The Nonprofit Operations Guide: Strategy and Ecosystem
Your strategy — the problem you’re trying to solve, who you’re solving it for, and why — shapes every decision that happens in your organization. Clarity of what the organization does and does not do, and commitment to that clarity, are required to ensure that the daily activities can be performed well and managed for quality over time.
Every organization must innovate and adapt over time, which means managing the tension between achieving high-quality daily activities and exploring new ideas. It’s entirely possible to do this well, but more common to do it poorly. The hallmarks of organizations that expand, scale, or innovate successfully are found in their clarity — they can clearly state why they’re undertaking an initiative and how it adds to the value they provide — and their commitment — they know what it takes to execute and are committed to ensuring the health of that execution.
For these reasons, strategy (and the ecosystem it was created within) come first in our look at an organization’s Operational Layers.
A diagram for the operating model toolkit, to show that an organization’s strategy is the vision for its position within the environment and is guided by the theory of change.
Definitions
The ecosystem encompasses all of the stuff outside of your organization’s doors — your consumers, competitors, regulatory environment, trends, tastes, culture, and the factors that go into the problem you’re trying to solve. From this ecosystem, you construct a theory or hypothesis about how you’re going to provide value to your clients. The why and what of your position in this ecosystem make up your strategy or mission.
So much has been written about strategy since Michael Porter’s 1979 “Five Forces” work that there’s little to add. Since Deep Why is an operations firm, we leave the strategy formulation to others. We focus on implementation — designing or re-aligning the organization’s activities so that they support the strategy.
Strategy and ecosystem are critically important for operations and execution. In a world with infinite possibilities, you can’t actually do much until you decide:
Exactly what problem are you solving?
Exactly who are you solving it for?
Why are you solving this problem for these people?
In what context will you solve this problem? That is, exactly what are you doing and what won’t you do?
Why Do You Need a Strategy?
Strategy is often framed as a competitive advantage. In the nonprofit and public sector world, you can replace “strategy” with “mission.” Your strategy is your reason for existing. It defines the purpose in what your employees do every day. It is your board’s and employees’ North Star to navigate by when they have to make decisions. The mission focuses and frames the decisions about everything that happens in the organization.
Indicators of Healthy Strategy
There are many resources that help you identify if you have a problem with your strategy, and what to do about it. For the purposes of operationalizing a new project, undertaking a major transition, or detangling an existing set of practices, the most common and most critical indicator of potential success is strategic clarity, followed closely by commitment to that strategy.
A page from Lewis Carroll’s Alice in Wonderland. Alice asks the Cheshire Cat which way to go from here, and the Cat responds that it depends on where she wants to get to.
Clarity
Any organization that is out of start-up mode should be able to clearly and confidently answer what you do, for whom, under what circumstances, and why (to what end). You can’t design, fix, or become efficient with your execution until you can frame and focus the work. Put another way — if you don’t know where you’re going most any path will do.
Each activity you’re engaged in requires people, tools, and processes (operations) that allow the activity to get done, and monitoring and management to ensure the quality of what you’re doing. These, in turn, require alignment to a North Star (mission or strategy) to help guide the thousands of daily decisions that arise from providing services in a complex environment. Obscuring that North Star makes it impossible to create a good operating model — which lays out how your organization knows its achieving its goals — because you can’t rely on the consistent definition of “achieving the goals” required to establish measurement and monitoring of those goals.
Mission-driven organizations have valid reasons to struggle with achieving the clarity necessary for excellent execution. If your objective is to help people, denying them help because it doesn’t fit within your mission can be difficult to do. You may have a broad mission that can make it difficult to focus — think community organizations that provide a number of different supportive programs for a specific region.
Organizations also obscure their North Star through through a lack of clarity around the value they add to the community. This often manifests as frequent changes of direction or taking on of new programs that are driven almost exclusively by available funding. If that’s your situation, what can you do about it?
Get clear on what you’re really good at so you can do more of it. Are you excellent at engaging the community through events? Do you excel at connecting first generation students with college mentors? Whatever it is, this is the value you’re bringing to other people’s lives when you do what you do, and strong organizations maximize their efforts toward the places where they add the most values.
Ask other people what they think your value is. If there’s misalignment between what other people think about your value and what you believe, you will struggle to execute well. Funders will fund what they believe about your organization; clients will come to your organization seeking services based on their perceptions; staff will execute based on their understanding.
Explore the factors that allow you to be excellent at your value-add to the community. While people — whether individuals or your general hiring decisions — are likely part of that equation, dig deeper — what allows them to excel? Is it that they have the right support and good management? Is it that they are expected to be autonomous and have tools that support them well? Is it that they consistently make decisions that are aligned with the mission? Make sure you’re protecting these factors in any changes you make.
Get clear on what you don’t, or won’t, do. This one is much harder. Money is typically involved in decisions to pursue poor-fit activities. Almost all social-sector organizations have a “can do” spirit and don’t like saying they won’t or can’t do something. However, the organizations that scale well and the organizations that provide many high-quality services without succumbing to mission creep are both very good at identifying what they don’t do.
Resist the temptation to fix everything in your organization. If you understand the factors that let you excel, and find that you can put more resources into a program to address low performance and that program is one you could otherwise excel at, then by all means see the tips on commitment below. However, not all poorly-done activities are worth fixing, and it can distract you from the things you do really well.
Take the long view. The primary reason that organizations ignore their own boundaries is a fear of running out of money. As you’ll see throughout this series, that may work in the short run, but it puts you on a cycle of poor operations and poor execution if it isn’t coupled with a long-term commitment to winnowing out the failed experiments over time. It may feel risky to say “we don’t do that” but it’s more risky to spread yourself too thin.
Commitment
Once you are clear on your strategy, you have to commit the resources that will allow you to execute. Commitment shows up when you allocate an appropriate budget to the actual operating requirements of your strategy — both in the immediate term, and over time to ensure you are maintaining the level of execution that your strategy calls for.
Commitment means that, when decisions are called for during your operations project, you frame your decisions consistently within the strategy. Commitment means not robbing an existing activity to pay for a new one. It is impossible to construct an operating system — the tools and processes that people interact with daily — when your staff doesn’t have or can’t rely on the resources required to do the job now and in the future.
Because the problems that social sector organizations tackle are interconnected, multi-dimensional, and subject to external forces from funders and policymakers, it can be hard to turn down an opportunity to extend the services you already provide into something that is reasonably adjacent to them. This isn’t an inherently bad thing — done well, it can add value for your constituents. Done poorly, it erodes your ability to execute on your existing programs.
The organizations who scale well and the organizations that provide many high-quality services without succumbing to mission creep are highly committed to what they do, and say no to everything else. Once an organization has a successful set of offerings, they are often courted by foundations to extend their programming in certain ways — and the top performers politely decline if that extension isn’t a good fit. This commitment allows high performing organizations to focus on continuously improving their tools, processes, management and monitoring toward excellence, because all of their resources and energy are focused and not fragmented.
This article is part of a series on Nonprofit Operations that is designed to introduce concepts and language that can be very helpful in understanding common pain points in our sector.