Do You Know How to Use AI for Your Nonprofit?
It’s interesting how these Five Common Strategy Mistakes shared by the Harvard Business Review blog are as applicable to nonprofit as for profit businesses (albeit with slightly different twists). Many thanks to Joan Magretta , author of Understanding Michael Porter: The Essential Guide to Competition and Strategy, for alerting us to these common traps into which even the best managers can fall.
Joan’s Mistake #1. Confusing marketing with strategy.
Clairification: So often nonprofits think all they have to do is become whizzes at marketing and fundraising and their problems will be solved. Not true. If your prospective donors want silk purses, and you become great at selling silk purses, that isn’t going to actually further your mission if you only produce sow’s ears. Nonprofits talk a lot about mission (aka value proposition) but don’t always focus strategically on building the mix of programs and services that will optimally deliver on that mission. Nor do most nonprofits do an effective job at differentiating themselves from their competition (see #2, below).
Joan’s Mistake #2. Confusing competitive advantage with “what you’re good at.”
Clairification: Many nonprofits have similar missions and are not good at distinguishing themselves from each other. Let’s say it’s feeding the hungry. Every nonprofit that feeds the hungry is good at it, or at least ‘good enough’ from the perspective of those who are fed, but each does not do the job in the same manner. One offers healthier food. Another offers more culturally appropriate food. Still another makes access to the food a priority, delivering groceries to food deserts. Mission alone does not equal competitive advantage in attempting to attract donor-investors. It’s how one delivers on the mission that matters.
Joan’s Mistake #3: Pursuing size above all else, because if you’re the biggest, you’ll be more profitable.
Joan’s Mistake #4. Thinking that “growth” or “reaching $1 billion in revenue” is a strategy.
Clairification: Mistakes #3 and #4 are interesting because, until recently, Charity Navigator awarded ‘stars’ based to an extent on how much the charity was growing. If the charity reached an optimal size, and decided to stop adding programs and serving more people, they were essentially penalized. One year, working at a human services organization that had slowed its pace of growth, I called Charity Navigator to find out why we’d been demoted from 4 stars to 3 stars. I was told that even though our costs of fundraising and administration had gone down that year, our total growth had slowed and that was perceived as a sign of weakness. (Charity Navigator has since recognized the faultiness of this logic).
Joan’s Mistake #5: Focusing on high-growth markets, because that’s where the money is.
Clairification: For nonprofits the danger is focusing on large grants that become available, or wealthy prospective individual donors who want to create new programs, when these gifts will have to be applied to projects that are not central to the nonprofit’s mission. This can be a very poor strategy decision, leading to what is known as mission creep – which can sometimes be creepy, indeed.
Does your organization fall into any of these strategy traps? What one thing can you do differently in 2012 to become more thoughtful in your approach to planning?