You may have recently come to the conclusion that your nonprofit organization is in need of an overarching strategy in order to be successful.
And you would be right.
The first step in any effective strategic process is essentially a truth telling exercise. It’s a matter of confronting the reality of what an organization – any organization – is, and what it really does.
In his book ‘The Nonprofit Strategy Revolution’, consultant David La Piana of La Piana Associates calls this “understanding Organization Identity.” It’s fair to say that leaving out this step may doom a strategic planning process to failure.
Now, strategy is not the same as planning (although planning can be strategic). Strategy should be an ever-evolving, ongoing effort to determine the right approach towards a desired end.
Good strategy, not necessarily good planning, ultimately determines the success of a nonprofit’s attempt to achieve its mission. And it is often essential to good nonprofit leadership and management.
In this post, we will take a brief look at where you should start the strategic thinking process, and what you need to do to understand your own nonprofit’s identity.
Start Here
La Piana recommends that you start by being brutally honest about what your organization really is and does. Your board and management need to make an assessment of who they are as an entity, what they do, how they do it, and how they finance it.
This process of assessment is not your strategy, but it does lay out the “raw ingredients of strategy”.
Next, your management and board need to draft an ‘Organization Identity Statement’. This will outline the following:
- A Sound Organization Business Model
- A Clear Market Awareness
- An Understanding of Your Organization’s Competitive Advantage(s)
Here we address each of these sections in more detail.
Your Business Model
Your board and management team need to be crystal clear on the following:
- Who the organization is or seeks to be (i.e. its mission and vision).
- The work you do. In other words, what are the activities you perform to achieve your mission and promote your vision?
- How you do it (i.e. the structure, operations, budgets, and policies that support these activities).
- How you fund it.
If all of these elements – mission, organizational structure, program activities, and finances – click, then you have a sound business model.
However, if there’s something clearly not working (a lack of integration between these elements, or dissonance among board members with regards to the organization’s mission) then you must rethink the business model.
Take the time to identify it, and make sure it’s the right one. As La Piana contends, “a relatively brief structured conversation among organizational leaders… can lead to startling insights on the part of participants.”
Be open and honest with one another. Otherwise, you’ll set down the path of a costly and time-consuming strategic process, only to find that your strategy is built on unsteady ground.
Your Market Awareness
Next, you must know the marketing landscape for your organization. And you must be able to pinpoint its position in that landscape.
Your nonprofit needs to ask and answer the following questions:
- What is your organization’s market – i.e., who do they serve?
- Is that market expanding or shrinking?
- Who else is in the same market? Who are your competitors?
- Where does your organization stand in relation to its competitors? And what are your organization’s relative strengths and weaknesses?
- How did your organization obtain its current status relative to others?
- Where does your organization want to go in the future?
- What are the demographic, economic, social, and technological trends that will shape our market in the future? And what threats or opportunities do they post for your organization?
This isn’t a step to be taken lightly.
Developing a deep and meaningful understanding of your organization and its competition can be an involved process of fact gathering and analysis, or a focused conversation among staff, the management team, and the board.
Either way, it’s crucially important that you fully comprehend your organization’s market position, wider market trends, and the strengths and weaknesses of your competition.
Your Competitive Advantage
The discussion of the marketing landscape and competition segues quite nicely into the discussion of your organization’s competitive advantages.
Taken from the perspective of a nonprofit, competitive advantage is essentially about your organization’s unique ability to produce sustainable social change.
Therefore, understanding your competitive advantage comes from asking: “Is there something that differentiates us from our competition? What makes us better than the average organization in our market in order to produce superior outcomes?”
Your competitive advantage can take one of two forms:
1. Asset Advantages – These involve a process or method that your organization has developed or owns that is inherently better than what other organizations have. For example:
- Better program design.
- A highly accessible location, network of locations, website, special connection with funders, or a class of donors.
- Great name recognition and reputation among funders or members
- An influential and well-connected board of directors.
2. Execution Advantages – Even if there is no unique process, method or technology, your organization may just be doing things better than others. Examples would be:
- Greater efficiency or effectiveness in the delivery of products or services.
- Superior marketing to or communication with clients, members or beneficiaries.
- Better transparency in accounting and reports of outcomes.
- More effective use of social media in connecting with members.
As La Piana writes, “breaking the concept (of competitive advantage) down, as we have here, into asset advantages and execution advantages requires thinking about your organization in what is probably an entirely new way – and one that will not occur during a traditional strategic planning exercise”.
Do You Need Help Understanding Your Organization’s Identity?
La Piana’s book and the accompanying Facilitator’s Guide contain detailed direction on how to conduct a strategy thinking session for developing and documenting an Organization Identity Statement.
But if you’d like some hands-on guidance, contact us today to arrange a strategy session with Checkbox.