March 17, 2011

Getting to “No”: The Three Cs of Strategic Consideration

The essence of strategy is deciding what not to do.

This idea was presented by Michael Porter in the 1996 Harvard Business Review article titled, “What is Strategy,” and has proven to be prescient in light of the current strain on the core business models of many nonprofits.

Nonprofits have plenty of reasons to say “yes” to a new program or funding opportunity. Among them:

• “There is a need, so we must address it.”
• “Somebody is going to get the grant, so it may as well be us.”
• “The additional funding will allow us to add a staff member.”
• “It fits our mission.”

In other words, “Why not?”

Indeed, why not. My experience working with nonprofits is that overall, boards are pretty good at playing with “what if” scenarios. What if the state were to cut back on its funding for our core program? What if a new, for-profit competitor were to enter our market? What if our program continues to expand and we outgrow our current facility?

What nonprofits are not so good at – perhaps because they are inclined toward optimism and favorable thinking – is the development of “why not” scenarios. Simply put, nonprofits need a process to move toward a strategic “no,” even if there are some legitimate reasons for saying “yes.”

Getting to “no” does not mean playing it safe by talking yourself out of every opportunity. In fact, risk taking might be a core value and a major contributor to past success for your organization. Strategic consideration, however, does require that boards and executives adopt a somewhat contrarian view to balance the prevalent “bigger is better” philosophy guiding many nonprofits.

In addition to fostering greater objectivity, the contrarian view allows a nonprofit to pursue an opportunity with confidence and vigor, knowing that it has survived the gauntlet of considerations and questions through which it must pass. The remainder of this article outlines the considerations that comprise that strategic gauntlet, organized around the three C’s.

The First C: The Organizational Core
The first question in getting to “no” is whether or not the opportunity hits at the core of who you are and what you do. For example:

• Does it fit the vision you have for your organization moving forward?
• Is it a logical extension of your organizational history?
• Is it aligned with the values that have sustained your organization throughout its history?
• Does it fit the organization’s mission?

Ah, the mission. The fact is that most nonprofit mission statements are so broad that virtually any new venture can be justified. However, the consideration of “fit” needs to penetrate below the surface of the words in the mission statement. To assess “fit” with mission, consider the following:

— If your organization provided this program only, to what extent would your mission still be relevant?
— If your organization was known only by this program, would it project the desirable organizational identity?
— Does the program align – logically and practically – with everything else you do?

If the deliberation stalls at this stage, you may be on your way to “no.” If, however, this core consideration is satisfied, you can move with confidence to the next set of questions.

The Second C: Organizational Capacity
The capacity question can seem deceptively simple. There may be little doubt that your organization can “pull this off.” But is your organization able to deliver the program or service better than anyone else in your domain of influence? And, given that capacity (defined primarily as time, expertise and infrastructure) is finite, how will the introduction of this new activity affect what you do currently? Will it draw time, energy and resources away from other activities? Will it create a spillover effect that benefits all that you do by attracting new resources and creating new energy?

The Third C: Competition
The essence of competition is differentiation. Assuming that the program under consideration has passed through the core and capacity filters, your organization is left with perhaps the most difficult question of all: can we make it work in a competitive environment?

Put simply, a nonprofit can differentiate itself from or compete with other providers in one of four ways. You can compete on price, a strategy based on being the “bargain” provider in the field. Or, you can compete on quality, based on the belief that you deliver the program more effectively than others in the field. You can compete based on your niche position, assuming that indeed you are the only game in town. And finally, you can compete on convenience, either by virtue of location or ease of access.

Obviously, this process requires serious discussion and may involve difficult decisions. But whether the process takes you to “no” or “yes,” you can be confident that the outcome is a strategic one.

Need Additional Assistance?

If you are interested in going deeper into your nonprofit strategy or if you wish to review your organizational strategy more broadly, click the link below to schedule a 30-minute phone or zoom consultation with Mike Stone.

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