October 18, 2011
A few years ago I discovered a framework for evaluating foundation strategy (developed by Peter Frumpkin) that draws attention to three critical features of strategy: its soundness, the quality of its implementation, and the results it produces. The framework has proven to be immensely helpful to me as I work with foundations and has transferred nicely into my work with other nonprofits.
The truth is I work with a number of nonprofits that operate under strategies that appear to be…well, less than sound. Either the elements of the strategic plan itself do not seem to hang together or the actions and decisions of the organization do not fall into a discernable pattern. Lacking anything beyond my observations and intuition, however, I could say nothing more than soundness was lacking because I didn’t see evidence of it.
So, what exactly is that evidence we should look for in assessing soundness of a nonprofit strategy? What is it that holds a strategic plan together or gives coherence to a set of discrete decisions?
I have concluded that soundness of strategy rests on two essential features. The first is the clarity of the organizational core, a definitive statement encompassing the essential who, what, and why of the organization’s work. The second feature of a sound strategy is the presence of a strategy driver. Whereas the core is the starting point for strategy development, the driver is the mechanism that ensures that decisions and actions – whether to strengthen the core or expand beyond it – are intentional and consistent.
The Organizational Core
To help clarify the essential elements of the organizational core, I devised the following definition for use with clients:
Your strongest competencies aimed at the highest priority needs of your targeted population, within your defined domain.
To illustrate, consider the organizational core of Second Chance, whose mission is to reduce recidivism among ex-offenders by preparing them to acquire and retain gainful employment:
Strongest competency – teaching and training
Priority needs – skills to acquire and retain gainful employment
Target population – recently released inmates
Domain – the local criminal justice system
Once clarified, the core provides the basis for the development of an organizational strategy. It is at this point that the second feature of sound strategy comes into play: the primary strategy driver.
The strategy driver, in essence, defines the nature of your business and consequently provides the lens through which program decisions and resource allocations are considered. I present nonprofits with three possibilities: a client-driven strategy, a service-driven strategy, and a domain-driven strategy. While all three considerations come into play, a sound strategy utilizes a primary driver as its guide (“what prompts us to act”) and the other two to set boundaries (“how far we will go”). To illustrate, consider the choices facing Second Chance.
A client-driven strategy is based on the specialized needs of the target population and leads an organization to seek additional opportunities to address those needs. For Second Chance, this means deciding which specific needs of former inmates it will – and won’t – address (the service boundary); and where they will go to reach additional clients in the target population (the domain boundary). A client-driven strategy might lead to the development of services to help new inmates and their families prepare for reunification.
A service-driven strategy builds on the organization’s content expertise or specialized knowledge. For Second Chance, this would mean offering its core expertise – preparing individuals to secure gainful employment – in new places or to new groups of people. The boundaries are defined by which groups it believes can benefit from that core expertise (the client boundary) and where those new groups can be found (the domain boundary). A service-driven strategy might lead Second Chance to develop a training program for displaced workers from local manufacturing plants.
With a domain-driven strategy, the organization responds to the changing needs or preferences that occur within its “sandbox” as it has defined it. For Second Chance, this would mean building on its relationship with the local criminal justice system to address additional issues or concerns related to recidivism. The boundaries of the strategy are defined by which people it would serve (the client) and how it believes it can best meet their most pressing needs (the service). A domain-driven strategy might lead to the addition of a recovery programs for inmates with alcohol or drug dependency.
By identifying the organizational core and the primary strategy driver at the outset, boards and executive staff set the framework for discussions that are far more likely to produce a strategy that is focused, relevant, and consistent over time.
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