Tuesday, July 30, 2013

Organizational Strength Through Diversification

By Virgil Carter
With the emerging indications of economic strengthening, it may be time for CEOs, staff and volunteer leaders to do a quick check on the strength of their organizations.  Is your organization economically strong?  Do you have the protection and advantage of economic diversification?

A recent Strategy+Business article, “A Continuous Quest for Economic Balance”, by Richard Shediac, Chadi N. Moujaes and Mazen Ramsay Najjar, focuses on the important economic diversification of countries.  Much of what they write has equal application to the strength and well-being of many of our non-profit organizations.

For example, the authors write “Countries can be over-concentrated in any number of ways—for example, relying too heavily on large companies, exports, or foreign investment—and even countries that appear extremely diversified may still be vulnerable to unexpected events.”  How applicable is this to your organization?

A quick check of your annual budget will reveal the sources of your revenues.  If your major source of revenue accounts for more than about 35% of total revenues, you may question whether or not there is sufficient diversification (and protection) for your organization’s well-being.  If a single source of revenue counts for the majority of your revenue flow (over 50%) your organization may be at substantial risk in the event of disruption to the source of revenue.  Risk may be reduced and economic strength will be gained through economic diversification.

How to achieve strength through improved economic balance?  Certainly, continuing to support the elements that are at the center of an organization’s financial strength is obvious.  The answer for successful diversification is not simple.  And it is not achieved in a single step.  Diversification is a continuous, never-ending journey.  Perhaps the most successful journey is one that looks to increase the return of other key existing revenue sources, while also looking for new opportunities that are consistent with the mission of the organization.  Innovation and entrepreneurial efforts are a key in this regard.

For many non-profit organizations, economic strength through diversification is not easy.  No organization can be successful, however, without economic strength.  And if a conscious effort for needed diversification isn’t made, economic strength will never be achieved.   Is your economic balance where you’d like it to be?

For the full Strategy+Business article:  http://www.strategy-business.com/article/00064?pg=0

Monday, July 22, 2013

Make the Most of Your Organization’s Culture

By Virgil Carter
There’s a saying in non-profit organizational leadership to the effect of “culture eats strategy for lunch”!  Experienced volunteer and staff leaders of non-profit organizations quickly learn that their organization’s culture is a formidable force.  It is so powerful that it can stop logical and needed improvements in their tracks.  “This is the way we do things”, is just another way of defining organizational culture.  For example, culture can perpetuate outmoded and ineffective programs for years, simply because “this is the way we do things”!  How does a leader deal with organizational culture?
Organizational culture can be defined as those mind-sets, beliefs, values and behaviors that determine “how we see things around here”.  Organizational culture often is an unspoken, but shared, understanding of the way the organization functions, how individuals fit into the organization, the characteristics of their organizational roles, and how their roles are valued.  Culture is a major determinant of roles and performance—individual and organizational.
In an article, “Stop Blaming Your Culture”, in Strategy + Business, authors Jon Katzenbach and Ashley Harshak write, “When a new leader’s strategy puts the culture of a company at risk, the culture will trump the strategy, almost every time”.  They point out that when your strategy and culture clash visibly, more likely than not, the culture is trying to tell you something about your own leadership direction and tactics.
What to do?  The authors suggest that there is an effective way to face cultural challenges.  Instead of blaming one’s culture, it can be used positively.  “View culture as an asset:  a source of energy, pride and motivation…”, say the authors.  “Figure out which of the old behaviors embedded in your culture can be applied to accelerate the needed changes”.  Look for ways to counterbalance and diminish other elements of the culture that hinder change.  Using culture as a positive force will help “initiate, accelerate and sustain truly beneficial change”, with much less conflict, and with positive results, than one might expect.
It’s usually much more productive to use existing culture in support of important leadership initiatives than to challenge and attempt to change the culture with “new” ideas.
For the entire S+A article, see http://www.strategy-business.com/article/11108?pg=all

Monday, July 15, 2013

Linking Operations to Your Strategy

By Virgil R. Carter

Many non-profit organizations have a strategic plan.  Virtually all of these organizations also have an annual operating budget.  Some organizations also develop and use an annual business or operational plan.  But what’s the connection among these?  How can you, your staff and volunteer leaders plan and manage the connection between your strategy and annual operations?

The business press frequently hosts readable articles on the important connection between strategy and operations.  Although written for business, many topics are equally useful for non-profit organizations.  Colorful titles suggest the importance of the issue, including “Putting Leadership Back Into Strategy”, “Mastering the Management System”,  “Five Competitive Forces That Shape Strategy” and the compelling “Innovation Killers:  How Financial Tools Destroy Your Capacity to Do New Things”.  These topics often are as common to the non-profit world as the for-profit world.

One of the most effective ways to link strategy and operations is also the simplest--through the annual budget process.  An organization’s annual budget really is a plan for what the organization will do during the fiscal year, isn’t it?  Thus, budgeting and strategy should be connected—operations and expenditures for the coming year should be based on the organization’s strategic plan and priorities.  Conversely, a budget developed in isolation from the organization’s strategy is simply a spending plan!

There are some challenges, however, in linking budgeting to strategy:
  • Use the strategic plan to identify what’s important:  Identify the priority strategic objectives, how they will be implemented and how progress will be measured;
  • Don’t work backwards:  Avoid simply assigning all existing goods and services to some aspect of the strategic plan as a means of justifying and continuing everything that the organization currently does;
  • Encourage new, targeted programming:  Strategic priorities and market opportunities change over time, so encourage and reward new programming proposals that support new, emerging needs.
Want to improve the connections between your strategy and operations?  Here’s a final thought:  think about your annual operational cycle and how the various elements of your annual cycle can be best organized in support of your overall strategy.  How can your annual budgeting cycle be linked to your strategy?  How can your business planning cycle be linked to your strategy?  How can you develop usable metrics and evaluations to assess your operations and the extent to which they support your organization’s strategy? 
Successful organizations are those that have found ways to link strategy and operations!

Monday, July 8, 2013

How to Define Success?

By Virgil Carter

How does your association define success?  Success comes in many flavors.  Perhaps the important thing is to identify and implement what works for you.  Thereafter communicate, communicate, and communicate. 

So, what does your association value most?  Is it performance?  How about relationships?  Perhaps its competencies or credentialing.  Each organization is different when it comes to what matters most, not to mention why it matters to us.  So, to define success, there has to be agreement on what matters most.  The situation, which may change over time, has a lot to do with defining success.  For example, an association in a protracted, downward financial spiral, for example, may define success very differently than an association whose growth has been 30% per year for the past five years.

Here are some important success categories, with suggestions how they might be used. 

  1. Strategy--Does our association have a sustained record of performance to plan over time (successful strategy is not measured in 12-month cycles and someone’s pet agenda for the year)?
  2. Voice of the customer—Who are our (right) customers and how do you know if they are satisfied (yes, there may be “wrong” customers)?
  3. Financial—Do we have sustained performance over time meeting budget or ending each year with positive variances (no margin, no mission)?
  4. Business operations—What is the record of new program development and existing program retirement over the past 5 years (are you still doing what you did 5 years ago)?
  5. Learning & growth—What investment do we make on a consistent annual basis for volunteer’s and staff’s learning and growth in their association roles (no investment, no dividends)?
When you have figured out what matters most to your association and how you will measure success, it’s time to think about annual communications planning and the year’s key audiences and messages.  Key messages are important for association leaders—volunteers and staff—to focus on, repeat and reinforce.  The messages help everyone to understand and stay on the same page.

There are many useful ways to define organizational success.  And to communicate effectively about it.  When there is consensus about success, your volunteers, staff and external relationships will thank you, knowing what to expect and how to help.  How do you measure organizational success?

Monday, July 1, 2013

Good Vibrations: Volunteers and CEOs

By Virgil R. Carter

Experienced CEOs know that relationships with volunteers may be challenging.  CEO tenure is often volatile—a situation that cannot benefit the organization, the CEO or the organization’s members.  Why is this too often the case?

Let’s take a closer look:  volunteers usually care passionately about the association.  Many volunteers are leading figures in their field.  While many volunteers are subject-matter experts, many have little leadership experience in the unique setting of nonprofit, volunteer-led organizations.

By comparison, many CEOs spend years expanding their enterprise-wide leadership and management knowledge of nonprofits. Many CEOs actively participate in the broader nonprofit world. Compounding this disparity of knowledge and experience is the fact that roles and responsibilities of volunteer leaders and CEOs often are highly ambiguous. Even where there are written policies, there may be many more unwritten policies actually determining who does what, when, and how. Sound familiar?

What can be done to reduce tension between volunteers and CEOs?  One important improvement is forging and maintaining a volunteer-staff partnership built on two categories of activity essential for many non-profit associations:

Mission-driven activities: These activities tend to represent the purpose of the organization. These activities motivate volunteers and are where most want to be active. These activities, which are rightly led and populated by volunteers, may produce few revenues and may be largely subsidized. This financial situation may be coupled with volunteer assertions that association activities shouldn’t produce revenues over expenses, to keep volunteer costs to a minimum.  Mission-driven activities are critical. There is nothing wrong with subsidized activities, so long as revenues from other sources are available for the needed subsidies.

Business operations activities: These activities are where most of the positive revenue is created to subsidize mission-driven activities. Because they are profit-and-loss oriented, they must be staff led and managed, since volunteers simply have neither the access nor the time to manage business affairs in the timely and agile manner required. A caution: business activities must be related to the mission, as much as subsidized activities.

Clear roles:  Establishing clear roles and accountabilities for these two categories of association activity enables volunteer leaders and CEOs to play to their respective strengths. Such clarity, coupled with good communications, enables effective leadership, improved relationships, and strengthened organizational performance.

Leadership role clarity is an important step to transform tension between volunteer leaders and CEOs into productive partnership. The results—more effective volunteers, stability in CEO tenure, and more successful, enjoyable associations—make the partnership worth everyone’s effort.