There’s no shortage of opinions on what organizations need to do to succeed. The business media is full of free “analysis” that usually comes down to either second-guessing, or just guessing. I'm reminded of the stock market guru who placed a distant third in a well publicized investment contest with a second grade class and a chimpanzee...
The social sector has its share of voices too, and if solutions were simply black and white, our jobs would be a whole lot easier. Reality is messy, and mission-based organizations face an increasingly competitive environment.
In a quest to get beyond so-called conventional wisdom, we asked the question, “What do nonprofits really need to do to succeed?” Like me, you might be surprised by some of the answers.
Public Interest Management Group assembled data for 40 nonprofits of various sizes and fields of service on several aspects of their business: the types of strategies they have in place; characteristics of their organizational cultures; practices around the people in the organization; and features of their business models.
Then we analyzed the data, looking at 28 organizational facets that, we hypothesized, should be related to overall success. We defined organizational success as: (1) mission-related results, relative to others in the field; (2) consistent financial surpluses; and (3) growth over time.
The early results are in, and they are fascinating. For example,
- A tightly focused business strategy correlates higher with success than anything related to day-to-day operations. While I was happy to see this relationship—after all, I’m a strategy consultant by day—I didn’t expect it. My assumption had been that strategy was important, but less essential than, for example, staff productivity or diversity of funding.
- The data show a strong correlation between a business-focused organizational culture and success. This didn’t shock me. But I was surprised to see that a strong mission-focus in the organizational culture had no correlation at all with success.
- Within the grit of organizations' operations, two facets stood out as most highly correlated with success: commitment to collecting and using data; and quality control systems. Efficient service delivery, by comparison, correlated moderately with success.
- An organization’s business model is clearly critical to success. No surprise there, but we see nuances. Effective business models come in different "flavors." Various combinations of facets correlate with success, chief among them being a strong market orientation.
Our analysis paints a picture with shades of gray. Conventional wisdom has holes. But we do see a clear relationship between business-savvy practices and success. And the data offers some guidance on which practices bear most attention.
The study results will be released in the spring, and will no doubt offer some additional insights. In the meantime, we have a little food for thought. I, for one, love having real information to chew on!