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Strategy for Social Organizations. Bob Kennedy William Davidson Institute and The University of Michigan. What is Strategy?. Opportunity Identification Scanning the environment Identifying opportunities for value creation Formulation
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Strategy for Social Organizations Bob Kennedy William Davidson Institute and The University of Michigan
What is Strategy? • Opportunity Identification • Scanning the environment • Identifying opportunities for value creation • Formulation • Organizing a set of activities to deliver efficiently and effectively • Implementation • Creating and managing resources and an organizationto deliver on this vision
The Customer is the one who pays you money!! Who is Your Customer? • Southwest Airlines • NGO focused on citizenship training for teens
Strategy: Opportunity Identification • What does the “market” look like? • Who else operates in this market? • Do segments exist that are not being served (or are being underserved)? • Is someone willing to pay to service these segments?
Opportunity Identification: Southwest Airlines • Most airlines were full service • Travel agents, nice meals, hub & spoke systems, multiple classes of service • Insight: Smaller city pairs were not being well served
Strategy: Formulation • Can your organization create an operating model that creates value • Provides service at lower cost, OR • Creates better value for the customer (i.e. higher willingness to pay)
Limited Passenger Service Short point-to-point routes Frequent, reliable departures Very Low Ticket Prices Lean, productive ground and gate crews High Aircraft Utilization Formulation: Southwest Airlines
Strategy: Implementation • Is your organization aligned for effective implementation? • People • Incentives • Support activities • Organizational Structure • Culture • Leadership and Communications
Implementation: Southwest Airlines • People: Non-union, flexible work rules • Incentives: high pay, team oriented • Supportive activities: one model aircraft, no assigned seats, no meals, etc. • Org Structure: Flat organization, empower line workers • Culture: fun • Leadership: Communication, mission, etc.
What Changes with NGOs? • Customer: those who pay differ from those served • Objective: often social goal, not profits • Competition: comp exists, even though many SE leaders are reluctant to admit it. • Organizational issues: many workers incented by non-financial considerations • Leadership and communications: discussing efficiency and effectiveness is uncomfortable
An Example: Acumen Fund • Opportunity ID: • Wealthy individuals who believe in incentives and mistrust gifts • Many worthy organizations to well off for grants • Formulation: • Act as a venture philanthropy that demands high performance • Invest in metrics and oversight. • Focus on BACO measures (best alternative charitable alternative)
Acumen Fund (2) • Implementation • Hire professional managers, pay market salaries • Academic outreach • Fellows program • Invest in community building among donors • Advisory boards, brainstorm sessions, tours • Result: Now manage $10 mm • Goal is $100 mm by 2010. Changes are good.
Strategy in Your Organization • Opportunity ID: What is the opportunity? • Who do you compete with? • Is someone willing to pay for this “service”? • Formulation: • Can you do this more efficiently or effectively than “rivals?” If not, why should you be funded? • Implementation: • Do you have the right: people, incentives, support activities, org structure, culture, and leadship in place to succeed?
