Five Good Ideas for greater strategic clarity

Non-profit leaders constantly face these types of complex strategic questions: There’s an exciting new funding opportunity, should we pursue it? Our programs are all important, but are they in the right combination or frequency? Some of my board members are passionate about a new idea for growth, should we explore it? In this session, Robin shared ideas for how non-profits can achieve greater clarity and alignment to feel better positioned to answer these kinds of challenging questions. She also provoked ideas for how leaders can fight the “starvation cycle” in which many Canadian non-profits find themselves.

Five Good Ideas

1. Know what success looks like in three years.
2. Decide as an organization what you don’t do. Declare what you will be bad at.
3. Stack your circles. Resource your organization to achieve outcomes.
4. Test, learn, adapt…Repeat!
5. Take a stand against starvation.

Resources

1. Delivering on the Promise of Non-profits: An article by leaders at The Bridgespan Group that introduces key concepts of strategic clarity
2. The Way We Think About Charity Is Dead Wrong: A Ted Talk with Dan Palotta 
3. The Non-profit Starvation Cycle: A Stanford Social Innovation Review article about the mindset and behaviours we need to change in the sector
4. A video interview with professor Frances Frei: “When to disappoint your customers”
5. The strategic plan is dead. Long live strategy: An article about some of the challenges of formal plans…and the importance of planning
6. Empathy Maps: An important tool for more deeply and intimately understanding those you serve

Full session transcript

Thank you, Elizabeth. I’ve been inspired by you and Maytree and your work for many years which makes it a real honour to have been asked to do this today. I was reminded of Maytree and its extraordinary legacy, actually, this morning, coming from the Toronto Foundation’s Vital Signs launch. I see lots of familiar faces of people who were also there. And Sharon Avery, who heads up the Toronto Foundation, gave a shout out to Alan Broadbent at the back of the room for really being the catalyst for Vital Signs 16 years ago. Really conceived of this notion of having a barometer that would take the pulse, collect rigorous data around the state of our city to really arm so many of us; and it has for so many years to help really guide and drive the work. So really hats off to Alan and the Maytree team and now to the Toronto Foundation for continuing that legacy.

When Elizabeth asked me to speak today, my instinct was to say no. That’s really because I do see myself more as a coach and a facilitator than an expert who would give a talk. As organizations I’ve worked with, some in the room can attest to, my approach is really about drawing out your expertise and asking you uncomfortable and hopefully provocative questions, as opposed to coming with the answers myself. What I’ve realized in preparing for today is that during the last 16 or so years as I’ve volunteered in the non-profit sector, studied it, worked in non-profits and with non-profits, I’ve had this unique vantage point. I’ve had the privilege of working with dozens of organizations. I’ve been able to see patterns, common strengths, shared challenges, and remarkable impact. So today my goal is to really draw on that and to really channel some of the thought leaders that I look to for inspiration in the work that I do. So here goes.

Idea number one. Know what success looks like in three years. What I’ve come to see over and over is that non-profits, funders, direct-service organizations alike are usually very clear on their vision and their mission. What gets them out of bed in the morning. What lights them and their colleagues up. The big, lofty goals that they have whether it’s reducing homelessness or increasing outdoor playtime for kids or finding a cure to a disease. What I find starts to get non-profit leaders to squirm a bit more in their seats is when I ask them what will be different in the world in three years as a result of your work. What can you hold yourself accountable for having achieved specifically, not just directionally – more of something or less of something else that you want to go away. And not just a vague future point, but three years. A horizon you can see, you can really imagine, but far enough out to give you some runway to achieve results. So when we talk about strategic clarity, it really needs to start with clarity on the impact you intend to achieve in a specific time and that is hard as many of you can attest to. Once you get alignment around those outcomes as an organization, what I have seen is what can be powerfully unlocked.

To bring this to life, TRIEC, an organization some of you know well, the Toronto Region Immigrant Employment Council, recently clarified their intended impact and landed on this as their statement. “By 2020, as a result of TRIEC’s efforts and in partnership with their partners and champions, 5,000 job-ready skilled immigrants will be meaningfully employed and 160 workplaces will be more immigrant inclusive.” There’s also an example in the first article that I included on the list of resources that gives you the Harlem Children’s Zone intended impact statement. Now once this impact is defined, the next step in strategic clarity is really to figure out how you are going to achieve it as an organization. What are the different pathways to get there? Not a mirror of what you’re currently doing, but standing inside of that impact that you seek, really stepping back and determining how are you uniquely positioned to achieve that. It’s really the combination of those things. The what we aim to achieve, for whom, and how that are the critical components of a theory of change. The Bridgespan Group has been writing about intended impact and theory of change for decades, or at least a couple decades. I included that first article they really authored. I would say it’s really their seminal article on the topic. So idea number one, know what success looks like for your organization in three years and align your efforts around that.

Which brings me to idea number two. Decide as an organization what you won’t do. Declare what you will be bad at. Now I suspect when I just said that for many of you there was this little voice in your head that said, “Bad at! Why would we want to be bad at anything? We are do-gooders.” Here’s why. Resources are scarce. If we can agree that strategy is defined as a guide to inform the allocation of those scarce resources toward maximum social impact. If our goal is to achieve as tight a fit possible between the actions we’re gonna undertake, the resources we’re gonna expend, and the impact that we can have then the bad news is you can’t do everything. The sad reality is that resources are limited while social needs seem endless. But there’s good news! To again quote the smart folks at the Bridgespan Group, “Everything isn’t equally worth doing by you. Different courses of action lead to different levels of impact.”

One of my favourite professors at Harvard Business School, a woman name Frances Frei who’s an expert in customer service and wrote a book called Uncommon Service. This idea is really premised on the notion, her book is really premised on the notion that companies and organizations need to know what they want to be bad at. In the video that I’ve suggested you watch where she’s interviewed, she says that the number one obstacle to excellence is being really well intentioned. Just to say that again, the number one obstacle to excellence is being really well intentioned. While you can desire to be great at everything, you can’t be better than others at everything and you have to make choices. She says that you aren’t being bad for sport, you are being bad in the service of great. Once you understand that in order to be great you have to be bad, we just need then the wisdom to know what to be bad at and what to be great at. I think she’s right when she says, “It’s more of an emotional barrier than anything else.” Getting over the sense that it’s not right to be bad at things.

We have a responsibility to be good at everything, don’t we? This is a unique challenge for service organizations which most non-profits fundamentally are. Apple knew, which she references in the video, that when they created the MacBook Air, for example, that to be best-in-class at weight, to have the lightest, slimmest computer, they had to give up on things. They had to give up on battery life. They had to give up on memory. I encourage you to consider the things you’re willing to give up in service of excellence and in service of greater strategic clarity. Maybe make that a conversation at a staff meeting, or board meeting, or meeting with your funder or grantee. If, for example, you’re a multi-service organization serving people from 0 to 100, do you have a view on the age group or age groups where you are most effective.

In the case of the Harlem Children’s Zone – and this story is again explained in that first article on my list – they started as a broad family service organization in New York City called Reedland Centers for Children and Families. Their vision, their mission was to improve the lives of America’s poorest children. One of the fledgling programs of that organization about 20 years ago was a program called Harlem Children’s Zone. They realized that the prospects for Harlem’s children were getting worse. So they made this bold and incredibly difficult decision as an organization to stop running the rest of their programs and they doubled down, they zeroed in on this neighbourhood and its 0-to-18 population and they transitioned out of activities that were not in line with the intended impact of the Harlem Children’s Zone.

The problem I frequently see in the non-profit sector is the idea of making choices comes with fear. Fear of losing the funding if you aren’t seen as serving a broad enough population. Fear of turning vulnerable people away who need your support. And while those are both legitimate fears, what Frances Frei would argue is that mindset can lead to what she calls “exhausted mediocrity.” “You don’t need to understand those you serve,” she says, “if you’re gonna be average at everything.” If you only wanna be a three on a scale of one to five, then you don’t need to be in touch with your clients or beneficiaries, at least not regularly. But if you’re gonna make trade-offs, then you really need to know intimately and deeply what your beneficiaries want and need from you and then deliver it. Understanding the needs of those you serve is a really critical step in strategic clarity.

One of the exercises that we often use, my partner and I, with organizations to start to surface some of the needs of clients and beneficiaries, is drawn from the business-model canvas, a tool to complement that. It’s called the Empathy Map. I’m gonna actually draw it for you. So the exercise is to really think – Can you hear me okay if I still do this? Okay, so here’s the exercise, you really think about what it is that those that you’re serving are thinking. What is it that they see around them? What is it that they’re doing? How are they being? What is it that they’re hearing around them? The exercise is to really say what is their attitude in public? How are the people that we’re seeing working with? Showing up? What are their behaviours to others? What really counts to them in that thinking section? What are their major worries? What are their preoccupations? What are they hearing? What are the influencers around them saying to them? What’s driving their behaviour and what do they see? What’s their environment like when they wake up in the morning? What is the world around them and how does that impact what they do in the decisions that they make in a day?

This is an exercise you can do as a team. The tool’s online if you Google Empathy Map, and I’ve included it on the list. It’s a starting place to begin to unpack, which I know many of you do with great frequency, but a lot of the time we’re holed up in our offices and at our desks and don’t take that opportunity to really step outside and really understand who we’re serving. So I’ve seen this tool really help organizations become much more clear on which needs of their beneficiaries are really most important for them to address to help them make some more clear and informed choices. So idea number two – decide as an organization, what you won’t do. Make sure this is driven by the real needs and priorities of those you serve. Declare what you will be bad at and then stop doing those things and invest more deeply in your areas of excellence.

Idea number three. Stack your circles. I made up that term. Resource your organization to achieve outcomes, not deliver programs. Okay, I’m gonna draw again. Any strong strategy really includes three parts. I’ve talked about the first one, and that really is your impact, your theory of change. What it is that you do and what impact it has for whom. The second part to any strong strategy really is about the money. There’s no point in having a theory of change that is not fundable, that you can’t raise dollars for. That there aren’t resources out there to allow you to execute on. The third part is really about your capacity. That’s the skills, the talent, that’s your volunteers, that’s your board, that’s your staff. In a perfectly aligned strategy, you can imagine that these three circles are stacked. You’ve got, you’re crystal clear on the impact that you want to achieve. You have all of the money you need to achieve it. You have all the right skills and talent to deliver on that. It’s dreamy. Dreamy, right? Now what I know is that isn’t the reality of the sector. Instead most of you typically feel like those circles are constantly being tugged apart. Probably that you are being pulled apart.

Margaret Eaton who runs TRIEC, the organization I was referencing earlier, forwarded me last week one of the latest Nonprofit AF blog posts. Anyone read that one? Some nodding heads, yeah. You got some hands, I do proudly. So this latest one is called “Answers on grant proposals if non-profits were brutally honest with funders.” Loved it. Admittedly there’s some laugh-out-loud answers in there, but there’s one that feels particularly apropos here. The question on the application is “How will you use the funds if you receive this grant?” A familiar one, right? Answer: “We honestly really need this grant to pay for rent and utilities and for wages so our staff can do important work and feed our families. But, since you won’t allow your funds to be used for those things, we will say that your grant is paying for whatever you will actually fund then get other funders or donors to give and then tell them that their money is paying for the stuff that they want to fund. We’ll ultimately waste hundreds of hours every year trying to figure out who’s paying for what. Hours that can be used to deliver services. Please send unrestricted money.” Good, right? For as much as I am sure that resonates with many of you, it certainly did me, and you should read the rest of that blog post.

Challenges persist around funders short-changing capacity at the expense of impact. All true. I think hard to refute. I’m gonna come back to this idea. I also believe that lack of strategic clarity can be to blame as much of the time. This shows up in the form of organizations applying for grants that promise the world and then they’re stuck having to deliver it. But more subtly, without being clear and aligned as an organization around this top circle, the risk is going after money that just resembles the kind of impact that you think maybe you should be having but doesn’t get you closer to your intended impact. There’s a good quote in the “Delivering on the promise of non-profits” article that I shared that says, “Missions are typically better at providing inspiration than direction.” The reality is that this feeling of being tugged apart can often be self-imposed. We need to take time as organizations and as a sector to reflect on our part in it.

So here’s really the heart of the idea. Ask for what you actually need to have the impact you want to generate. That same article goes on to say, and here’s the quote, “Both non-profit leaders and funders need to stop pulling punches with themselves and with others, and confront the reality of what it will cost to deliver results. Knowing that a new program will cost $500,000 to implement, but only raising a fifth of that and then attempting to initiate it with the hope that more money will come later or something is better than nothing is standard operating procedure for too many non-profits.” Where this comes back to strategic clarity is that, and I know this is controversial, I believe the only way for this to change at a sector level is if we stop competing on price and start competing on outcomes. I say compete in quotes. We need to collude around our unwillingness to compete on outputs, but instead ensure that our organizations are well-positioned to achieve results.

I had breakfast a couple of weeks ago with Lee Soda who runs ACSA, a wonderful multi-service organization in Scarborough that works in Agincourt. She was telling me about a program that they run called No Nonsense, one where they partner with job training organizations in the city and offer this training for free to the newcomers that they serve. She explained that when they applied for this grant, they didn’t just apply to cover the cost of the training. They said they would only run the program if they were able to get funding to address all the barriers that stand in the way of clients attending. So now their funding, which they successfully attained, includes childcare, transit passes, food from their food bank, the staff time to run the program, as well as the cost of the training itself. In applying for the grant, they costed out the outcomes they wanted to achieve for a specific number of individuals to complete their training and to be well-positioned for paid employment. That is what they asked for. I know ACSA is not alone and that there are numerous funders in the city that see the value of approaching community investment in this way and we just need to see more of it. In summary, back to the idea. Stack your circles. Change the direction of the tug towards maximizing the overlap between the impact you seek, the funds that you attain, and the capacity you have.

Idea number four. Test, learn, adapt, repeat. An article came out in 2013 that I know many in the sector read called, “The strategic plan is dead. Long live strategy.” Anyone here read it? Yeah, handful of people. It’s on the list. The subtitle is this: “In today’s fast-changing world, why freeze your strategic thinking in a five-year plan?” Now if I wrote that article, my headline would probably have read something like this: “The strategic plan is too often misunderstood and over-emphasized! Long live strategic clarity.” But I suspect that wouldn’t have been nearly as catchy.

What I find compelling in that article is what I saw as its central premise. It’s really the idea that I’m sharing that the static strategic plan is dead or really needs to be abolished. The one we’ve all seen that gets written every three years or five years, can often sit on a shelf or maybe in the Cloud. I don’t know if people have shelves anymore. Is often driven by a board that believes that is what the organization needs. It comes from good intention. What maybe should be dead is the approach of making a plan and sticking to it at all costs. Instead, what is needed is setting a strategic direction and being in a constant state of testing it which doesn’t mean not planning. In fact, I love in the article there’s a Dwight Eisenhower quote that says, “Plans are useless, but planning is everything.” What I say to organizations is to think of your theory of change as just that. It’s a theory. It’s a set of hypotheses that have been informed by evidence, by your own experience, but that needs to be validated over time.

My partner Margot and I worked with a furniture bank in 2014 on the development of their theory of change. Dan Kirshaw, their executive director, often talks about which version of their theory of change they’re on. I think they’re on version six. And what I like about that is the idea that it’s alive in their organization. That they’re learning and they’re adjusting and adapting. They’re using it as a tool. What I hear often from organizations that we work with is that just the time and space to stop and think and plan is really what’s so powerful. There’s not much magic to what we do, but the carving out of that time. This quality of conversation around what we aim to achieve and why and how well we are doing isn’t an every-five-year conversation. It’s an all-the-time conversation. So the good idea here is really about building a culture that supports strategic clarity and alignment. It’s one that’s not afraid to put a set of hypotheses out there about the impact that you can generate, but then to also be equally fearless about learning and course correcting as necessary.

That brings me to my last idea. It’s picking up on the fearlessness part. Idea number five. Take a stand against the starvation mindset. Generating real and sustainable outcomes requires investment. We benefit as a society from that investment. I know this one is obvious. It’s likely obvious to us all, but not to all. There is some real myth busting and authentic conversation that’s required here. Indulge me in a story for a moment. When my son, Noah, turned seven, we decided as we had done many times before for our kids and since to “ECHOage” his birthday party. Anyone here heard of ECHOage the website? Okay, so I’ll explain what it is. It’s a site that’s been around for about a decade and it’s designed to address three, what I think are, really important needs. One, kids get too many gifts for birthday parties. Two, charities need money. And three, parents seek to teach their kids generosity. Enter ECHOage. The concept is your kids pick a charity of their choice from this long list on the website and they create this electronic invitation like an evite on it. It invites your kid’s guests to the party and guests make a contribution instead of giving a gift. Half the money goes to the charity, half the money goes to the kid or the parents to buy one big gift that they’re excited about. Win-win, right?

So now, it’s my son’s party. In walks this parent with her son and this big, wrapped gift in hand. And I had one of those awkward moments where I said, “Oh no, you didn’t need to bring a gift. It’s an ECHOage party.” And her reply was this: “Oh no, I don’t do ECHOage. Do you know that they take a cut?” Now if I didn’t have 12 restless, seven-year-olds chomping at the bit to begin trampolining, she may still be regretting the day that she brought that remote control truck to my son’s party. What I wanted to say was this: “Please keep your gift. You’re right the organization does take a cut. The fee is 7% and the two women who started ECHOage have raised 10 million dollars for charities over the last decade. What makes you think that should be a volunteer position? Is it that we’re only willing to pay people for the services they provide as long as it doesn’t have a social impact? Do you not think that Toys R Us took a cut?” But I held my tongue.

Dan Pallotta, who frequently speaks passionately in defense of charities says, “The things that we have been taught to think about giving and charities and the non-profit sector are actually undermining the causes we love and the profound yearning to change the world.” He goes on to point out in his TED Talk, which I also included on the list, what many of you have likely seen. That we have this visceral reaction to the idea that people could make money helping people. That is the mindset we need to take a stand against. This last idea isn’t just about or even squarely about strategic clarity. It’s about something much bigger. It’s about the mass starvation that we have accepted as a society and as a sector. In the sector we celebrate doing more with less like it’s a badge of honour. As Pallota says, “We are not moving the needle on the biggest problems we face because we have a belief system that is keeping us small and reactive.” The idea here is to take a stand against the starvation mindset.

As Gregory & Howard noted in the non-profit starvation cycle article that I included, “Underfunding overhead can have disastrous effects. It is a fact that organizations that build robust infrastructure are more likely to succeed than those that don’t, but funders continue to underfund overhead and non-profits continue to skimp on it.” So what can we do? We can be crystal clear as organizations about the results that we seek to generate and the resources required to do it. We can educate our funders. We can educate ourselves as funders about what is really required to achieve and sustain impact. Organizations and our grant writers within them need to take responsibility for their part in training funders to believe that they can do more with less. We can educate our boards about what it takes to hire the talent that will get the job done. We can be myth busters everywhere.

I did follow up with that mom from the birthday party. It took a few days, but I sent her a note to tell her why we chose ECHOage and the pride I take in paying those fees. The ultimate impact that I seek. The North Star that anchors my personal theory of change and lights me up every day is the impact and promise of this talented and passionate sector unleashed, well resourced, and crystal clear on where we are going and how to get there. Thank you.