The Nonprofit Operations Guide: Mature and Institutional Organizations
Mature organizations have committed to a strategy, have documented their processes, and are mostly engaged in extending their reach and seeking more efficient, effective ways of getting their work done. They are characterized by a focus on governance and protecting their operational alignment to perpetuate their ability to provide services.
Mature organizations most often undertake change initiatives to achieve efficiency gains within their operating system, though they can also engage in innovation projects that exist outside of their stable infrastructure. The level of decision volatility is very low, typically manifesting as small tweaks to the strategy, operating model, and operating system layers in response to changes in the external or internal environments.
Definitions
A graph of the types of decisions facing organizations at each stage of operational maturity. Decision volatility for mature organizations is typically very low.
Governance
The collected practices that allow an organization’s leadership to oversee and ensure the health and stability of the organization and adapt to changes without significant risk to the existing infrastructure.
A board is tasked with certain legal and fiscal compliance duties that are a type of governance. Another type of governance is a standing committee that brings together all of the stakeholders that use the cross-departmental technology (“enterprise technology”) to discuss how changes in practice influence needs for changes in technology, and how changes in technology may impact day-to-day practice.
Institutional Organization
Institutional and mature organizations operate in a similar manner and demonstrate similarly low decision volatility. An Institutional organization is well established — having typically been around for decades or even centuries— and is far less subject to small-scale environmental disruptions due to government funding or large endowments. Federal and state governmental agencies and public and private higher education are examples of institutional organizations.
Mature Organization
An organization that has established exactly who it serves, what it does, and in what context, is able to withstand the loss of even key individuals, and has well-understood management and monitoring processes in place to routinely ensure the alignment between strategy, measurement, and operations.
Non-institutional mature organizations are those that are more subject to external shocks, like a significant loss of funding or policy change that threatens their ability to do business.
Are you a Mature Organization?
The decision volatility in mature organizations is very low and is largely centered on maintenance and lessons learned
During maturation, your organization focused on establishing its operating model to ensure consistent quality. It invested in the necessary technology and management structure to help ensure new staff can be trained and provided with the right tools to do the job, and the work monitored on an ongoing basis for quality and effectiveness.
As a mature organization, you may largely take these elements for granted until something breaks. You are not making decisions that are going to threaten the strategy of the organization, and you’re not making decisions that radically change the way the work is done unless you have a really compelling reason. You are mostly worried about ensuring the right resources are always on hand to protect and perpetuate the organization’s hard-won insights and reputation.
Your organization is mature if you meet several of these characteristics:
Everyone in the organization understands the strategic focus and generally makes decisions in alignment with the organization’s mission and overarching goals.
You have a strategic planning and review process that incorporates all stakeholders and occurs regularly.
You have clearly defined roles for executing and managing almost every activity in the organization.
It is a routine part of the organization’s work to create budgets, manage budgets against actual spending, and file required financial and legal findings. While deadlines for these efforts may be busy, they do not cause other routine financial activities to stop.
Financial controls are well understood and comply with both laws and best practices.
All, or almost all, processes are documented and the knowledge of how to do any job in the organization can be transferred to new staff without significant disruption to the organization or clients.
Change management protocols are in place for major systems. For example, if you have enterprise technology that supports a key part of your work, you also have an approach to dealing with process changes that may require technology changes, or vice versa.
Program success is monitored through metrics established and evaluated routinely. These metrics may be managed proactively — that is, using business intelligence tools to detect trends in mature data systems with well-understood rules.
All stakeholders — clients, constituents, donors, board members, volunteers, staff, partners, and the general community — are aware of your services and know when to engage you. Marketing and communication is focused on maintaining awareness rather than educating the community about your services.
Considerations for Mature Operations
Understanding how mature and institutional organizations are impacted in their strategy, operating model, and operating system can help inform change and innovation.
Strategy and Environment
Mature organizations are committed to their strategy, and have made hundreds of decisions — big and small — that align with that commitment. This provides stability and allows for all stakeholders to learn over time who you are, when to engage with you, and what to expect. Everyone knows what to expect from mature corporate entities like Ford, Apple, and Microsoft. Similarly, the general public have an awareness of what institutional organizations provide and when to engage — think about your awareness of public infrastructure that touches your life, like schools, public safety, and utilities.
Leadership at mature organizations tends to take a “steady hand on the tiller” approach. Though there may be a lot of pressure and noise made about being innovative and agile, the truth is that mature organizations have invested heavily in infrastructure that supports their strategic focus, and leaders who incur too much risk to that infrastructure are short-lived. This leads to the biggest consideration for mature and institutional organizations — the tension between “the way we’ve always done it” and the rapid pace of change in today’s world.
Operating Model
Mature organizations develop and must manage a tension between work that enables strategically-aligned performance and activities that are carefully measured. If what you measure is what gets managed, line staff naturally pay the most attention to what is being measured and managed.
In many organizations, staff evolve a conviction that their metrics are the purpose of their work, leading to rigidity and bureaucratic tendencies even in organizations with a clear, compelling mission. Because the operating model establishes what gets measured and how it is managed, it is critical for mature organizations to engage in active change management practices that keep the operating model aligned with the strategy.
For mature and institutional organizations, shifts and changes in strategy or day to day work may be small and seem harmless, but they can have unexpected consequences due to the complex and inter-related nature of mature organizations.
To achieve ongoing operational excellence, changes must be monitored and metrics must be assessed against their strategic purpose in an active, ongoing way. This is the core sentiment behind many management fads over the years, from Total Quality to Six Sigma to Agile. Essentially, the goal is to continuously manage the tension between changes in the environment — as reflected in strategic adjustments — and all of the daily work that is carefully structured in the operating system, by continuously evaluating the ways in which you monitor, manage, and govern those activities to ensure they’re aligned and not falling prey to complacency or bureaucracy.
Operating System
The best known risk to mature organizations is lack of agility in response to environmental changes. All mature organizations have invested heavily in the kinds of things that people need to deliver services at a consistent level of quality — that is, the tools and technology that support the work and the processes and management that ensure the quality of the work.
The more an organization is able to reduce its decision volatility, the more it is able to construct infrastructure that is complex — tying together different departments, streamlining information with well defined and well-managed processes. These are not systems that can change quickly, and quick changes can have unexpected consequences up- or downstream due to the interconnected nature of mature systems.
A mature operating system is one in which processes are well documented, tools and technology have been selected and often modified to enforce very specific processes and practices, staff are well trained and well versed in their part of the organization, and management has a structured approach to monitoring service delivery quality and escalating anything that may disrupt quality of service.
A mature organization is not possible without a predictable and manageable set of activities. Mature organizations’ biggest consideration for their operating system is ensuring appropriate budget and other resources to keeping it running smoothly and well. The operating system for a mature organization is its bedrock — it provides the data necessary for management and strategy, it facilitates the daily work, and when done correctly it greatly reduces the staff’s burden while improving the constituent experience.
Mature organizations invest both in maintenance — whether that’s technology upgrades or ongoing training — as well as risk mitigation, to help minimize the risks associated with being so reliant on the operating system. Mature organizations rarely make dramatic changes to their operating system, at least not without tremendous planning and a much more involved, expensive, and slow-moving change initiative than you may find in earlier stage organizations. All of these things mean that responsiveness and agility become less important than stability and endurance.
Myths about Mature Operations
Myth #1: Mature organizations can’t innovate, or even really change that much
Strategic complacency is no longer an option even for the most established and well-funded institutions. Strategic leadership is increasingly required to balance rapidly changing constituent demands with the organization’s identity. Strategic initiatives at mature and institutional organizations must recognize and work within this tension to be successful.
While strategic complacency is not an option, mature and institutional organizations often suffer from complacency further downstream. If you work for a mature or institutional organization, you have probably heard the sentiment from long-term staff members that they’ve were here before this new leader/initiative/requirement and will be here after. They’ve weathered dozens of change initiatives — many likely poorly thought out or poorly executed — and know every new leader is trying to make a mark, so they’ve become pretty cynical about change.
This cynicism is a mark of organizational complacency — there is little urgency to change when no threat is visible, or all prior threats have been nothing to get excited about. An organization that actively manages its operating model — which provides alignment and role clarity for all members of the organization — is better positioned to communicate urgency and need for change, and less at risk for fire drills, when it takes the time to assess change initiatives against its operating model and consider how to adapt.
Change is inevitable, and no organization is exempt from it. Because a mature organization’s operating system is designed as a cushion against unexpected change — acting to enforce predictable service delivery and standards — it can also become an innovation killer. Effective mature organizations will often have change management embedded into their strategic thinking, and will be thoughtful about how they facilitate change and innovation.
It’s not uncommon to designate a project or department as experimental or to have a designated incubation division in a mature organization. This is done to isolate the disruption of early-stage and maturing activities until they’re mature enough to incorporate into the broader infrastructure. This approach also prevents change fatigue and the kind of “I’ll still be here when this fad has passed” cynicism by protecting line staff from experiments until the value can be clearly communicated and correctly incorporated into the overall system.
Myth #2: Maturity is only for very large organizations
Maturity does not imply anything about the number of clients served, size of the operating budget, or staffing levels. Maturity is a reflection of ongoing consistency in the strategy, mission, and metrics that allow people to “just do their job” without having to think about creating the infrastructure that supports that job.
I have seen some enduringly successful mature organizations that have less than 10 people on their staff and who serve less than 3,000 people per year. They provide exceptionally high quality service year on year because they’ve worked very hard and very deliberately to establish:
Strategic focus: their success has led them them to field offers to expand or grow, but they’ve rejected anything that doesn’t truly and completely align with their existing work.
Role clarity and aligned roles: everybody on these small teams knows what is — and isn’t — their job. Everybody understands how their role fits into the overall strategy and is empowered to make decisions that reflect that understanding.
Strong ongoing communication: they don’t take their communications for granted, just because they’re a small team. They talk to each other routinely, with a structure and focus. This lets them have a governance structure that escalates changes from the strategy or operations side and talks through necessary changes.
Process clarity and documentation: they prioritized the structure and documentation of their most essential processes, even though like all small teams they could have easily said they didn’t have time. The investment of energy paid off in all cases when a key staff member left and a new person could be brought onboard easily, allowing the remaining team to be confident that their temporary increase in workload was truly only temporary.
Fiscal controls: even though these organizations are small, they are very disciplined about their financial controls. They budget carefully. They have an appropriate division of financial responsibilities and enforce them.
Stable operating system: the technologies in use vary between these organizations, with some needing very sophisticated enterprise systems and some working well off of Google Docs. All of them, however, have created a set of tools that have standards known to all, and work hard to enforce those standards so that they can report and monitor the quality of their work on an ongoing basis.
Myth #3: Mature organizations are all well run
Maturity is certainly a reflection of attaining the hallmarks of a well run organization (strategic focus, role clarity, etc) but once those hallmarks are established, they require quite a lot of care to remain true to their original purpose of supporting a strong and healthy organization. They can very easily tip into complacency, cynicism, fire drills and bureaucracy.
Strategic focus and role clarity can ossify into a rigid hierarchy that blindly follows orders and is riddled with political maneuvering. Process clarity, fiscal controls, and a stable operating system can lead to prioritizing the system’s needs above all, turning employees into people who feed the system rather than providing valuable services to constituents. If you’ve ever worked in a large, well-established organization, these trends will probably be more familiar to you than the beneficial side of maturity.
A well-run, mature organization understands that perpetuating a high quality delivery of service means remaining always alert for signs of entropy. That work is ongoing and does not end. Well-run organizations have an appropriate maintenance budget and spend time and energy ensuring effective governance and change management processes are in place.
These mechanisms provide the necessary channels of communication between all layers of the organization, so that resources can be allocated to maintaining what needs to be maintained, repairing what is broken, and creating new responses to new challenges. They also require the commitment of leadership to protect these activities and not cut them as wasteful or no longer necessary; they require the commitment of committee members and staff to put legitimate energy into governance efforts and not treat them cynically.
It is extremely hard work to maintain a well-run, mature organization. When that work is put in, however, employees and leadership benefit from a stable set of expectations that can be continuously improved over time without being perpetually disruptive.