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What You Need to Know about Nonprofit Strategic Thinking

Discover the overwhelming significance of strategic thinking in the nonprofit sector.

By Bisk
What You Need to Know about Nonprofit Strategic Thinking

How does a nonprofit organization adapt to changing times, maintain its mission statement, overcome dips in donation dollars and remain relevant as more and more causes are championed by nonprofit agencies?

It’s all about strategic thinking, according to John Michel, an associate professional specialist in the Department of Management at the University of Notre Dame’s Mendoza College of Business.

Nonprofits, just like any business, must start from the ground up. They must exhibit operational effectiveness while not losing sight of strategic positioning.

Operational effectiveness, as defined by Michel, means performing better than a competitor and being efficient. That, though, does not equal having a strategy.

Increasing Efficiency by Narrowing Service

Strategic positioning means performing differently than a competitor, or even performing similar activities in a different way. By doing this, an organization can more successfully position itself and be sustainable.

Nonprofits, however, can’t lose sight of the need for trade-offs, which allow an organization to guard against copycat organizations, and distinguish from straddlers, agencies that attempt to have a toehold in multiple areas.

For instance, Southwest Airlines found a way to engage in activities differently than rival air carriers, thereby creating trade-offs to increase efficiency. The airline utilizes only one type of aircraft, limiting its routes to domestic destinations only. It flies in and out of second-tier airports and has remained flexible even with a union contract while maintaining good relations with its organized labor force. Southwest, according to Michel, abstains from using travel agents and does not appear on discount travel websites, which cuts down on transactional costs incurred by travelers.

Strategic positioning, as a concept, originates from three base positions – variety, needs and access. For nonprofits, this includes the scope of services that an organization offers, the target needs that the organization hopes to meet, and how it reaches its clients, either through distribution, geography or online.

As an example, Michel cited Discount Tire, which chose to deliberately limit the services it offers to tires, wheels and tire repair. In doing so, the company’s target needs base is customers who are strictly looking for tire service and sales. Discount Tire operates hundreds of stores nationally, geographically addressing its access base through retail locations.

This strategic position allows Discount Tire to focus its inventory, its employee base and its geographic footprint toward a singular goal.

Stacking Up Against the Competition

Michel also outlined the four-step process for outlining and implementing a strategy canvas, which is essentially a roadmap of an organization’s strategic position.

To create a strategy canvas, Michel recommends that an organization list the important points of its product or service before picking one or more relevant organizations to offer as a comparison. Next, the entity creating a strategy canvas should pinpoint where it stands for each important point while also showing the positions of comparable entities.

By doing this, an organization can identify where it contrasts with comparable organizations, thereby showing donors and stakeholders what sets it apart.

For example, Hotel Formule 1, a French company, created a strategy canvas that highlighted attributes showing the company was able to provide superior, discount accommodations when stacked against comparable lodging. Instead of offering amenities such as a gym or on-site restaurant, Hotel Formule 1 instead focused its efforts on the quality of bed linens, cleanliness and the quietness of its rooms for providing travelers with an affordable, yet exceptional, stay.

You can learn more about strategic thinking to help your organization thrive in the nonprofit environment from successful nonprofit leaders. To learn how you can earn a nonprofit executive certificate from the University of Notre Dame’s 100% online programs. 


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Category: Nonprofit Leadership