9 big reasons non-profits should consider strategy maps

In the nearly five years since I left corporate life to take care of my Dad (now 93) and concentrate on helping small non-profits build marketing capability, I’ve seen some amazing examples of mission-driven organizations that manage to find the “sweet spot” in the community that they (and not others) are best able to fill, to grow sustainably in a huge economic downturn, and implement the things they make their strategic priorities.

I’ve also seen many examples of Boards that don’t engage in the right kind of dialogue, organizations that mistake lists of new potential programs as a strategy, and management teams that implement late or poorly.

I think people who run non-profits are some of the most amazing people I know. They make a difference with very limited resources. They find motivated, talented people who will work for them for little money. They not only develop and offer services to clients or beneficiaries, but they find a way to fund those services. They keep volunteers and constituents happy.

Increasingly, I’m realizing how limited executive directors’ management toolkit is to manage all of that complexity. They often don’t have good measures that tell them if both the programmatic and fund development aspects of their enterprise are on track to meet objectives and budget.

They are often hamstrung by fuzzy strategies that don’t really answer the important questions, like: what is the group/market that the organization can serve differently and better than other alternatives? Or: does the organization have sufficient scale to be able to provide its services efficiently? Or: has it identified the financial engine that provides adequate resources to run the existing program and keep improving it, which includes funding information technology needs? Or: what does the organization have to really excel at operationally to fulfill its mission and vision?

Tomorrow I’m talking with a group of non-profit executive directors associated with the Nonprofit Resource Center about why I think strategy maps, as conceived by Kaplan and Norton, can be a useful tool for non-profits. A strategy map is just (just?) a visual depiction of how four perspectives — learning/growth, internal/operations, customer, and financial — relate to one another in a cause-and-effect fashion to achieve the impact that the organization aims to achieve. Here’s a posting of some case studies and examples of public sector agencies that are using balanced scorecards and strategy maps.

And here are some of the benefits for Boards and management that I’m sharing with the executive directors tomorrow. We’ll see if they think I’m all wet!

Explanatory Slide: how the four perspectives link to achieve the mission

A strategy map provides the Board with:

  • A tool for developing a shared mental model of key drivers, the cause-and-effect relationship between critical inputs like internal processes (e.g. training) and outputs (e.g. services)
  • A framework for prioritizing strategic options
  • A stimulus for meaningful dialogue
  • A visual approach to describing the strategy
  • A basis for deciding what metrics should really matter to the Board
  • A way of embracing difficult but important factors that must be balanced in the strategy – like growth and profitability

For management, a strategy map can provide:

  • A tool that can be used as a framework for strategic analysis (strengths/weaknesses)
  • A tool for testing value: is it differentiated and does it meet a real market need?
  • A tool for improving execution because: the team understands how their processes connect to the strategy; the right things are measured – things that ultimately underpin the strategy; targets and quantifiable objectives relate back to what’s important; the strategy gets linked to action plans; and the organization prioritizes a few strategic initiatives that are the right things

Creating a strategy map doesn’t have to turn into a giant time suck.  It can be helpful to an individual executive director just to try to draw something that they think shows the linkage between the internal organization and an agency’s constituents and funding sources.  Though Kaplan and Norton would surely snort at me, I embrace fully the management art of fiddling. Here’s a tool.  Fiddle around with it.  Might it help add clarity to a discussion where Board members seem to be talking at cross purposes?  Or where the internal team isn’t focused on doing the right things right?

Comments Off on 9 big reasons non-profits should consider strategy maps

Filed under Strategy, Uncategorized

Comments are closed.