In strategic planning it is critical to formally consider how your organization will accomplish its goals. The answer to this question is a strategy. There are a variety of formal definitions for strategies, but everyone fundamentally agrees that a strategy is the answer to the question, "How?"
"Strategies are simply a set of actions that enable an organization to achieve results."
MAP for Nonprofits, St. Paul, MN
"Strategy is a way of comparing your organization's strengths with the changing environment in order to get an idea of how best to complete or serve client needs."
Jim Fisk & Robert Barron, The Official MBA Handbook
Essentially, there are three different categories of strategies: organizational, programmatic, and functional. The difference among the categories is the focus of the strategy:
Organizational strategy outlines the planned avenue for organizational development (e.g., collaborations, earned income, selection of businesses, mergers, etc.).
Programmatic strategy addresses how to develop, manage and deliver programs (e.g., market a prenatal care service to disadvantaged expectant mothers by providing information and intake services in welfare offices).
Functional strategies articulate how to manage administration and support needs that impact the organization's efficiency and effectiveness (e.g., develop a financial system that provides accurate information using a cash accrual method).
When to Develop Strategies
Strategy development follows the creation and affirmation of the organization's purpose statement, environmental and program data collection and analysis, and identification of critical issues. It is critical that strategy development follow these steps because the information gathered and decisions made in these phases are the foundation for strategy creation and selection (see also FAQ 1, What is Strategic Planning?, and FAQ 8, What is a Situation Assessment?). Each of these steps provides the following:
The purpose statement, the statement of the organization's ultimate goal, provides the direction to which the strategies should ultimately lead.
External market data and program evaluation results provide critical data to support strategy development. Without this information and insight, the organization's strategies will not be in alignment with or effective in the marketplace.
The critical issues list serves as the specific focus and framework for the activities of the organization and the pattern of these activities (developing and selecting the strategies).
How to Develop Strategies
Strategy formulation is a combination of rational, scientific examinations and educated, intuitive best guesses. Many individuals are overwhelmed by the idea of developing strategies, but it can be a fun and invigorating process. The process entails:
examining the organization's critical issues
determining how the organization's strengths and skills can be employed to address the critical issues
analyzing opportunities and strengths and looking for ways to synthesize the two
exploring and choosing the best approaches for the organization.
During this evaluation ask these key questions: Does the strategy meet/address critical issues? Is this aligned with our mission? Is this approach financially viable?
One effective method of strategy generation is to list critical issues and organizational strengths onto flipcharts and then have staff or board members brainstorm possible uses of those strengths or other skills to address the critical issues. Once the brainstorm session is completed, use a roundtable discussion to investigate and evaluate the possible strategies. Remember to develop a list of alternative strategies to investigate and keep in the contingency planning file.
It is important not to discount the ideas that come to people during non-working hours. The Polaroid camera is the result of a three year old's question to her father: "Dad, why can't I see the picture now?"
Strategy of Development Tools
A number of analytical tools have been developed to assist organizations with the planning process . Many nonprofit organizations have adapted these tools, modifying the questions and criteria to align with their own specific services and markets. Listed below are analytical tools frequently used by nonprofit and for-profit organizations.
SWOT Analysis
SWOT analysis is a methodology of examining potential strategies derived from the synthesis of organizational strengths, weaknesses, opportunities and threats (SWOT). The partnering of the different elements and the extensive data collected as a result of the analysis can serve as a spark for roundtable discussions and refinement of current strategies or generation of new strategies.
The MacMillan Matrix
This strategy grid, developed by Dr. Ian MacMillan, is specifically designed to assist nonprofit organizations to formulate organizational strategies. There are three assumptions underlying this approach:
the need for resources is essentially competitive and all agencies wanting to survive must acknowledge this dynamic
given that resources are scarce, there is no room for direct duplication of services to a single constituency -- this is wasteful and inefficient
mediocre or low quality service to a large client population is less preferable to delivering higher quality services to a more focused population.
These assumptions have implications that are difficult and painful for many organizations and individuals. It might mean terminating some programs to improve core services and competencies, giving programs and clients to more efficient, effective agencies, or competing aggressively with those programs that are less effective or efficient.
MacMillan's matrix examines four program dimensions that guide placement on the strategy grid and indicate implied strategies.
Alignment with Mission Statement
Services or programs that are not in alignment with the organizational mission, unable to draw on existing organizational skills or knowledge, unable to share resources, and/or unable to coordinate activities across programs should be divested.
Competitive Position
Competitive position addresses the degree to which the organization has a stronger capability and potential to fund the program and serve the client base than the competitive agencies.
Program Attractiveness
Program attractiveness is the complexity associated with managing a program. Programs that have low client resistance, a growing client base, easy exit barriers, and stable financial resources are considered simple or "easy to administer." The level of program attractiveness also includes an economic perspective or a review of current and future resource investments.
Alternative Coverage
Alternative coverage is the number of other organizations attempting to deliver or succeeding in delivering a similar program in the same region to similar constituents.
The MacMillan Matrix provides ten cells in which to place programs that have been reviewed in terms of these four dimensions. Each cell is assigned a strategy that directs the future of the program(s) listed in the cell (e.g., aggressive competition, joint venture, orderly divestment, etc.). One cell of the matrix, "Soul of the Agency," requires additional explanation. These are the difficult programs for which the organization is often the clients' "last, best hope." Management must find ways to use the programs in other cells to develop, piggyback, subsidize, leverage, promote, or otherwise support the programs in this category.
Additional Strategies for Your Organization
Listed below are several strategies applicable to both the organizational and program levels, adapted from Philip Kotler's Strategic Marketing for Nonprofit Organizations. From a social need and services perspective, some are more desirable than others.
Surplus Maximization
An agency runs its organization in a manner that increases the amount of resources on hand. Usually this strategy is adopted to accumulate resources for expansion or growth.
Revenue Maximization
An agency manages its organization to generate the highest possible revenues, perhaps in an effort to establish a reputation or critical mass.
Usage Maximization
An agency works to serve the highest number of users of their services. This strategy can be used to position the organization or program for funding or budgetary purposes.
Usage Targeting
An agency provides services in a manner that encourages serving a specific number or type of constituents. This strategy is used to address unmet needs of specific populations or to cover the costs associated with providing services.
Full Cost Recovery
An agency manages its programs and services so that it financially breaks even, providing as much service as the finances will allow. Many nonprofits adopt this strategy in an effort to provide services without entering fiscal crisis.
Partial Cost Recovery
An organization operates with a chronic deficit every year, providing services that are critical and cannot be provided at a break even level of costs (e.g., mass transit or the Post Office). These organizations rely on public and private foundations, individuals, and governments to cover the annual deficit.
Budget Maximization
An agency maximizes the size of its staff, services, and operating expenditures regardless of revenue/cost levels. Organizations that are concerned with reputation and the impact of trimming services or infrastructure on that reputation employ this strategy.
Producer Satisfaction Maximization
An organization operates towards a goal of satisfying the personal/professional needs of a founder, staff, or board of directors rather than the established needs of external clients and customers.
Fees for Service
An organization provides services to clients for a fee. The fee is typically below market rates and does not cover the full cost of providing the services.
New Revenue Strategies
An organization uses direct marketing activities designed to generate new sources of revenue from specific funders. Examples include starting a new service or program, approaching a new funder, changing the way services are provided, or setting up a profit making venture.
Legitimization Strategies
An organization works to communicate to the community that it is conforming to existing standards and norms - that it is a legitimate and worthy participant in the sector. Examples include adapting services to funder priorities, contributing non cash or cash resources to other nonprofit organizations, or seeking endorsements or board participation from prominent individuals.
Retrenchment Strategies
An organization emphasizes efforts to reduce internal costs to offset the potential or real loss of revenues or grant monies. Examples include increasing staff workloads, increasing use of part time or volunteer staff, eliminating services or programs, or reducing non-fixed expenses such as training or supplies.
How can we do a competitive analysis?
Nonprofits have not traditionally been thought of as organizations that need to be competitively oriented. Unlike for-profit businesses, which compete for customers and whose very survival depends on providing services or products to satisfied, paying "clients," many nonprofit organizations operate in a non-market, or grants, economy - one in which services may not be commercially viable. In other words, the marketplace may not supply sufficient resources to support an adequate, ongoing provider base. Moreover, the customer (client) does not decide which provider gets adequate, ongoing funding. (In fact, many nonprofits are considered "sole-source," the only place to get the service, so there is not necessarily any choice in which provider receives funding even if the client does have some say). Consequently, nonprofit organizations have not necessarily had an incentive to question the status quo, to assess whether client needs were being met, or to examine the cost-effectiveness or quality of available services.
The competitive environment has changed, however: funders and clients, alike, are beginning to demand more accountability; sole-sourced nonprofits are finding that their very success is encouraging others to enter the field and compete for grants; and grant money and contributions are getting harder to come by, even as need and demand increase. This last trend - increasing demand for a smaller pool of resources, requires today's nonprofits to rethink how they do business, to compete where appropriate, to avoid duplicating existing comparable services, and to increase collaboration, when possible.
The MacMillan Matrix for Competitive Analysis of Programs
The MacMillan Matrix is an extraordinarily valuable tool that was specifically designed to help nonprofits assess their programs in that light. The matrix is based on the assumption that duplication of existing comparable services (unnecessary competition) among nonprofit organizations can fragment the limited resources available, leaving all providers too weak to increase the quality and cost-effectiveness of client services. The matrix also assumes that trying to be all things to all people can result in mediocre or low-quality service; instead, nonprofits should focus on delivering higher-quality service in a more focused (and perhaps limited) way. The matrix therefore helps organizations think about some very pragmatic questions:
Are we the best organization to provide this service?
Is competition good for our clients?
Are we spreading ourselves too thin, without the capacity to sustain ourselves?
Should we work cooperatively with another organization to provide services?
Using the MacMillan Matrix is a fairly straightforward process of assessing each current (or prospective) program according to four criteria, described below.
1. Fit
Fit is the degree to which a program "belongs" or fits within an organization. Criteria for "good fit" include:
congruence with the purpose and mission of the organization;
ability to draw on existing skills in the organization; and
ability to share resources and coordinate activities with programs.
2. Program Attractiveness
Program attractiveness is the degree to which a program is attractive to the organization from an economic perspective, as an investment of current and future resources (i.e., whether the program easily attracts resources). Any program that does not have high congruence with the organization's purpose should be classified as unattractive. No program should be classified as highly attractive unless it is ranked as attractive on a substantial majority of the criteria below:
high appeal to groups capable of providing current and future support
stable funding
market demand from a large client base
appeal to volunteers
measurable, reportable program results
focus on prevention, rather than cure
able to discontinue with relative ease, if necessary (i.e., low exit barriers)
low client resistance to program services
intended to promote the self-sufficiency or self-rehabilitation of client base
3. Alternative Coverage
Alternative coverage is the extent to which similar services are provided. If there are no other large, or very few small, comparable programs being provided in the same region, the program is classified as "low coverage." Otherwise, the coverage is "high."
4. Competitive Position
Competitive position is the degree to which the organization has a stronger capability and potential to deliver the program than other agencies - a combination of the organization's effectiveness, quality, credibility, and market share or dominance. Probably no program can be classified as being in a strong competitive position unless it has some clear basis for declaring superiority over all competitors in that program category. Criteria for a strong competitive position include:
good location and logistical delivery system;
large reservoir of client, community, or support group loyalty;
past success securing funding;
superior track record (or image) of service delivery;
large market share of the target clientele currently served;
gaining momentum or growing in relation to competitors;
better quality service and/or service delivery than competitors;
ability to raise funds, particularly for this type of program;
superior skill at advocacy;
superiority of technical skills needed for the program;
superior organizational skills;
superior local contacts;
ability to conduct needed research into the program and/or properly monitor program performance;
superior ability to communicate to stakeholders; and
most cost effective delivery of service.
After each program is assessed in relation to the above four criteria, each is placed in the MacMillan matrix, as follows. For example, a program that is a good fit, is deemed attractive and strong competitively, but for which there is a high alternative coverage would be assigned to Cell No. 1, Aggressive Competition.
High Program Attractiveness:
"Easy" Program Low Program Attractiveness:
"Difficult" Program
Alternative Coverage
High Alternative Coverage
Low Alternative Coverage
High Alternative Coverage
Low
GOOD FIT Strong Competitive Position 1. Aggressive Competition 2. Aggressive Growth 5. Build up the Best Competitor 6. "Soul of the Agency"
Weak Competitive Position 3. Aggressive Divestment 4. Build Strength or Get Out 7. Orderly Divestment 8. "Foreign Aid" or Joint Venture
POOR FIT
9. Aggressive Divestment 10. Orderly Divestment
Once all programs have been placed in the appropriate positions on the matrix, an organization can review its mix of programs, sometimes called a "program portfolio," and decide if any adjustments need to be made. Ideally, an organization would have only two types of programs. The first would be attractive programs (programs that attract resources easily), in areas that the organization performs well and can compete aggressively for a dominant position.
These attractive programs can be used to support the second program type: the unattractive program with low coverage. The unattractive program is considered unattractive by funders, with low alternative coverage, but makes a special, unique contribution and in which the organization is particularly well-qualified. These programs typically fall under Cell No. 6, the soul of the agency. These programs are known as the "soul of the agency" because the organization is committed to delivering the program even at the cost of subsidizing it from other programs. An organization cannot afford to fund unlimited "souls," and it might have to face some difficult decisions about how to develop a mix of programs that ensure organizational viability as well as high-quality service to clients.
For example, five years ago there was little funding for case management by AIDS Service Organizations. Unwilling to let clients fend for themselves in getting the help they needed, many organizations devoted staff time to this service. At the time this was a "soul of the agency" program. These days, this program is more attractive (i.e., fundable) though there is also growing alternative coverage. Therefore, organizations in a strong position to serve the clients well, with cultural competence and program expertise, should aggressively compete: those in a weak competitive position should get out of the business.
Articulating Previous Strategies
Most organizations operate within the guidelines of certain program and organizational strategies, although often these have neither been recognized or articulated as actual strategies. Once an organization is in the process of strategic planning, however, it is time to make explicit these unspoken strategies and incorporate them into this deliberate consideration of the organization's future directions. This should happen as part of the situation assessment: look for past patterns of operation or allocation of resources -- these are your previous strategies; analyze whether those strategies were effective, and why; and consider whether or not they should be held as strategies for the future.
Identification of Critical Issues
Upon completion of the situation assessment, a planning committee should be in a position to identify all of the critical issues, or fundamental problems or choices, facing the organization, and then begin to address those issues and identify priorities. A first attempt will probably result in a very long list of "critical" issues. Some might indeed be critical, but require no action at present and should, therefore, be monitored; some will require immediate attention, and as such should be dealt with accordingly; and some will be of critical importance to the long-term viability and success of the organization. Those are the issues (usually no more than six to eight issues qualify) that become the framework for the decisions that must be made next: decisions regarding strategies, long-range goals and objectives, and financial requirements.
To arrive at this final list of true critical issues, the planning committee should brainstorm a list of issues that might qualify and then assess each issue by asking: Why is it an issue? What are the consequences of not responding to this issue in the near future ? Why does the issue need immediate attention? Why is it a critical issue? Again, the final list should include no more than six to eight items; beyond that, the organization is in danger of losing focus and sabotaging its own best intentions.
Finally, additional research may be needed, in order to gather specific information about new opportunities which can be pursued. This might include: description of new target markets and their needs; description of new products and/or services with descriptions of start-up costs, competitor analysis, long-term financial projections, and break-even analysis.
"Strategies are simply a set of actions that enable an organization to achieve results."
MAP for Nonprofits, St. Paul, MN
"Strategy is a way of comparing your organization's strengths with the changing environment in order to get an idea of how best to complete or serve client needs."
Jim Fisk & Robert Barron, The Official MBA Handbook
Essentially, there are three different categories of strategies: organizational, programmatic, and functional. The difference among the categories is the focus of the strategy:
Organizational strategy outlines the planned avenue for organizational development (e.g., collaborations, earned income, selection of businesses, mergers, etc.).
Programmatic strategy addresses how to develop, manage and deliver programs (e.g., market a prenatal care service to disadvantaged expectant mothers by providing information and intake services in welfare offices).
Functional strategies articulate how to manage administration and support needs that impact the organization's efficiency and effectiveness (e.g., develop a financial system that provides accurate information using a cash accrual method).
When to Develop Strategies
Strategy development follows the creation and affirmation of the organization's purpose statement, environmental and program data collection and analysis, and identification of critical issues. It is critical that strategy development follow these steps because the information gathered and decisions made in these phases are the foundation for strategy creation and selection (see also FAQ 1, What is Strategic Planning?, and FAQ 8, What is a Situation Assessment?). Each of these steps provides the following:
The purpose statement, the statement of the organization's ultimate goal, provides the direction to which the strategies should ultimately lead.
External market data and program evaluation results provide critical data to support strategy development. Without this information and insight, the organization's strategies will not be in alignment with or effective in the marketplace.
The critical issues list serves as the specific focus and framework for the activities of the organization and the pattern of these activities (developing and selecting the strategies).
How to Develop Strategies
Strategy formulation is a combination of rational, scientific examinations and educated, intuitive best guesses. Many individuals are overwhelmed by the idea of developing strategies, but it can be a fun and invigorating process. The process entails:
examining the organization's critical issues
determining how the organization's strengths and skills can be employed to address the critical issues
analyzing opportunities and strengths and looking for ways to synthesize the two
exploring and choosing the best approaches for the organization.
During this evaluation ask these key questions: Does the strategy meet/address critical issues? Is this aligned with our mission? Is this approach financially viable?
One effective method of strategy generation is to list critical issues and organizational strengths onto flipcharts and then have staff or board members brainstorm possible uses of those strengths or other skills to address the critical issues. Once the brainstorm session is completed, use a roundtable discussion to investigate and evaluate the possible strategies. Remember to develop a list of alternative strategies to investigate and keep in the contingency planning file.
It is important not to discount the ideas that come to people during non-working hours. The Polaroid camera is the result of a three year old's question to her father: "Dad, why can't I see the picture now?"
Strategy of Development Tools
A number of analytical tools have been developed to assist organizations with the planning process . Many nonprofit organizations have adapted these tools, modifying the questions and criteria to align with their own specific services and markets. Listed below are analytical tools frequently used by nonprofit and for-profit organizations.
SWOT Analysis
SWOT analysis is a methodology of examining potential strategies derived from the synthesis of organizational strengths, weaknesses, opportunities and threats (SWOT). The partnering of the different elements and the extensive data collected as a result of the analysis can serve as a spark for roundtable discussions and refinement of current strategies or generation of new strategies.
The MacMillan Matrix
This strategy grid, developed by Dr. Ian MacMillan, is specifically designed to assist nonprofit organizations to formulate organizational strategies. There are three assumptions underlying this approach:
the need for resources is essentially competitive and all agencies wanting to survive must acknowledge this dynamic
given that resources are scarce, there is no room for direct duplication of services to a single constituency -- this is wasteful and inefficient
mediocre or low quality service to a large client population is less preferable to delivering higher quality services to a more focused population.
These assumptions have implications that are difficult and painful for many organizations and individuals. It might mean terminating some programs to improve core services and competencies, giving programs and clients to more efficient, effective agencies, or competing aggressively with those programs that are less effective or efficient.
MacMillan's matrix examines four program dimensions that guide placement on the strategy grid and indicate implied strategies.
Alignment with Mission Statement
Services or programs that are not in alignment with the organizational mission, unable to draw on existing organizational skills or knowledge, unable to share resources, and/or unable to coordinate activities across programs should be divested.
Competitive Position
Competitive position addresses the degree to which the organization has a stronger capability and potential to fund the program and serve the client base than the competitive agencies.
Program Attractiveness
Program attractiveness is the complexity associated with managing a program. Programs that have low client resistance, a growing client base, easy exit barriers, and stable financial resources are considered simple or "easy to administer." The level of program attractiveness also includes an economic perspective or a review of current and future resource investments.
Alternative Coverage
Alternative coverage is the number of other organizations attempting to deliver or succeeding in delivering a similar program in the same region to similar constituents.
The MacMillan Matrix provides ten cells in which to place programs that have been reviewed in terms of these four dimensions. Each cell is assigned a strategy that directs the future of the program(s) listed in the cell (e.g., aggressive competition, joint venture, orderly divestment, etc.). One cell of the matrix, "Soul of the Agency," requires additional explanation. These are the difficult programs for which the organization is often the clients' "last, best hope." Management must find ways to use the programs in other cells to develop, piggyback, subsidize, leverage, promote, or otherwise support the programs in this category.
Additional Strategies for Your Organization
Listed below are several strategies applicable to both the organizational and program levels, adapted from Philip Kotler's Strategic Marketing for Nonprofit Organizations. From a social need and services perspective, some are more desirable than others.
Surplus Maximization
An agency runs its organization in a manner that increases the amount of resources on hand. Usually this strategy is adopted to accumulate resources for expansion or growth.
Revenue Maximization
An agency manages its organization to generate the highest possible revenues, perhaps in an effort to establish a reputation or critical mass.
Usage Maximization
An agency works to serve the highest number of users of their services. This strategy can be used to position the organization or program for funding or budgetary purposes.
Usage Targeting
An agency provides services in a manner that encourages serving a specific number or type of constituents. This strategy is used to address unmet needs of specific populations or to cover the costs associated with providing services.
Full Cost Recovery
An agency manages its programs and services so that it financially breaks even, providing as much service as the finances will allow. Many nonprofits adopt this strategy in an effort to provide services without entering fiscal crisis.
Partial Cost Recovery
An organization operates with a chronic deficit every year, providing services that are critical and cannot be provided at a break even level of costs (e.g., mass transit or the Post Office). These organizations rely on public and private foundations, individuals, and governments to cover the annual deficit.
Budget Maximization
An agency maximizes the size of its staff, services, and operating expenditures regardless of revenue/cost levels. Organizations that are concerned with reputation and the impact of trimming services or infrastructure on that reputation employ this strategy.
Producer Satisfaction Maximization
An organization operates towards a goal of satisfying the personal/professional needs of a founder, staff, or board of directors rather than the established needs of external clients and customers.
Fees for Service
An organization provides services to clients for a fee. The fee is typically below market rates and does not cover the full cost of providing the services.
New Revenue Strategies
An organization uses direct marketing activities designed to generate new sources of revenue from specific funders. Examples include starting a new service or program, approaching a new funder, changing the way services are provided, or setting up a profit making venture.
Legitimization Strategies
An organization works to communicate to the community that it is conforming to existing standards and norms - that it is a legitimate and worthy participant in the sector. Examples include adapting services to funder priorities, contributing non cash or cash resources to other nonprofit organizations, or seeking endorsements or board participation from prominent individuals.
Retrenchment Strategies
An organization emphasizes efforts to reduce internal costs to offset the potential or real loss of revenues or grant monies. Examples include increasing staff workloads, increasing use of part time or volunteer staff, eliminating services or programs, or reducing non-fixed expenses such as training or supplies.
How can we do a competitive analysis?
Nonprofits have not traditionally been thought of as organizations that need to be competitively oriented. Unlike for-profit businesses, which compete for customers and whose very survival depends on providing services or products to satisfied, paying "clients," many nonprofit organizations operate in a non-market, or grants, economy - one in which services may not be commercially viable. In other words, the marketplace may not supply sufficient resources to support an adequate, ongoing provider base. Moreover, the customer (client) does not decide which provider gets adequate, ongoing funding. (In fact, many nonprofits are considered "sole-source," the only place to get the service, so there is not necessarily any choice in which provider receives funding even if the client does have some say). Consequently, nonprofit organizations have not necessarily had an incentive to question the status quo, to assess whether client needs were being met, or to examine the cost-effectiveness or quality of available services.
The competitive environment has changed, however: funders and clients, alike, are beginning to demand more accountability; sole-sourced nonprofits are finding that their very success is encouraging others to enter the field and compete for grants; and grant money and contributions are getting harder to come by, even as need and demand increase. This last trend - increasing demand for a smaller pool of resources, requires today's nonprofits to rethink how they do business, to compete where appropriate, to avoid duplicating existing comparable services, and to increase collaboration, when possible.
The MacMillan Matrix for Competitive Analysis of Programs
The MacMillan Matrix is an extraordinarily valuable tool that was specifically designed to help nonprofits assess their programs in that light. The matrix is based on the assumption that duplication of existing comparable services (unnecessary competition) among nonprofit organizations can fragment the limited resources available, leaving all providers too weak to increase the quality and cost-effectiveness of client services. The matrix also assumes that trying to be all things to all people can result in mediocre or low-quality service; instead, nonprofits should focus on delivering higher-quality service in a more focused (and perhaps limited) way. The matrix therefore helps organizations think about some very pragmatic questions:
Are we the best organization to provide this service?
Is competition good for our clients?
Are we spreading ourselves too thin, without the capacity to sustain ourselves?
Should we work cooperatively with another organization to provide services?
Using the MacMillan Matrix is a fairly straightforward process of assessing each current (or prospective) program according to four criteria, described below.
1. Fit
Fit is the degree to which a program "belongs" or fits within an organization. Criteria for "good fit" include:
congruence with the purpose and mission of the organization;
ability to draw on existing skills in the organization; and
ability to share resources and coordinate activities with programs.
2. Program Attractiveness
Program attractiveness is the degree to which a program is attractive to the organization from an economic perspective, as an investment of current and future resources (i.e., whether the program easily attracts resources). Any program that does not have high congruence with the organization's purpose should be classified as unattractive. No program should be classified as highly attractive unless it is ranked as attractive on a substantial majority of the criteria below:
high appeal to groups capable of providing current and future support
stable funding
market demand from a large client base
appeal to volunteers
measurable, reportable program results
focus on prevention, rather than cure
able to discontinue with relative ease, if necessary (i.e., low exit barriers)
low client resistance to program services
intended to promote the self-sufficiency or self-rehabilitation of client base
3. Alternative Coverage
Alternative coverage is the extent to which similar services are provided. If there are no other large, or very few small, comparable programs being provided in the same region, the program is classified as "low coverage." Otherwise, the coverage is "high."
4. Competitive Position
Competitive position is the degree to which the organization has a stronger capability and potential to deliver the program than other agencies - a combination of the organization's effectiveness, quality, credibility, and market share or dominance. Probably no program can be classified as being in a strong competitive position unless it has some clear basis for declaring superiority over all competitors in that program category. Criteria for a strong competitive position include:
good location and logistical delivery system;
large reservoir of client, community, or support group loyalty;
past success securing funding;
superior track record (or image) of service delivery;
large market share of the target clientele currently served;
gaining momentum or growing in relation to competitors;
better quality service and/or service delivery than competitors;
ability to raise funds, particularly for this type of program;
superior skill at advocacy;
superiority of technical skills needed for the program;
superior organizational skills;
superior local contacts;
ability to conduct needed research into the program and/or properly monitor program performance;
superior ability to communicate to stakeholders; and
most cost effective delivery of service.
After each program is assessed in relation to the above four criteria, each is placed in the MacMillan matrix, as follows. For example, a program that is a good fit, is deemed attractive and strong competitively, but for which there is a high alternative coverage would be assigned to Cell No. 1, Aggressive Competition.
High Program Attractiveness:
"Easy" Program Low Program Attractiveness:
"Difficult" Program
Alternative Coverage
High Alternative Coverage
Low Alternative Coverage
High Alternative Coverage
Low
GOOD FIT Strong Competitive Position 1. Aggressive Competition 2. Aggressive Growth 5. Build up the Best Competitor 6. "Soul of the Agency"
Weak Competitive Position 3. Aggressive Divestment 4. Build Strength or Get Out 7. Orderly Divestment 8. "Foreign Aid" or Joint Venture
POOR FIT
9. Aggressive Divestment 10. Orderly Divestment
Once all programs have been placed in the appropriate positions on the matrix, an organization can review its mix of programs, sometimes called a "program portfolio," and decide if any adjustments need to be made. Ideally, an organization would have only two types of programs. The first would be attractive programs (programs that attract resources easily), in areas that the organization performs well and can compete aggressively for a dominant position.
These attractive programs can be used to support the second program type: the unattractive program with low coverage. The unattractive program is considered unattractive by funders, with low alternative coverage, but makes a special, unique contribution and in which the organization is particularly well-qualified. These programs typically fall under Cell No. 6, the soul of the agency. These programs are known as the "soul of the agency" because the organization is committed to delivering the program even at the cost of subsidizing it from other programs. An organization cannot afford to fund unlimited "souls," and it might have to face some difficult decisions about how to develop a mix of programs that ensure organizational viability as well as high-quality service to clients.
For example, five years ago there was little funding for case management by AIDS Service Organizations. Unwilling to let clients fend for themselves in getting the help they needed, many organizations devoted staff time to this service. At the time this was a "soul of the agency" program. These days, this program is more attractive (i.e., fundable) though there is also growing alternative coverage. Therefore, organizations in a strong position to serve the clients well, with cultural competence and program expertise, should aggressively compete: those in a weak competitive position should get out of the business.
Articulating Previous Strategies
Most organizations operate within the guidelines of certain program and organizational strategies, although often these have neither been recognized or articulated as actual strategies. Once an organization is in the process of strategic planning, however, it is time to make explicit these unspoken strategies and incorporate them into this deliberate consideration of the organization's future directions. This should happen as part of the situation assessment: look for past patterns of operation or allocation of resources -- these are your previous strategies; analyze whether those strategies were effective, and why; and consider whether or not they should be held as strategies for the future.
Identification of Critical Issues
Upon completion of the situation assessment, a planning committee should be in a position to identify all of the critical issues, or fundamental problems or choices, facing the organization, and then begin to address those issues and identify priorities. A first attempt will probably result in a very long list of "critical" issues. Some might indeed be critical, but require no action at present and should, therefore, be monitored; some will require immediate attention, and as such should be dealt with accordingly; and some will be of critical importance to the long-term viability and success of the organization. Those are the issues (usually no more than six to eight issues qualify) that become the framework for the decisions that must be made next: decisions regarding strategies, long-range goals and objectives, and financial requirements.
To arrive at this final list of true critical issues, the planning committee should brainstorm a list of issues that might qualify and then assess each issue by asking: Why is it an issue? What are the consequences of not responding to this issue in the near future ? Why does the issue need immediate attention? Why is it a critical issue? Again, the final list should include no more than six to eight items; beyond that, the organization is in danger of losing focus and sabotaging its own best intentions.
Finally, additional research may be needed, in order to gather specific information about new opportunities which can be pursued. This might include: description of new target markets and their needs; description of new products and/or services with descriptions of start-up costs, competitor analysis, long-term financial projections, and break-even analysis.
Comments
Post a Comment
Thanks for leaving comments. You are making this discussion richer and more beneficial to everyone. Do not hold back.