Business Strategy for Nonprofits—A Primer

WordelThe ability to craft effective business strategies is essential for nonprofit organizations being able to respond to rapidly changing conditions and deliver on their mission. The excerpt below from an article in the Stanford Social Innovation Review (a must-read for nonprofit leaders) addresses a key element of what is needed: strategic thinking. And to take this one step further, we need to develop cultures of strategic thinkers—teams working together to constantly create, innovate and test strategies for growth.

“We think that what is necessary today is a strategy that breaks free of static plans to be adaptive and directive, that emphasizes learning and control, and that reclaims the value of strategic thinking for the world that now surrounds us.”

The Strategic Plan is Dead. Long Live Strategy—Stanford Social Innovation Review

This post is a short primer on a simple, structured approach to creating aligned business strategies. The methodology presented is a very practical, hands-on way for teams for practice and implement strategic thinking—to become the strategic cultures envisioned above. The steps outlined below give the broad strokes of how to create a business strategy and are a teaser and invitation for you to check out our Business Strategy Template. This tool will guide you through the process for creating a business strategy, step-by-step, with the support of short embedded videos.

Creating a Business Strategy

There are three steps for creating a business strategy:

Step 1: Creating Business Strategy Maps

A business strategy map captures the seven key business scope decisions a business leader must make:

  1. Products & Services: What products and services do I offer to my target customer segments(s)?
  2. Target Customer Segments: What are my target customer segments?
  3. Value Propositions: What benefits do I promise my target customer segment?
  4. Sales Channels: What are my direct and indirect sales channels?
  5. Delivery Platforms: What are my delivery platforms?
  6. Revenue Streams: What are my revenue sources?
  7. Cost Structure: What are the key elements in my cost structure?
Step 2: Measuring Competitive Advantage

Sustainable competitive advantage is a measurable state in which a business develops, sells and delivers in a way that creates four conditions:

  1. Market Potential: Being the Provider, Partner and Employer-of-Choice.
  2. Scalability: Capable of creating and meeting market demand.
  3. Sustainability: Capable of preventing or mitigating significant risks.
  4. Return: Businesses achieving their potential returns (including non-monetary).
Step 3: Make Requests and Align Strategies

The last step in the process pulls together the information gathered in Steps 1 and 2 to create a clear strategic path forward:

  1. Advocate Focus & Priorities: Agree on milestones and key investments.
  2. Make Compelling Requests: Requests from teams to the Enterprise and from the Enterprise to teams.
  3. Align With Enterprise Priorities & Decisions: Based on input from Steps 1 & 2, Enterprise leaders make decisions and set priorities that teams align with.

Next Step: Download the Business Strategy Template and take it for a test drive.

Related Resources:

The Strategic Plan is Dead. Long Live Strategy

Compelling Requests: A High Performance Team Tool

Why Is Competitive Advantage In The Nonprofit Sector So Important?