: Frameworks and Tools for Educational Entrepreneurs looks at charter school case studies and applies management tools (like SWOT analysis, customer satisfaction surveying, balanced scorecard) to analyze what these schools could have done to be more successful. While the book focuses on charter schools, the tools and frameworks can easily be applied to any nonprofit organization.

Organized around three crucial challenges to charter school leaders—managing mission, managing internal operations, and managing the larger stakeholder environment—the book provides charter school leaders with tools and insights for achieving educational and organizational success. In its description of these managerial challenges, and in its detailed examinations of particular schools, the book offers a clear, credible approach to the efficient and sustainable management of what are still young and experimental educational institutions.

Frederick M. Hess, director of education policy studies at the American Enterprise Institute, says of the book:

The importance of this volume lies not in the prescription of best practices but in the strategic ‘toolbox’ of skills and frameworks that the authors share. For providers seeking better ways to promote both growth and quality, this book will prove invaluable. For policy makers, parents, philanthropists, and educators seeking to understand how to help charter schooling deliver on its promise, this volume will prove an invaluable resource. Finally, the authors’ savvy suggestions for aligning mission, institutional operations, and stakeholders offer a strategic vision that holds promise not only in the charter sector but also for those in traditional district schools.   

Again, although the cases are all related to charter schools, the lessons and insights can and should be used by any nonprofit leader. From better financial management, to stronger mission alignment, to more accurate understanding of the needs of your various constituents, to more effective leadership, this book helps social change leaders create stronger, more effective organizations that will ultimately result in greater change.

You can learn more about the book here.

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Making a Social Impact Market Play

Nonprofits exist in a strange netherworld between market forces and social change. They are trying to create a solution to a social problem, but as much as some might like to deny it, that desired social change exists within a market economy. That means that in order to be successful, nonprofits, just like any business, must continually analyze, understand and create strategies around whatever market forces are at play (competition for funding, clients, partnerships, inputs, results; increased/decreased regulation; changing client/funder demand; changing input costs; changing technology, etc.).

The tendency among some of those working toward social impact is to assume that simply because they are doing good in the world, those market forces can somehow be ignored or dismissed. Good will win out over the market. But it is not a binary system. Organizations that are working toward good are very much subject to market forces and must be strategic about how to address them.

Which brings me to a SWOT analysis, an often misunderstood tool that can help nonprofits do just that.  Most people understand that a SWOT analysis helps an organization break down the internal forces at work (their own strengths and weaknesses) and the external opportunities and threats that face them in the marketplace. But once these are uncovered, the more important step is to translate those realities into strategies that increase the nonprofit’s position in the market, whether that is increased profit, increased social impact, or both.

Strengths are the resources, capabilities, core competencies, and experience that could be used to develop a competitive advantage, or a better position in the marketplace than their competitors, such as:

  • Brand name
  • Funder/investor retention
  • Access to clients/customers
  • Access to inputs required to create the desired social impact
  • Cash reserves
  • Demonstrated social impact
  • Use/understanding of critical technology

Weaknesses are things that the nonprofit should possess in order to create a competitive advantage, but happen to lack. They can also be the flip side of a strength, such as a nonprofit that has a large staff (strength) but whose large staff makes it difficult to be flexible towards changing program requirements (weakness). Some examples:

  • Lack of staff talent/expertise
  • Limited network/relationships/alliances
  • Low funder/investor retention rates
  • Limited access to inputs required to create social impact
  • Lack of demonstrated results

The External Analysis exposes the situation in the marketplace and how that situation positively (opportunities) or negatively (threats) could affect the organization. Opportunities are external realities that could result in greater social impact, profit and growth for the organization:

  • Growing social need/customer demand
  • New technologies that could decrease costs to deliver programs/products/services
  • Relaxation of government regulations for addressing the social challenge
  • Declining competitors for funding or program delivery

Threats are situations that have the potential to diminish the organization’s social impact/profitability/growth. For example:

  • Increasing competitors
  • Stricter regulations
  • Increasing cost of inputs
  • Diminishing client/customer demand
  • Changing technology

But this analysis gets you nowhere if you don’t take the most important next step, which is to craft strategies from the results. The various strategies for the organization going forward fall into four categories:

  1. Strength-Opportunity Strategies that use the organization’s strengths to go after external opportunities. For example when a nonprofit uses their strong brand name (strength) to expand into a newly emerging client need (opportunity). Teach for America has recently decided to take a version of their teacher recruitment program to schools outside of America.
  2. Weakness-Opportunity Strategies that overcome a nonprofit’s weaknesses in order to go after external opportunities. For example when Kiva recently decided to give their loaners whose demand outstripped loanee supply (weakness) an opportunity to make loans to American entrepreneurs whose demand for loans due to the bank crisis and the recession were growing (opportunity).
  3. Strength-Threat Strategies that harness a nonprofit’s strengths in order to overcome its vulnerability to external threats. For example a nonprofit that harnesses its well-connected board (strength) to strengthen their relationships with foundations and individual donors who are being bombarded by an increasing number of nonprofits (threat).
  4. Weakness-Threat Strategies that create a defensive plan for preventing the nonprofit’s weaknesses from making it susceptible to external threats. For example when a nonprofit decides to go through the patent process to guard its unprotected results-achieving curriculum (weakness) from growing competitors (threat).

Creating and then employing these strategies allows a social impact organization to be proactive and opportunistic about market dynamics–market dynamics which very much play into whether the solution they seek will come to fruition.

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Wednesday, September 23rd, 2009 Nonprofits, Strategy 1 Comment


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