Strategy is not planning. Strategy is about making smart strategic choices as the world changes around us and taking action in real-time. To help your organization think and act strategically every day, not just once every few years, consider these five principles for strategy development.
1. Know Yourself
Whether as individuals or as organizations, we sometimes forget to remember who we are. For individuals, remembering might mean spending time with an old friend or a sibling, someone who brings you back to your fundamental self. For organizations, it means taking time with board and management to review the most basic elements of the organization’s identity: its mission, customers, service area, programs, and funding:
- Why does your organization exist?
- Who do you serve?
- Where do you work?
- What do you do?
- How do you pay for it?
These questions are deceptively simple, but together the answers comprise your business model. Having a shared understanding of your organization’s business model is a critical precursor of strategy development.
2. Know Your Market
To really know yourself, you need to know the world around you. We all work within a larger context; our organizations, as well as those we serve, are and will continue to be impacted by social, economic, demographic, political, and funding changes. Taking time to truly explore and understand those changes and their implications can help you better identify future opportunities and challenges, how they may affect your organization, and what you will do in reaction to (or better yet, in anticipation of) each.
Knowing your market also means knowing who else is working in your “space,” and how your organization compares. Remember that while board and staff may have one view of how your organization stacks up, clients, customers, colleagues, funders, policy makers, and even competitors might have another. Both perspectives are critical.
3. Build On Your Strengths
It is human nature to fret over our weaknesses. But we as individuals are more energized, and organizations are more successful, when we focus on our strengths. The best approach to developing strategy is to use the organizational identity discussed in the first principle to guide you in doing more of what you do best.
But before you can do that, you need to fill in one more missing piece. Another part of knowing yourself is knowing how your organization is distinct from others in your field—your competitive advantage. Ask yourself: What is the particular strength we have that differentiates us, makes us unique, and helps us make the case that others should support our work?
Once you know what your competitive advantage is, do more of it! Knowing where your organization truly excels will help you best compete on behalf of your mission and have the greatest impact with your resources.
Strategy is a coordinated set of actions aimed at creating and sustaining a competitive advantage in carrying out your nonprofit’s mission.
4. Make Decision-Making Criteria Explicit
Strategy is about making choices, and one of the most important tools nonprofits can use in making strategic decisions is a strategy screen.
A strategy screen is a list of criteria, or standards, against which you will test various strategic options. Common criteria include: “supports our mission,” “reinforces our competitive advantage,” or “will be financially sustainable by [date].” Others will be unique to your organization’s needs and interests, such as: “enhances our profile as the go-to resource for new mothers,” or “leverages the skills of our active volunteer base.”
Develop this screen before beginning to generate strategies so that you are not tempted to alter your “must haves” to fit a tempting strategy. That said, strategy screens are not meant to be prohibitive, merely to focus your decision making. You can still choose to pursue a strategy that does not meet all the criteria; the screen just makes that choice more intentional and deliberate.
By having this screen in place, decision-making criteria are made visible and explicit, helping to keep everyone on the same page and moving in the same direction.
5. Identify Your Big Question
Every organization faces “Big Questions.” Sometimes these come in the form of an opportunity (Nonprofit X has approached us about a potential merger), sometimes in the form of a competitive challenge (Nonprofit Y is starting up a competing program), and sometimes in the form of a business model challenge (membership is declining, and the data that used to be our competitive advantage is now publicly available online). Big Questions can arise anytime, and often move you beyond the scope of your current strategies.
It is important to be clear on what your current Big Question is, and to determine what (additional) information you need to answer it. Once you have that information, you can test potential strategic responses against your strategy screen.
With these five principles, you will be well prepared to develop strategy in real-time, when you need it.